12 F.3d 892 (9th Cir. 1993), 92-15651, Maffei v. Northern Ins. Co. of New York

Docket Nº:92-15651.
Citation:12 F.3d 892
Party Name:J.R. MAFFEI; Richard Maffei; Betty J. Maffei, Plaintiffs-Appellants, v. NORTHERN INSURANCE COMPANY OF NEW YORK; Maryland Casualty Co., Defendants-Appellees.
Case Date:December 27, 1993
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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12 F.3d 892 (9th Cir. 1993)

J.R. MAFFEI; Richard Maffei; Betty J. Maffei, Plaintiffs-Appellants,



Co., Defendants-Appellees.

No. 92-15651.

United States Court of Appeals, Ninth Circuit

December 27, 1993

Argued and Submitted Oct. 7, 1993.

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[Copyrighted Material Omitted]

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Philip Borowsky and Dennis Kruszynski, Cartwright, Slobodin, Bokelman, Borowsky, Wartnick, Moore & Harris, San Francisco, CA, for plaintiffs-appellants.

Roxanne L. Holmes, Bronson, Bronson & McKinnon, San Francisco, CA, for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before: HUG, Jr., FARRIS and BRUNETTI, Circuit Judges.

HUG, Circuit Judge:

This is an action by an insured, J.R. Maffei, against the two defendant insurance carriers for breach of contract, bad faith, and declaratory relief. The action was originally filed in state court, but then was removed by the defendants on the basis of diversity of citizenship, pursuant to 28 U.S.C. Sec. 1441. The primary issue in this case is whether a discharge of sulfur dioxide resulted from a fire in a drum of sodium hydrosulfite or from a non-fire-related chemical reaction in the drum. The insurance policies of J.R. Maffei, Richard Maffei, and Betty J. Maffei ("Maffei"), underwritten by Northern Insurance of New York and Maryland Casualty Insurance Company, Defendants-Appellees, cover "hostile fires," but exclude other pollution claims.

The insurance companies refused to defend Maffei in several state court lawsuits for personal injury and property damage, which were brought against Maffei by third parties who alleged injury from exposure to sulfur dioxide smoke emitted from a drum of material stored adjacent to Maffei's warehouse in Berkeley. Maffei contends that the district court erred by striking the testimony of Maffei's fire and insurance experts, by placing the burden of proof on the plaintiffs, and by holding that there was no material issue of fact as to whether a fire occurred. We reverse the summary judgment and remand.


Maffei owned and operated a warehouse facility in Berkeley, California. Outside his warehouse, he stored 39 drums of various chemicals used in the manufacture of dry-cleaning products. Around 6:00 p.m. on September 16, 1989, neighbors noticed a thick whitish-yellow vapor cloud of smoke emanating from the vicinity of the drums. The fire department was summoned, and immediately began spraying the drum with water. This produced an explosion of some sort and a much larger thick dense cloud of whitish-yellow smoke. By 10:00 p.m., the cloud had begun to shrink, but the drum was still too hot to touch. Fire officials retrieved a piece of "molten metal-like material" that appeared to have been ejected from the drum. Experts were unable to examine the drum until 5:30 a.m., because it remained too hot to touch. The lid and walls of the drum were bulged outward. The bottom of the drum was "extremely corroded" and rusted through.

Three lawsuits involving over 40 plaintiffs were filed in state court to recover damages

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for injuries suffered as a result of exposure to the sulfur dioxide cloud. Maffei tendered the lawsuits to the insurance companies for defense and indemnity, but the insurers refused the tender and denied coverage on the basis of the policies' pollution exclusions.

Maffei had two policies: a primary comprehensive general liability policy and an umbrella policy, both underwritten by the two insurance companies. Both policies contained a "Pollution Exclusion," which excluded from coverage damages for bodily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants. The exclusion defined "pollutants" as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." The exclusion did not apply to bodily injury or property damage "caused by heat, smoke or fumes from a hostile fire." Amendment of Pollution Exclusion. "Hostile fire" was defined as one that "becomes uncontrollable or breaks out from where it was intended to be." The hostile fire exception to the pollution exclusion is at issue in this case.

