In Headwaters Resources v. Illinois Union Insurance Co., the insured used fly ash to construct a golf course in a residential area. Neighbors complained the fly ash polluted the groundwater and the dust from the fly ash was an irritant. Headwaters wanted a defense from these claims, but its insurance companies said the pollution exclusion applied and precluded coverage. Summary judgment in favor of the insurance companies was affirmed on appeal.
The district court found that certain of the at-issue pollution exclusions unambiguously applied to bar coverage and that the remaining pollution exclusions, although possibly ambiguous, still applied because the complaints unquestionably alleged traditional environmental pollution. As a result, the complaints triggered the pollution exclusions in all of the policies, and the district court granted summary judgment in favor of the insurance companies.
The various policies that insured Headwaters contain similar but not identical exclusionary language. Broadly stated, the pollution exclusions are forms of the “total pollution exclusion” that “[t]he majority of courts have held [to be] ‘clear and unambiguous.’” The district court found that the “the complaints in the . . . lawsuits alleged bodily injury and property damage arising out of the actual or threatened dispersal of pollutants from waste that was processed by Headwaters.”
In sum, the exclusions were not ambiguous, the exclusions applied to the fly ash, and summary judgment was proper.