841 F. Supp. 2d 1286
N.D. Ga.2011Background
- RaceTrac seeks a declaratory judgment that Ace’s Excess CGL policy covers liabilities from two Mississippi lawsuits alleging benzene poisoning from gasoline fumes at RaceTrac-operated stations.
- Ace disclaimed coverage, arguing the Pollution Exclusion excludes injuries arising from pollution and that benzene is a pollutant under the policy.
- Underlying plaintiffs Bunns and Williams allege health injuries from exposure to gasoline vapors after renovations at a leased location.
- Policy contains an unambiguous Pollution Exclusion (endorsement 9) excluding injuries arising out of or related to pollution, with a narrow hostle fire exception.
- Georgia substantive law governs interpretation; the court must determine if the Pollution Exclusion is ambiguous or enforceable and whether public policy invalidates it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Pollution Exclusion apply to on-site pollution injuries? | Pollution exclusion should be ambiguous and construed for coverage. | Exclusion unambiguous; bars coverage for pollution-related injuries. | Pollution Exclusion is not ambiguous and excludes coverage. |
| Are benzene/gasoline fumes pollutants under the policy? | Gasoline fumes may not fit pollutant definition; Barrett creates ambiguity. | Benzene fits pollution definition; exclusion applies. | Benzene meets the policy’s pollutant definition; exclusion applies. |
| Would enforcement of the Pollution Exclusion violate Georgia public policy? | Barrett public policy favors insureds’ reasonable expectations. | Public policy does not override clear unambiguous exclusions. | Public policy does not invalidate the Pollution Exclusion. |
Key Cases Cited
- Reed v. Auto-Owners Ins. Co., 284 Ga. 286, 667 S.E.2d 90 (Ga. 2008) (pollution exclusion applied to carbon monoxide poisoning; strict construction of exclusions; on-site pollution not ambiguous)
- Barrett v. Nat'l Union Fire Ins. Co. of Pittsburgh, 304 Ga. App. 314, 696 S.E.2d 326 (Ga. Ct. App. 2010) (ambiguity over whether natural gas is a pollutant; insureds’ reasonable expectations limited when exclusion unambiguous)
- Davis v. Kaiser Found. Health Plan of Ga., 271 Ga. 508, 521 S.E.2d 815 (Ga. 1999) (public policy informing insureds’ reasonable expectations; exclusions must be read in light of policy language)
- Fireman’s Fund Ins. Co. v. Univ. of Ga. Athletic Ass’n, 288 Ga. App. 355, 654 S.E.2d 207 (Ga. Ct. App. 2007) (ambiguous terms and reasonable expectations principles applied to insurance contracts)
- Kerr-McGee Corp. v. Ga. Cas. & Sur. Co., 256 Ga. App. 458, 568 S.E.2d 484 (Ga. Ct. App. 2002) (illustrates ambiguity may arise in coverage contexts; exclusions may be ambiguous in some contexts)