Eighth Circuit Interprets CGL's “Pollutant”
May 19, 2014
In United Fire & Cas. Co. v. Titan Contractors Serv., Inc., 13-1307, 2014 WL 1887365 (8th Cir. May 13, 2014), the court held that TIAH, an acrylic concrete sealant, constituted a pollutant under the absolute pollution exclusion of the CGL policy. Therefore, United had no duty to defend or indemnify Titan.
Titan Contractors Services, Inc. (“Titan”) provides construction-cleanup services, and was insured under a CGL insurance policy provided by United Fire and Casualty Company (“United”). The policy contained an absolute pollution exclusion that excluded “ 'bodily injury' or 'property damage' which would have not occurred in whole or in part but for the actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of 'pollutants' at any time.” Pollutants were defined in the policy as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”
On April 20, 2007 Titan applied TIAH to flooring at a worksite, and as the result of failure to properly vent the site TIAH infiltrated the offices of three women. They were exposed to the acrylic concrete sealant and developed significant physical ailments, including acute chemically induced asthma and vocal cord dysfunction.
The women brought negligence claims against Titan in March 2009 in Illinois State Court. Titan gave notice and tendered defense of the lawsuit to United pursuant to the policy. United commenced defense of Titan, then filed action seeking a declaration that it did not owe a duty to defend or indemnify Titan because the absolute pollution exclusion barred coverage for the claims raised in the lawsuit. Titan counterclaimed, seeking declaration that United owed a duty to defend and indemnify. The parties filed cross-motions for summary judgment, and the district court granted Titan's motion and denied United's, reasoning that TIAH did not constitute a pollutant. United appealed both the grant of summary judgment for Titan and the denial of its motion for summary judgment. This court reversed and remanded.
United owed a duty to defend so long as the claims potentially fall outside the scope of the exclusion. If United did not owe a duty to defend, it also owed no duty to indemnify. The question was whether an ordinary person purchasing the policy would consider TIAH to fall unambiguously within the policy's definition of pollutant, thereby releasing United from a duty to defend the negligence claim. If the policy was ambiguous, it would be construed against the insurer, and in interpreting insurance policies, Missouri courts “apply the meaning that would be attached to the policy by an ordinary person of average understanding if purchasing insurance.”
The Webster dictionary defines an irritant as “something that irritates.” The material safety data sheet for TIAH warns the substance “may produce irritation,” “may be irritating,” “is toxic,” and “can cause serious injury.” Promotional materials caution the vapors can cause irritation. The court concluded that this evidence shows that TIAH produces irritation, and an ordinary insurance purchaser would conclude that TIAH is an irritant that would be excluded as a pollutant. Additionally, while not dispositive, an insurance purchaser can be put on notice that a substance may trigger the exclusion if a substance is a pollutant under federal statutory classification.
The Court rejected Titan's attempt to analogize this case to Hocker Oil Co. v. Barker-Phillips-Jackson, Inc., 997 S.W.2d 510 (Mo.Ct.App.1999), where the court found it ambiguous whether gasoline constituted a pollutant under the policy's exclusion, because the insured's major source of liability was excluded. The court rejected the reliance on Hocker Oil because it was a minority position that has been almost uniformly rejected, and the unique facts differ substantially. The court noted that the exclusion will not necessarily apply where the substance causing injury has the potential to irritate but has caused harm in a manner other than by irritating. The denial of United's motion for summary judgment was vacated and the case was remanded for further proceedings.
Editor's Note: The commercial general liability policy contains an absolute pollution exclusion for the actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants,” a defined term in the policy. Pollutant means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. When considering whether the ordinary consumer would consider TIAH (an acrylic concrete sealant) a pollutant, the court utilized the plain meaning of the term “pollutant,” which includes substances which may produce irritation. Because TIAH's promotional materials warned that the product may cause irritation and it contained substances which are pollutants under federal classification, the court reversed and remanded the decision of the Illinois State Court that TIAH was not a pollutant.