MOTHBALLS ARE A POLLUTANT -- NO COVERAGE FOR ANY INSURED
Construing the pollution exclusion of a commercial general liability policy, a magistrate judge in the Eastern District of Texas recently recommended summary judgment be granted in favor of a liability insurance carrier, exonerating the carrier from any duty to defend or indemnify its insured against an underlying suit under either a CGL policy or an umbrella policy. In United Fire & Casualty Co. v. Condeb, L.P., No. 5:14CV150 (E.D. Tex. Feb. 22, 2016), the insured, Condeb, faced an underlying lawsuit alleging that toxic chemicals/pesticides and fumes had contaminated the claimant’s workplace, which was managed by Condeb, and injured the claimant. The toxic chemicals turned out to be mothballs that been placed in the building’s attic in an effort to drive out squirrels. Apparently, the mothball fumes were so strong they drove out the employees as well.
Condeb had a commercial package policy issued by United Fire, which contained CGL and umbrella coverage. Both coverages contained pollution exclusions. While defending Condeb under a reservation of rights, United Fire sought a declaratory judgment that it owed no duty to defend or indemnify Condeb under either policy.
Condeb did not dispute that mothballs were a pollutant, but argued that only one of the two Condeb entities sued was the owner of the property – the other Condeb entity was the management company and did not own the property at issue. Nevertheless, the magistrate judge observed that the pollution exclusion applies to a discharge of pollutants at premises owned or occupied by “any insured.” Thus, the ownership of the property by one of the Condeb entities caused the pollution exclusion to apply to all the insureds, even those who do not own the property.
The magistrate judge also recommended United Fire be granted immediate summary judgment on its duty to indemnify Condeb, even though the underlying suit had not yet been tried. Relying on the rule set out in Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 82 (Tex.1997), the magistrate judge concluded the allegation that maintenance employees of “the Defendants” were responsible for placing the mothballs in the attic meant any liability either defendant could possibly incur would necessarily arise out of pollutants, and thus there was no possibility United Fire would ever have a duty to indemnify under these facts.