Aloha Petroleum Ltd. v. National Union Fire Insurance Co. of Pittsburgh

The federal district court for the District of Hawaii ruled that under two policies that lacked pollution exclusions, an insurer had an obligation to defend a fossil fuel company in climate change-related lawsuits brought by the <a href="https://climatecasechart.com/case/city-county-of-honolulu-v-sunoco-lp/">City and County of Honolulu</a> and the <a href="https://climatecasechart.com/case/county-of-maui-v-sunoco-lp/">County of Maui</a>. First, the court found that the underlying lawsuits “possibly allege an occurrence,” or “accident,” that was covered under the policies based on the standard articulated by the Hawai‘i Supreme Court. Second, on the question of whether property damage occurred during the two policies’ terms, which ran from February 1, 1986 to February 1, 1988, the court was “skeptical” that the underlying complaints’ allegations of greenhouse gas emissions during that period equated to allegations of property damage but concluded that it was not necessary to reach that issue because the underlying complaints possibly alleged property damage during the policies’ terms. In particular, the court concluded that allegations “that sea level rise has been rising since the 1960s, causing flooding, and inundating low-lying property,” were “sufficient to raise the potential or possibility of coverage” under the policies, even if there were not allegations about “exactly when the flooding took place nor precisely how it damaged property.” The court also found that undated allegations of property damage were sufficient for the fossil fuel company to meet “its very light burden to prove the possibility of coverage” in order to establish the duty to defend. Third, the court found that the insurer could not plausibly argue that it was impossible that the underlying complaints’ requests for compensatory damages sought “damages because of property damage.”

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The federal district court for the District of Hawaii ruled that insurers had no duty to defend a fossil fuel company policyholder under 10 policies that included pollution exclusions in climate change-related lawsuits brought in Hawaiʻi state courts by the County of Maui and the City and County of Honolulu. The district court previously certified two questions to the Hawaiʻi Supreme Court regarding what would constitute a covered “occurrence” and whether greenhouse gases are “pollutants.” The district court concluded that although the allegations in the underlying complaints of reckless behavior would constitute a covered occurrence, the Hawaiʻi Supreme Court had “unequivocally” ruled in the insurer’s favor by holding that greenhouse gases were pollutants and by concluding that the policyholder could not rely on legal uncertainty created by a national dispute over whether pollution exclusions should be limited to traditional pollutants because the policyholder’s claims would be excluded under either interpretation. The court said it would address the duty to defend under policies that did not include pollution exclusions in a subsequent decision.

In an energy company’s lawsuit asserting that its insurers had breached their duty to defend the company in Maui’s and Honolulu’s cases seeking to hold fossil fuel companies liable for climate change impacts, the federal district court for the District of Hawaii certified two questions of Hawai‘i law to the Hawai‘i Supreme Court: (1) For any insurance policy defining a covered “occurrence” in part as an “accident,” can an “accident” include recklessness? and (2) For an “occurrence” insurance policy excluding coverage of “pollution” damages, are greenhouse gases “pollutants,” i.e., “gaseous” “irritant[s] or contaminant[s], including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste”? Regarding whether greenhouse gases constituted pollutants, the energy company argued for a distinction between greenhouse gases and “traditional environmental pollution.”

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