Coverage of Claims against Restaurant after it Dumped Cooking Grease into Sewer Is Barred by Pollution Exclusion

The Colorado Supreme Court has reversed an intermediate appellate court and decided that the pollution exclusion in a commercial general liability (“CGL”) insurance policy issued to a restaurant barred coverage under the policy of claims against the restaurant that arose after it dumped cooking grease into the sewer and created a grease clog. 

The Case

Two men working on the sewer system in La Junta, Colorado, discovered a grease clog in a manhole near Hog’s Breath Saloon & Restaurant and were injured when they tried to clear it. The injured workers sued Hog’s Breath and the trial court found the restaurant’s owner liable for the worker’s injuries because Hog’s Breath had dumped greasy water in the sewer in sufficient amounts to cause the sewer clog, which in turn created a buildup of hydrogen sulfide gas. After a trial on damages, the workers obtained a monetary judgment against the restaurant’s owner.

Apparently unable to collect their judgment, the workers served a writ of garnishment on the restaurant’s CGL insurer. The insurer moved for summary judgment, asserting it had no duty to indemnify, and the trial court granted the insurer’s summary judgment motion, finding that the pollution exclusion barred coverage.

The workers appealed and an intermediate appellate court reversed, holding that the terms of the pollution exclusion clause were ambiguous and that its application to cooking grease – a common waste product – could lead to absurd results and negate essential coverage.

The dispute reached the Colorado Supreme Court.

The Supreme Court’s Decision

The Colorado Supreme Court reversed, and concluded that the pollution exclusion clause barred coverage in this case.

It explained that it was “mindful of the concerns expressed by the court of appeals,” but found them inapplicable here. As the Colorado Supreme Court explained, in this case, the restaurant discharged enough cooking grease into the sewer system to create a five to eight foot clog that led to a dangerous buildup of toxic gas – conduct that violated a city ordinance prohibiting the discharge of a pollutant in an amount that created an obstruction to the sewer flow. The court stated that it agreed with the trial court that, under the circumstances of this case, “the discharge of cooking grease amounted to the discharge of a pollutant.”

The court observed that the policy defined pollutants as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.” In essence, the court found, a pollutant was “any substance” that was “an irritant or a contaminant” and it decided that cooking grease became a contaminant “when discharged into a sewer in quantities sufficient to create a clog.”

The court rejected the workers’ argument that the pollution exclusion clause applied only to “traditional” pollution, finding “no reason” to believe that an ordinary person would understand the pollution exclusion clause to apply only to “traditional” pollution and adding that prevailing law did not limit the exclusion in such a way.

Therefore, the court ruled, the pollution exclusion clause barred coverage, and the workers could not garnish the insurance policy.

The case is Mountain States Mutual Cas. Co. v. Roinestad, No. 10SC853 (Colo. Feb. 25, 2013).