Where lead-based paint was ingested by a tenant's child, the tenant sued her landlord for injuries allegedly sustained by the child. The landlord tendered the claim to its commercial general liability (CGL) insurer who, instead of defending the landlord, filed a declaratory judgment action seeking a determination that the pollution exclusion of the CGL policy barred coverage for the alleged injuries.
The trial court granted summary judgment for the insurer. That judgment was reversed by an intermediate court of appeals and then reinstated by the Georgia Supreme Court, which held that, although not specifically listed in the pollution definition as a "pollutant," lead-based paint is, in fact, a "pollutant" within the meaning of the policy. The policy's pollution exclusion was, therefore, applicable, and the insurer had no duty to defend and indemnify the landlord. See Georgia Farm Bureau Mut. Ins. Co. v. Smith, 298 Ga. 716, 784 S.E.2d 422 (2016).
The Policy Language
The terms of the CGL policy required the insurer "to pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage'" ... "only if: (1) the 'bodily injury' or 'property damage' is caused by an 'occurrence' that takes place …." An occurrence is defined as "an accident." Coverage was subject to exclusions, including the pollution exclusion, which provided that the insurance does not apply to "(1) '[b]odily injury' or 'property damage' arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of 'pollutants': (a) [a]t or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured."
A "pollutant" is defined in the policy as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste."
Trial Court Granted Summary Judgment
The trial court granted summary judgment for the insurer, finding that lead-based paint was a "pollutant," just like "carbon monoxide" had been found to be a "pollutant" by the Georgia Supreme Court in the decision of Reed v. Auto-Owners Ins. Co., 284 Ga. 286, 667 S.E.2d 90 (2008). In the Reed decision, the court had previously held that, although carbon monoxide was not explicitly listed in the policy as a pollutant, it fell within the policy's definition of a pollutant. The trial court applied the Reed decision's analytical framework to the facts of the lead-based paint involved here and concluded that it was constrained to find that lead, like carbon monoxide, was a contaminant meeting the policy definition of "pollutant."
Court of Appeals Reverses Trial Court
The appellate court concluded that the question of whether lead-based paint was a pollutant was one of "first impression" that had never before been decided by the court. Rather than applying the Reed court analysis that dealt with carbon monoxide poisoning, the court looked to an appellate decision from Maryland—Sullins v. Allstate Ins. Co., 340 Md. 503, 667 A.2d 617 (1995)—that dealt specifically with the question of whether lead-based paint was a pollutant. Maryland held that lead-based paint was not a pollutant.
The Georgia appellate court cited the Maryland decision on the proposition that a reasonable insured could have understood the pollution exclusion to exclude coverage for injuries caused by certain forms of industrial pollution, rather than those caused by the presence of leaded materials in a private residence. The court concluded that the terms "contaminants" and "pollutants" used in a CGL policy's pollution exclusion were ambiguous and should be strictly construed against the insurance company.
Georgia Supreme Court Reverses—Applies the Pollution Exclusion
The George Supreme Court reversed the appellate court and explained that, in construing the pollution exclusion, it has refused to adopt an approach that considered the purpose and historical evolution of pollution exclusions before looking to the plain policy language of the clause itself. The court reiterated that it rejects the notion that the pollution exclusion is limited to industrial and/or environmental harm. It cited numerous Georgia decisions that have found residential injuries are subject to the pollution exclusion, including carbon monoxide, asbestos released from floor tiles, smoke emanating from a residential premises, and gasoline. Georgia courts have, therefore, enforced the absolute pollution exclusion without requiring that the pollutant at issue be explicitly named in the policy.
The court found that the contractual language of the CGL policy unambiguously governs the factual scenario of lead-based paint injuries. In a rebuff to the lower court of appeals, the court stated, "the Court of Appeals had 'no more right by strained construction to make the policy more beneficial by extending the coverage contracted for than they would have had to increase the amount of the insurance.'"
This decision clarifies that Georgia courts will apply the definition of "pollution" or "pollutant" in a manner to broadly encompass any number of potential residential pollution or contaminant situations and will not find the exclusion to be ambiguous.
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