Pollution exclusion clauses began appearing in commercial general liability policies when federal laws began making businesses liable for the cost of massive environmental clean-ups—like the remediation of “Volatile Organic Compounds” that was recently at issue in Chubb Custom Ins. Co. v. Space Systems/Loral, Inc., No. 11-16272 (9th Cir. March 15, 2013). A recent Colorado case presented the issue of when the grease that goes into your bacon double cheeseburger becomes a “contaminant,” like PCBs or benzene, for purposes of excluding coverage under a local eatery’s CGL policy. It probably didn’t help that the establishment in question bore the name, “Hog’s Breath Saloon & Restaurant.” In Mountain States Mut. Cas. Co. v. Roinestad, No. 10SC853 (Col. Feb. 25, 2013), the Supreme Court of the State of Colorado held that “quantity matters.” When a restaurant dumps enough kitchen grease to create an eight-foot-deep clog in a sewer pipe, the pollution exclusion applies.
In October 2003, Christopher Roinestad and Gerald Fitz-Gerald, employees of the City of La Junta, Colorado, discovered a grease clog in one of the manholes connected to the city’s sewer system. Sewer clogs create stagnant water, and stagnant water can produce hydrogen sulfide, a poisonous gas. This clog, it turned out, was five- to eight-feet deep. When Mr. Fitz-Gerald inserted a water jet tool down the manhole, he was overcome by the gas, lost consciousness and tumbled headlong into the tube of horror. Mr. Roinestad was overcome while trying to extricate his co-worker from the gelatinous morass.
Investigations traced the grease to the Hog’s Breath, a steakhouse with food that one reviewer describes as “all around fantastic!” (With a name like “Hog’s Breath” . . . .) The two workers sued the restaurant in a Colorado district court for negligence per se, citing a local ordinance against the discharge into sewers of viscous garbage or waste, “in amounts which will cause an obstruction.” Hog’s Breath’s CGL carrier, Mountain States Mutual Insurance Company, originally defended the suit under a reservation of rights, but it ultimately obtained a judgment in federal court, declaring it had no duty to defend. Mountain States Mut. Cas. Co. v. Kirkpatrick, No. 06-cv-00221-WDM-OES (D. Colo. Aug. 30, 2007). The decision turned on the pollution exclusion in Hog’s Breath’s policy:
This insurance does not apply to . . . “Bodily injury” . . . arising out of the . . . discharge, dispersal, seepage, migration, release or escape of pollutants . . . .
Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Meanwhile, the injured workers were granted summary judgment against Hog’s Breath and served a writ of garnishment on its insurer. The Colorado district court agreed with Mountain States that the claim was barred by the pollution exclusion, but an appellate court reversed, finding that the exclusion was ambiguous insofar as it applied to the stuff you cook fries in.
The Colorado Supreme Court found that the ordinary definition of “contaminant” probably covers “cooking grease . . . when discharged into a sewer in quantities sufficient to create a clog.” But it was the magnitude of the clog that won the day:
While a resident of La Junta who dumps an occasional pan of greasy water into a sewer may not contaminate and therefore not pollute the sewer, a restaurant that repeatedly dumps large amounts of cooking grease or greasy water into a sewer over time, thereby creating a five- to eight-foot clog, is dumping contaminants . . . .
Plaintiffs argued that this conclusion ran afoul of the reasonable expectations doctrine, under which a court may override even unambiguous policy language, if that language would cause an ordinary, objectively reasonable person to believe she was entitled to coverage. In connection with that argument, the plaintiffs explained the historic connection between pollution exclusions and the growth of federal environmental law. A reasonable person, they argued, would expect the exclusion to cover hexavalent chromium—not Crisco.TM
The court did not accept the theory that “an ordinary person would understand the . . . clause to apply only to ‘traditional’ pollution.” But it also found that Hog’s Breath’s practices were not in keeping with “tradition”:
[T]he dumping of large quantities of cooking grease into the sewer such that a clog would form would fun afoul of at least once city ordinance. An ordinary person could not read the pollution exclusion clause to exclude “traditional” pollution but preserve coverage for conduct that violated a city ordinance prohibiting the discharge of “solid or viscous pollutants in amounts which will cause obstruction to the flow.”
Oleum ipsa loquitur!