160 F.3d 997 (4th Cir. 1998), 97-2160, Assicurazioni Generali, S.p.A. v. Neil

Docket Nº:97-2160, 97-2310.
Citation:160 F.3d 997
Party Name:ASSICURAZIONI GENERALI, S.p.A., Plaintiff-Appellant, v. Kenneth NEIL, Defendant-Appellee. ASSICURAZIONI GENERALI, S.p.A., Plaintiff-Appellant, v. Kenneth NEIL, Defendant-Appellee.
Case Date:November 18, 1998
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 997

160 F.3d 997 (4th Cir. 1998)

ASSICURAZIONI GENERALI, S.p.A., Plaintiff-Appellant,

v.

Kenneth NEIL, Defendant-Appellee.

ASSICURAZIONI GENERALI, S.p.A., Plaintiff-Appellant,

v.

Kenneth NEIL, Defendant-Appellee.

Nos. 97-2160, 97-2310.

United States Court of Appeals, Fourth Circuit

November 18, 1998

Argued Sept. 23, 1998.

Page 998

[Copyrighted Material Omitted]

Page 999

Edward J. Longosz, II, Miles & Stockbridge, P.C., McLean, Virginia, for Appellant. Gerald William Ueckermann, Jr., O'Malley, Miles, Nylen & Gilmore, P.A., Calverton, Maryland, for Appellee. Naomi G. Beer, Miles & Stockbridge, P.C., McLean, Virginia, for Appellant.

Before WILKINSON, Chief Judge, and HAMILTON and MOTZ, Circuit Judges.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

An insurance company filed this diversity declaratory judgment action to resolve questions under a general liability policy. The company sought a declaration that it need not provide defense or coverage to its insured in two personal injury actions brought against the insured in Florida. The district court awarded summary judgment and attorneys' fees to the insured. Because, under Maryland law, the policy's pollution exclusion bars coverage for the injuries alleged in the underlying tort actions, we reverse.

I.

This controversy arises out of an accident at a Holiday Inn in West Palm Beach, Florida. A Maryland partnership in which Kenneth Neil was a general partner owned and operated the Holiday Inn for sometime; in December 1991, the partnership sold its interest in the hotel. Three months later, in March 1992, several hotel guests suffered carbon monoxide poisoning. The injured guests brought personal injury actions against the new owners and Neil.

Neil's general liability insurance policy, issued by Assicurazioni Generali, S.p.A. (Generali), an Italian corporation, covered a number of hotels owned by the partnership, including the West Palm Beach Holiday Inn. The stated policy period was August 1, 1991 to August 1, 1992.

The policy provides comprehensive general liability insurance for"bodily injury" caused by an "occurrence." The policy defines "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury." It defines bodily injury as "bodily injury, sickness or disease sustained by any person which occurs during the policy period."

The policy also provides coverage for injury arising from Completed Operations Hazards, which is defined to include:

bodily injury ... arising out of operations ... but only if the bodily injury ... occurs after such operations have been completed or abandoned and occurs away from premises owned by or rented to the Named Insured.

In addition, the policy contains an "absolute" pollution exclusion. This exclusion states:

[T]he insurance provided in this Section of the Policy DOES NOT APPLY TO:

(

  1. The contamination of any environment by pollutantsthat are introduced at any time, anywhere, in any way;

    (b) Any bodily injury, personal injury, property damage, costs or other loss or damage arising out of such contamination ...; or

    (c) Payment for the investigation or defense of any loss, injury or damage ... related to any of the above.

    It is hereby understood that the following meanings apply to various terms used in the foregoing:

    a. "CONTAMINATION" means any unclean or unsafe or damaging or injurious or unhealthful condition arising out of the presence of pollutants, whether permanent or transient in any environment.

  2. "ENVIRONMENT" includes any person, any manmade

    objects or feature ... land, bodies of water ... air and any other feature of the earth or its atmosphere, whether or not altered, developed or cultivated, including, but not limited to, any of the above, owned, controlled or occupied by the insured.

    c. "POLLUTANTS" means smoke, vapors, soot, fumes, acids, sounds, alkalies, chemicals, liquids, solids, gases,

    Page 1000

    thermal pollutants and all other irritants or contaminations.

    Notwithstanding anything in the foregoing which may bestated in the foregoing to the contrary, it is hereby understood and agreed that this Pollution Exclusion does not apply to "Bodily Injury ... caused by heat, smoke or fumes arising from a hostile fire."

    The policy requires locations covered under the policy to be identified and kept on file with the insurer. Consistent with this provision, in January 1992, Neil notified Generali that he no longer owned or managed the West Palm Beach Holiday Inn and sought a refund of a portion of the policy to reflect this fact. Generali subsequently issued a refund and an endorsement providing that coverage for the West Palm "location" was "deleted" effective January 15, 1992; the endorsement also stated that "All Other Terms and Conditions Remain Unchanged."

    After Neil sought, and Generali denied, defense and coverage in the Florida suits, Generali brought this declaratory judgment action, seeking to establish that its policy provided no coverage to Neil. The district court granted summary judgment to Neil. The court held that (1) the deletion of the West Palm Beach location did not deprive Neil of coverage under the general liability provision, (2) in addition to the general liability coverage, Neil was entitled to coverage under the completed operations hazard provision, and (3) the pollution exclusion did not bar coverage.

    Because determination of the applicability of the pollution exclusion dictates the holding of this case, we focus on that issue, assuming without deciding that the policy would otherwise provide coverage. We note as a preliminary matter that the parties agree that Maryland law applies in this diversity action involving an insurance contract issued in Maryland. See Continental Cablevision of New England, Inc. v. United Broadcasting Co., 873 F.2d 717, 720 (4th Cir.1989); Traylor v. Grafton, 273 Md. 649, 332 A.2d 651 (Md.1975).

    II.

    Neil contends that the Generali policy's pollution exclusion eliminates coverage only for injuries resulting from environmental pollution and therefore does not bar coverage for injuries arising from carbon monoxide poisoning inside a hotel, as alleged in the Florida cases.

    The policy language providing for the pollution exclusion is, however, quite expansive. It excludes from coverage "[t]he contamination of any environment by pollutants that are introduced at any time, anywhere, in any way. " (Emphasis added). Moreover, the policy defines "contamination" as "any " injurious condition "arising out of the presence of pollutants, whether permanent or transient in any environment." (Emphasis added). The definition of "pollutants" includes"smoke, vapors, soot, fumes, acids, sounds, alkalies, chemicals, liquids, solids, gases, thermal pollutants and all other irritants or contaminations." Thus, carbon monoxide--whether considered a "fume," "vapor," or "gas"--plainly falls within this policy definition of "pollutant."

    The policy also defines "environment" broadly to include "any person, manmade objects or feature" and "any other feature of the earth or its atmosphere, whether or not altered, developed or cultivated." The policy goes on to explain that the pollution exclusion does not bar coverage for any bodily injury "caused by heat, smoke or fumes arising from a hostile fire." This provision clearly applies to accidents that occur within a building and that do not result from what is commonly considered industrial environmental pollution. If, contrary to its broad language, the policy intended "environment" to...

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