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The U.S. Court of Appeals for the Eleventh Circuit, affirming a decision by a federal district court in Georgia, has ruled that stormwater qualified as a pollutant under a pollution exclusion in an insurance policy.

The Case

A lawsuit against Centro Development Corp. alleged that stormwater had caused silt and other contaminants from adjacent property on which Centro was conducting activities to harm the plaintiff's property.

Centro's insurer, Central Mutual Insurance Co., denied coverage of the claim, relying on its policy's pollution exclusion.

Centro sued Central Mutual, alleging that it should not have denied coverage.

The U.S. District Court for the Northern District of Georgia dismissed Centro's complaint, holding that the pollution exclusion was unambiguous and that stormwater qualified as a pollutant under the policy.

Centro appealed to the Eleventh Circuit.

The Central Mutual Policy

The Central Mutual policy defined pollutants as: any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, soot, fumes, acids, alkalis, chemicals and waste.

The Eleventh Circuit's Decision

The Eleventh Circuit affirmed.

In its decision, the circuit court cited a Georgia Supreme Court decision, Georgia Farm Bureau Mutual Ins. Co. v. Smith, 298 Ga. 716 (Ga. 2016), for the proposition that, in the case of a pollution exclusion, the pollutant at issue need not be explicitly named in the policy for the exclusion to apply.

The Eleventh Circuit then found that stormwater was “unambiguously” a “pollutant” under the Central Mutual insurance policy.

The Eleventh Circuit explained that, in Owners Ins. Co. v. Lake Hills Home Owners Ass'n, Inc., 57 F. App'x 415 (11th. Cir. 2002), it held that stormwater qualified as a pollutant under the “exact same language” as in the Central Mutual policy issued to Centro. Moreover, the circuit court pointed out, it previously held that, under the Clean Water Act “[w]hen rain water flows from a site where land disturbing activities have been conducted, such as grading and clearing,” it qualified as a pollutant. Hughey v. JMS Dev. Corp., 78 F.3d 1523, 1525 n.1 (11th Cir. 1996).

The circuit court concluded, therefore, that the pollution exclusion in the Central Mutual insurance policy was unambiguous and that stormwater qualified as a pollutant under the policy.

The case is Centro Development Corp. v. Central Mutual Ins. Co., No. 17-13489 (11th Cir. April 27, 2018). Attorneys involved include: For CENTRO DEVELOPMENT CORPORATION, Plaintiff – Appellant: Stephen P. Fuller, Davidson Fuller & Sloan, LLP, JOHNS CREEK, GA. For CENTRAL MUTUAL INSURANCE COMPANY, Defendant – Appellee: Stephanie Feingold Glickauf, Rachel E. Hudgins, Goodman McGuffey Lindsey & Johnson, LLP, ATLANTA, GA.

Steven A. Meyerowitz is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications. As FC&S legal director, Meyerowitz, a member of the team that conceptualized FC&S Legal, provides daily analysis and commentary on the most significant insurance coverage law decisions from courts across the country and news regarding legislative and regulatory developments. A graduate of Harvard Law School, Meyerowitz was an attorney at a Wall Street law firm before founding Meyerowitz Communications, a law firm marketing communications consulting company.