A federal court in Alabama granted summary judgment to an insurer finding no duty to defend or indemnify under a commercial environmental policy where the damages were not due to “contracting operations,” and were not “unexpected or unintended.” Heartland Catfish Co., Inc. v. Navigators Specialty Ins. Co., 2017 WL 2116587 (S.D. Ala. May 15, 2017) (appeal filed 11th Cir. June 19, 2017).
The insured, a business that purchased fat, oil and grease (“FOG”) and recycled it into fuel, was issued a commercial environmental policy offering multiple coverages, including coverage for environmental damage that was unexpected and unintended. As part of its business, the insured bought and picked up waste and cooking oil from restaurants, which was transported to the plant to be unloaded outside a facility leased from another. The process “was messy and FOG and fuel would leak or spill on the property.” The insured was aware of the issues with leaks and took measures to mitigate the spills. The company that leased the property to the insured incurred losses due to difficulty in cleaning the property and sued for breach of contract, negligence, trespass, and diminution of value caused by environmental damage, and obtained a default judgment against the insured. The insurer denied the insured’s claim for indemnity. The company that leased the property sought a declaration that the insurer owed coverage for the judgment. Cross-motions were filed on, among other issues, whether the pollution damage was expected or intended. The court found based on the insured’s attempt to mitigate spills and leaks that the damage was not unexpected or unintended.