Court Opinion

ID: 5789169
Source: CourtListenerOpinion
Date Created: 2022-01-12 18:06:15.195385+00
Date Added: 2024-06-11T08:42:12.889174
License: Public Domain

Hurlbutt and Peradotto, JJ.
(dissenting). We respectfully dissent. In our view, Supreme Court properly determined that the commercial general liability policy issued by defendant-respondent does not cover plaintiffs for property damage caused by an oil leak from a spur pipeline through which plaintiff Griffith Oil Company, Inc. (Griffith), a petroleum distributor, *1625received oil from its supplier. As the majority recognizes, the policy excludes coverage for property damage caused by a pollutant, i.e., the oil spill, unless an exception to the exclusion applies. In this case, an exception to the exclusion would apply in the event that the property damage arose out of a “products completed operations hazard.” That term, as defined in the policy, includes property damage “occurring away from [the insured’s] premises and arising out of ‘[the insured’s] product’ . . . except. . . [p]roducts that are still in [the insured’s] physical possession.” The insured’s “product” is defined in relevant part as “[a]ny goods or products . . . manufactured, sold, handled, distributed or disposed of by” the insured. It is undisputed that the oil that leaked from the spur pipeline had not yet come into Griffith’s possession, but was awaiting delivery.
In Frontier Insulation Contrs. v Merchants Mut. Ins. Co. (91 NY2d 169 [1997]), the Court of Appeals noted in addressing a product-hazard exclusion that “[t]he distinct risk of loss occasioned by a defect in the insured’s product, which manifests itself only after the insured has relinquished control of the product and at a location away from the insured’s normal business premises, is covered by the purchase of separate ‘products hazard’ coverage” (id. at 176). Thus, product-hazard insurance is intended to cover “events that occur after [the] insured’s product is placed in the stream of commerce” (id.). Here, inasmuch as the oil was spilled before it ever came into the possession of Griffith, it had not been placed in the stream of commerce, nor was it “manufactured, sold, handled, distributed or disposed of’ by Griffith. We thus agree with the court that the pollution exclusion applies, and we would affirm. Present — Scudder, EJ., Hurlbutt, Peradotto, Green and Gorski, JJ.