Pollution Exclusion Bars Insurer v. Insurer Contribution Claim

The United States District Court for the Eastern District of Missouri, applying Missouri law, held that a general liability policy’s pollution exclusion can exclude coverage for asbestos related claims even when the exclusion does not expressly include asbestos.

In the underlying case, the insured, Anheuser-Busch, LLC (“A-B”), was sued by the widow of a former employee who alleged she contracted mesothelioma after being exposed to asbestos carried home on her husband’s clothes. A-B was insured by both Zurich American Insurance Co. (“Zurich”) and Insurance Company of North America (“INA”). In 2014, Zurich settled with the widow and paid the full settlement amount totaling $1.5 million. Zurich subsequently brought the instant suit against INA seeking a remedy in equity based on INA’s coverage.

INA, however, argued that the pollution exclusion in its policies excluded it from liability. The exclusion bars coverage for “bodily injury . . . arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into . . . the atmosphere.” However, the exclusion does not apply if such discharge, dispersal, or escape is “sudden and accidental.” INA argued that asbestos was an “irritant, contaminant, and/or pollutant” which was “discharge[d], dispers[ed], release[d], or escaped[d]” into “the atmosphere.”

In contrast, Zurich argued that the exclusion was not applicable because it did not “expressly or clearly include asbestos.” Further, Zurich argued that considering asbestos an irritant or contaminant in this context would invite “boundless” interpretations which would include virtually every substance or chemical. Zurich did not contest that INA met its burden of proof that the discharge or dispersal of asbestos was not “sudden and accidental,” thus, the Court concluded that INA demonstrated that the asbestos at issue was not suddenly or accidentally discharged, given the parties’ stipulation that the decedent was alleged to have inhaled and ingested the asbestos continuously for more than a decade. 

The court, however, held that the pollution exclusion did exclude asbestos related claims. The court reasoned that the plain meaning of “irritant, contaminant and/or pollutant” clearly included asbestos. As support, the court pointed to several cases in which Missouri courts held that asbestos was an ‘irritant’ or ‘contaminant.’ Additionally, the court referenced the federal Clean Air Act which lists asbestos as a “hazardous air pollutant.”

The court also looked to a recent Missouri Supreme Court case and an Eighth Circuit case that respectively found that lead and Radium were pollutants under similar pollution exclusions that did not expressly include the substances. 

As a result, the court held that the pollution exclusion exempted INA from liability. Therefore, INA was not liable to Zurich for contribution and Zurich was responsible for the full amount of the $1.5 million settlement. Zurich Am. Ins. Co. v. Ins. Co. of N. Am., No. 4:14 CV 1112 CDP (E.D. Mo. May 21, 2019).