The Leasing Hotline

Insurer Ordered to Defend 'Sturgeon King' Against Odor Allegations

A federal court has turned up its nose at an insurance company's attempt to brand as “pollution” the smells wafting from the famed Barney Greengrass delicatessen in New York City. Barney Greengrass Inc. v. Lumberman's Mutual Casualty Co., 09 Civ. 7697. Southern District Judge Naomi Reice Buchwald ruled that Lumberman's Mutual Casualty Co. must defend the 102-year-old eatery, which bills itself as “The Sturgeon King,” against claims that odors, smoke and exhaust allegedly forced a co-op owner to sell his apartment.

The judge concluded that the insurer cannot invoke a “pollution exception” to the deli's policy that would allow it to disclaim the defense of the restaurant in litigation sparked by the complaints of Theo R. Bohn.

“Defendant's suggested interpretation of the exclusion is unreasonable because it would mean that plaintiff, the 'Sturgeon King,' procured liability insurance for its business while at the same time agreeing to exclude coverage for all 'losses' caused by a byproduct integral to that business: the aromas which many people (other than Mr. Bohn, of course) apparently find quite pleasant,” the judge said. The judge held that the venting of allegedly noxious restaurant odors from the delicatessen amounted to an insurable “occurrence” under New York Law.

The underlying litigation, now in state Civil Court, was brought by Mr. Bohn, an attorney who owned a cooperative apartment in the same building where Barney Greengrass Inc. is a commercial subtenant. Mr. Bohn claims that because of the odors that seeped into his apartment from the restaurant's kitchen sink, he was unable to work in his apartment and was forced to sell at a price lower than he otherwise could have realized.

Claiming that the City of New York issued several vent-related violations against the restaurant, Mr. Bohn sued the co-op owners and the managing agent in 2004. The building filed a third-party complaint against its commercial tenant, who in turn filed a fourth-party complaint, alleging that any damages suffered by Mr. Bohn were the responsibility of Barney Greengrass Inc. The building also charged Barney Greengrass breached its sublease because it failed to buy insurance naming fourth-party plaintiffs as “additional insureds.”

Barney Greengrass invoked its commercial liability policy, but when Lumberman's balked at paying its defense costs, it sued in the Southern District in 2009. Judge Buchwald found that since Barney Greengrass “has met its burden of establishing that the Bohn action alleges an 'occurrence,' defendant must defend Barney Greengrass in that underlying action unless Lumberman's can carry its 'heavy burden' to establish” the pollution exclusion.

Judge Buchwald said that the “common speech understanding” of the exclusion clause “makes clear that the pollution exclusion does not apply to the odors at issue in the underlying action … . In contrast, any alleged damage from 'smoke' and 'exhaust,' if ultimately attributable to Barney Greengrass, may come within the ambit of the pollution exclusion,” she said. “Nonetheless, Lumberman's cannot escape its duty to defend because it cannot show that 'no reasonable possibility exists that [Barney Greengrass] may be held liable for some act or omission covered by the policy.'”

The judge found that since Barney Greengrass “has met its burden of establishing that the Bohn action alleges an 'occurrence,' defendant must defend Barney Greengrass in that underlying action unless Lumberman's can carry its 'heavy burden' to establish” the pollution exclusion. She said that the “common speech understanding” of the exclusion clause “makes clear that the pollution exclusion does not apply to the odors at issue in the underlying action.”

Therefore, the judge found that Lumberman's is liable to Barney Greengrass for all defense costs, including attorneys' fees already incurred in the underlying action.

' Mark Hamblett, New York Law Journal.

Insurer Ordered to Defend 'Sturgeon King' Against Odor Allegations

A federal court has turned up its nose at an insurance company's attempt to brand as “pollution” the smells wafting from the famed Barney Greengrass delicatessen in New York City. Barney Greengrass Inc. v. Lumberman's Mutual Casualty Co., 09 Civ. 7697. Southern District Judge Naomi Reice Buchwald ruled that Lumberman's Mutual Casualty Co. must defend the 102-year-old eatery, which bills itself as “The Sturgeon King,” against claims that odors, smoke and exhaust allegedly forced a co-op owner to sell his apartment.

The judge concluded that the insurer cannot invoke a “pollution exception” to the deli's policy that would allow it to disclaim the defense of the restaurant in litigation sparked by the complaints of Theo R. Bohn.

“Defendant's suggested interpretation of the exclusion is unreasonable because it would mean that plaintiff, the 'Sturgeon King,' procured liability insurance for its business while at the same time agreeing to exclude coverage for all 'losses' caused by a byproduct integral to that business: the aromas which many people (other than Mr. Bohn, of course) apparently find quite pleasant,” the judge said. The judge held that the venting of allegedly noxious restaurant odors from the delicatessen amounted to an insurable “occurrence” under New York Law.

The underlying litigation, now in state Civil Court, was brought by Mr. Bohn, an attorney who owned a cooperative apartment in the same building where Barney Greengrass Inc. is a commercial subtenant. Mr. Bohn claims that because of the odors that seeped into his apartment from the restaurant's kitchen sink, he was unable to work in his apartment and was forced to sell at a price lower than he otherwise could have realized.

Claiming that the City of New York issued several vent-related violations against the restaurant, Mr. Bohn sued the co-op owners and the managing agent in 2004. The building filed a third-party complaint against its commercial tenant, who in turn filed a fourth-party complaint, alleging that any damages suffered by Mr. Bohn were the responsibility of Barney Greengrass Inc. The building also charged Barney Greengrass breached its sublease because it failed to buy insurance naming fourth-party plaintiffs as “additional insureds.”

Barney Greengrass invoked its commercial liability policy, but when Lumberman's balked at paying its defense costs, it sued in the Southern District in 2009. Judge Buchwald found that since Barney Greengrass “has met its burden of establishing that the Bohn action alleges an 'occurrence,' defendant must defend Barney Greengrass in that underlying action unless Lumberman's can carry its 'heavy burden' to establish” the pollution exclusion.

Judge Buchwald said that the “common speech understanding” of the exclusion clause “makes clear that the pollution exclusion does not apply to the odors at issue in the underlying action … . In contrast, any alleged damage from 'smoke' and 'exhaust,' if ultimately attributable to Barney Greengrass, may come within the ambit of the pollution exclusion,” she said. “Nonetheless, Lumberman's cannot escape its duty to defend because it cannot show that 'no reasonable possibility exists that [Barney Greengrass] may be held liable for some act or omission covered by the policy.'”

The judge found that since Barney Greengrass “has met its burden of establishing that the Bohn action alleges an 'occurrence,' defendant must defend Barney Greengrass in that underlying action unless Lumberman's can carry its 'heavy burden' to establish” the pollution exclusion. She said that the “common speech understanding” of the exclusion clause “makes clear that the pollution exclusion does not apply to the odors at issue in the underlying action.”

Therefore, the judge found that Lumberman's is liable to Barney Greengrass for all defense costs, including attorneys' fees already incurred in the underlying action.

' Mark Hamblett, New York Law Journal.