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Thermo Terratech, Inc. v. GDC Enviro-Solutions, Inc.

Citation: 32 ELR 20168
No. No. 00-30723, 265 F.3d 329/(5th Cir., 09/24/2001)

The court holds that neither a contractual liability exclusion nor a professional liability exclusion contained in a comprehensive general liability (CGL) insurance policy bars coverage of claims made by a hazardous waste incinerator and the owner of a plant against an insurance company as a result of the incinerator failing and causing a fire at the plant. The incinerator and plant entered into an agreement resolving all claims then existing between the parties, including those that arose because of the fire. Thereafter, the plant's fire insurer sued the incinerator in part to recover insurance proceeds paid to the plant. The district court found for the incinerator, who then sued the plant to recover attorneys fees and costs incurred in defending the fire insurer's litigation. During the relevant time period, the plant had a CGL policy with an insurer, but the insurer refused to defend the plant, thus, the plant brought suit against the insurer. A magistrate judge found that a contractual liability exclusion and a professional liability exclusion in the CGL policy barred recovery from the insurer by both the plant and the incinerator.

The court first holds that the contractual liability exclusion does not apply. The exclusion applies to the primary cause of the fire and resulting property damage, and the primary cause of the fire at the plant was a plant employee's negligent act and not the instructions given by that employee to another employee. The court also holds that the professional liability exclusion does not apply because the services rendered by the negligent employee were not professional services as that term is defined under state law. The case, therefore, was reversed and remanded.

Counsel for Plaintiffs
James K. Irvin
Professional Law Corporation
909 Poydras St., New Orleans LA 70112
(504) 569-7000

Counsel for Defendants
William E. Willard
Powers & Willard
7967 Office Park Blvd., Baton Rouge LA 70895
(225) 928-1951

Barbour, * J. Before Davis and Jones, JJ.

* District Judge of the Southern District of Mississippi, sitting by designation.