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8/8/2019 RACETRAC PETROLEUM v ACE - ACE Motion to Dismiss Brief
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(hereinafter “the underlying lawsuits’) filed by Jacqueline Sheree Bunns,
Dakota Bunns, Harley Bunns, and Lisa Williams (hereinafter “the
underlying plaintiffs”), all of whom are former employees of a RaceWay
service station leased from RaceTrac.
A. The Underlying Lawsuits
In 2009, the underlying plaintiffs filed the two underlying lawsuits in
the state courts of Mississippi (hereinafter “the Bunns lawsuit” and “the
Williams lawsuit”), alleging that the underlying plaintiffs sustained personal
injuries from exposure to benzene from gasoline vapors in the stores during
their employment at a RaceWay service station between 2005 and 2007.
[Doc. 1, Exhibits “D” and “E”].
B. The ACE Excess Policies
ACE issued an excess commercial general liability policy to
RaceTrac, number XSL-G20593854, which was effective from June 1, 2005
through June 1, 2006. [Doc. 1, Exhibit “A”]. ACE subsequently issued an
excess commercial general liability policy to RaceTrac, number XSL-
G21732850, which was effective from June 1, 2006 through June 1, 2007.
[Doc. 1, Exhibit “B”].
Both of the insurance policies provide coverage for “the ‘ultimate net
loss’ in excess of the ‘retained limit’ shown in the declarations’ that the
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insured becomes legally obligated to pay as damages because of ‘bodily
injury’ or ‘property damage’ to which this insurance applies,” subject to the
insurance contracts’ terms, conditions, limitations and exclusions.
Paragraph I(A)(1)(a), Excess Commercial General Liability Policy, XS-
6U91c (07/02), p. 1 [Doc. 1, Exhibits “A” and “B”].
C. The Pollution Exclusion
Both of the ACE policies contain an absolute pollution exclusion for
“any injury … arising out of or in any way related to pollution, however
caused.” The term “pollution” is defined in the policies as “the actual,
alleged or potential presence in or introduction into the environment of any
substance if such substance has, or is alleged to have, the effect of making
the environment impure, harmful, or dangerous. Environment includes any
air, land, structure or the air therein, watercourse or water, including
underground water.” Endorsement 9, XS-6W35 (09/95) [Doc. 1, Exhibit
“A”]; Endorsement 10, XS-6W35 (09/95) [Doc. 1, Exhibit “B”].
After RaceTrac provided notice to ACE of the Bunns lawsuit, ACE
denied coverage for that lawsuit based on the excess liability policies’
pollution exclusion. [Doc. 1, Exhibit F”]. ACE never received any notice
from RaceTrac of the Williams lawsuit until this declaratory judgment
action was filed. [Doc. 3, ¶¶ 37-40].
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D. RaceTrac’s Declaratory Judgment Action
On July 13, 2010, RaceTrac filed its complaint seeking declaratory
relief and attorneys fees. [Doc. 1]. In its complaint, RaceTrac alleged that
the ACE excess liability insurance policies provide coverage for the Bunns
and Williams lawsuits because RaceTrac may become obligated to pay an
“ultimate net loss” and “loss adjustment expenses” in excess of each policy’s
$500,000.00 retained limit resulting from “bodily injuries” caused by an
“occurrence” within the “coverage territory” during the policy periods.
[Doc. 1, ¶ 35].
RaceTrac alleged in its complaint that the pollution exclusion in the
ACE excess policies does not preclude coverage for the Bunns and Williams
lawsuits because the pollution exclusion is unenforceable as against the
public policy of the state of Georgia. [Doc. 1, ¶¶ 43-55]. In its answer,
ACE denied RaceTrac’s allegations that the claims asserted in the Bunns and
Williams lawsuits are covered under the excess liability insurance policies,
and denied that the policies’ pollution exclusion violates the public policy of
the state of Georgia. [Doc. 3].
