New York Court Holds Pollution Exclusion Inapplicable to 9/11 Claims

In its recent decision in National Union Fire Insurance Co. of Pittsburgh, PA v. Burlington Ins. Co., 2018 N.Y. Misc. LEXIS 1503 (Sup. Ct. NY Co. Apr. 27, 2018), the Supreme Court of New York for New York County considered whether the total pollution exclusion applied with respect to an underlying bodily injury suit brought individuals claiming injury as a result of exposure to toxic conditions at the World Trade Center site in the immediate aftermath of September 11, 2001.

Burlington issued a primary policy and National Union issued a commercial umbrella policy to one of the contractors that aided in the cleanup recovery after September 11, 2001. The insured was named as a defendant in several suits brought by individuals claiming respiratory illness and other injuries as a result of having worked on the recovery effort without having been provided proper protective wear. Burlington denied coverage for the suits on the basis of its policy’s total pollution exclusion. National Union subsequently dropped down to provide a defense and ultimately settled the matters. It later brought suit against Burlington, alleging that Burlington’s denial of coverage was improper.

In considering the matter, the court noted that it has long been the case that under New York law, the pollution exclusion is limited to matters believed to be traditional or classic environmental harm. It nevertheless noted a pair of decisions from the Southern District of New York finding the pollution exclusion inapplicable to similar World Trade Center-related claims on the basis that the injured claimants were not suing on the theory that the insured-defendants created a pollution condition, or failed to abate one, but instead that the defendants failed to provide a safe workplace and failed to provide appropriate protections against an existing pollution condition. The court found these cases persuasive and held the exclusion inapplicable to the underlying matters.

In so concluding, the court rejected Burlington’s argument that notwithstanding any individual claimant’s theory of liability, the pollution exclusion should still apply since “none of the workplace safety issues or injuries would exist but for the polluted environment.” The court conceded that New York courts have, in fact, applied a “but for” analysis for some insurance policy exclusions, such as the assault and battery exclusion. It nevertheless found a lack of support for applying a “but for” analysis in the context of the pollution exclusion, and in fact noted case law to the contrary. The court concluded, therefore, that in light of the “extensive allegations of lack of workplace safety” and given case law from the federal courts, Burlington failed to meet “its heavy burden of showing that the dispersal of pollutants, standing alone, caused the plaintiffs’ injuries in the Underlying Actions.”