73 F.3d 335 (11th Cir. 1996), 94-9278, Bituminous Cas. Corp. v. Advanced Adhesive Technology, Inc.

Docket Nº:94-9278.
Citation:73 F.3d 335
Party Name:BITUMINOUS CASUALTY CORPORATION, Plaintiff-Counter-Defendant, Appellant, v. ADVANCED ADHESIVE TECHNOLOGY, INC., Defendant-Counter-Claimant, Appellee, Georgia Pad, Inc., Defendant-Appellee.
Case Date:January 23, 1996
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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Page 335

73 F.3d 335 (11th Cir. 1996)

BITUMINOUS CASUALTY CORPORATION,

Plaintiff-Counter-Defendant, Appellant,

v.

ADVANCED ADHESIVE TECHNOLOGY, INC.,

Defendant-Counter-Claimant, Appellee,

Georgia Pad, Inc., Defendant-Appellee.

No. 94-9278.

United States Court of Appeals, Eleventh Circuit

January 23, 1996

John M. Bovis, William S. Allred, Bovis, Kyle & Burch, Atlanta, GA, for appellant.

Page 336

John T. Minor, III, William Francis Jourdain, Robert Greg McCurry, Minor, Bell & Neal, Dalton, GA, for appellee.

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

Before HATCHETT, DUBINA and BLACK, Circuit Judges.

HATCHETT, Circuit Judge:

Following Georgia law in this diversity case, we hold that a pollution exclusion provision in a commercial liability insurance policy is ambiguous and must be construed against the insurer. We affirm the district court.

BACKGROUND

Appellee Advanced Adhesive Technology, Inc. (Advanced) manufactures and sells adhesive products. Appellant Bituminous Casualty Corporation (Bituminous) sold Advanced a general commercial liability insurance policy (GCL policy) effective from January 1, 1993, to January 1, 1994. Bituminous also issued an umbrella insurance policy to Advanced effective from July 9, 1993, to April 1, 1994.

The GCL policy contains, through an endorsement, a "POLLUTION EXCLUSION" that precludes coverage for:

(1) Bodily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants.

(2) Any loss, cost or expense arising out of any governmental direction or request that the named insured test for, monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants.

Subparagraph (1) above does not apply to bodily injury or property damage caused by heat, smoke or fumes from a hostile fire. As used in this exclusion, a hostile fire means one which becomes uncontrollable, or breaks out from where it was intended to be.

Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

The GCL policy interprets "bodily injury" to include death. The umbrella policy contains a similar pollution exclusion and defines "bodily injury" in the same manner.

On May 12, 1993, E. Lee Bazini died while allegedly installing carpet on his boat using an Advanced product, AAT-1108 Headliner and Boat Adhesive (AAT-1108). On August 30, 1993, Bazini's estate (the estate) made a claim against Advanced alleging that Bazini died from inhaling the dichloromethane fumes of AAT-1108 and that the labels on the AAT-1108 container possessed insufficient warnings as to the proper use of the product. 1 Thereafter, Advanced sought coverage from Bituminous in the form of a legal defense and indemnification. In January 1994, Bituminous filed this lawsuit in the Northern District of Georgia, seeking a declaration that the GCL policy "does not afford coverage for the Bazini claims by operation of the ... [pollution] exclusion." Advanced asserted a counterclaim contending that Bituminous "will deny coverage under the Umbrella Policy for the Bazini claim for the exact reason that [Bituminous] has denied coverage under the [GCL] policy." Both parties filed motions for summary judgment.

In an order dated October 24, 1994, the district court first concluded that AAT-1108's vapors constituted "pollutants." The court went on to hold, however, that

(1) Plaintiff's failure to include the word "emission" within the pollution exclusion, (2) the tenuousness of the use of "discharge, dispersal, release or escape" to describe the...

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