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II. LEGAL ARGUMET
ACE moves this Court to dismiss this declaratory judgment action
because RaceTrac’s complaint fails to state a claim upon which relief can be
granted. Specifically, the complaint fails to set forth plausible facts which, if
proven true, would be sufficient to show that RaceTrac is entitled to
coverage under the ACE excess liability insurance policies. The pollution
exclusion in the policies plainly and unambiguously precludes coverage for
both the Bunns and Williams lawsuits.
RaceTrac’s complaint also fails to set forth plausible facts which, if
proven true, would be sufficient to support its allegation that the pollution
exclusion is unenforceable as against the public policy of Georgia.
Moreover, ACE submits that the pollution exclusion is valid and enforceable
and that as a matter of law it does not violate the public policy of the state of
Georgia.
Under the Federal Rules of Civil Procedure, a complaint must contain
“a short and plain statement of the claim showing that the pleader is entitled
to relief.” Fed. R. Civ. P. 8(a)(2). Until recently, a complaint was required
to be dismissed under Fed. R. Civ. P. 12(b)(6) for failure to state a claim
upon which relief can be granted when it appeared “beyond doubt that the
plaintiff can prove no set of facts in support of his claim which would entitle
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him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d
80 (1957). However, inBell Atlantic Corp. v. Twombly, 550 U.S. 544, 127
S. Ct. 1955, 167 L.Ed.2d 929 (2007), the United States Supreme Court
recently replaced the “no set of facts” standard with the “plausibility
standard,” which requires that factual allegations “raise the right to relief
above the speculative level.” Id. at 555; ADA v. Cigna Corp., 605 F.3d
1283, 1288-1289 (11th Cir. 2010). The “plausibility standard” does not
impose a probability requirement at the pleading stage; it simply calls for
enough facts to raise a reasonable expectation that discovery will reveal
evidence” supporting the claim. Id. at 556, 127 S. Ct. at 1974; ADA v.
Cigna Corp., supra at 1289; Dege v. ationwide Ins. Co., 2008 U.S. Dist.
LEXIS 41487 at [*2-*3] (N.D. Ga. May 22, 2008).
In assessing a motion to dismiss under Rule 12(b)(6), a court typically
limits its consideration to the complaint, the written instruments attached to
it as exhibits, documents incorporated into the complaint by reference, and
matters of which a court may take judicial notice. Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S. Ct. 2499, 168 L. Ed. 2d
179 (2007); Grossman v. ationsbank, A., 225 F.3d 1228, 1231 (11th Cir.
2000); Breckenridge Crest Apartments, Ltd. v. Citicorp Mortgage, Inc.,
826 F. Supp. 460, 464. Determining whether a complaint states a plausible
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claim for relief is a context-specific task that requires the reviewing court to
draw on its judicial experience and common sense. Ashcroft v. Iqbal , 556
U.S. --- , 129 S. Ct. 1937, 1950, 173 L. Ed. 2d 868 (2009). The United
States Supreme Court has suggested that courts considering motions to
dismiss adopt a “two-pronged approach”: 1) eliminate any allegations in the
complaint that are merely legal conclusions; and 2) where there are well-
pleaded factual allegations, “assume their veracity and then determine
whether they plausibly give rise to an entitlement to relief.” Id.; ADA v.
Cigna Corp., 605 F.3d at 1290. A complaint must be dismissed under Fed.
R. Civ. P. 12(b)(6) if the facts as pled do not “state a claim for relief that is
plausible on its face.” Twombly, 550 U.S. at 570, 127 S. Ct. at 1974, 167
L.Ed.2d 929; Edwards v. Prime Inc., 602 F.3d 1276, 1291 (11th Cir. 2010);
Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009).
A. The Absolute Pollution Exclusion In The Ace Insurance Contracts
Precludes Coverage For The Bunns And Williams Lawsuits.
Under Georgia law, insurance policies are a matter of contract and are
interpreted by ordinary rules of contract construction in order to ascertain the
intention of the parties, who are bound by its plain and unambiguous terms.
