In Williams v. Employers Mutual Casualty Co., No. 4:13-CV-2393, 2015 WL 892556 (E.D. Mo. Mar. 2, 2015), the United States District Court for the Eastern District of Missouri, applying Missouri law, granted several insurers’ motions for judgment on the pleadings, holding that the pollution exclusions in their policies barred coverage for bodily injury and property damage caused by radionuclides and bacteria in drinking water. The insurers, therefore, had neither a duty to defend nor a duty to indemnify their policyholder. Id. at *1, 10, 12-13.
The insurers had issued policies to the owner of a mobile home park, providing coverage for certain “bodily injury” or “property damage.” Id. at *5, 12-13. Significantly, the policies contained exclusions for “bodily injury” or “property damage” arising out of “the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants.’” Id. “Pollutants” was generally defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes acids, alkalis, chemicals and waste.” Id. at *6, 13; see also id. at *12-13 (citing the less specific reference to an “irritant or contaminant” in one of the insurers’ policies).
A class of residents of the mobile home park sued the owner in the Circuit Court of Lincoln County, Missouri, “alleg[ing] that the water dispensed by [the policyholder] to the class members was contaminated with radioactive materials, bacteria and other contaminants.” Id. at *1. The insurers refused to defend their policyholder, contending that coverage was unavailable because of the pollution exclusions and because the lawsuit did not allege bodily injury or property damage. Id. The state court subsequently determined that “‘members of the Class, in fact, suffered bodily injuries and property damages that were proximately caused by [the policyholder’s] negligence and trespass,’” and awarded damages. Id. at *1-2. The state court also ruled that the particles in question were “‘not classifiable as solid, liquid, or gas,’” “‘not inherently thermal,” and “‘typically not an irritant to humans.’” Id. at *1.
The class representative—pursuant to an assignment agreement with the policyholder—then sued the insurers for equitable garnishment of the judgment amount, contending that the insurers’ denial of coverage and refusal to defend was a breach of the insurance contracts. Id. at *1-2. The insurers thereafter filed motions for judgment on the pleadings. Id. at *1.
The court began by rejecting the class representative’s argument that the insurers “cannot attack the Underlying Judgment because they chose not to defend [the policyholder] in that action.” Id. at *3. The court explained that, “[n]ormally, the duty [to defend] ‘is determined by comparing the language of the insurance policy with the allegations in the Complaint.’” Id. (citation omitted). The insurers would “have no duty to defend if the policies’ pollution exclusions barred coverage of all claims asserted in the Underlying Lawsuit.” Id. at *4.
The class representative argued that judgment on the pleadings was improper because (a) the pollution exclusions were ambiguous and (b) whether the particles at issue fit within the exclusions was a question of fact. See id. at *7-8. The court rejected these arguments. It reasoned that the underlying complaint “include[d] several allegations, which clearly demonstrate that the alpha particles and coliform are contaminants.” See id. at *8-9 (identifying allegations that the water exceeded the state’s “Maximum Contaminant Levels of public water-supply systems”). Further, “[t]he allegations in [the] equitable garnishment Petition [we]re not relevant to whether [the insurers] had a duty to defend at the inception of the underlying litigation” and thus could not demonstrate ambiguity. Id. at *10; see also id. (reaffirming that “[f]acts offered at trial and the underlying judgment do not create an issue of fact regarding a duty to defend”). Accordingly, the court held that “radionuclides (or radiation from radium and alpha particles) and coliform bacteria are pollutants as a matter of law,” and no duty to defend arose. Id.
The court then quickly disposed of the class representative’s argument that “even assuming arguendo that [the insurers] had no duty to defend, [the insurers] still ha[d] not established as a matter of law that [they] had no duty to indemnify.” Id. at *12. Relying on the “clear” rule that “‘[w]here there is no duty to defend, there is no duty to indemnify,’” id. (citation omitted), the court held that the insurers could likewise not be responsible for the judgment award. Id. at *12-13.
Williams reinforces that factual findings in an underlying lawsuit, as well as other developments subsequent to the filing of the underlying complaint, cannot broaden the duty to defend.