Something stinks: Unhappy homeowner sues county
In 2010, Coley Brown filed a complaint against the East Richland County, South Carolina, Public Service District for inverse condemnation, trespass, and negligence. The complaint alleged that the district had installed a sewage force main and an air relief valve on Brown’s street, and the valve released offensive odors on his property multiple times a day. Brown made repeated requests to the district to remedy the problem but, despite the district’s attempts, the odor never subsided. The stench ultimately caused Brown to buy a new piece of property and move, but he was unable to sell the old property. The district tendered the complaint to its insurer, the South Carolina Insurance Reserve Fund, and the Fund denied coverage.
Pursuant to the policy, the Fund was legally obligated to pay damages resulting from “[p]roperty [d]amage to which this insurance applies caused by an occurrence.” The policy defined “occurrence” as “an accident, including continuous or repeated exposure to conditions, which result[s] in personal injury or property damage neither expected nor intended from the standpoint of the insured.”
The policy defined property damage as:
(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or
(2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.
Pursuant to Exclusion (f) (the pollution exclusion), no coverage exists for:
… personal injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritant, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental[.]
In March 2011, the Fund filed a complaint against the district seeking a declaratory judgment that the Fund had no duty to defend or indemnify the district in the Coley Brown matter. The Fund denied coverage based on the pollution exclusion as well as the Fund’s position that the damages alleged by Brown did not qualify as “property damage” caused by an “occurrence.” The district counterclaimed, seeking its own declaratory judgment that the Fund had a duty to defend and indemnify the district. In June 2011, the district and the Fund filed cross motions for summary judgment.
In June 2012, the court found that the policy’s exclusion barring the inverse condemnation claim was valid and enforceable. As to the negligence and trespass claims, the court found that the pollution exclusion’s reference to gases and fumes encompassed the offensive odors delineated in Brown’s complaint. The court also determined that the discharges of offensive odors were included within the district’s ordinary operations; thus, the pollution exclusion’s exception was inapplicable. Finally, the court found there was no ambiguity between the policy’s definition of “occurrence” and the pollution exclusion. Therefore the court determined that the Fund owed no duty to defend or indemnify the district. The district subsequently filed a motion to alter or amend the court’s judgment, which the court denied. The district appealed.
On appeal, the district argued that the pollution exclusion was void because it conflicted with provisions of the South Carolina Tort Claims Act. Specifically, the district argued that the act required the Fund to provide coverage for all risks for which immunity was waived under the act. Additionally, the district asserted that because its decision to purchase insurance from the Fund precluded it from purchasing additional insurance from other sources, it was improperly exposed to liability for any excluded risks. The court disagreed, noting that the tort claims act did not explicitly state whether a pollution exclusion was a proper addition to a tort liability policy issued through the Fund. The court stated its belief that the legislature did not intend to preclude the use of such exclusions, even in policies issued pursuant to the act.
Next, the district asserted that the pollution exclusion was inapplicable, because it did not mention offensive odors or explain why such odors should be considered as pollution when they are not harmful and not regulated. Again the court disagreed, holding that the pollution exclusion applied because the odors at issue could be properly classified as “fumes” or “gases,” both of which were listed in the exclusion.
The district further argued that if the pollution exclusion applied, the exception to the exclusion operated to require coverage because the circumstances surrounding the releases of the odors were unique and unexpected. Again the court disagreed, holding that the releases of the odors were not accidental and unexpected, so the exception did not apply. The order of the lower court was affirmed.
South Carolina Insurance Reserve Fund vs. East Richland County Public Service District—Court of Appeals of South Carolina-March 23, 2016-No. 5393.