Boardman Petroleum v. Federated Mut. Ins. Co., 269 Ga. 326, 498 S.E.2d
492 (1998); Grange Mut. Ins. Co. v. DeMoonie, 227 Ga. App. 812, 490
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S.E.2d 451 (1997); Progressive Preferred Ins. Co. v. Brown, 261 Ga. 837,
838, 413 S.E.2d 430 (1992); Richards v. Hanover Ins. Co., 250 Ga. 613,
299 S.E.2d 561 (1983). In construing an insurance contract, a court must
consider it as a whole, giving effect to each provision. York Ins. Co. v.
Williams Seafood of Albany, Inc., 273 Ga. 710, 544 S.E.2d 156 (2001).
An insurer’s duty to indemnify, or provide coverage to, an insured
party is triggered only when the insured is determined to be liable for
damages within the policy's coverage. See Util. Serv. Co. v. St. Paul
Travelers Ins. Co., 2007 U.S. Dist. LEXIS 4634 (M.D. Ga. Jan. 22, 2007);
Erie Indem. Co. v. Acuity, 2006 U.S. Dist. LEXIS 52590 (N.D. Ga. July 19,
2006); Safeco Ins. Co. v. Atlanta Metro Leasing, Inc., 1993 U.S. Dist.
LEXIS 21468 (N.D. Ga. May 11, 1993). In this case, the complaint filed by
RaceTrac seeks coverage for damages that it may become liable to pay for
the bodily injuries in the Bunns and Williams lawsuits which are alleged to
have resulted from exposure to benzene from gasoline vapors. [Doc. 1, ¶
45]. However, both of the ACE excess liability insurance policies contain
absolute pollution exclusions which plainly preclude coverage for the
injuries alleged in the Bunns and Williams lawsuits.
The bodily injury and property damage liability coverage provided
under the ACE excess liability insurance policies is subject to a number of
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exclusions, including a pollution exclusion. The policies initially provided,
in pertinent part:
2. Exclusions
This insurance does not apply to:
* * *f. Pollution
Any injury, damage, expense, cost, loss, liability or legal obligation arising out of or in any way relatedto “pollution”, however caused.
Paragraph I(A)(2)(f), Excess Commercial General Liability Policy, XS-
6U91c (07/02), pp. 2-3 [Doc. 1, Exhibits “A” and “B”]. However, that
pollution exclusion was superseded by the pollution exclusion contained in
Endorsement No. 9 of the ’05-’06 policy and Endorsement No. 10 of the
‘06-’07 policy, which state, in pertinent part:
Exclusion 2.f of Section I, Coverage A is replaced by thefollowing: f. Any injury, damage, expense, cost, loss, liability or legal
obligation arising out of or in any way related topollution, however caused.
Pollution includes the actual, alleged or potential
presence in or introduction into the environment of anysubstance if such substance has, or is alleged to have, theeffect of making the environment impure, harmful, or dangerous. Environment includes any air, land, structureor the air therein, watercourse or water, includingunderground water.
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Endorsement 9, XS-6W35 (09/95) [Doc. 1, Exhibit “A”]; Endorsement 10,
XS-6W35 (09/95) [Doc. 1, Exhibit “B”].
1. The pollution exclusion is valid and enforceable. It is well-settled that an insurance company may fix the terms of its
policies as it wishes, provided they are not contrary to law, and it may insure
against certain risks and exclude others. Reed v. Auto-Owners Inc. Co., 284
Ga. 286, 667 S.E.2d 90 (2008); Payne v. Twiggs County School District ,
269 Ga. 361, 496 S.E.2d 690 (1998); Continental Cas. Co. v. HSI Fin.
Serv. Inc., 266 Ga. 260, 466 S.E.2d 4 (1996). Terms in an insurance policy
are given their ordinary and common meaning, unless otherwise defined in
the contract. Claussen v. Aetna Casualty & Surety Co., 259 Ga. 333, 380
S.E.2d 686 (1989). No construction of an insurance contract is required or
even permissible when the language is plain, unambiguous, and capable of
only one reasonable interpretation. Boardman Petroleum v. Federated
Mut. Ins. Co., supra; Giles v. ationwide Mut. Fire Ins. Co., 199 Ga. App.
