A Traveler Cos. Inc. unit is not liable to defend a trucking company for the damage caused by a hydrochloric acid cloud due to an exclusion of contaminants in its coverage, a federal appeals court said Friday and upheld a lower court decision.
The plaintiff in the case, Laurel, Mississippi-based Burroughs Diesel Inc., had successfully claimed that an exemption from Travelers Indemnity Co. of America & # 39 ;s exclusion of pollutants for smoke was applied, according to Friday's decision by the 5th U.S. Circuit Court of Appeals in New Orleans Burroughs Diesel, Inc. v. The Travelers Indemnity Co. of America .
On October 14, 2016, more than 5,000 gallons of hydrochloric acid leaked from a storage tank in Laurel, Mississippi, on property adjacent to the Burroughs.
The acid was a liquid, but it quickly created a cloud that swept across the street and engulfed Burroughs' property, which allegedly caused extensive damage to its buildings, vehicles, inventors, tools, machinery and equipment, the decision said.
Burroughs Insurers Travelers denied coverage and relied on an exclusion of pollutants in their policies. Burroughs appealed to the U.S. District Court in Hattiesburg, Mississippi, alleging breach of contract, breach of good faith and fair trade and damage to contracts.
The district court ruled in favor of the insurer and was confirmed by a unanimous three-judge appeals court panel. The traveler's policy excludes pollution losses. There was an exception to this exclusion, but for losses caused by "smoke", the decision said.
Burroughs "claims that the cloud resulting from the release of the hydrochloric acid constituted" smoke ", which is a" specified cause of loss, "the decision said.
The panel disagreed. Burroughs" locks on "to a secondary definition in the definition of smoke that defines it as "a suspension of particles in a gas", it said.
"We do not interpret state law to mean that it was enough to find any definition that fails to focus on smoke due to combustion, "said the decision.
" Instead, we search through dictionaries for the common, popular, or logical meaning of "smoke." That is the first definition in the same dictionary: "the gaseous products of burning material", the panel said in confirming the lower court's ruling that the police smoke exemption does not apply.
Burroughs 'lawyer had no comment, while travelers' lawyers did not respond to a request for comment. [1