Am. Nat'l Property & Cas. Co. v. Wyatt

• Decision Date: 25 June 2013
• Docket Number: No. WD 75226.,WD 75226.
• Citation: 400 S.W.3d 417
• Court: Missouri Court of Appeals
• Parties: AMERICAN NATIONAL PROPERTY & CASUALTY CO., Respondent, v. Randall WYATT, Appellant, Robin Ferguson, Appellant.

400 S.W.3d 417

AMERICAN NATIONAL PROPERTY & CASUALTY CO., Respondent,

v. Randall WYATT, Appellant,Robin Ferguson, Appellant.

No. WD 75226.

Missouri Court of Appeals,

Western District.

March 26, 2013.

Motion for Rehearing and/or Transfer to Supreme Court Denied April 30, 2013.

Application for Transfer Denied June 25, 2013.

Nicki Cannezarro, for Respondent.

Andrew Protzman, for Appellants.

Before Division One: THOMAS H. NEWTON, Presiding Judge, JOSEPH M. ELLIS, Judge and GARY D. WITT, Judge.

JOSEPH M. ELLIS, Judge.

On August 16, 2010, Joyce Bentley drove her granddaughter, Megan Wyatt, and Megan's friend, Robin Ferguson, to her apartment at 103 N.E. Dogwood Street in Oak Grove, Missouri, for an overnight visit. Bentley parked her car in the garage, shut the garage door, and went inside, neglecting to turn off the car engine. Later that day, responding to a call from a neighbor about a suspicious odor, police entered the house and found Bentley and Ferguson unconscious and Wyatt dead from carbon monoxide inhalation. Bentley later died at the hospital.

Megan's father subsequently filed a wrongful death claim against Bentley and American National Property & Casualty Company (“ANPAC”), with whom Bentley had a “Missouri Tenants Homeowners Policy”at the time of the incident. Similarly, Robin, by and through her biological father and next friend, filed a negligence claim against Bentley and ANPAC. The plaintiffs from these two tort actions will hereinafter be referred to as “the Plaintiffs.”

In response to those two lawsuits, ANPAC filed the current declaratory judgment action in the Circuit Court of Jackson County seeking a declaration that its policy excluded coverage for the claims asserted by the Plaintiffs against Bentley. The parties subsequently filed competing motions for summary judgment based upon an agreed set of stipulated facts. Ultimately, the trial court denied the Plaintiffs' motion and granted ANPAC's, concluding that the pollution exclusion in the policy precluded coverage because carbon monoxide from a vehicle is a “pollutant” under the unambiguous terms of the policy. ¹ The court found that “[a]n average layperson knows that automobile exhaust fumes have a toxic, potentially fatal effect, especially when inhaled by a person in a confined space and therefore would understand that automobile fumes which contain carbon monoxide are ‘pollutants.’ ” The Plaintiffs appeal from that decision.

Because the trial court makes its decision to grant summary judgment based upon the record submitted and the law, this court need not defer to the trial court's determination and reviews the grant of summary judgment de novo. Harpagon MO, LLC v. Clay Cnty. Collector, 335 S.W.3d 99, 102 (Mo.App. W.D.2011). In so doing, we apply the same criteria as the trial court in determining whether summary judgment was properly entered. Id. “Summary judgment is proper only if the moving party establishes that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.” Dydell v. Taylor, 332 S.W.3d 848, 852 (Mo. banc 2011). Accordingly, in reviewing the propriety of summary judgment, this Court views the record “in the light most favorable to the party against whom judgment was entered and accords the non-movant the benefit of all reasonable inferences from the record.” Id.

In the case at bar, the parties stipulated to the material facts. The injuries suffered by the two children were undisputedly caused by carbon monoxide generated by a car that was negligently left running in the garage by Bentley. Thus, the only issue to be adjudicated is whether, as a matter of law, ANPAC established that coverage was excluded under the language of the insurance contract. “The interpretation of an insurance policy, and the determination whether coverage and exclusion provisions are ambiguous, are questions of law that this Court reviews de novo.” Burns v. Smith, 303 S.W.3d 505, 509 (Mo. banc 2010).

The Plaintiff's argue that the trial court erred in finding that the injuries were excluded from coverage because the exclusionary language related to pollutants was ambiguous and should have been construed against ANPAC. They claim that a reasonable homeowner purchasing the policy would not interpret the policy as excluding from coverage damages caused by exposure to carbon monoxide within the home and would instead believe the exclusion to be applicable only to cases of traditional environmental pollution.

