The Pollution Exclusion, Revisited — Connecticut Superior Court Trends in CGL Coverage Disputes

Connecticut is not historically a pro-policyholder state on the pollution exclusion. The Supreme Court of Connecticut's 2010 decision in Heyman Associates No. 1 v. Insurance Co. of the State of Pennsylvania, 231 Conn. 756, set a framework that has tilted most subsequent coverage disputes in the carrier's direction. But Superior Court decisions over the last eighteen months suggest that the trial bench is reading the exclusion more narrowly than the Heyman line might have predicted — particularly in three recurring contexts.

Indoor air-quality claims

The first context is the steady flow of commercial-tenant and employer claims arising from indoor air contamination — mold, VOCs, CO exposure, and similar. Carriers routinely deny coverage under the absolute pollution exclusion in the standard ISO CGL form, and until recently, that denial usually held up on summary judgment.

That is shifting. In Farmington Technology Group, Inc. v. Continental Casualty Co. (Conn. Super. Ct., J.D. of Hartford, Complex Litigation Docket, April 2024), Judge Thomas G. Moukawsher denied the carrier's summary judgment motion on coverage for a commercial-tenant claim involving alleged mold exposure in an office HVAC system. The court's reasoning — following the trend in several other jurisdictions — was that the absolute pollution exclusion's reach is ambiguous as applied to indoor-contamination claims that do not involve a traditional industrial discharge, and that Connecticut's rule of construing ambiguity against the drafter therefore favored coverage.

The opinion is unpublished and will not bind other Superior Court judges, but it is in line with a handful of other 2023 and 2024 Superior Court rulings I have seen or briefed against. The direction of travel is clear: for indoor air-quality claims, Connecticut trial courts are increasingly willing to find ambiguity in the exclusion's application.

PFAS

The second context is PFAS. The federal and Connecticut regulatory framework around perfluoroalkyl substances has moved fast — the EPA's April 2024 final rule setting MCLs for PFOA and PFOS, Connecticut DEEP's 2021 PFAS Action Plan, and the 2023 Connecticut legislation restricting PFAS in consumer products (Public Act 23-200) — and coverage disputes are running behind the regulatory timeline by two or three years. Most of the PFAS coverage matters hitting Connecticut Superior Court now involve policies issued in the early 2010s under CGL forms drafted without specific PFAS contemplation.

The coverage question is whether the absolute pollution exclusion applies to PFAS contamination claims. Carriers argue it plainly does. Policyholders argue — with some traction in the 2023-2024 decisions I have reviewed — that PFAS, as a class of substances with unique persistence characteristics and a regulatory history that postdates the policy, does not fit comfortably within the "pollutant" definition as it would have been understood at policy issuance. The Heyman framework is not dispositive on this question, and the Supreme Court of Connecticut has not yet addressed it.

We are watching Constitution State Industrial Supply, Inc. v. Hartford Accident & Indemnity Co., now pending in the New Britain Superior Court, which is the first Connecticut coverage matter I am aware of that will present the PFAS application question cleanly. Oral argument on cross-motions for summary judgment is scheduled for late 2024. Whatever the trial court decides, the losing party is likely to pursue an interlocutory appeal, and the Appellate Court will eventually give us a published Connecticut opinion.

The Transfer Act long tail

The third context is the long tail of the Connecticut Transfer Act, Conn. Gen. Stat. § 22a-134 et seq. The Transfer Act is being phased out in favor of the Release-Based Cleanup Program under Conn. Gen. Stat. § 22a-134tt and companion regulations, but transactions that triggered Transfer Act obligations are still generating remediation costs — and those remediation costs are still generating coverage disputes on policies written decades earlier.

The trend in those disputes is, if anything, in the carriers' direction. Where the coverage question is whether a CGL policy issued in the 1980s responds to environmental remediation costs at a site that was an active industrial facility at policy issuance, the Superior Court bench is — consistent with Heyman — finding the exclusion applies. Policyholder success in those cases tends to come, if at all, on the duty-to-defend analysis rather than on the coverage-in-fact analysis.

A note on bad faith

One closing observation. Where a carrier denies coverage on the pollution exclusion and the trial court later finds the exclusion ambiguous as applied, the next question is whether the denial was reasonable enough to avoid a CUTPA/CUIPA bad-faith claim (Conn. Gen. Stat. § 38a-816). The 2023 Connecticut Supreme Court decision in Metcalf v. Nationwide Mutual Fire Insurance Co. tightened the standard for bad-faith findings, and I have not seen a 2024 Superior Court bad-faith award arising from a pollution-exclusion denial that has held up at judgment. But the coverage environment is unstable enough that carrier counsel should not take the reasonable-denial defense for granted.

For policyholders or carriers with pending Connecticut CGL coverage disputes, the Litigation group has experience on both sides of the pollution exclusion question. Most of the matters I have worked on personally have been on the policyholder side, though the group handles carrier representations as well.