Colorado Court of Appeal Ruling Important For Consumers
Colorado has dealt a blow to the insurance industry, after the Colorado Court of Appeals ruled that the pollution exclusion in a liability policy was ambiguous and therefore did not operate to exclude coverage. A bar in LaJunta, Colorado was sued by two city workers who were cleaning out a sewer line near the bar and were severely injured after inhaling hydrogen sulfide fumes. The hydrogen sulfide resulted from cooking oil and greasy water being poured into the sewer drain by the bar's employees. After the bar was found liable to the two employees for nearly $4 million, the employees sought insurance money from the bar's liability insurer, but the insurer denied coverage claiming the pollution exclusion applied. The Colorado Court of Appeals disagreed with the original trial court and the federal district court of Colorado, and held the pollution exclusion did not apply to the facts of this case because the exclusion was ambiguous and therefore unenforceable. The Court of Appeals pointed out that, if the insurance company's position were followed, it would lead to absurd results.
Thomas W. Henderson, a Burg Simpson shareholder who focuses on insurance issues, said: "This is an important decision for Colorado policyholders and consumers as it shows the insurance industry that Colorado Courts will carefully analyze cases before allowing an insurance company to escape liability by making absurd arguments, such as claiming that an exclusion applies when the facts or law don't support such a result."
