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Cincinnati Ins. Co. v. Becker Warehouse, Inc.

ELR Citation: 32 ELR 20360
Nos. No. S-00-767, 262 Neb. 746/(Neb., 11/02/2001)

The court affirms a lower court holding that a pollution exclusion clause in a warehouse owner's commercial general liability insurance policy excludes coverage of contamination from xylene fumes. Contractors building an addition to the warehouse improperly used a xylene-based sealant, the fumes of which contaminated foodstuffs stored in the warehouse. The foodstuff owners filed suit against the warehouse owner. The warehouse owner filed insurance claims seeking indemnity and defense from its insurer, but the insurer denied coverage. The court first holds that the pollution exclusion clause is unambiguous. The policy excludes damage caused by the discharge, dispersal, seepage, migration, release, or escape of pollutants. The policy language does not specifically limit excluded claims to traditional environmental damage, nor does the exclusion purport to limit materials that qualify as pollutants to those that cause traditional environmental damage. The court also holds that the warehouse owner's reasonable expectations as an insured are irrelevant because reasonable expectations are only considered when policy language is found to be ambiguous. The court next holds that even though the contractors brought xylene to the warehouse in the form of a sealant, the xylene fumes that escaped qualify as a pollutant under the policy. "Pollutant" is defined in the policy as substances that are harmful or toxic to persons, property, or the environment, and xylene is such a substance. The court then holds that for purposes of the pollution exclusion, xylene fumes were discharged, dispersed, released, or escaped. The xylene fumes were not confined to the general area of their intended use, and their escape is the only logical explanation for the alleged xylene contamination of the foodstuffs. In addition, the court holds that the care, custody, and control provision in the warehouse owner's policy provides coverage of damage to property in the warehouse owner's control and care if the damage stems from certain listed causes. The causes of loss defined by the policy specifically excludes the discharge, dispersal, release, or escape of pollutants.

The full text of this decision is available from ELR (16 pp., ELR Order No. L-408).

Counsel for Appellee
Robert T. Grimit
Baylor, Evnen, Curtiss, Grimit & Witt
206 S. 13th St., Lincoln NE 68508
(402) 475-1075

Counsel for Appellants
Eugene P. Welch
Gross & Welch
2120 S. 72d St., Ste. 800, Omaha NE 68124
(402) 392-1500