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Recyc Systems Southeast LLC v. Farmland Mutual Insurance Co.

United States District Court, M.D. Georgia, Columbus Division

May 16, 2018




         Property owners near a smelly holding pond maintained by Recyc Systems Southeast, LLC (“Recyc”) sued Recyc in Alabama state court for property damage allegedly caused by the odors emanating from the pond. Recyc tendered the lawsuit to its insurer, Farmland Mutual Insurance Company (“Farmland”), for defense and indemnification. Farmland refused to defend Recyc in that action, taking the position that the claims asserted in that lawsuit are excluded by the policy's pollution exclusion. Recyc subsequently filed the present action against Farmland in Georgia state court, alleging claims for breach of contract, declaratory relief, and specific performance. Having properly removed that action to this Court, Farmland now moves for judgment on the pleadings, arguing that the claims in the underlying action are excluded from coverage under the policy as a matter of law. For the reasons explained in the remainder of this Order (ECF No. 9), Farmland's motion is granted.


         “Judgment on the pleadings is appropriate where there are no material facts in dispute and the moving party is entitled to judgment as a matter of law.” Cannon v. City of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001). The Court “must accept the facts alleged in the complaint as true and view them in the light most favorable to the nonmoving party.” Id.

         Additionally, the Court may consider documents attached to the complaint because such documents are “part of the [complaint] for all purposes.” Fed.R.Civ.P. 10(c). And when specific factual details contained in a document attached to a complaint contradict the general allegations of the pleading, the document governs. See Griffin Indus., Inc. v. Irvin, 496 F.3d 1189, 1206 (11th Cir. 2007) (stating that dismissal of a complaint is warranted if a document attached to a complaint forecloses recovery as a matter of law).


         Viewing Recyc's Complaint and the documents attached thereto in the light most favorable to Recyc reveals the following facts:

         I. Recyc's Business & the Insurance Policy

         Recyc obtains nutrient-rich water disposed of by poultry plants in Alabama and applies the water to local farmland as a type of liquid fertilizer. Am. Compl. ¶ 2, ECF No. 7. Before it applies the water to the farmland, Recyc stores the water in a holding pond that it maintains. Id.

         Defendant Farmland issued a commercial general liability policy to Recyc (“Policy”). Id. ¶ 3; see generally Policy, ECF No. 7-1. The Policy describes Recyc's business as a “custom fertilizer application.” Policy, ECF No. 7-1 at 22. The Policy generally covers “‘property damage'. . . caused by an ‘occurrence' that takes place in the ‘coverage territory' . . . during the policy period.” Id. at 25. The Policy defines “property damage” as “[p]hysical injury to tangible property, including all resulting loss of use of that property” and “[l]oss of use of tangible property that is not physically injured.” Id. at 39.

         The pollution exclusion in the Policy states that “[t]his insurance does not apply to . . . ‘property damage' arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants.'” Id. at 26-27. “Pollutants” are defined as “[a]ny organic or inorganic substance or material that is a solid, liquid, gaseous or thermal irritant or contaminant, including but not limited to: smoke, vapor, soot, dust, fumes, acids, alkalis, chemicals, fibers, particles, sludge, by-products, biofuels, herbicides, pesticides, insecticides, fertilizers, and all other similar chemicals, and waste.” Id. at 60. The pollution exclusion further specifies five circumstances in which it applies, two of which are relevant here. First, paragraph (1)(a) of the exclusion excludes coverage when the injurious pollutants originate “from any premises, site or location which is . . . rented” to the insured. Id. at 27. Second, paragraph (1)(d) excludes coverage when the pollutants originate “from any premises, site or location on which [the] insured . . . [is] performing operations if the ‘pollutants' are brought on or to the premises, site or location, in connection with such operations by such insured.” Id. Recyc purchased an additional Herbicide, Pesticide or Fertilizer Applicator Coverage endorsement which states, “Paragraph (1)(d) of the [pollution exclusion] does not apply to . . . ‘property damage' arising out of the application of herbicides, pesticides, fertilizers, or other similar chemicals” (“fertilizer application endorsement”). Id. at 62. Otherwise, the pollution exclusion “applies even if the ‘pollutants' have a function in [the insured's] business, operations, premises, site or location.” Id. at 60.

         II. The Alabama Lawsuit

         Owners and occupants of property near Recyc's holding pond (“Alabama plaintiffs”) sued Recyc and others in the Circuit Court of Marshall County, Alabama. The Alabama plaintiffs allege in that action that “Tyson Chicken, Inc. (Tyson) contracts with [Recyc] for [Recyc] to remove certain chicken waste by-products from Tyson's Albertville chicken processing facility . . . and to store said waste in an open air pond located on [land leased to Recyc]” and that Recyc “allowed noxious odors to emanate from the waste pond and travel onto [the Alabama plaintiffs'] property, thereby interfering with [the Alabama plaintiffs'] use and enjoyment of their property.” Ala. Compl. ¶¶ 3 & 6, ECF ...

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