483, 405 S.E.2d 112 (1991).
The Georgia courts repeatedly have held that absolute pollution
exclusions similar to the pollution exclusion in the ACE excess liability
insurance policies are unambiguous and enforceable. Reed v. Auto-Owners
Ins. Co., supra (claim for injury from fumes fell within clear language of
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absolute pollution exclusion); Truitt Oil & Gas Co. v. Ranger Ins. Co., 231
Ga. App. 89, 498 S.E.2d 572 (1998) (absolute pollution exclusion not
ambiguous because “pollutants” defined in policy as including “any liquid or
gaseous contaminant” and included damages from leakage of gasoline);
Perkins Hardwood Lumber Co. v. Bituminous Casualty Corp., 190 Ga.
App. 231, 378 S.E.2d 407 (1989) (no ambiguity as to scope of pollution
exclusion); Owners Ins. Co. v. Farmer , 173 F. Supp. 2d 1330 (N.D. Ga.
2001) (absolute pollution exclusion unambiguously excluded all pollutants
regardless of source or location); orth Georgia Petroleum Co. v.
Federated Mut. Ins. Co., 68 F. Supp. 2d 1321 (N.D. Ga. 1999)
(absolute pollution exclusion not ambiguous); Damar, Inc. v. United States
Fire Ins. Co., 856 F. Supp. 679 (N.D. Ga. 1993), aff’d, 21 F.3d 1126 (11th
Cir. 1994) (absolute pollution exclusion unambiguously excluded liability
coverage for all liabilities arising out of pollution).
Indeed, courts around the country that have construed absolute
pollution exclusions like the one at issue here routinely enforced such
exclusions to clearly and unambiguously preclude coverage for losses
caused by pollution. See, inter alia, Madison Constr. Co. v. Harleysville
Mut. Ins. Co., 451 Pa. Super. 136, 678 A.2d 802 (1996); Cook v. Evanson,
83 Wn. App. 149, 920 P.2d 1223 (1996); Crescent Oil Co. v. Federated
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Mut. Ins. Co., 20 Kan. App. 2d 428, 888 P.2d 869(1995); Apana v. TIG Ins.
Co., 504 F. Supp. 2d 998 (D. Haw. 2007); Maska U.S., Inc. v. Kansa Gen.
Ins. Co., 198 F.3d 74 (2d Cir. 1999); Stamford Wallpaper Co. v. TIG Ins.,
138 F.3d 75 (2d Cir. 1998); Union Mut. Fire Ins. Co. v. Hatch, 835 F.
Supp. 59 (D.N.H. 1993); Bureau of Engraving v. Federal Ins. Co., 793 F.
Supp. 209 (D. Minn. 1992), aff’d, 5 F.3d 1175 (8th Cir. 1993); Alcolac, Inc.
v. California Union Ins. Co., 716 F. Supp. 1546 (D. Md. 1989).
The mere fact that the ACE excess liability insurance policies do not
list the specific substances covered under the absolute pollution exclusion
does not mean that the exclusion is ambiguous. A contract is not rendered
ambiguous by the mere fact that the contract does not define a term, Da
Cunha v. Standard Fire Ins. Company/Aetna Flood Ins. Program, 129
F.3d 581 (11th Cir. 1997), or that the parties may not agree upon the proper
construction to be given it. Wile v. Paul Revere Life Ins. Co., 410 F. Supp.
2d 1313 (N.D. Ga. 2005). As other courts have noted, the fact that a large
number of solids, liquids or gases may qualify as irritants or contaminants is
evidence of the absolute pollution exclusion’s far-reaching scope, not its
ambiguity. Owners Ins. Co. v. Chadd's Lake Homeowners Ass'n, 2004
U.S. Dist. LEXIS 30675 at [* 17] (N.D. Ga. Dec. 28, 2004). For these
reasons, the pollution exclusion in the ACE excess liability insurance
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policies is valid and enforceable.
