Limitation On What Constitutes "Waste Material"
In Allstate Ins. Co. v. Leong, 2010 U.S. Dist. LEXIS 46277 (D. Haw. May 11, 2010), the court found that a policy’s pollution exclusion does not apply to the release from a sewer line that damages a neighboring retaining wall. Allstate issued a homeowners’ policy to Leong. Leong was brought in as a third-party defendant in a suit by the neighbor whose retaining wall was damaged against the City of Honolulu. Allstate agreed to defend Leong, but filed a declaratory judgment action regarding its duty to defend. The primary issue was whether the damage caused by the release from the sewer line was excluded by a pollution exclusion for property damage consisting of or caused by “waste materials or other irritants, contaminants, or pollutants.”
The underlying complaint alleged that the retaining wall was damaged by sewage and effluent that built up behind it. The court found that the exclusion was ambiguous because “it is unclear whether the overflow/leak from the sewage pipe constitutes” waste materials. The court noted that although raw sewage can constitute a health hazard, since the sewer line could also include rainwater and other sources, it was an issue of fact as to whether the discharge was “waste materials.” The court noted that if a storm sewer overflowed and flooded a house, the water that flooded the house could include antifreeze and oil, but that did not mean that the water would constitute “waste materials or other irritants, contaminants or pollutants.” The court went on to hold that even if the discharge was “waste material” the complaint did not limit its allegations to property damage caused by waste material, but also included property damage resulting from the buildup of pressure from the liquid. Since the damage could have been caused by the pressure, and not “the hazardous or dangerous nature of what the liquid contained,” the pollution exclusion did not apply to the duty to defend.
