Gasoline Leaking into a Natural Spring is Excluded Pollution
Post 4842
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In Erie Insurance Exchange v. SHRI BRAMANI, LLC; ERIC MOBERLY; KAP LEASING, INC.; KEVIN MOBERLY; MOBERLY BROTHERS PROPERTIES, LLC; AND PRADIPKUMAR PATEL, No. 2023-CA-0169-MR, Court of Appeals of Kentucky (July 19, 2024) the Court of Appeals was asked to reverse a trial court that the insurer’s pollution exclusion did not exclude coverage for the negligent leakage of gasoline from one of the insured’s underground fuel storage tanks onto the neighboring real property owned by Appellees.
BACKGROUND
The Policy
Erie issued a commercial general liability policy of insurance which covered the premises and the operation of the convenience store and gas station on Lane Allen Road. The policy was in force until June 12, 2020. The policy generally provided coverage for legal liability to third parties arising out of bodily injury, property damage, or personal and advertising injury. As with most policies of insurance, the policy contains several exclusionary clauses including an exclusion of coverage for injuries or damages caused by “pollution.”
The Gas Leak
On or about October 17, 2019, the Kentucky Division of Waste Management (“KDWM”) received a telephonic complaint of petroleum odors around the Lane Allen Food Mart. A KDWM official was sent to investigate and noted what appeared to be petroleum leeching through a groundwater spring. Further investigation and testing indicated that the petroleum was coming from one of the Lane Allen Food Mart’s underground petroleum storage tanks.
Lane Allen Food Mart entered into an Agreed Order with the Energy and Environment Cabinet admitting that it had violated Kentucky Revised Statutes (“KRS”) Chapter 224, and the statute’s accompanying regulations, as related to its underground petroleum storage tanks. Pursuant to the Agreed Order, Lane Allen Food Mart consented to an assessed penalty of ten thousand dollars for the agreed-upon violations.
Post-Leak Events
Following discovery of the fuel leak, Moberly Brothers made a claim against Lane Allen Food Mart. Moberly Brothers alleged that the fuel leak caused it to suffer economic harm as a result of widespread, permanent environmental contamination. Specifically, Moberly Brothers asserted that the leaked fuel entered and contaminated a natural water spring located on its property, which rendered the property unfit for the bottled water facility that was planned for the property. Erie denied the claim based on the pollution exclusion contained in the policy. Erie agreed to defend the claim against the Lane Allen Food Mart under a reservation of rights. Subsequently, Erie filed a separate action against its insureds and Moberly Brothers.
ANALYSIS
Kentucky Courts have always strongly adhered to a policy of protecting the reasonable expectations of policyholders. Although insurance carriers have the right to impose reasonable limitations on their coverage, the question then becomes the reasonableness of the condition as a limitation on public policy as opposed to one of strict contract considerations between private parties where no public interest is involved.
Most consumers would recognize that gasoline is a product that becomes a pollutant when it leaks into the ground and contaminates soil and water. Even a valuable and useful product like gasoline can become a pollutant when it contaminates a natural resource.
The focus of the inquiry under the absolute pollution exclusion is not on the nature of the substance alone, but on the substance in relation to the property damage or bodily injury.
Nature of the Alleged Damage.
Where the purported pollutant results in “contamination, negative health or environmental effects,” the exclusion is enforceable. Moberly Brothers alleges significant environmental damage to its real property due to the gasoline that leaked from the Lane Allen Food Mart’s underground storage tank. Moberly Brothers alleged in its complaint that the petroleum gasoline damaged and contaminated its property and seeks damages to restore and recover the use and value of the property. This is precisely the type of pollution-related damage that falls within the scope of the exclusion.
Gasoline is clearly a pollutant when it leaks from an underground storage tank and enters a neighbor’s land and contaminates the water and soil thereon. Because the pollution-exclusion clause is unambiguous, the property damages suffered by Moberly Brothers are not covered by Erie’s policy of insurance, and the trial court therefore erred in entering a judgment against Erie. The judgment was reversed and remanded for entry of a declaratory judgment in Erie’s favor.
ZALMA OPINION
No insurance policy covers every potential risk of loss. Almost every liability policy has a pollution exclusion. Since gasoline, escaping into the land, is obviously a pollutant and the insured admitted to the pollution, the exclusion applied and the insurer neither owed defense or indemnity to the insureds.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Proof of Highly Contaminated Water is Required for Extra Payments
Post number 5300
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Acting as Your Own Lawyer is Foolish
Evidence of Breach of Contract Survives Dismissal of All Other Charges
In Lee Lifeng Hsu and Jane Yuchen Hsu v. State Farm Fire And Casualty Company, C. A. No. N24C-09-020 CLS, Superior Court of Delaware (February 27, 2026) a claim to State Farm who paid approximately $61,000 after assessments but denied coverage for additional items including ceramic tiles, the kitchen floor ceiling, underlayment plywood, and numerous personal property items resulted in suit by the Hsu’s acting in pro per.
Facts
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Insurance Condition Requires Following the Intent of the Parties
Post number 5307
Principles of Contract Interpretation Compels Reading Contract as Written
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In Eastside Floor Supplies, Ltd. v. SCS Agency, Inc., Hanover Insurance Company, et al., No. 2024-01501, Index No. 609883/19, 2026 NY Slip Op 01488, Supreme Court of New York, Second Department (March 18, 2026)
In May 2019, a fire damaged business personal property belonging to the plaintiffs, which was stored in portable storage containers at their Manhattan premises. At the time of the fire, the plaintiffs were insured under a businessowners insurance policy (BOP) issued by the defendant Hanover Insurance Company which provided general coverage for business personal property, and which included a specific extension for “Business Personal Property Temporarily in Portable Storage Units” (the portable storage ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
