CASE LAW NOTE
A Review of Case Law of Interest to IIARI Members This feature of The Anchor reviews recent case law involving the insurance industry. Please contact the authors for more information: Jennifer R. Cervenka, Esq. and Melissa E. Darigan, Esq., Partridge Snow & Hahn LLP, 401-861-8200, www.psh. com. Pollution exclusion does not relieve insurer from duty to defend: Employers Mutual Casualty Company v. ELJ, Inc., et al., Providence County Superior Court, C.A. No. PC06-3960 (April 18, 2013) Summary: The Rhode Island Superior Court recently found that a pollution exclusion clause did not relieve an insurer of its duty to defend the policyholder in litigation over noise and dust allegedly created by the policyholder’s business obligations. Employers Mutual Casualty Company issued a commercial general liability policy to ELJ, Inc. The policy excluded coverage for bodily injury or property damage arising out “the actual alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants.’” “Pollutants” was defined in the policy as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” Tracy and Lane Ukura brought suit in 2005 against ELJ, a rock crushing and loam screening business, seeking recovery from the noise of ELJ’s operations and the accumulation of stone dusk on the Ukuras’ property. ELJ sought coverage for this claim under its Employers Mutual policy. Employers Mutual denied coverage and thereafter brought this action seeking a ruling that it had no duty to defend ELJ from the Ukuras’
claim. The Superior Court held that an insurer’s duty to defend is determined by applying the “pleadings test;” that is, the Court is required to look at the allegations in a complaint and determined if the plaintiff recites facts that bring the injury within the coverage provisions of the policy, irrespective of whether the plaintiff will ultimately succeed on its claims. Where the policy contains a “duty to defend provision,” any doubts as to the adequacy of the pleading to encompass occurrences within the coverage of the policy are resolved against the insurer and in favor of the insured. If this test is met, the insurer must defend the claim. Using this test, the Court found that the Ukuras’ complaint against ELJ alleging private nuisance, continuing trespass and intentional infliction of emotional distress, stated sufficient facts to bring their alleged injury within the coverage of ELJ’s policy with Employers Mutual, thus triggering the insurer’s duty to defend. In doing so, the Court rejected the argument by Employers Mutual that there is no duty to defend because the policy’s pollution exclusion bars the Ukuras’ claims, finding that “stone dust” and “sound” are not explicitly listed among the “pollutants” defined in the pollution exclusion of the policy.
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The Anchor 22 Second Quarter, 2013