If Courts Have Said it Once They Have Said it a Million Times: Exclusions Susceptible to Multiple Reasonable Interpretations Are Ambiguous
Time 2 Minute Read
Categories: Duty to Defend, Excess

Law360 recently published a roundup of the biggest general liability rulings in the first quarter of 2022. As part of that roundup, it discussed Omega Protein, Inc. v. Evanston Insurance Company, which the Mississippi Supreme Court decided in January 2021. And it quoted Hunton Partner and practice group leader Syed Ahmad’s analysis of the opinion.

In Omega Protein, a contractor was working on a large metal storage tank at the Omega facility. The storage tank held stickwater, which is a liquid comprising water, fish oil, and fish solids. While the contractors were welding and grinding, it exploded, killing one of the workers. The estate of the worker sued Omega, alleging that explosive gases inside the tank caused the explosion.

Evanston, one of the contractor’s insurers, denied coverage, contending that a pollution exclusion applied. The trial court granted summary judgment to Evanston, finding that the pollution exclusion barred coverage because the stickwater produced three toxic gases, which caused the explosion.

The pollution exclusion excluded coverage for “irritant[s] or contaminants,” but it did not define either of those words. Omega contended that the three toxic gases could not be irritants or contaminants because they are found naturally (in small quantities) in the air and because they were properly contained in the tank where they were not contaminating or irritating anything.

The Mississippi Supreme Court considered the dictionary definitions of “irritant” and “contaminant,” as used in the pollution exclusion, and found that the exclusion was ambiguous as to whether the substance had to be an irritant or contaminant at any quantity in any situation or whether the substance could be an irritant or contaminant in only certain circumstances—like the substances in Omega. Because the exclusion was ambiguous, it had to be construed in favor of the policyholder. And because the exclusion had to be construed in favor of the policyholder, the trial court erred by granting summary judgment to the insurer.

In Law360’s roundup, they quoted Syed Ahmad. As he explained, “That the different definitions pointed to conflicting outcomes is the hallmark of ambiguous policy language.” And, “if insurers intend for policy terms to have one special meaning among the many options, they should make that clear by defining the terms accordingly.”

You can read the entirety of the article, and Ahmad’s comments, here.


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