Commercial General Liability Pollution Exclusion
National Union Fire Ins. Co. of Pittsburgh, PA. v. Burlington Ins. Co., Supreme Court New York, New York County, Index No. 155114/2013 (April 27, 2018)
The insured, Mayore Estates, owned a building in Manhattan next to the World Trade Center. In 2005, several claimants sued the insured in New York state court alleging injuries resulting from post-9/11 cleanup activities at the insured’s premises. Subsequent actions followed. The claims were removed to federal court and consolidated in a multi-district litigation. Plaintiff-claimants sought damages for respiratory illnesses and other injuries purportedly suffered during the cleanup of buildings near the World Trade Center site “as a result of the carelessness, recklessness and negligence of the Defendants . . . in failing to provide . . . a safe place to work . . . and in failing to provide the Plaintiff[s] with proper and appropriate respiratory protection and protection from exposure to toxins during the time that the Plaintiff[s] participated in the cleanup.” Plaintiff-claimants alleged that they were exposed to and inhaled “toxic substances and particulates” and sought recovery based on several theories of liability, including breaches of New York Labor Law and common law negligence.
Mayore Estates was insured by USF&G under a primary general liability policy in effect from December 2000-2001, and by Burlington for the following year, 2002. Mound Cotton’s client, National Union, issued an umbrella liability policy for the period February 14, 2002 through December 10, 2002.
Burlington issued disclaimer letters in connection with both the state and federal actions, taking the position that: 1) the claims were barred by a total pollution exclusion that excluded coverage for bodily injury that “would not have occurred in whole or part but for” the dispersal of pollutants; 2) the claims were barred by an asbestos exclusion; and 3) the injuries began before the Burlington policy incepted. After learning of Burlington’s declination, National Union defended Mayore Estates under a reservation of rights, and thereafter demanded that Burlington assume the defense and reimburse National Union for defense costs. Burlington refused, and National Union brought a declaratory judgment action.
On April 27, 2018, the court granted National Union’s summary judgment motion and denied Burlington’s cross-motion. The court agreed that a total pollution exclusion is applicable to “traditional” or “classic” environmental pollution under New York law. Relying on two federal district court decisions in the World Trade Center litigation, the court held that it need not determine whether the emissions from the World Trade Center disaster were “traditional” or “classic” within the meaning of the exclusion because plaintiff-claimants also asserted independent workplace safety claims. The court further concluded that the asbestos exclusion did not preclude coverage under the Burlington policy because asbestos was only one of numerous toxicants and contaminants involved. Finally, the court held that the underlying actions alleged injuries that occurred during the Burlington policy period.