THE BOTTOM LINE:
Perhaps In Nebraska.
In a recent case, State Farm Fire And Casualty Company v. Dantzler, No. A-12-1042 (Dec. 17, 2013), the Nebraska Court of Appeals determined that an absolute pollution exclusion clause in a State Farm policy may cover a lead paint loss.
The defendant, Dantzler, was a landlord. A renter sued, claiming that his son was poisoned by high levels of lead paint on Dantzler’s rental property. At the time of the suit Dantzler held a State Farm “Rental Dwelling” policy. The policy excluded claims for bodily injury due to a “discharge, dispersal, spill, release or escape” of pollutants. State Farm claimed that the lead paint exposure was not covered by this policy language.
Both parties filed for summary judgment. The trial court agreed with State Farm. It found that the wording in the pollution exclusion clause was not ambiguous. Lead was indeed a pollutant within the meaning of the policy. The trial court also concluded that the son could only have been exposed if the lead was discharged, dispersed, spilled, released or escaped.
The Court of Appeals both agreed and disagreed with the trial court’s ruling. It reaffirmed the State’s position on absolute pollution exclusion clauses. The Court found that such clauses exclude all claims, not just environmental claims. The Court also agreed that lead is a pollutant.
However the Court of Appeals disagreed that lead paint exposure unambiguously constitutes a “discharge, dispersal, spill, release or escape” as a matter of law. “These terms (in the policy) limit the ways by which the pollutant must travel from a contained place to the injured person’s surroundings and then cause injury.” Id., slip op. at 4 quoting Lefrak Organization, Inc. v. Chubb Custom Ins. Co., 942 F. Supp. 949, 953 (S.D.N.Y. 1996). These terms do not always encompass the “process by which lead-based paint become available for human ingestion/inhalation….” Id., slip op. at 5. Since the Court was not able – on the record before it – to determine how the child became poisoned by the lead, it found an ambiguity. It then denied summary judgment and remanded the case.