The South Carolina Court of Appeals held that coverage for foul but otherwise harmless odors from a sewerage system was precluded by a pollution exclusion in a policy issued by the South Carolina Insurance Reserve Fund (the “Fund”). S.C. Ins. Reserve Fund v. E. Richland Cnty. Pub. Serv. District, 2016 WL 1125810 (S.C. Ct. App. Mar. 23, 2016).
A resident sued a county, alleging that the county’s sewerage valves constantly emitted offensive odors onto his property. The county tendered the complaint to the Fund, which disclaimed coverage on the basis of the policy’s pollution exclusion. Litigation ensued, and the Fund obtained a summary judgment. The county appealed.
The Court of Appeals affirmed, adopting a broad reading of the pollution exclusion and affirmed entry of declaratory judgment in favor of the Fund. The court was not persuaded by the contention that “odors must be harmful in some way to be considered pollutants,” holding that foul odors fell within the ordinary meaning of the terms “fumes” and “gases” included in the definition of “pollutants” in the exclusion. Moreover, the court held that the “sudden and accidental” exception to the exclusion did not apply because release of the fumes was part of the county’s “routine business operations and was not unexpected.” The Court of Appeals also rejected the county’s argument that the pollution exclusion was void because the South Carolina Tort Claims Act requires the Fund to “provide coverage for all risks for which immunity has been waived under the Act,” instead following the terms of the policy.