Why it matters: Do personal injuries resulting from lead-based paint fall under a pollution exclusion in a commercial general liability policy? According to a decision from a Georgia appellate court, the answer is “no.” In this case, the owner of a rental property was sued for failing to abate lead-based paint in a rental property, which allegedly resulted in injuries to a tenant. When the property owner tendered the tenant’s complaint to its insurer, the insurer denied coverage based on the pollution exclusion. In the declaratory judgment action that ensued, the trial court granted summary judgment for the insurer. The appellate panel reversed, holding that, in contrast to certain types of industrial pollution, it was not clear from the language of the pollution exclusion that the presence of leaded materials in a private residence was excluded. If the insurer intended to include lead paint in the exclusion, it should have done so expressly.

Detailed discussion: Amy Smith lived in a rental property with her daughter Tyasia Brown for several years, beginning in 2004. Alleging that her daughter suffered severe and permanent injuries as a result of having ingested lead-based paint in the house, Smith sued the owner of the property. She claimed that a 2007 inspection of the premises by the health department revealed that Brown had been exposed repeatedly and continuously to the lead-based paint that was cracking, chipping, and peeling throughout the house.

When the property owner requested defense for the suit under its commercial general liability policy issued by Georgia Farm Bureau Mutual Insurance Company (GFBM), the insurer denied the request and filed a declaratory judgment action in Georgia state court.

GFBM told the court that it was not required to provide coverage for the alleged injuries or to defend the policyholder because the claimed injuries came within the policy’s pollution exclusion.

The pollution exclusion stated that the policy did not apply to “ ‘[b]odily injury’ or ‘property damage’ arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’: (A) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured.” The policy defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

The trial court judge granted summary judgment to GFBM. The Court of Appeals reversed.

“We agree . . . that lead-based paint is not clearly a ‘pollutant’ as defined by the policy,” the court wrote. “The policy’s definition of ‘pollutant’ does not include the words ‘lead,’ ‘lead-based paint,’ or even ‘paint.’ Whether lead-based paint is properly classifiable as one of the substances specifically enumerated in the policy’s definition of ‘pollutant’ is not clear.”

The question of whether lead-based paint constitutes a “pollutant” for the purposes of a pollution exclusion clause was one of first impression in Georgia, the panel noted, and cited a conflict in judicial opinions from other jurisdictions on the issue. A review of the other cases convinced the court that the exclusion did not bar coverage for injuries allegedly arising out of the ingestion or inhalation of lead-based paint. In particular, the court noted a Maryland case in which the state’s highest court found that the terms “contaminants” and “pollutants” in a similar pollution exclusion were ambiguous, and did not clearly exclude “leaded materials in a private residence.”

The Georgia appeals panel adopted the same position. “We hold that if GFBM had intended to exclude injuries caused by lead-based paint from coverage in the policy at issue in this case, it was required, as the insurer that drafted the policy, to specifically exclude lead-based paint injuries from coverage,” the panel wrote. “Inasmuch as ambiguities in an insurance contract are strictly construed against the insurer as drafter of the document, and an exclusion from coverage sought to be invoked by the insurer is likewise strictly construed, as in this case, the trial court erred by holding that [lead-based paint] claims came within the policy’s exclusions.”

Reversing the trial court, the appellate panel held that GFBM had a duty to defend the tenant lawsuit.

To read the opinion in Smith v. Georgia Farm Bureau Mutual Insurance Company, click here.