County of Columbia v. Continental Insurance , 189 A.D.2d 391 ( 1993 )

OPINION OF THE COURT

Mercure, J.

From June 1, 1980 through June 1, 1986, defendant Aetna Casualty & Surety Company insured plaintiff under comprehensive general liability policies providing coverage for bodily injury, property damage and personal injury. Similar coverage was provided by defendant Firemen’s Insurance Company of Newark, N.J. during the period June 1, 1986 through June 1, 1987 and by defendant Continental Insurance Company from June 1, 1986 through June 1, 1990. During the time periods relevant to this action, all of defendants’ policies excluded from the bodily injury and property damage liability coverage 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 irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water”.

In January 1989, H.K.S. Hunt Club, Inc. (hereinafter HKS) commenced an action against plaintiff seeking injunctive relief and damages for the impairment of its land by leachate contamination from an adjoining parcel utilized by plaintiff as a refuse and solid waste disposal site. The complaint pleaded causes of action (1) alleging thát plaintiff’s conduct constituted a continuing nuisance, (2) alleging that plaintiff’s conduct constituted a continuing trespass, and (3) for treble damages pursuant to RPAPL 853 upon the ground that plaintiffs use of the property "put [HKS] out of its own property in an unlawful manner and continues to hold and keep [HKS] out of its property by unlawful means”. Plaintiff thereafter requested that defendants defend and indemnify it in the underlying HKS action and, in October 1989, commenced this declaratory judgment action seeking, inter alia, a declaration of its rights and defendants’ obligations under the subject policies.

Following service of an answer to plaintiff’s amended complaint, Aetna moved and Firemen’s and Continental cross-moved for summary judgment dismissing the complaint upon the ground that the pollution exclusion clause contained in defendants’ policies exempted them from defending plaintiff in the underlying action. Plaintiff cross-moved for partial summary judgment on the duty to defend, arguing that the property damage and personal injury coverage afforded by defendants’ respective policies mandated that they provide plaintiff with a defense. Supreme Court granted defendants’ motions and denied plaintiff’s cross motion, finding that the pollution exclusion clauses contained in the policies issued by defendants exempted them from defending plaintiff in the action brought by HKS and, further, that the complaint in the underlying action did not allege offenses encompassed by the personal injury portion of the relevant policies. This appeal by plaintiff ensued.

We affirm. Although the allegations of HKS’ complaint against plaintiff fall squarely within the pollution exclusion of defendants’ respective policies, thereby precluding coverage against liability for bodily injury and property damage, plaintiff contends that coverage nonetheless exists under the policies’ personal injury and advertising injury liability endorsement. We disagree. Insofar as is relevant to this appeal, that coverage binds the respective defendants to "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of personal injury * * * sustained by any person or organization and arising out of the conduct of the named insured’s business”.^* "Personal injury”, in turn, is defined as an "injury arising out of one or more of the following offenses committed during the policy period: (1) false arrest, detention, imprisonment, or malicious prosecution; (2) wrongful entry or eviction or other invasion of the right of private occupancy; (3) a publication or utterance [constituting defamation or invasion of an individual’s right of privacy]”. The dispute here centers on the construction given the clause "wrongful entry or eviction or other invasion of the right of private occupancy”.

It is well settled that "[t]he duty to defend arises whenever the allegations in a complaint against the insured fall within the scope of the risks undertaken by the insurer, regardless of how false or groundless those allegations might be” (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310; see, Servidone Constr. Corp. v Security Ins. Co., 64 NY2d 419, 424-425; Town of Moreau v Orkin Exterminating Co., 165 AD2d 415, 418). Thus, "[i]f the complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend” (Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 73). That is not to say, however, that we are required to accept HKS’ legal characterization of the causes of action alleged in the complaint. To the contrary, as arbiters of the law, it is our privilege to determine the nature of the claim alleged in the complaint, based upon the facts alleged and not the conclusions which the pleader draws therefrom (see, Allstate Ins. Co. v Mugavero, 79 NY2d 153, 162-163).

