The policyholder, Hawk, subcontracted Ivory Transport to transport solid and/or hazardous waste to the property. Thereafter, the EPA began an inspection of the property and discovered extensive hazardous waste requiring removal. The insurer asserted that any potential liability in the underlying suit was excluded by the Total Pollution Exclusion, as well as two other exclusions dealing with contractors and subcontractors and an auto exclusion.
As to the applicability of the pollution exclusion, the court noted that interpretation has resulted in conflicting judicial decisions throughout the country. Specifically, state courts generally fall into two categories on this issue: the first group applies the exclusion literally, finding the terms clear and unambiguous; the second limits the exclusion to situations involving traditional environmental pollution.
The court, however, noting that Hawaii has not ruled on the issue, determined that it did not have to resolve the issue in this matter because, under either standard, and even after applying the more liberal test, the insurer was entitled to summary judgment, as the pollutants alleged to have been dispersed undisputedly involved traditional environmental pollution. As such, the provision would not be contrary to a lay person's reasonable expectation of the Total Pollution Exclusion clause. Nautilus Insurance Co. v. Hawk Transport Services, L.L.C. (D. Haw., June 20, 2011).