Source: Sedgwick Insurance Law Blog, April 17, 2012
By: Stevi Raab
In Travelers Prop. Cas. Co. of America v. Chubb Custom Ins. Co., 2012 U.S. Dist. LEXIS 44756 (E.D. Pa. Mar. 30, 2012), the U.S. District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, considered whether noxious odors emanating from a pig farm were pollutants as defined by the general liability policies’ pollution exclusions. The court held that the policies’ pollution exclusions precluded coverage where the insureds sought a defense for an action alleging physical harm and property damage caused by hazardous substances and foul-smelling odors emanating from the insureds’ pig farm.
The Clemens Family Corp. and its subsidiary Country View Family Farms LLC (collectively, the Clemens) owned a commercial pig farm in Indiana. The facility collected pig excrement into a large cement pit that drained through a dragline, which deposited the waste onto nearby fields for use as fertilizer. Several neighbors sued the Clemens alleging that the pig farm produced “harmful and ill-smelling odors, hazardous substances and contaminated wastewater” that escaped onto neighboring properties. The complaint alleged that the “offensive and noxious odors” impaired the plaintiffs’ use and enjoyment of their properties and caused nausea, vomiting, headaches, respiratory problems, irritation, and aggravation of existing medical conditions.
Travelers Property Casualty Company of America and Zurich American Insurance Co., which issued primary general liability policies to the Clemens, denied coverage based on their policies’ respective pollution exclusions, which precluded coverage for damages by the insured’s “actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants.’” Both policies defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”
Addressing the issue of whether the manure odors fell within the policies’ definition of pollutants, the court cited Pennsylvania cases applying standard dictionary definitions to the term “pollutant.” The court also looked to Pennsylvania cases holding that fumes are pollutants for the purposes of pollution exclusions. Relying on these cases, the court held that:
[N]oxious odors produced by pig excrement (or waste) that cause bodily injury and property damage appear to fit squarely within the definition of pollutant under the policies. The fact that pig waste is spread over fields as fertilizer is of no moment, as “waste” includes materials left over from a production operation, and the policies’ definition of pollutant expressly includes waste that is to be reused.
In reaching its holding, the court considered the Clemens’ argument that “because odors can be unpleasant or sweet, harmful or innocuous, the allegation of foul odors is too ambiguous to be construed as a pollutant barring coverage.” The court, however, rejected such a bright line rule and instead held that the nature of the alleged odors, in relation to the alleged harm, determines whether it is a pollutant. Thus, the court explained that the noxious odors unambiguously fell within the definition of pollutant because the pig farm created pollution resulting in physical harm. The court also rejected the Clemens’ argument that farm odors cannot be pollutants in a rural area, noting that a pollutant does not cease being a pollutant simply because it is common to an area.