New York Appellate Court Deems Pollution Exclusion Ambiguous --Finds Fact Question Presented as to Whether Asbestos Qualifies as a "Pollutant" Under Exclusion
December, 2003
Affirming the denial of insurer’s motion for summary judgment, the New York Appellate Division, Second Department holds that although asbestos may be a “thermal irritant” as listed in the policies’ pollution exclusion, failure to expressly include the term “asbestos” within the definition of “pollutant” creates ambiguity giving rise to a fact question as to whether asbestos is a “pollutant” within the meaning of the exclusion. Village Mall at Hillcrest Condominium v. Merrimack Mut. Fire Ins. Co., 766 N.Y.S. 2d 70 (N.Y. App. Div. 2003).
Facts
Plaintiff insured filed suit seeking a judgment declaring that defendant Merrimack was obligated under seven successive annual insurance policies to provide a defense and/or indemnify it in connection with an underlying personal injury action brought against it arising out of asbestos inhalation. Merrimack disclaimed coverage based upon the subject policies’ pollution exclusion clauses.
The pollution exclusion clauses state that coverage does not apply to “‘bodily injury’ or ‘property damage’ arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants.” Pollutants are defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.” (emphasis added)
The trial court denied Merrimack's motion for summary judgment in the declaratory judgment action, finding that while Merrimack established, prima facie, its entitlement to judgment as a matter of law, there were issues of fact as to whether asbestos was considered a “pollutant,” as that term was defined under the subject policies.
Analysis
The Second Department affirmed the denial of summary judgment for Merrimack, noting that “[t]o negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case.” Where the language of the policy “is doubtful or uncertain in its meaning, any ambiguity must be resolved in favor of the insured and against the insurer.” Further, if the exclusionary clause fails to include the particular loss that the insured alleges, then the insured is entitled to be defended and possibly indemnified.
While the appellate court recognized that both it and New York's highest court have acknowledged that asbestos may be a “thermal irritant” as listed in the pollution exclusions (see Belt Painting v. TIG Ins. Corp., 100 N.Y.2d 377; Continental Cas. Co. v. Rapid-Am. Corp., 80 N.Y.2d 640; A-One Oil v. Massachusetts Bay Ins. Co., 250 A.D.2d 633), it nevertheless found that because the term “asbestos” is not specifically included within the definition of “pollutants”, an ambiguity is created which must be resolved against the insurer. As such, “there is an issue of fact as to whether asbestos falls within the definition of a ‘pollutant’ as defined under the terms of the policies herein.”
Learning Point:
By acknowledging that asbestos falls within the general category of “thermal irritant” used in the subject pollution exclusions yet finding ambiguity because the term “asbestos” was not specifically listed in the definition of “pollutant”, Village Mall places insurers in an obvious quandary. Relying on general terminology may be deemed insufficient as in this case; yet specifically identifying one thermal irritant such as asbestos will likely give rise to counter-arguments in other cases that naming one thermal irritant and not another creates ambiguity as to whether the unnamed thermal irritant constitutes a “pollutant” within the meaning of the pollution exclusion.
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