Opinion ID: 769015
Heading Depth: 3
Heading Rank: 2

Heading: Whether the Effluent is a Pollutant

Text: 19 The District first argues that the district court erred in finding that the District's effluent constitutes a pollutant within the scope of the pollution exclusion provisions in the insurance policies. The policies define pollutants broadly to include toxic chemicals, liquids or gases; or waste material or other irritants or contaminants. Appellant's App. at 83, 111. The District argues that an ambiguity exists about whether sewage sludge from a sewage treatment facility should be considered a pollutant. The District relies on two federal district court decisions from Colorado and a Colorado Court of Appeals decision, City of Englewood v. Commercial Union Assurance Cos., 940 P.2d 948, rev'd in part by Compass, 984 P.2d 606, which recognized a distinction between toxic industrial sludge, and non-toxic, non-hazardous biosolids or domestic sewage sludge, because of the beneficial reuse of sewage sludge in agriculture. See id. at 955. City of Englewood held that genuine issues existed as to the legal and factual characterization of domestic municipal sewage sludge. See id. The District argues that in cases where sewage sludge is the alleged pollutant, there is a mixed question of law and fact as to whether the sewage sludge constitutes a pollutant. 3 20 However, the portion of the Colorado Court of Appeals decision upon which the District's argument is based was recently overruled by the Colorado Supreme Court. In Compass Ins. Co. v. City of Littleton, the Colorado Supreme Court held that the Colorado Court of Appeals erred in City of Englewood in considering whether genuine issues existed as to the legal and factual characterization of sewage sludge with respect to whether it constituted a pollutant. See 984 P.2d at 615. Compass held that, in resolving duty-to-defend claims, courts may only look at the allegations of the underlying complaint against the insured, and cannot look to any extrinsic evidence, including evidence that sewage effluent may not be a pollutant, in analyzing pollution exclusion provisions. See id. at 615-16. Under Colorado law, the only relevant inquiry is how the complaint characterized the materials and whether that characterization fits within the terms of the policy. See id. 21 Thus, the relevant inquiry in this case is how the Old Timer complaint characterized the alleged discharges. The Old Timer complaint makes the factual allegation that the District discharged Suspended Solids, Fecal Coliform Bacteria, Ammonia, Residual Chlorine, and other chemicals and substances in amounts in excess of levels permitted by law, and that it discharged raw sewage and other pollutants. Appellant's App. at 64, 69. Clearly, these materials constitute waste material and contaminants within the policies' broad definition of pollutants. See Compass, 984 P.2d at 615-16 and 615 n.7. It would, therefore, have been improper for the district court to have looked beyond the face of the complaint, as urged by the District, in order to have considered any extrinsic evidence offered by the District in its attempt to change the characterization of the discharge. See id. at 615-16. The complaint also makes the legal allegation that the discharges constitute pollutants, and that the plaintiffs suffered damage from pollutants discharged by the District that entered and remained on their land. See Appellant's App. at 64, 69, 70. Finally, the environmental statutes that the Old Timer complaint alleges the District violated and under which the complaint seeks damages, define pollutants to include sewage and sewage sludge. See 33 U.S.C. 1362(6); Colo. Rev. Stat. 25-8-103(15) (1990). Accordingly, we conclude the district court did not err in finding that the sewage and effluent the District is alleged to have discharged constitute pollutants within the meaning of St. Paul's insurance policies' exclusions.