“When interpreting the terms of an insurance policy, this Court applies the meaning that would be understood by an ordinary person of average understanding purchasing this insurance.” Schmitz v. Great Am. Assur. Co., 337 S.W.3d 700, 705–06 (Mo. banc 2011). “If the policy is ambiguous, it will be construed against the insurer.” Id. at 706. “If the policy is unambiguous, the policy will be enforced according to its terms.” Id.

“A policy is ambiguous if there is duplicity, indistinctness, or uncertainty in the meaning of the language in the policy.” Id. (internal quotation omitted). “The language of an insurance policy is ambiguous when it is reasonably and fairly open to different constructions. To test whether the language used in the policy is ambiguous, the language is considered in the light in which it would normally be understood by the lay person who bought and paid for the policy.” Vega v. Shelter Mut. Ins. Co., 162 S.W.3d 144, 147 (Mo.App. W.D.2005) (internal quotation omitted). Whether an ambiguity exists must be assessed by an examination of the exclusionary clause in the context of the entire policy. Jensen v. Allstate Ins. Co., 349 S.W.3d 369, 377 (Mo.App. W.D.2011).

The personal liability provisions of the ANPAC policy appear to provide broad coverage for the insured:

We will pay, up to our limit of liability, all sums for which an insured is legally liable because of bodily injury or property damage caused by an occurrence covered by this policy. We will defend any suit, even if the suit is groundless, false, or fraudulent, provided the suit resulted from bodily injury or property damage not excluded under this coverage.

(bold omitted). The exclusionary language relied upon by ANPAC in denying coverage states:

Coverage E—Personal Liability and Coverage F—Medical Payments to Others do not apply to bodily injury or property damage:

* * *

n. arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants ...

Elsewhere, the policy defines “pollutants” as “any solid, liquid, gaseous, or thermal irritant or contaminant, including but not limited to smoke, vapors, soot, fumes, acids, alkalis, toxic chemical, and waste. Waste includes materials to be recycled, reconditioned, or reclaimed.” “Combining these various provisions, the Policy excludes coverage for any bodily injury resulting from the ‘discharge, dispersal, seepage, migration, release or escape’ of ‘any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, [toxic] chemicals and waste.’ ” Apana v. TIG Ins. Co., 574 F.3d 679, 681 (9th Cir.2009).

This is standard language used by the insurance industry and is frequently referred to as the “total pollution exclusion.” Id. at 680. While barely touched upon in Missouri case law, “[t]he scope of this exclusion has been described as one of the most hotly litigated insurance coverage questions to arise over the past three decades.” Id. (internal quotation omitted). “Indeed, ‘rarely has any issue spawned as many court decisions, and as variant in rationales and results, as has the pollution-exclusion clause.’ ” Id. (quoting Porterfield v. Audubon Indem. Co., 856 So.2d 789, 800 (Ala.2002)).

The historical background of the total pollution exclusion was aptly set out by the Illinois Supreme Court in American States Insurance Co. v. Koloms, 177 Ill.2d 473, 227 Ill.Dec. 149, 687 N.E.2d 72, 79–82 (1997):

The events leading up to the insurance industry's adoption of the pollution exclusion are “well-documented and relatively uncontroverted.” Morton International, Inc. v. General Accident Insurance Co., 134 N.J. 1, 31, 629 A.2d 831, 848 (1993). Prior to 1966, the standard-form CGL policy provided coverage for bodily injury or property damage caused by an “accident.” Center for Creative Studies v. Aetna Life & Casualty Co., 871 F.Supp. 941, 943 n. 3 (E.D.Mich.1994), quoting J. Stempel, Interpretation of Insurance Contracts: Law and Strategy for Insurers and Policyholders 825 (1994). The term “accident,” however, was not defined in the policy. As a result, courts throughout the country were called upon to define the term, which they often interpreted in a way as to encompass pollution-related injuries. In response, the insurance industry revised the CGL policy in 1966 and changed the former “accident”-based policy to an “occurrence”-based policy. The new policy specifically defined an “occurrence” as “an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury and property damage that was neither expected nor intended from the standpoint of the insured.” Morton International. Inc., 134 N.J. at 32, 629 A.2d at 849 (and cases cited therein). Despite these changes, courts continued to construe the policy to cover damages resulting from long-term, gradual exposure to environmental pollution. As one court observed, “so long as the ultimate loss was neither expected nor intended, courts generally extended coverage to all pollution-related damage, even if it arose from the intentional discharge of pollutants.” New Castle County v. Hartford Accident & Indemnity Co., 933 F.2d 1162, 1196–97 (3d Cir.1991).

Meanwhile, at about the same time, the United States Congress substantially amended the Clean Air Act in an effort to protect and enhance the quality of the nation's air resources. Pub.L. No. 91–604, 84 Stat. 1676 (1970) (now...