Source: http://www.lexology.com, November 2, 2012
By: Mary Beth Forshaw and Bryce L. Friedman, Simpson Thacher & Bartlett LLP
A Missouri district court ruled that a pollution exclusion excused an insurer from any duty to defend claims arising out of exposure to harmful lead products. Doe Run Resources Corp. v. Lexington Ins. Co., 2012 WL 4480732 (E.D. Mo. Sept. 28, 2012). The court reasoned that the exclusion unambiguously applied to claims alleging the continuous release of lead-based pollutants into the environment during the course of business operations. Although straightforward, the decision is noteworthy for several reasons:
First, the court rejected the notion that the exclusion was ambiguous and/or did not encompass lead-based claims because lead was not specifically listed in the provision. Even construing the exclusion narrowly, the court concluded that the term “pollutants” plainly encompassed lead and other toxic chemicals released from the plant.
Second, the ruling reinforced the principle, endorsed by many jurisdictions, that extrinsic evidence should not be considered when interpreting an unambiguous policy term. Here, having deemed the exclusion unambiguous, the court afforded no significance to two emails discussing the applicability of the exclusion to lead-related claims. The court also declined to consider Doe Run’s objection to the inclusion of a lead exclusion during contract negotiations with Lexington.
Third, the decision limits the scope of Hocker Oil Co. v. Barker-Phillips-Jackson, Inc., 997 S.W.2d 510 (Mo. Ct. App. 1999), and other decisions that have declined to enforce a pollution exclusion or found the exclusion ambiguous. In Hocker Oil, a Missouri appellate court ruled that an absolute pollution exclusion was ambiguous as to whether it encompassed claims arising out of an isolated gasoline leak from an underground tank. The Hocker Oil court reasoned that because gasoline was not specifically listed as a pollutant and because the policyholder’s business related to the transporting and storing of gasoline, the policyholder would likely not consider gasoline a pollutant.
In sum, the decision supports insurers’ denial of defense or indemnity for lead-related claims based on the pollution exclusion, consistent with a number of recent decisions. See Hussey Copper, Ltd. v. Arrowood Indem. Co., 391 Fed. Appx. 207 (3d Cir. 2010); Bituminous Cas. Corp. v. Aaron Ferer & Sons Co., 2007 WL 2066452 (D. Neb. July 16, 2007); Cincinnati Ins. Co. v. Thomas, 2006 WL 3569195 (Ohio App. Dec. 11, 2006).