Property owners and landlords should be aware that if a tenant or others are injured as a result of poisoning from lead or other substances which are defined as “pollutants,” there is a good chance that your liability insurance policy does not provide coverage for the tenant’s claimed damages and you will not be entitled to a defense of a lawsuit seeking damage against you.
On March 21, 2016, the Georgia Supreme Court reversed an appellate court’s first impression ruling and held that a personal injury arising from lead poisoning due to lead-based paint ingestion is excluded from coverage under a commercial general liability (“CGL”) insurance policy’s “pollution” exclusion provision. The Georgia Supreme Court further held that an insurer owes no duty to defend its insured against allegations of personal injury resulting from the ingestion of lead-based paint in a residential rental property owned by the insured policyholder.
The insured – a landlord of residential rental property – was sued by his tenant after the tenant’s daughter sustained permanent personal injury from the ingestion of lead-based paint that was present in the rental property. In response, the landlord made a claim to his insurance company to defend him against the tenant’s suit. The landlord’s CGL policy provided that his insurer had a duty to defend him, but only against suits arising from damages to which the policy applied. In response, the landlord’s insurance company took the position that the tenant’s daughter’s injuries were not covered under the landlord’s policy and, therefore, the insurer had no duty to defend the landlord against the tenant’s lawsuit.
The Georgia Supreme Court agreed with the insurance company and found that the landlord’s CGL policy contained an absolute pollution exclusion that barred coverage for bodily injury resulting from exposure to any “pollutant.” The policy defined “pollutant” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste.” The Georgia Supreme Court, therefore, concluded: “Under the broad definition contained in [the landlord’s] policy . . . the lead present in paint unambiguously qualifies as a pollutant and that the plain language of the policy’s pollution exclusion clause thus excludes [the tenant’s] claims against [the landlord] from coverage.”
Of course, the tenant will still be able to maintain her suit against the landlord, but unfortunately her recovery will be dependent on whether the landlord can afford to pay any potential monetary judgment entered against him.
In light of the recent Georgia Supreme Court decision, property owners in Florida should likewise be mindful of controlling Florida precedent that govern in similar circumstances.
One such case decided by the Eleventh Circuit Court of Appeals (which governs cases in the federal courts in Florida), affirmed a lower district court’s ruling that a city housing authority’s CGL insurer owed no duty to defend its insured against a lawsuit alleging presence of crumbling lead-based paint in public housing units. On cross-motions for summary judgment, the lower court held that lead in paint was a “pollutant” within the CGL policy’s pollution exclusion. In affirming the lower court’s ruling, the Eleventh Circuit held that “lead is specifically recognized as a pollutant under Florida laws governing pollutant discharge prevention and removal” pursuant to Chapter 376.301(32), Florida Statues. The Eleventh Circuit also noted that the lower court was correct in finding that lead is a “pollutant” under the insured’s CGL policy because lead is a chemical and the policy’s “pollution” exclusion clause specifically listed “chemicals” in its definition of “pollutants.”
At the state level, the Florida Supreme Court held that the “pollution” exclusion of CGL insurance policies applied to indoor air contamination from ammonia spills and insecticide accidentally sprayed on bystanders, thereby excluding coverage for injuries sustained as a result of the occurrence. Similarly, an appellate court in Florida recently affirmed a lower trial court’s ruling that coverage for losses caused by Chinese drywall was barred by a “pollution” exclusion in the insured’s homeowners policy. The appellate court found that the elemental sulfur and concomitant gases met the statutory definitions of “pollution” and “contaminant” as found in Section 403.301(1), Florida Statutes, and the insureds’ “policy excluded gaseous pollutants and contaminants, including vapor and fumes.”
These decisions and the federal laws passed by the United States Congress are instructive. In 1992, the Residential Lead-Based Paint Hazard Reduction Act was passed in order to protect families from exposure to lead found in paint. This Act also placed certain requirements on sellers and landlords to disclose known information regarding lead-based paint and hazards before the sale or lease of residential housing built prior to 1978. For more information on the Residential Lead-Based Paint Hazard Reduction Act, please visit the following website: http://tinyurl.com/424bnx2.
Notwithstanding the foregoing case law, property owners and landlords in Florida confronted with “pollution” related lawsuits from tenants or others may not have to go it alone in defending themselves should their insurer refuse to provide indemnification. Each insurance policy is different; therefore, it is important for property owners and landlords to know what coverages, exclusions and conditions are contained in their insurance policy.