The court found there was no duty to defend or indemnify under a pollution policy for claims arising from a building fire. URS Corp. v. Zurich Am Ins. Co., 2014 N.Y. Misc. LEXIS 222 (N.Y. Sup. Ct. Jan. 16, 2014).
Two firemen were killed while fighting a fire at the Deutsch Bank building in New York City. The owner of the building, URS, was sued by the estates of the two deceased firemen and other firemen who were injured by the fire.
URS was an additional insured under a contractors pollution liability policy issued by Hudson Specialty Insurance Company. The policy promised to pay for damages to the insured "if the damages result from a pollution condition." "Pollution condition" was defined as "the discharge, dispersal, release or escape of smoke, vapors, fumes, acids, alkalis, toxic chemicals, [etc.]" The policy explicitly noted that it did not provide commercial general liability coverage. Hudson denied coverage and URS sued.
Hudson moved to dismiss the complaint. Hudson argued it had no duty to defend because its policy was intended to indemnify the insured against claims for environmental harm. None of the alleged injuries in the underlying suits could plausibly be held to have arisen out of a "pollution condition" under the Hudson policy. URS argued two of the underlying actions alleged "toxic smoke." Further, the fire constituted a "release" of smoke or other contaminant, thereby qualifying as a pollution condition. Hudson responded that these claims fell within the scope of the CGL policies, not the pollution liability policy.
The court noted the interpretation of the language in the Hudson policy to define the scope of coverage was a question of first impression in New York. Interpretations of the pollution exclusion in CGL policies did exist, however, and were instructive. These cases supported the conclusion that the exclusion was meant to deal with broadly dispersed environmental pollution and not the confined environment found here.
Therefore, Hudson's motion to dismiss the complaint was granted.