2. Benzene is a “pollutant” within the plain language of thepolicies’ pollution exclusion.
The pollution exclusion in the ACE excess liability insurance policies
defines “pollution” to include “the actual, alleged or potential presence in or
introduction into the environment of any substance if such substance has, or
is alleged to have, the effect of making the environment impure, harmful, or
dangerous.” Benzene specifically is designated by the federal government
as a “hazardous air pollutant” in The Clean Air Act and a “toxic pollutant”
in the Environmental Protection Agency’s (“EPA”) List of Hazardous
Substances. 42 U.S.C. § 7412(b)(1); 40 C.F.R. § 401.15(8). In addition,
courts in other jurisdictions have ruled that benzene is a pollutant within the
meaning of an insurance policy’s absolute pollution exclusion. See
orthbrook Indem. Ins. Co. v. Water Dist. Management Co., 892 F. Supp.
170 (S.D. Tex. 1995) (claims for bodily injury arising out of discharge of
chemicals including benzene fell within insurance policies’ pollution
exclusion); Gotham Ins. Co. v. GLX, Inc., 1993 U.S. Dist. LEXIS 10891
(S.D.N.Y. Aug. 6, 1993) (claims of injury and damages arising from release
of benzene solution precluded from coverage by insurance policy’s pollution
exclusion).
When the language of an insurance policy defining the extent of the
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insurer's liability is unambiguous and capable of but one reasonable
construction, the court must enforce the contract as made by the parties.
Horace Mann Ins. Co. v. Drury, 213 Ga. App. 321, 445 S.E.2d 272 (1994);
Burnette v. Georgia Life & Health Ins. Co., 190 Ga. App. 485, 379 S.E.2d
188 (1989). Under the plain language of the pollution exclusion, the ACE
excess liability insurance policies provide no coverage for the injuries and
damages alleged in the Bunns and Williams lawsuits.
B. The Absolute Pollution Exclusion In The ACE Excess LiabilityInsurance Policies Does ot Violate Georgia Public Policy.
Plaintiff’s contention – that application of the pollution exclusion in
this case would violate public policy – is not supported by Georgia law.
Competent parties are free to choose and insert whatever provisions they
desire in a contract, unless prohibited by statute or public policy.
Department of Transp. v. Brooks, 254 Ga. 303, 328 S.E.2d 705 (1985);
Empire Fire & Marine Ins. Co. v. Dobbins, 205 Ga. App. 700, 423 S.E.2d
396 (1992); Donaldson v. Pilot Life Ins. Co., 177 Ga. App. 748, 41 S.E.2d
279 (1986); Simmons v. Select Ins. Co., 183 Ga. App. 128, 358 S.E.2d 288
(1987). Under Georgia law, a “contract cannot be said to be contrary to
public policy unless the General Assembly has declared it to be so, or unless
the consideration of the contract is contrary to good morals and contrary to
law, or unless the contract is entered into for the purpose of effecting an
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illegal or immoral agreement or doing something which is in violation of
law.” Department of Transp. v. Brooks, supra at 312; State Farm Mut.
Auto. Ins. Cos. v. Walker , 234 Ga. App. 101, 103, 505 S.E.2d 828 (1998);
Hartford Ins. Co. of Southeast v. Franklin, 206 Ga. App. 193, 195, 424
S.E.2d 803 (1992); Fournier v. Hartford Fire Ins. Co., 862 F. Supp. 357,
382 (N.D. Ga. 1994).
The courts must exercise extreme caution in declaring a contract, or
any portion of a contract, void as against public policy, and should do so
only where the case is free from doubt and where an injury to the public
interest clearly appears. Emory Univ. v. Porubiansky, 248 Ga. 391, 282
S.E.2d 903 (1981); Precision Planning, Inc. v. Richmark Cmtys., Inc., 298
Ga. App. 78, 679 S.E.2d 43 (2009); Baldwin v. State Farm Fire & Cas. Co.,
264 Ga. App. 229, 590 S.E.2d 206 (2003); Piedmont Arbors Condominium
Ass'n v. BPI Constr. Co., 197 Ga. App. 141, 397 S.E.2d 611 (1990); Harris
v. ational Evaluation System, Inc., supra at 1083. The Georgia courts
have found an exclusion in an insurance contract to be unenforceable
because it violates public policy only when the legislature has statutorily
mandated that an insurance contract provide the particular coverage sought
to be excluded by the policy provision at issue. American Home Assurance
Co. v. Smith, 218 Ga. App. 536, 462 S.E.2d 441(1995) (Emphasis added);
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Hartford Ins. Co. of Southeast v. Franklin, 206 Ga. App. 193, 424 S.E.2d
803 (1992); orth Georgia Petroleum Co. v. Federated Mut. Ins. Co., 68 F.
