Coal Plant Operator and Insurer Settle Dispute Over Coverage for Coal Dust Pollution


Grizzly Processing LLC v. Wausau Underwriters Ins. Co. (E.D. Ky. June 30, 2010)

In March 2010 we reported on Grizzly Processing LLC v. Wausau Underwriters Ins. Co.   In that case, Grizzly Processing LLC (“Grizzly”) was sued in state court by ninety plaintiffs alleging the company contaminated their homes with coal dust and other pollutants in Floyd County, Kentucky.  Plaintiffs also alleged damages from plant noise, including blast operations, violations of certain environmental regulations, and violations of the Kentucky Surface Mining Act.  Plaintiffs sought compensatory damages including diminution in the value of their residences, costs of repair, medical expenses, and damages for pain and suffering.
Wausau Underwriters Insurance Company (“Wausau”) issued four policies between 2006 and 2008, two commercial general liability and two umbrella excess liability policies, to Grizzly.  All four of the policies contain an exclusion barring coverage for the “contamination” of “pollutants” and any injury or property damage that arose out of that contamination.  On the basis of these exclusions, Wausau refused to pay Grizzly’s defense costs in the underlying litigation.

Grizzly commenced a declaratory judgment action in state court, and Wausau removed the suit to federal court.  Wausau moved for summary judgment on the basis of the exclusions.  The court addressed only Wausau’s liability for coal dust because in its motion, Wausau did not address whether it is liable for plaintiffs’ other claims in the underlying litigation, noting that some of those claims may not have been asserted until after Wausau filed its motion. 

The United States District Court for the Eastern District of Kentucky granted Wausau’s motion.  With respect to coal dust, the court held that the policies explicitly excluded coverage.  The court noted that “[a]s to whether coal dust is included in the definition of pollutant, each of the insurance policies defines a ‘pollutant’ as an ‘irritant’ or ‘contaminant’”.  The court held that “[t]here can be no doubt that ‘coal dust’ is an irritant or contaminant.”  The court also noted that federal regulations identify coal dust as a “contaminant”, stating, “Congress has recognized that coal dust inhalation causes permanent damage.”  Additionally, the court noted that the Sixth Circuit “has determined that coal dust is clearly a pollutant for purposes of an insurance exclusion.”

Accordingly, the court granted summary judgment to Wausau, finding that plaintiffs’ claims in the state court action that they were damaged by “coal dust” were not reasonably susceptible of an interpretation that they were covered by the terms of the insurance policies at issue.

On June 30, 2010, the court signed an order dismissing the case as the parties resolved the remaining claims.  Settlement details were not included in the court filings.

For a copy of the Order click here

Toni Frain and Joseph Oliva

 

http://www.goldbergsegalla.com/attorneys/Frain.html

http://www.goldbergsegalla.com/attorneys/Oliva.html

 

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