Decision on Pollution Exclusion Stinks for Insurer (NY)
December 16, 2011
Barney Greengrass is a small delicatessen located on the Upper West Side. The “Sturgeon King” has been open for more than 100 years, and is a well known breakfast spot. But its neighbor, Theodore Bohn, is not a fan. Claiming that he was unable to use his living room because of overpowering odors, he sued the restaurant. Barney Greengrass tendered the defense of the suit to its insurer, Lumbermens, who denied coverage, citing to the pollution exclusion, which excluded coverage for property damage arising out of the discharge of “pollutants.”
The restaurant filed a declaratory judgment action against its insurer, and was awarded summary judgment. The district court found that to read pollution as encompassing restaurant odors would “contradict common speech” and the “reasonable expectations of a business person.” On appeal, the insurer argued that the odors were “fumes,” defined in the policy as a pollutant. The appellate court rejected that claim, noting that the policy did not define fumes, and that any precedent for odors falling within the ambit of the exclusion were in circumstances where the odor was linked to traditional environmental pollution, such as the dumping of waste materials or leakage from a sewage treatment plant.
Lumbermens also claimed that, under the New York City Administrative Code, restaurant odors could constitute “air contaminants” subject to regulation. But the Court was unwilling to link such regulations to an insurance coverage dispute and upheld judgment in favor of the restaurant.
If would like more information about this case, please write to Mike Bono at firstname.lastname@example.org.