Supp. 2d 1321 (N.D. Ga. 1999).
Each case requiring public policy considerations must be weighed
carefully on its own merits, and apply the appropriate legal guideline to the
particular facts presented to the court. Collier v. State Farm Mut. Auto. Ins.
Co., 249 Ga. App. 865, 549 S.E.2d 810 (2001); ational Consultants, Inc.
v. Burt , 186 Ga. App. 27, 366 S.E.2d 344 (1988); Harris v. ational
Evaluation System, Inc., 719 F. Supp. 1081 (N.D. Ga. 1989).
The absolute pollution exclusion contained in the ACE excess liability
insurance policies cannot be against Georgia public policy because the
Georgia legislature never has required that liability insurance policies
provide coverage for injuries or damage caused by pollution. Because
Georgia law does not require liability insurance in every case, exclusions are
not per se prohibited but must be individually evaluated to determine
whether they are against public policy. Southern Guaranty Ins. Co. v.
Preferred Risk Mut. Ins. Co., 257 Ga. 355, 359 S.E.2d 665 (1987); Hoque
v. Empire Fire & Marine Ins. Co., 281 Ga. App. 810, 637 S.E.2d 465
(2006). No Georgia court or statute ever has declared the pollution
exclusion per se unenforceable in all circumstances.
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The only Georgia court to specifically address the issue of whether
pollution exclusions are against Georgia public policy came to the same
conclusion – i.e., that pollution exclusions do not violate Georgia public
policy. orth Georgia Petroleum Co. v. Federated Mut. Ins. Co., 68 F.
Supp. 2d 1321 (N.D. Ga. 1999). In that case, the insured argued that the
absolute pollution exclusion in a commercial general liability policy violated
public policy because “approval of the clause by the Georgia Insurance
Commissioner was induced by the insurance industry's representation that
the clause merely ‘clarified’ the scope of existing coverage.” Id. at 1327.
The court in orth Georgia Petroleum recognized that, “[u]nder Georgia
law, an exclusion in an insurance contract is unenforceable because it
violates public policy only if the legislature has statutorily mandated that an
insurance contract provide that particular coverage.” Id. at 1327 (citing,
inter alia, Horace Mann Ins. Co. v. Drury, 213 Ga. App. 321, 445 S.E.2d
272 (1994), and Hartford Ins. Co. of Southeast v. Franklin, 206 Ga. App.
193, 424 S.E.2d 803 (1992) (Emphasis added).
The court in orth Georgia Petroleum then considered the case of
Hulstzman v. State Farm Fire & Cas. Co., 188 Ga. App. 12, 372 S.E.2d 9
(1988), which held that “in those cases where restrictions or limitations have
been imposed by the courts on the right of an insurer to define and limit the
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handler and purveyor of gasoline. The ACE excess policies on their face
reflect that RaceTrac’s business is “Convenience Store” [Doc. 1, Exhibits
“A” and “B”]. In the insuring sections of the policies, ACE insured
RaceTrac for potential liability for “bodily injury” or “property damage”
caused by an “occurrence” that takes place in the “coverage territory”
occurring within the “policy period,” subject to any applicable exclusions,
one of which was the pollution exclusion. Paragraph I(A)(1)(b), Excess
Commercial General Liability Policy, XS-6U91c (07/02), p. 1 [Doc. 1,
Exhibits “A” and “B”]. In other words, ACE insured RaceTrac for liability
for bodily injuries arising out of slip-and-falls on the premises, and other
potential liabilities associated with RaceTrac’s business as a convenience
store operator.
