James River Insurance v. Ground Down Engineering

Aug 20: In the U.S. Court of Appeals, Eleventh Circuit, Case No. 07-13207. James River Insurance Company appealed the district court’s dismissal of its claim seeking a declaratory judgment that it is not obligated to provide a legal defense to Ground Down Engineering under the insurance policy Ground Down purchased from James River. James River also appealed the denial of its summary judgment motion. James River argues that the “pollution exclusion” in the policy excuses it from the obligation to defend Ground Down and Ground Down’s engineer, Laurel Hall, in a suit filed by Priority Development for "negligently failing to discover construction debris and fuel tanks during an environmental site
assessment."

In its decision, the Appeals Court concluded that the district court erred in holding that the pollution exclusion does not apply. and vacated the district court’s dismissal and remanded the case with instructions for the district court to enter an order granting summary judgment to James River.

In its decision, the Appeals Court said, "Appellees argument fails for two reasons. First, Priority’s complaint states that the damages associated with the construction debris come from the elevated levels of methane gas caused by the debris and lists the debris under the heading 'environmental contamination.' Second, the pollution exclusion is not actually limited to irritants or contaminants. The definition for pollutants states that 'irritants or contaminants' covers 'waste' which includes 'all . . . materials to be disposed of, recycled, stored, reconditioned, or reclaimed.' Only a strained reading of this language would exclude construction debris causing elevated levels of methane gas from this definition. Finally, the first sentence of the exclusion states that 'Pollution / environmental impairment / contamination is not covered under this policy.' The construction debris described in Priority’s complaint, even without the methane gas, would be considered an environmental impairment."

Access the complete opinion (click here).