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Lakeside Non-Ferrous Metals, Inc. v. Hanover Ins. Co.

Citation: 29 ELR 21028
No. 97-17034, 172 F.3d 702/(9th Cir., 04/05/1999)

Applying California law, the court holds that trespass and nuisance claims for land and groundwater contamination fall within the pollution exclusion clause of a company's insurance policy. After the company was sued by a city for contaminating the city's land and surrounding waters, the company filed an action to compel its insurers to defend the claim. The court first holds that the policy unambiguously proclaims that it does not cover propertydamage claims that are caused by pollution. The court next holds that the nuisance and trespass claims in the city's underlying complaint are rooted in pollutionbased property damage. Allowing the company to recast its claim under the personal injury provision would render the pollution exclusion a dead appendage to the policy. The court then notes that its conclusion is strengthened by the policy's definition of "property damage," which includes loss of use. In the underlying complaint, the city claims that the company's contamination interfered with its ability to use, develop, sell, let, or encumber its property and diminished its use and enjoyment of the property. These loss of use claims fit squarely within the definition of property damage and are excluded from coverage via the pollution exclusion.

Counsel for Plaintiff
Andrew S. Cohn
Law Offices of Andrew S. Cohn
1942 University Ave., Ste. 206, Berkeley CA 94704
(510) 841-4796

Counsel for Defendants
Ashley M. Bale
Zelle & Larson
One Market Plaza
Steuart St. Tower, 15th Fl., San Francisco CA 94105
(415) 978-9788

Before Tashima and Fitzgerald,1 JJ.