Pollution Exclusion / Lead Paint

Georgia Supreme Court finds lead a “pollutant” in Absolute Pollution Exclusion rejecting view that it only applies to traditional pollution.

The Georgia Supreme Court, applying Georgia law, reversed the appellate court, and held, as a matter of first impression, that lead poisoning due to lead-based paint ingestion was excluded from coverage pursuant to an “absolute pollution exclusion” in a Comprehensive General Liability insurance policy.

A tenant sued her landlord for injuries her daughter sustained as the result of ingesting lead from deteriorating lead-based paint at a rental property.  The landlord was insured by Georgia Farm Bureau Mutual Insurance Company (“GFB”).  After the landlord tendered the claim to GFB, GFB filed a declaratory judgment action seeking a determination that the injuries were not covered under the policy and that it had no duty to defend.  GFB argued that the injuries from lead poisoning were not covered by the policy due to the policy’s pollution exclusion.  The trial court concluded that lead-based paint unambiguously fell within the policy’s definition of a “pollutant,” and, as a result, the injuries were excluded from coverage.  The Court of Appeals reversed citing that Georgia law requires the narrow construction of exclusions from coverage in insurance policies.  According to the appellate court, a reasonable insured could have understood the pollution exclusion to exclude coverage for injuries caused by certain forms of industrial pollution, rather than the presence of leaded materials in a private residence.  Thus, the appellate court held that GFB’s pollution exclusion was ambiguous and should be strictly construed against the insurer.  GFB petitioned the Georgia Supreme Court for certiorari which was granted.

The pollution exclusion in the GFB policy provided:  “This insurance does not apply to: (f) Pollution (1) “Bodily injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants”: (a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured.”   A “pollutant” was defined in the policy as “any solid, liquid, gaseous or thermal irritant or contaminate, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

The Supreme Court of Georgia held that that absolute pollution exclusion found in the GFB policy unambiguously excluded claims for personal injury as a result of lead poisoning.  According to the court, “the CGL policy contains an absolute pollution exclusion clause which precludes recovery for bodily injury or property damage resulting from exposure to any pollutant.”  The court noted that there is a jurisdictional split over whether to apply pollution exclusions to all injuries caused by pollutants or, given the historical purpose behind such clauses, to apply these exclusions only to injuries or damages caused by what is traditionally considered environmental pollution.  Ultimately, the court found that Georgia courts have repeatedly applied pollution exclusions outside of the context of traditional environmental pollution and have enforced such exclusions without requiring that the pollutant at issue be explicitly named in the policy.  The court held that lead present in paint unambiguously qualifies as a pollutant, and therefore, under the plain language of the policy’s pollution exclusion, the tenant’s claim was excluded from coverage.

Georgia Farm Bureau Mut. Ins. Co. v. Smith, No. S15G1177 (Ga. Mar. 21, 2016).

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