Markel Int. Ins Co., LTD. v. Florida West Covered RV & Boat Storage, LLC. (United States Court of Appeals, 11th Cir., August 11, 2011)
This action for declaratory relief involved coverage for a third party, who alleged he was forced to wade through retained flood water to retrieve his personal property from a storage unit that he leased from Florida West. The underlying complainant alleged that he "contract[ed] bacterial poisoning," "a severe bacterial infection," and "injury" due to "milling[s] from roadwork" which had mixed with the flood water. In response to the complaint, Florida West sought protection under its standard commercial general liability insurance policy ("CGL") with Markel.
The issue was whether the state court complaint alleged facts that fell within the scope of two policy exclusions contained in the Markel CGL policy. The district court granted summary judgment in favor of Markel, finding that Markel was not obligated to defend or indemnify Florida West under the CGL policy because the absolute pollution exclusion and absorption/inhalation/disease exclusions applied to defeat coverage.
The policyholder, Florida West, argued that the district court improperly relied on the dictionary definitions of "irritant" and "contaminant" without considering whether millings are irritants or contaminants under environmental regulations and case law from other jurisdictions. The policyholder also argued that the court erred in even considering whether millings constituted a pollutant because the underlying complaint alleged that bacteria caused the infection.
On appeal, the court agreed with the district court that, pursuant to a reasonable reading of the complaint, millings mixed with flood water constituted a "pollutant" within the meaning of the absolute pollution exclusion. Thus, the district court correctly looked to the dictionary definitions of "contaminant" and "irritant" in construing the exclusion, and thus, according to the underlying complaint, the presence of millings in the water was precisely what caused his injuries. The appellate court further agreed with the district court that it was the product's "ability to produce an irritating effect [that] places the product within the policies' definition of an 'irritant.'" "Consequently, a product that causes no harm when used properly still may be classified as a pollutant under the exclusion. The appeals court held that in affirming the decision, it was “of no moment that the complaint does not actually use the words ‘irritant,’ ‘contaminant,’ ‘pollutant,’ or ‘pollution’" as the millings were specifically alleged to have produced the bacterial poisoning and infection.