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Vol. 9 - Issue 8
December 7, 2020


Traditional Environmental Noise: Court Addresses Applicability Of Pollution Exclusion To Car Horn Honking [Real Case]


Regular readers of Coverage Opinions have heard me say that I don’t address the pollution exclusion too often.  Back in the day it was a great issue.  There were so many interesting cases addressing the parameters of the exclusion – both as a matter of law [the traditional versus non-traditional scope issue] and factually [does the pollution exclusion apply to this hazardous substance or that].  But, as the number of cases has grown – like a weed – there are lesser opportunities for novel issues. There are probably some cases, with good facts, that are not being litigated, because existing case law dictates, with enough assurance for those involved, whether the pollution exclusion applies. 

Early last month a California federal court gave pollution exclusion enthusiasts something to get excited about.  The court addressed the novel issue of whether the pollution exclusion – admittedly, a unique one – applied to a claim for unwanted noise.

The decision in Crosby Estates at Rancho Santa Fe v. Ironshore Specialty Ins. Co., No. 19-2369 (S.D. Calif. Nov. 3, 2019) is somewhat lengthy.  As I’m wont to do in these situations, I’ll focus on just the part what matters for purposes here.

The coverage issues arise out of the following scenario. The Crosby Estates at Rancho Santa Fe, a community association, was sued by a neighboring community association, Avaron Community Association. Wait till you see this.  We’re talking some bad blood between these condos.

The court described the war between the condos as follows:

“Avaron alleged that in 2007, Avaron and The Crosby entered into a ‘Shared Use Maintenance Agreement’ giving The Crosby an easement for ingress and egress over Avaron’s property.  Avaron alleged that The Crosby 1) breached the Shared Use Maintenance Agreement by removing speedbumps on Avaron’s property; 2) interfered with Avaron residents’ quiet use and enjoyment by instigating ‘Operation Honk,’ a coordinated effort in which residents of The Crosby repeatedly honked their car horns when they passed over speedbumps on Avaron’s property; and 3) intentionally destroyed and removed speedbumps on Avaron’s property to allow residents of The Crosby to ‘drive as fast as they can through the easement without regard for the safety or well being of the residents and guests in Avaron.’ Avaron sought compensatory damages, punitive damages, termination of The Crosby’s rights under the SUMA, and injunctive relief.”

The Crosby, insured under a D&O policy issued by Ironshore, sought coverage for the Avaron suit.  Ironshore initially disclaimed coverage and then agreed to provide a defense to The Crosby as a courtesy.  But then there were all kinds of issues concerning the role of a retention on the defense and choice of counsel.  The opinion devotes numerous pages to these issues.  I’ll skip all of that here.

At some point a coverage action was filed by The Crosby against Ironshore.  Again, the ins and outs of this are not relevant for purposes here. 

Here’s the part that matters.  Ironshore maintained that it had no obligation to provide coverage to The Crosby on account of the policy’s pollution exclusion.  Huh?  The pollution exclusion?  The Crosby had been sued because its residents honked their car horns when they passed over speedbumps on Avaron’s property.  And they allegedly destroyed and removed speedbumps on Avaron’s property.  What in the world does that have to do with the pollution exclusion?  

It is tied to the policy’s definition of “pollutants:” “any substance located anywhere in the world exhibiting any hazardous characteristics as defined by, or identified on any list of hazardous substances issued by, the United States Environmental Protection Agency or any state, county, municipality or locality counterpart thereof. Such substances shall include, without limitation, solids, liquids, gaseous or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials. Pollutants shall also mean any other air emission, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products and any noise.”
The pollution exclusion here, when you apply this definition of “pollutants,” is about as broad as you can get (especially when you consider its reference to that which every governmental entity in America -- from the United States, down to my township – may consider a hazardous substance). 

At the very end of the definition is “any noise.”

Of course horn honking is “any noise.”  But that wasn’t how the court went about addressing the potential applicability of the exclusion. Rather, the court stated that it was compelled to interpret “noise” in the context of how it is used in the policy – within the definition of “pollutant” – and not literally and in isolation.    

By doing so, the court reached the following conclusion: “It is reasonable that a layperson may not consider someone honking their horn while they pass over a speedbump to be a pollutant or pollution. [MacKinnon] (‘[T]he interpretation of the pollution exclusion as limited to conventional environmental pollution is . . . reasonable.’). Based on the Policy provisions and the allegations in the Avaron Lawsuit complaint, the Court concludes that interpreting the pollution exclusion to include car horn honking is not the only reasonable interpretation.” (emphasis in original).

The court’s opinion does not say this specifically, but it seems that, for purposes of “noise,” it was limiting the pollution exclusion to noise related to an environmental or hazardous substance.  In a way, the court is limiting the exclusion to “traditional environmental noise.”  In that case, perhaps this pollution exclusion would apply to noise created by trash trucks, the operation of a waste disposal facility or a rock quarry. 

But a claim against Aunt Gertrude, for injury caused by her constant talking about her bursitis, would not be precluded under the Crosby Estates court’s analysis.  [Don’t worry Aunt Gert, we would never sue you.  Then you wouldn’t stop talking about that.]     

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