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Indiana Lumbermens Mut. Ins. Co. v. West Or. Wood Prods., Inc.

Citation: 32 ELR 20109
No. No. 00-35621, 268 F.3d 639/(9th Cir., 10/05/2001)

The court affirmed a district court holding that pollution exclusion clauses in two comprehensive general liability policies issued by an insurer to an Oregon lumber company precluded the insurer's duty to defend the company from a nuisance action brought by the company's neighbors. The neighbors alleged that the company's plant emitted gases and particulates causing personal injury and property damage. The insurer cited the pollution exclusion clauses and refused to defend the company, but the company claimed that the hostile fire exception to the pollution exclusion clauses applied, thereby triggering a duty to defend. The court first holds that because the neighbors seek damages for bodily injury caused by the company's ongoing gas, smoke, and pollutant emissions, the pollution exclusion clauses' plain text bars coverage. The court also holds that the neighbors' allegations do not suffice to trigger the hostile fire exception. The insurance policy defines "hostile fire" as a fire that becomes uncontrollable or breaks out from where it was intended to be. There is no allegation in the neighbors' complaint that any fire ever became uncontrollable. The neighbors' complaint alleges that the company can control the emissions and that it be enjoined from further emissions. Such allegations do not involve uncontrollable events. The court then holds that the pollution exclusion is not unenforceable because its title in the policy is not in all capital letters. State law requires that explanatory titles in insurance policies be written in type not smaller than eight-point capital letters. The size of the type used by the insurer for the pollution exclusion clause titles is larger than eight-point capital letters.

Counsel for Plaintiff
Lisa E. Lear
Bullivant, Houser & Bailey
300 Pioneer Tower
888 SW 5th Ave., Portland OR 97204
(503) 228-6351

Counsel for Defendant
William A. Drew
Elliott, Ostrander & Preston
707 SW Washington St., Ste. 1500, Portland OR 97205
(503) 224-7112

Graber, J. Before Thompson and Tashima, JJ.