Here, the essential factual allegations of the complaint are that "leachate contamination [from plaintiffs landfill] * * * has * * * polluted and contaminated the soil, air, ground and surface waters (including protected wetlands) on, under and over [HKS’] property, and such pollution and contamination will continue unless restrained and abated; and * * * [plaintiff] ha[s] deposited, and [is] continuing to deposit, refuse and other solid waste on and near [HKS’] property”. The only monetary relief sought is "compensatory damages for the permanent injury to and reduction in value of [HKS’] property * * * and trebling such damages pursuant to [RPAPL 853]”. Notably, we need give no consideration to the fact that, after stating the essential underlying factual allegations, the complaint is divided into separate causes of action claiming in conclusory fashion that plaintiffs use of its landfill constitutes "a continuing nuisance” and "a continuing trespass” and that HKS is entitled to treble damages pursuant to RPAPL 853 (see, Allstate Ins. Co. v Mugavero, supra). As such, the issue is not whether a nuisance or trespass claim may possibly fit within the policies’ personal injury coverage but whether the facts alleged in HKS’ complaint do.

In our view, an action for environmental damage to real property such as the one pleaded in HKS’ complaint could not possibly constitute a "wrongful entry or eviction or other invasion of the right of private occupancy” so as to come within the personal injury liability coverage of defendants’ policies. Unlike a general insurance policy, where coverage is stated in very broad terms and subject to clearly defined exceptions (as is the case in the bodily injury and property damage coverage of defendants’ policies), the personal injury coverage is "buil[t] from the ground up [and] affords coverage only for defined risks” (Martin v Brunzelle, 699 F Supp 167, 171). As such, coverage is limited to “claims * * * actually arising out of the enumerated * * * torts” (Aetna Cas. & Sur. Co. v First Sec. Bank, 662 F Supp 1126, 1132; see, American & Foreign Ins. Co. v Church Schools, 645 F Supp 628, 634). By application of the principle of ejusdem generis (see generally, Lawrence v Town of E. Fishkill, 167 AD2d 447, 448, lv denied 78 NY2d 857; McKinney’s Cons Laws of NY, Book 1, Statutes § 239), the key to interpreting the phrase "other invasion of the right of private occupancy” lies in the definition of "wrongful entry” and "eviction”, both of which involve actual interference with possessory rights to real property. Based upon the foregoing, we conclude that the coverage under the personal injury liability endorsement is limited to liability for purposeful acts aimed at dispossession of real property by someone asserting an interest therein, an element not pleaded in HKS’ complaint (see, Foggan, Lawrence and Renberg, Looking for Coverage in All the Wrong Places: Personal Injury Coverage in Environmental Actions, 3 Envtl Claims J 291, 296 [spring 1991]).

Further, construing the personal injury and advertising injury liability coverage of defendants’ respective policies in the context of the entire policy (see, Meyers & Sons Corp. v Zurich Am. Ins. Group, 74 NY2d 298, 302-303), the facts alleged in the underlying complaint do not "raise a reasonable possibility that [plaintiff] may be held liable for some act or omission covered by the [personal injury liability coverage]” (supra, at 302). Of greatest significance here is the fact that defendants’ policies provide comprehensive general liability coverage for property damage which, were it not for its specific pollution exclusion, would clearly cover HKS’ claim. Under the circumstances, to extend the personal injury coverage to occurrences which fall squarely within the property damage coverage would have the effect of rendering the pollution exclusion meaningless (see, Gregory v Tennessee Gas Pipeline Co., 948 F2d 203, 209 [5th Cir]).

In view of our determination that the personal injury liability coverage of defendants’ respective policies does not entitle plaintiff to a defense, we need not consider the parties’ remaining contentions.

* The policy issued by Continental for the period June 1, 1988 through June 1, 1989 contains a more restrictive definition of personal injury ("[wjrongful entry into, or eviction of a person from, a room, dwelling or premises that the person occupies”).