Maffei submitted a declaration of a thermal engineering expert, Dr. Kimble Clark, concluding that there had been a fire. Dr. Clark testified that sodium hydrosulfite, when exposed to small amounts of moisture, decomposes into flammable sulfur compounds. The heat generated by the decomposition can ignite those compounds and produce emissions of sulfur dioxide gas and smoke. Sodium hydrosulfite is a flammable solid subject to spontaneous combustion. Dr. Clark, after discussing dictionary definitions and his own definition of fire, stated:

Considering the above dictionary definitions and additional observations about the characteristics of fires, a composite definition of the word "fire" can be stated as follows:

A process where a substance reacts chemically with a second substance, usually called an oxidizer, to release heat, light and a flame comprised of gases and possibly suspended solid and liquid particles.

After discussing and analyzing the physical evidence available, he concluded:

The composite definition of "fire" is satisfied in all respects by the physical evidence. There was a chemical reaction between a fuel and oxidizer which released heat. Also, a "flame" or cloud of gases was generated. The outer surface of the metal drum was too hot to touch, indicating its temperature exceeded 120 [degrees]--140 [degrees] F. This means that the contents at the core of the drum must have been at a temperature substantially in excess of [120-140 degrees F], perhaps by several hundred degrees.... [T]emperatures of only 400-500 degrees F are sufficient to cause [sodium hydrosulfite] to burn.... No visible light was noticed because the fire was confined to the interior of the drum and was further obscured by the cloud it generated....

Maffei also submitted a declaration of insurance expert Robert Holtom, who has experience in the drafting, teaching, and interpretation of commercial general liability and fire clauses. Holtom stated that the vapor cloud "constituted a hostile fire" as defined by the policy.

The district court found that no genuine issue existed for trial and granted the motion of defendants for summary judgment. The court held that (1) the defendants established that the pollution exclusion barred the plaintiffs' claim; (2) no evidence supported the plaintiffs' claim that the hostile fire exception applied, and (3) the plaintiffs failed to establish that a genuine issue of material fact existed with regard to the application of the hostile fire exception. The court struck the declarations submitted by Maffei because they were "unnecessary" under Fed.R.Evid. 702, and because the Holtom declaration impermissibly asserted an unsupported legal conclusion. The court also found that Maffei failed to demonstrate that any fire occurred, and that a reasonable jury could not conclude that a fire occurred in the drum based on the evidence submitted by the plaintiffs.


We review an order granting summary judgment de novo. T.W. Electrical

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Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 629 (9th Cir.1987). We must view the evidence in the light most favorable to the nonmoving party and determine whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Tzung v. State Farm Fire and Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir.1989).

The primary question is whether there is a genuine issue of material fact about whether a fire occurred, within the meaning of the insurance policies. Maffei contends that there was a fire and explains that no one saw any flame because (1) the burning was confined to the interior of the drum; (2) no one was present when the fire began; and (3) any visible light that may have escaped the drum was obscured by the dense smoke.

The district court, however, stated that it was taking "a common sense approach" to the question, as compelled by California law, and noted that what occurred appeared to have been a chemical reaction, which no reasonable jury could conclude was a fire within the meaning of the exception to the exclusion.

The district court asked whether there was a fire, or a chemical reaction producing the vapor that could be called something less than a fire. He referred to a "high school definition" of fire as "oxidation rapid enough to produce heat and light," and concluded that there was "substantial evidence" that there was no fire, as fire is commonly understood.

The policies covered bodily injury and property damage caused by heat, smoke or fumes from a hostile fire. "Hostile fire" is defined by the policy as one that "becomes uncontrollable or breaks out from where it was intended to be." Beyond that, "fire" is not defined by the policies.

Under California law, the " 'clear and explicit' meaning of [policy] provisions, interpreted in their 'ordinary and popular sense,' unless used by the parties in a technical sense or a special meaning is given to them by usage, controls judicial interpretation." AIU Insur. Co. v. Superior Court, 51 Cal.3d 807, 274 Cal.Rptr. 820, 831, 799 P.2d 1253, 1264 (1990) (in bank). "[I]f the meaning a layperson would ascribe to contract language is not ambiguous," that meaning should be applied. Id.

Although California has not considered the question, several other jurisdictions have interpreted "fire" when used in insurance policies as involving "visible heat and light," according to the popular definition of "fire." See Washington State Hop Producers, Inc. v. Harbor Ins. Co., 34 Wash.App. 257, 660 P.2d 768, 769 (1983) (holding...

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