This alleged basis of RaceTrac’s claim for relief already has been
rejected for an insured which found itself in a similar position in Tech.
Coating Applicators, Inc. v. U.S. Fid. & Guar. Co., 157 F.3d 843 (11th Cir.
1998). In that case, the Eleventh Circuit held that the absolute pollution
exclusion did not nullify the essential coverage provided by the policies
because the policies continued to provide coverage for a wide variety of
accidents and mishaps associated with the business of the insured. Id. at
846.
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The facts alleged in RaceTrac’s complaint, which facts misstate the
plain terms of the ACE excess liability insurance policies, are not
“plausible” because they are clearly incorrect as shown by the policies which
are attached as exhibits to the complaint. RaceTrac is seeking a declaration
that it is entitled to insurance coverage based upon the terms of the ACE
policies. This Court should not consider misstatements of the policies’
terms when deciding whether RaceTrac’s complaint states a claim upon
which relief can be granted.
RaceTrac’s argument appears to be based upon the recent Georgia
Court of Appeals decision in Barrett v. at'l Union Fire Ins. Co., 304 Ga.
App. 314, 696 S.E.2d 326 (2010). InBarrett , the court considered whether a
lawsuit for injuries suffered by an employee of a company that installed
natural gas pipelines was dismissed properly under a commercial general
liability policy’s absolute pollution exclusion. In reversing the dismissal of
the complaint, the court in Barrett held that the policy’s absolute pollution
exclusion did not apply because (a) natural gas was not a pollutant within the
meaning of the policy, (b) it would violate public policy to permit the insurer
to sell a liability policy containing an exclusion for damages from natural
gas when the insured’s main product was natural gas, and (c) there was a
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question about whether the injuries arose from the natural gas discharge or
dispersal, rather than from the negligence of the insured's employees. Id.
The decision in Barrett is distinguishable from this case and therefore
not controlling. As an initial matter,Barrett involved a claim for physical
injuries caused by the negligence of the gas company’s employees, rather
than a claim for physical injuries caused by a pollutant as defined by the
policy, as in this case. The court inBarrett held,
As a threshold matter…the Barretts have not alleged thatBarrett was “poisoned” by natural gas or that he was harmedmerely by the release of natural gas from the tap. Rather, their complaint asserts that because of the negligence of AGLemployees, the natural gas released from the tap was allowed toaccumulate, thereby creating an oxygen-deprived atmosphere,and that it was the lack of oxygen that injured Barrett.
Id. at 318-319. By way of contrast, the Bunns and Williams lawsuits allege
physical injuries caused by benzene vapors. [Doc. 1, ¶¶ 45-46].
The decision in Barrett also is distinguishable from this case because
it involved a substance, natural gas, which was not a pollutant within the
meaning of the policy. The court inBarrett noted:
There is nothing in the current record showing that natural gas
is generally defined or viewed as an irritant or contaminant.Indeed, the allegations of the complaint indicate that exposureto natural gas is not necessarily dangerous and does notautomatically result in injury so long as the supply of oxygen isnot impeded. In the absence of any such evidence, we have nobasis for concluding that natural gas is a pollutant under theterms of the Policy.
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Id. at 319.
Unlike natural gas, benzene specifically is designated in The Federal
Clean Air Act as a “hazardous air pollutant,” 42 U.S.C. § 7412(b)(1), and is
included in the EPA’s List of Hazardous Substances as a “toxic pollutant,”
40 C.F.R. § 401.15(8), and therefore it falls within the absolute pollution
exclusion in the ACE excess liability insurance policies.
The decision in Barrett is therefore distinguishable from this case
because, in Barrett , regardless of whether natural gas was a pollutant within
the meaning of the policy, the record did not show that the injuries arose out
of the “discharge, dispersal, seepage, migration, release, or escape of”
natural gas as required by the policy’s pollution exclusion. Id. at 320-321.
