Commercial General Liability Total Pollution Exclusion Endorsement Will Not Apply to All Contact with Pollutants

In its 2000 decision of Doerr v. Mobil Oil Corp., 774 So.2d 119 (La. 2000), the Louisiana Supreme Court reshaped the application of the Commercial General Liability Total Pollution Exclusion Endorsement, overruling its previous position expressed in Ducote v. Koch Pipeline Co., L.P., 730 So.2d 432 (La. 1999).  The Doerr Court reasoned that it is appropriate to construe a pollution exclusion clause in light of its general purpose, which is to exclude coverage for environmental pollution, and under such interpretation, the clause will not be applied to all contact with substances that may be classified as pollutants.[1]

The Total Pollution Exclusion Endorsement addressed by the Doerr Court states:

This insurance does not apply to:

(1) “Bodily injury”, “property damage”, “personal injury” or “advertising injury” which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time.

(2) Any loss, cost or expense arising out of any:

(a) Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants; or

(b) Claim or suit by or on behalf of a governmental authority or others for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of pollutants.

Pollutants means solid liquid, gaseous, or thermal irritant or contaminant including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste.

Waste includes material to be recycled, reconditioned or reclaimed.

This exclusion does not apply to “bodily injury”, “property damage”, “personal injury” or “advertising injury” caused by heat, smoke or fumes from a hostile fire.  As used in the exclusion, a hostile fire means one which becomes uncontrollable or breaks out from where it was intended to be.

Applicability of Commercial General Liability Total Pollution Exclusion Determined by Factors

According to the Doerr Court, the applicability of a total pollution exclusion in any given case is determined by addressing the follow factors set out by the Doerr Court:

(1) Whether the insured is a “polluter” within the meaning of the exclusion;

(2) Whether the injury-causing substance is a “pollutant” within the meaning of the exclusion; and

(3) Whether there was a “discharge, dispersal, seepage, migration, release or escape” of a pollutant by the insured within the meaning of the policy.

The Doerr Court went on to set out the frame work for addressing each of these factors.  In determining whether an “insured” is a “polluter”:

the trier of fact should consider the nature of the insured’s business, whether that type of business presents a risk of pollution, whether the insured has a separate policy covering the disputed claim, whether the insured should have known from a read of the exclusion that a separate policy covering pollution damages would be necessary for the insured’s business, who the insurer typically insures, any other claims made under the policy, and any other factor the trier of fact deems relevant to this conclusion.

In determining whether the “injury-causing substance” is a “pollutant”, the Doerr Court noted that many substances could be classified as a pollutant and provided:

the trier of fact should consider the nature of the injury-causing substance, its typical usage, the quantity of the discharge, whether the substance was being used for its intended purpose when the injury took place, whether the substance is one that would be viewed as a pollutant as the term is generally understood, and any other factor the trier of fact deems relevant to that conclusion.

Regarding the third and final factor, the Doerr Court provided the following guidance for determining whether there was a “discharge, dispersal, seepage, migration, release or escape”:

the trier of fact should consider whether the pollutant was intentionally or negligently discharged, the amount of the injury-causing substance discharged, whether the actions of the alleged polluter were active or passive, and any other factor the trier of fact deems relevant.

Although Commercial General Liability policy language has somewhat evolved over the last thirteen years since the Court’s decision in Doerr, the criteria above remain the benchmark for determining the applicability of the Commercial General Liability Total Pollution Exclusion Endorsement.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.