Insurer ordered to defend construction firm in wildfire dust exposure case
The insurance company initially pointed to a pollution exclusion when denying the claim.
The United States Court of Appeals for the Ninth Circuit has reversed the ruling of a lower court, ruling that Wesco Insurance Company has a duty to defend policyholder Brad Ingram Construction in a case involving a truck driver who was routinely exposed to dust created by wildfire debris.
The 2018 Camp Fire wildfire occurred in Paradise, California, destroying thousands of buildings and leaving millions of pounds of toxic debris behind. The California Department of Resources, Recycling, and Recovery (CalRecycle) hired Ceres Environmental Services to assist in cleaning the area. Ceres hired other subcontractors, including Garlow Transport, a trucking company that employed Richard Vargas during the summer of 2019, where he drove hundreds of loads of wildfire debris from work sites to waste dumps.
Vargas would drive to work sites, where workers would load debris into his truck, stirring up dust that entered the vehicle. Once loaded, Vargas stepped into the dust to tarp the load before driving it to a waste facility. Vargas would then have to remove the tarp and unload the debris, once again exposing himself to the dust. He became ill that summer and in the fall of 2019 was diagnosed with sarcoidosis, an immune disease linked to exposure to environmental toxins.
Vargas sued Ceres and CalRecycle in August 2020, claiming they did not protect him from the toxins by not providing him with any respiratory protection or warning him of the danger. The on-site workers who loaded his truck wore hazardous material suits and respirators. Ceres filed a cross-complaint against Garlow and Brad Ingram Construction (Ingram), another subcontractor. Ingram tendered the cross-complaint to its insurer, Wesco. Ingram had a commercial general liability policy in effect from April 1, 2019, to April 1, 2020. Wesco disclaimed its duty to defend by asserting the policy’s total pollution exclusion endorsement.
In June 2022, the California Northern District Court ruled that Wesco had no duty to defend the insured due to the pollution exclusion in the insurance policy. They ruled that the pollution exclusion of the policy was applicable since they determined that toxic dust was a pollutant as defined by the policy. In January 2024, the United States Court of Appeals for the Ninth Circuit reversed that ruling.
The court ruled that while wildfire debris may be considered a pollutant in certain scenarios, the mechanism of exposure that happened in this situation did not clearly constitute an event commonly thought of as pollution. Since the pollution exclusion did not unambiguously apply to Vargas’s injuries, there existed a potential for coverage, and therefore the insurer has a duty to defend.
The case is Wesco Ins. Co. v. Brad Ingram Constr., 2024 U.S. App. LEXIS 1488 (9th Cir. 2024). Please note that this case is unpublished and therefore has limited precedential value.
FC&S editor’s note: In circumstances where coverage is disputed, exclusionary clauses are to be interpreted narrowly against the insurer. The burden is on the insurer to prove the claim is specifically excluded. Further, an insurer’s duty to defend is broader than the duty to indemnify. When the policy is ambiguous and the insured would reasonably expect the insurer to defend him, the insurer may have the duty to defend. In this situation, the court ruled the pollution exclusion was ambiguous enough, leaving a potential for coverage, meaning the insurer has a duty to defend. The court states they offer no opinion on whether Wesco would also have a duty to indemnify, if damages were awarded.
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