Michigan Municipal Liability Lawyers

The Residents Who Lived Near The Creek Filed A Lawsuit Against The City defendant Michigan Municipal Liability

Plaintiff city of Grosse Pointe Park had a practice of discharging sewage into a nearby creek when its sewer system became overtaxed during, for example, heavy periods of rain. As a result of these discharges, the residents
who lived near the creek filed a lawsuit against the city.Defendant Michigan Municipal Liability and Property Pool
was the city’s insurer and provided a defense in the lawsuit under a reservation of rights. Although the pool
covered other claims regarding sewage backups into homes and businesses, the pool refused to cover claims regarding
Michigan Supreme Court the discharges into the creek on the basis of the insurance policy’s pollution exclusion clause.
In this insurance coverage case, we must decide whether the insurance policy’s pollution exclusion clause
is ambiguous and whether extrinsic evidence may be examined in this particular case to aid in the construction of the
policy. We hold that this pollution exclusion clause is not ambiguous; therefore, consideration of extrinsic
evidence as a construction aid is not appropriate.

Further, we conclude that the city’s discharges fell within the scope of the pollution exclusion provision and, thus, coverage was properly denied on this basis.

Because we conclude that the pollution exclusion clause applies, we must also decide whether the pool is
nonetheless estopped from enforcing this clause because of its practice of covering sewage backup claims or because of
the manner in which it provided a defense to the city. We hold that under these facts, the pool is not estopped from
enforcing the pollution exclusion clause. The pool timely reserved its rights under the policy, and the city was
aware of the reservation. While the city claims to have suffered prejudice as a result of its reliance on a belief
that the underlying lawsuit would be covered, this belief was not justifiable under the facts presented.

Contact Michigan Municipal Liability Attorneys

Contact a Municipal Liability Lawyer now for a free case review.