In contrast, RaceTrac’s complaint alleges that the injuries to the Bunns and
Williams plaintiffs arose from benzene. [Doc. 1, ¶¶ 45-46] This clearly
falls within the ACE excess liability insurance policies’ absolute pollution
exclusion.
The court in Barrett utterly failed to evaluate whether the legislature
had statutorily mandated the inclusion of coverage for pollution, which is
necessary to establish that a policy exclusion for pollution is against Georgia
public policy. Instead, the court inBarrett summarily concluded without
applying the criteria set by Georgia law that it “would violate the public
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policy of Georgia to allow [the insurer] to sell a liability policy to cover
AGL whose main product is natural gas, which policy contains an exclusion
for damages resulting from such natural gas.” Id. at 319.
The holding in Barrett was premised upon the misapplied rule that
“Georgia public policy disfavors insurance provisions that ‘permit[] the
insurer, at the expense of the insured, to avoid the risk for which the insurer
has been paid’ and for which the insured reasonably expects it is covered.”
Id., quoting Davis v. Kaiser Foundation Health Plan, Inc., 271 Ga. 508,
510, 521 S.E.2d 815 (1999). However, the decision isDavis was based
upon a specific statute, O.C.G.A. § 33-24-56.1, which caused the court in
Davis to hold that, “It is now clear that the public policy of this State will not
permit insurers to require an insured to agree to a provision that permits the
insurer, at the expense of the insured, to avoid the risk for which the insurer
has been paid by requiring the insured to reimburse the insurer whether or
not the insured was completely compensated for the covered loss.” Davis,
supra (Emphasis added).
In the case at hand, unlike Davis, no Georgia statute requires liability
insurance coverage for injuries resulting from pollution. Thus, the ACE
pollution exclusions are not contrary to public policy.
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/s/ Wayne D. Taylor
WAYNE D. TAYLOR Georgia State Bar No. 701275
RUTH M. PAWLAK Georgia Bar No. 045810
MOZLEY, FINLAYSON & LOGGINS LLPOne Premier Plaza, Suite 9005605 Glenridge DriveAtlanta, Georgia 30342Tel: (404) 256-0700Fax: (404) 250-9355
Attorneys for Defendant ACE American Insurance Company
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CERTIFICATIO PURSUAT TO RULE 7.1
Counsel for defendant ACE American Insurance Company hereby
certifies that this pleading has been prepared using Times New Roman 14
point, one of the font and point selections approved by the Court in L.R.
5.1C.
Respectfully submitted this 1st day of November, 2010.
/s/ Ruth M. Pawlak
WAYNE D. TAYLOR Georgia Bar No. 701275RUTH M. PAWLAK Georgia Bar No. 045810
MOZLEY, FINLAYSON & LOGGINS, LLPOne Premier Plaza, Suite 9005605 Glenridge DriveAtlanta, Georgia 30342Tel: (404) 256-0700Fax: (404) 250-9355
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IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION RACETRAC PRETROLEUM, INC., )A Georgia Corporation, )
) CIVIL ACTION FILEPlaintiff, ) NO. 1:10-cv-2162-WSD
)vs. )
)ACE AMERICAN INSURANCE )COMPANY, a Pennsylvania )corporation, )
)Defendant. )
CERTIFICATE OF SERVICE
I hereby certify that I electronically filed the forgoing DEFEDAT
ACE AMERICA ISURACE COMPAY'S MOTIO TO
DISMISS COMPLAIT using the Court’s CM/ECF System, which will
automatically send a copy of same to the following counsel of record:
Michael S. French, Esq.Ryan D. Watstein, Esq.
WARGO & FRENCH LLP1170 Peachtree Street N.E., Suite 2020
Atlanta, Georgia 30309mfrench@wargofrench.com rwatstein@wargofrench.com
This 1st day of November, 2010.
/s/ Ruth M. Pawlak
RUTH M. PAWLAK Georgia Bar No. 045810rpawlak@mfllaw.com
Case 1:10-cv-02162-WSD Document 11-1 Filed 11/01/10 Page 27 of 27
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