Our client maintains and services sewage lift stations. He purchased liability insurance from Nationwide Insurance. Nationwide clearly knew that its insured maintained and serviced sewage lift stations, as that information was set forth in the application and the premiums were based on the proposed insured’s SIC designation as a lift station maintenance company.

Some time later, a bank which utilized a lift station serviced by our client was flooded with a backup of raw sewage. As hard as it is to believe, the bank took offense, and filed suit against our client for negligently maintaining the sewage lift station. The insured presented the claim to Nationwide Insurance to defend and indemnify, if necessary.

Nationwide, contrary to its many promises, on air and in print, sent a letter emphatically explaining to its insured that it was in fact NOT “on your side.” The claim was denied by Nationwide citing its “pollution” exclusion.

I filed suit for breach of contract. It is my position that the pollution exclusion does not apply for 3 reasons: 1) raw sewage does not fit the definition of “pollution” as set forth in the policy; 2) even if raw sewage was “pollution,” the exclusion requires that the insured be in the business of handling, or abating pollution, which our client was not; and 3) the insurance policy (which by statute incorporates the application for insurance) was intended by the parties to insure claims arising from sewage spills, and Nationwide is prohibited from excluding the very thing for which the insurance was sought.

I suspect that this case will be decided on summary judgment in the very near future.