922 F.3d 414
8th Cir.2019Background
- Restaurant Recycling sold processed waste cooking oil (fat product) to New Fashion Pork; the product was contaminated with lasalocid and lascadoil.
- New Fashion Pork sued Restaurant Recycling in Minnesota state court for breach of contract, breach of implied warranties, negligence, strict liability, and fraud, alleging contaminated feed harmed swine.
- Restaurant Recycling sought a declaratory judgment that its insurer, Employer Mutual, had a duty to defend and indemnify under a commercial general liability policy.
- Employer Mutual moved for judgment on the pleadings, invoking the policy’s total pollution exclusion for property damage "which would not have occurred in whole or part but for the . . . dispersal . . . of 'pollutants.'"
- Restaurant Recycling conceded lascadoil is a pollutant but disputed that lasalocid is; Employer Mutual argued lascadoil alone triggers the exclusion.
- The district court granted judgment for Employer Mutual; the Eighth Circuit reviewed de novo and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the policy’s total pollution exclusion bar coverage for New Fashion Pork’s property-damage claims? | Exclusion should not apply because dispersal requires intentionality or because lasalocid is not a pollutant. | Exclusion applies because lascadoil is a pollutant and the complaint alleges damage caused (in part) by dispersal of that pollutant. | Held: Exclusion applies; lascadoil’s presence in the fat and feed constitutes "dispersal" bringing claims within the exclusion. |
| Does "dispersal" require intentional conduct to trigger the exclusion? | Yes; plain meaning implies intentionality and accidental "occurrences" are covered. | No; "dispersal" has an ordinary meaning that includes unintentional spreading; policy language is passive and does not require intent. | Held: "Dispersal" need not be intentional; ordinary meaning covers unintentional spreading (e.g., processing and blending). |
| Must the pollutant be the sole cause of damage to trigger the exclusion? | No explicit sole-cause requirement; argued exclusion shouldn’t apply if other non-pollutant causes exist. | The exclusion applies if damage "would not have occurred in whole or part but for" the pollutant’s dispersal—partial causation suffices. | Held: Partial causation by a pollutant (here lascadoil) is sufficient to trigger the exclusion. |
| Does the policy’s coverage-for-"occurrences" (accidents) limit the exclusion to non-intentional dispersals? | Yes; because intentional dispersal would not be an "occurrence," the exclusion must be limited to intentional acts. | No; insurer can exclude certain types of damage even if policy otherwise covers accidents; limiting exclusion this way renders "dispersal" superfluous. | Held: The presence of an "occurrence" coverage provision does not construe the exclusion to exclude only intentional dispersal; exclusion remains broad. |
Key Cases Cited
- Thach v. Tiger Corp., 609 F.3d 955 (8th Cir. 2010) (standard of review and choice-of-law guidance).
- Midwest Family Mut. Ins. Co. v. Wolters, 831 N.W.2d 628 (Minn. 2013) (insurance policy interpretation follows contract principles).
- Farmers Home Mut. Ins. Co. v. Lill, 332 N.W.2d 635 (Minn. 1983) (ordinary-person standard for policy language).
- Meadowbrook, Inc. v. Tower Ins. Co., 559 N.W.2d 411 (Minn. 1997) (duty to defend comparison of complaint to policy language; duty broader than indemnify).
- Transcon. Ins. Co. v. W.G. Samuels Co., 370 F.3d 755 (8th Cir. 2004) (appellate court may affirm on any ground raised below).
- Auto-Owners Ins. Co. v. Hanson, 588 N.W.2d 777 (Minn. Ct. App. 1999) (nontechnical/plain-meaning approach to pollution exclusions; unintentional chipping of lead paint qualified as dispersal).
- MacKinnon v. Truck Ins. Exch., 73 P.3d 1205 (Cal. 2003) (authority advanced by insured for requiring intent for dispersal exclusion to apply).