County of Columbia v. Continental Insurance Co., 83 N.Y.2d 618 (1994)

A “personal injury” endorsement in a general liability insurance policy does not provide coverage for property damage claims arising from pollution, especially where the policy contains a pollution exclusion clause.

Summary

Columbia County sought a declaratory judgment that its insurers were obligated to defend it in an underlying lawsuit alleging property damage from leachate contamination. The County argued that the “personal injury” endorsement in its policies covered the claim, despite a pollution exclusion. The New York Court of Appeals held that the personal injury endorsement, which included coverage for “wrongful entry or eviction or other invasion of the right of private occupancy,” did not extend to pollution-related property damage. The court reasoned that the endorsement was intended to cover purposeful acts, not indirect harm from pollution, and that reading the endorsement to cover pollution damage would render the pollution exclusion meaningless.

Facts

Columbia County operated a solid waste management facility that discharged leachate into the groundwater. H.K.S. Hunt Club, Inc. (HKS), an adjacent property owner, sued the County, alleging that the leachate pollution constituted a continuing nuisance and trespass, impairing the soil, air, and water on its property. HKS claimed the County’s actions put them out of their property unlawfully. The County sought coverage from its insurers, who denied coverage based on pollution exclusion clauses.

Procedural History

The County sued its insurers seeking a declaration of coverage. The Supreme Court granted summary judgment to the insurers, finding no duty to defend. The Appellate Division affirmed. The Court of Appeals granted the County’s appeal.

Issue(s)

Whether a “personal injury” endorsement in a comprehensive general liability policy, covering “wrongful entry or eviction or other invasion of the right of private occupancy,” requires the insurer to defend the insured against claims of property damage resulting from pollution and leachate contamination.

Holding

No, because the “personal injury” endorsement does not extend to indirect and incremental harm resulting from pollution, and construing it to cover such harm would negate the policy’s pollution exclusion.

Court’s Reasoning

The court reasoned that the duty to defend arises only when the allegations in the complaint fall within the scope of the risks undertaken by the insurer. The court stated, “The duty to defend arises whenever the allegations in a complaint against the insured fall within the scope of the risks undertaken by the insurer”. The court found that the allegations of continuing nuisance and trespass did not constitute “wrongful entry or eviction or other invasion of the right of private occupancy” as contemplated by the personal injury endorsement. The court emphasized that the endorsement was intended to cover purposeful acts, evidenced by the other enumerated torts (false arrest, malicious prosecution, etc.). It further reasoned that interpreting the personal injury endorsement to cover pollution-related property damage would render the pollution exclusion clause meaningless. The court cited the principle that an insurance contract should not be read to render some provisions meaningless and noted that many jurisdictions have held that standard personal injury endorsements do not cover pollution-related property damage. The court stated that “It would be illogical to conclude that the claims fail because of the pollution exclusion while also concluding that the insurer wrote a personal injury endorsement to cover the same eventuality.”