State Farm Beats New Mexico Dry Cleaner on Pollution Exclusion

State Farm Fire & Casualty Co. is off the hook for costs incurred by a dry cleaning business responding to a New Mexico Environmental Department demand over chlorinated solvent contamination in the soil and groundwater at its site, a federal court ruled.

A pollution exclusion in a businessowners’ policy issued to the operator of the Albuquerque, N.M., dry cleaner barred coverage for the costs incurred both by the dry cleaner and the property owner, the US District Court for the District of New Mexico said in a Thursday order.

However, under New Mexico law, State Farm can’t recoup payments already ...