Hydrogen sulfide gas – breath so bad its uninsurable. The Hog’s Breath Saloon poured enough grease into the La Junta sewer system it created a 5-8 foot obstruction causing a toxic gas buildup that injured 2 workers clearing it up. They sued. The Saloon had an insurance policy with a pollution exclusion. The trial court applied the exclusion and denied coverage. The court of appeals reversed, concerned that calling cooking grease a pollutant could lead to absurd results. The Court disagreed. It held that dumping enough cooking grease to create a huge clog, violating a city ordinance, and causing a toxic gas buildup is a pollutant. The “Reasonable Expectations Doctrine” didn’t apply because reasonable insureds would not be deceived into believing that injuries caused by dumping that much grease into a sewer were insured. The insurance didn’t cover the workers’ injuries.
Tag Archives: CGL
Mountain States Mutual Casualty Co. v. Christopher Roinestad and Gerald Fitz-Gerald, and Tim Kirkpatrick, d/b/a Hog’s Breath Saloon & Restaurant, 2013CO14 (February 25, 2013)
Owning a nightclub is so full of drama there is a reality TV show about it. This case starts with a bar fight, but ends with a lawsuit against an insurance broker. A Bar’s Patron is injured during a fight and sues. Bar’s insurance policy had an assault and battery exclusion and denied coverage. Bar didn’t think its policy had the exclusion, so Bar sued Broker. Bar settles with Patron and executes a “Bashor” agreement, assigning any proceeds from Bar’s claims. But the claims against Broker are dismissed because of the assignment. The court of appeals held: 1) Broker must show the settlement was unreasonable, 2) Bar could still claim assigned damages, 3) Broker’s failure to obtain the insurance requested gave rise to a negligence claim, and 4) that claim was assignable because it was a commercial, not personal transaction. Summary Judgment for Broker reversed and the case was reinstated.
Colorado Pool Systems, Inc. and Patrick Kitowski v. Scottsdale Insurance Company and Don Hansen, 2012COA178 (October 25, 2012)
“It’s not my fault—it was an accident!” In this case, a swimming pool had to be rebuilt. An adjuster told the insured the work would be covered, but the insurer later denied coverage under a general commercial liability insurance policy. Construing the policy, the court held: 1) “accident” is an ambiguous term that means any damage not intended; 2) an “occurrence” is damage to non-defective work, but not to defective work, because defective work is required to be repaired; and 3) the Construction Professional Commercial Liability Insurance Act is retroactive, but unconstitutional as applied. The insured also brought a negligent misrepresentation claim. The court held that because “accident” was ambiguous in the policy, the claim was actionable. It was also reasonable for the insured to rely upon the adjuster’s statements as if they were fact. Summary Judgment was reversed.