In Citizens Ins. Co. of Am., et al. v. Augusta Chiller Service, Inc., et al., the Southern District of Georgia granted insurers' motions for summary judgment in part on their duty to defend under a primary and excess policy for a pollution exclusion for bodily injury claims arising out of a Freon leak. See Citizens Ins. Co. of Am., et al., No. CV 123-110, 2025 WL 895827, at *3 (S.D. Ga. Mar. 24, 2025). (This post will only discuss the pollution exclusions).
The court's analysis focused on four main points:
- The pollution only needs to be the "but-for" cause of the injury, not the sole cause of the injury.
- A typo in the pollution exclusion of one policy, which removed the phrase "which would not have occurred in whole or in," did not create ambiguity in an insurance policy.
- Any substance that is not "naturally harmless" is a pollutant.
- The application of the pollution exclusion did not make coverage illusory and did not violate public policy.
Policyholder Takeaways:
- The "but-for" causation test greatly increases the application of the pollution exclusion to causes only partially involving pollutants. Policyholders will need to craft arguments regarding the cause of the alleged injury.
- This case applies the pollution exclusion to any substance that is not "naturally harmless." Pollution exclusions were traditionally created for environmental pollution, but since then, the exclusions have been expanded in some jurisdictions to include any harmful substance. If a claim is brought against a policyholder alleging a harmful substance, the insurance company could argue that it is excluded under the pollution exclusion, regardless of the source of the pollutant.
- Policyholders often argue that an insurance policy is ambiguous, but more than a typographical error is necessary to create ambiguity. Policyholders should find persuasive case law, if they want to argue a policy is ambiguous.
The Insurers argue they are entitled to declaratory judgment that they have no duty to defend under the Primary and Excess Policies' pollution exclusions. (Doc. 53, at 10-12.) Defendants do not dispute that Freon is, by definition, a pollutant, but disagree that the exclusion is applicable, relying on the Georgia Court of Appeal's holding in Barrett v. Nat'l Union Fire Ins. Co. of Pittsburgh to argue the injuries were not caused by the “pollutant,” but rather by a lack of oxygen. (Doc. 59, at 4-6 (citing 696 S.E.2d. 326, 330 (Ga. Ct. App. 2010)); Doc. 62, at 1217.)
