Reported / Citable
Background
Great Lakes issued Lytton Springs Investments LLC a commercial general-liability policy covering October 21, 2023 through October 21, 2024. The policy covered damages because of bodily injury or property damage and included a pollution exclusion for injury or damage that would not have occurred but for the discharge, dispersal, seepage, migration, release, or escape of pollutants.
Jesus Diaz sued Lytton and others in Texas state court after allegedly coming into contact with raw sewage when toilets at property owned or operated by Lytton overflowed and flooded the premises. Diaz alleged that exposure to contaminated water caused severe injuries. Great Lakes provided Lytton a defense under a reservation of rights and sought a declaration that it owed neither a defense nor indemnity.
The Court’s Holding
Magistrate Judge Susan Hightower recommended granting Great Lakes’ amended summary-judgment motion on both defense and indemnity. Applying Texas’s eight-corners rule, the magistrate judge concluded that the underlying petition alleged bodily injury from raw sewage, which was an irritant and thus a pollutant under the policy. The alleged toilet overflow constituted a release of that pollutant, bringing the claims within the unambiguous pollution exclusion.
The magistrate judge rejected Lytton’s effort to use medical records suggesting Diaz also had a puncture wound. The records did not conclusively establish a coverage fact, would contradict the petition’s sewage-exposure allegations, and overlapped with liability merits. Because the underlying allegations were limited to sewage exposure, the same exclusion that defeated the duty to defend also eliminated any possibility of a duty to indemnify. The magistrate judge also granted leave to amend the complaint and recommended dismissing Great Lakes’ original summary-judgment motion as moot.
Key Takeaways
- Under Texas law, raw sewage alleged to have directly caused injury can qualify as an irritant and pollutant under a standard pollution exclusion.
- An overflowing toilet can constitute a release of a pollutant for purposes of that exclusion.
- Extrinsic evidence cannot create a coverage gap where the underlying petition already alleges excluded injuries and the evidence overlaps with liability merits.
Why It Matters
The recommendation illustrates the potentially broad reach of pollution exclusions in premises-liability cases involving sewage. It also underscores that, under Texas’s eight-corners framework, an insured generally cannot rely on outside medical evidence to recast the factual basis of the claimant’s pleaded injury.
This was a report and recommendation to the district judge, not a final district-court ruling; the parties were given 14 days to object.