Missouri Upholds Pollution Exclusion to Relieve Insurance Company from Duty to Defend Toxic Tort Claims Arising from Industrial Pollution

In a recent decision, the Missouri Supreme Court for the first time considered the meaning and application of a pollution exclusion in a commercial general liability policy, landing unanimously on the side of the insurance company in favor of denying coverage to the insured. In Doe Run Resources Corp. v. St. Paul Fire and Marine Ins. Co. et al., the Supreme Court decided whether a policy’s pollution exclusion relieved the insurer from having to defend a lead mining company in numerous toxic tort lawsuits alleging injury from industrial pollution emitted from an overseas operation. The outcome turned on whether the exclusion was ambiguous, and, therefore, should be construed against the insurer in favor of coverage.

In defending its decision to deny coverage, the insurer had to contend with Missouri appellate precedent relied upon by the insured that found, where the insured’s business involved chemicals that might be deemed “pollutants”, a pollution exclusion is inconsistent with the insured’s reasonable expectations of coverage.  Hocker Oil Co. v. Barker-Phillips-Jackson, Inc., 997 S.W.2d 510 (Mo. App. S.D. 1999).  The trial court adopted Hocker and found that the pollution exclusion created an ambiguity in the policy because it did not specifically identify lead as a pollutant. Consequently, the trial court construed the exclusion against the insurer and entered summary judgment in the insured’s favor on coverage. The Court of Appeals agreed that the pollution exclusion was ambiguous and did not bar coverage for the toxic tort claims.

On transfer from the Court of Appeals, the Supreme Court took the opposite view of Hocker and instead followed a more recent Eighth Circuit decision involving the same insured (Doe Run) which upheld a pollution exclusion and applied it to claims alleging injury from exposure to hazardous waste byproducts of the insured’s production process. Doe Run Res. Corp. v. Lexington Ins. Co., 719 F.3d 876 (8^th Cir. 2013). In doing so, the Supreme Court distinguished the facts of Hocker, which involved failure of a gasoline storage tank at a gas station, releasing 2,000 gallons of gasoline into the ground causing damage to neighboring property. The court said that this case is completely different because the alleged exposure here was to toxic lead byproducts released into the air by the insured’s production process, not the insured’s lead products themselves. In framing the facts of the case in this way, the court found this case to be identical to Lexington in which the Eighth Circuit found that a nearly identically worded pollution exclusion barred toxic tort coverage for claims from the insured’s Missouri facility. 

As a result of Doe Run, Missouri law is now clear that pollution exclusions are not inherently ambiguous as to toxic tort claims arising from exposure to industrial pollution rather than the insured’s product themselves, and insurers can probably rely on such an exclusion to deny coverage in such cases.