Pollutant Exclusion Bars Defense of Insured in Hog Confinement Fatality

Bituminous Casualty Corp. v. Sand Livestock Systems, Inc., no. 05-1063 (Iowa Feb. 23, 2007).

Gossage, an employee of Furnas Farms at an Ida County hog confinement facility (sounds like a prison, doesn't it?) was using the washroom when overcome by carbon monoxide fumes from a malfunctioning power washer also housed in the washroom. His estate sued Sand, who had installed the power washer heater.

Sand requested Bituminous to defend it but the insuror declined. invoking the 'pollution exclusion' clause of its commercial lines policy which denied coverage for bodily injury or property damage which would not have occured in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration release or escape of 'pollutants' at any time. Pollutants are defined by the policy as 'any solid, liquid, gaseous or thermal irritant or contaminant including smoke, vapor, soot, fumes, acids, alkalis chemicals and waste'. In addition there was a pollution exclusion in its commercial umbrella policy which stated that the policy did not apply to any liability for the actual or threatened discharge or release of pollutants, and to any obligation to defend on that basis.

Bituminous filed a federal complaint to determine its duty to defend and the the federal court certified the question to the Iowa Supreme Court for a local law determination, in view of the fact that it could not predict an outcome because the law is unsettled in the United States.

The court held that the broad definition of pollutants unequivocally included carbon monoxide and from that held that the local policy to enforce unambiguous policy exclusions as written compelled the result.

For Iowa farmers, the takehome is clear. Review your coverage with a specialist. But the larger issue is clearer, and it's one we've discussed here before. Make damned sure that the equipment you have on the property is in good working order and safe to be around, because you may not be able to count on the insurance company being there for you in a time of need.