In Aloha Petroleum Ltd. v. National Union Fire Insurance Company of Pittsburgh (Aloha),> the Supreme Court of Hawai'i held that, while the climate change litigation satisfied the "occurrence" requirement, greenhouse gases (GHG) are "pollutants" under a commercial general liability (CGL) policy, and the pollution exclusion precluded coverage.
Background
The city and county of Honolulu and the county of Maui (the Counties) filed lawsuits against major oil and gas companies, alleging the fossil fuel industry did not warn of the risk of climate change. The Counties allege the companies knew about these risks beginning in the 1960s but concealed their knowledge and increased production of fossil fuels, which led to climate change.
One of the defendant companies, Aloha Petroleum Ltd. (Aloha), had CGL insurance with National Union Fire Insurance Company of Pittsburgh, PA and others (National). The insurers issued consecutive CGL policies to Aloha beginning in 1978 and ending in 2010.
Aloha tendered defense and indemnity for the litigation and filed a declaratory judgment in Hawai'i federal court. There, National argued that climate change was the foreseeable result of intentional emission of GHGs and could not be an "accident." National also argued coverage was excluded under the pollution exclusion because GHGs are "pollutants."
Certified Questions
The United States District Court for the District of Hawai'i certified two questions to the Supreme Court of Hawai'i in Aloha.2 The District Court asked whether an "accident" includes an insured's reckless conduct, to which the Hawai'i Supreme Court answered "yes." The second question certified was whether GHGs are "pollutants" under the policies. The court also answered this affirmatively, but not before a lengthy analysis of the history and treatment of pollution exclusions.
Recklessness as an Accident
The relevant policies have different definitions for the term "occurrence."3 However, the court used the following post-1986 definition: "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The policies do not define the term "accident."
The court found that under the facts of this litigation, recklessness constitutes an "occurrence" because it "honors the principle of fortuity."4 Hawai'i courts define "accident" as "not intended or practically certain from the insured's standpoint." The court distinguished risks from intentional or planned losses and...
