A federal court in Georgia recently held that a pollution exclusion did not unambiguously exclude coverage for claim arising out of exposure to vaporized liquid nitrogen. Evanston Ins. Co. v. Xytex Tissue Servs., LLC, 2019 U.S. Dist. LEXIS 51668 (S.D. Ga. Mar. 27, 2019).
The insured stored biological material in cryogenic storage freezers in its warehouse, utilizing an on-site liquid nitrogen delivery system to keep the material cold. On the date of the loss, the system released liquid nitrogen to lower the pressure in the system. The liquid nitrogen then vaporized, which caused oxygen levels in the warehouse to drop which, in turn, caused a dense fog that set off the warehouse’s motion detectors and burglar alarms. A responding police officer passed away due to exposure to the conditions in the warehouse. The officer’s family filed a wrongful death lawsuit against the insured, which the insurer defended under a reservation of rights. The insurer then filed a declaratory judgment action and moved for summary judgment.
The court found that the pollution exclusion did not unambiguously exclude coverage so as to preclude a duty to defend. The court analyzed whether nitrogen was a “pollutant” as defined by the policy, i.e., an “irritant” or “contaminant.” The court rejected the insurer’s argument that the nitrogen was an “irritant” or “contaminant,” finding that, under the circumstances, there were multiple plausible interpretations of whether “irritant” and “contaminant” encompassed vaporized liquid nitrogen and differentiated vaporized liquid nitrogen from other substances such as lead and carbon monoxide. Thus, the court held that the application of the exclusion was a fact issue to be determined by a jury. The court determined the exclusion to be ambiguous, and held that the allegations of the underlying complaint failed to unambiguously exclude coverage and that the insurer was obligated to defend.