Titan Holdings Syndicate, Inc. v. City of Keene, N.H.

• Decision Date: 11 September 1989
• Docket Number: No. 89-1381,89-1381
• Parties: TITAN HOLDINGS SYNDICATE, INC., et al., Plaintiffs, Appellees, v. The CITY OF KEENE, NEW HAMPSHIRE, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 265

898 F.2d 265

TITAN HOLDINGS SYNDICATE, INC., et al., Plaintiffs, Appellees, v. The CITY OF KEENE, NEW HAMPSHIRE, Defendant, Appellant.

No. 89-1381.

United States Court of Appeals, First Circuit.

Heard Sept. 11, 1989.

Decided March 15, 1990.

Mary Louise Caffrey with whom Ernest L. Bell, III, and Bell, Falk & Norton, P.A., Keene, N.H., were on brief for defendant, appellant.

Sharon A. Spickler with whom Paul R. Cox, Kevin P. Landry and Burns, Bryant, Hinchey, Cox & Schulte, P.A., Dover, N.H., were on brief for plaintiffs, appellees.

Before SELYA, Circuit Judge, COFFIN and FAIRCHILD, ^* Senior Circuit Judges.

FAIRCHILD, Senior Circuit Judge.

At issue in this action for declaratory judgment is the scope of the "pollution exclusion" clauses in two liability insurance policies. We are asked to decide whether the district court erred by holding that the clauses relieve the policy issuers from defending a complaint brought against the City of Keene, New Hampshire, for damage allegedly caused by the City's operation of a sewage treatment plant.

On March 23, 1987, Jack and Mary Meanen brought a two-count lawsuit in a New Hampshire court against the City of Keene, New Hampshire. In it, they alleged that they "have been continuously bombarded by and exposed to noxious, fetid and putrid odors, gases and particulates, to loud and disturbing noises during the night, and to unduly bright night lighting" emanating from the City's sewage treatment plant which abuts their land. Count I, which included claims characterized as pleas of trespass and nuisance, alleges that the operation of the plant has "unreasonably and substantially interfered with [their] quiet enjoyment of the homestead and has substantially deprived [them] of the use of the homestead" and that the Meanens suffered injury through "losing the value and enjoyment of the use of the homestead, suffering physically from nauseousness; and suffering mentally while fearing for their safety and well-being as a result of the noxious fumes and while being exposed to public ridicule and jest." Count II, characterized as a plea of law, incorporates the allegations in Count I, and alleges that the City is liable for the Meanens' bodily injury, personal injury, and property damage pursuant to N.H.Rev.Stat.Ann. 507-B:9 I (1988 Cum.Supp.) (a provision which actually limits the liability of governmental units due to pollutant incidents).

Titan Holdings Syndicate, Inc. (Titan), through Illinois Insurance Exchange, and Great Global Assurance Company (Great Global) each issued to the City liability policies which cover part of the time period during which the Meanens claim damages. After the Meanens filed their suit, Titan and Great Global filed a "petition" in federal district court seeking a declaration that the pollution exclusion clauses of their policies avoided any obligation to defend or indemnify the City with respect to the Meanens' lawsuit. Both parties moved for summary judgment, and the district court in an unpublished order granted summary judgment for the insurance companies, holding that the liabilities claimed in the Meanens' suit against the City were not covered because they fell within the pollution exclusion clauses.

The City appeals, arguing that (1) excessive light and noise are not "pollutants" under the policies, so the policies cover liability for damages from "loud and disturbing noises during the night" and "unduly bright night lighting;" (2) because the exclusion clauses are ambiguous, coverage for the claims is owed for the Meanens' entire claim; and (3) the Meanens' claims are for "personal injury" as defined in the policies and the exclusion clauses do not apply to liability for "personal injury." The City also asks us to award fees and costs. ¹

I.

The policies issued to the City by the appellees each provide two broad areas of protection--coverage for bodily injury and property damage liability, and coverage for personal injury and advertising injury liability. Each policy also has a pollution exclusion clause excluding, from bodily injury and property damage liability coverage only, damage "arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants." ² The policies define "pollutants" as any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes material to be recycled, reconditioned or reclaimed.

Joint Appendix at 46, 66, 107 & 109.

Setting aside for the moment that portion of the Meanens' claim for bodily injury and property damage caused by the "noxious, fetid and putrid odors, gases and particulates," the City argues that the pollution exclusion clauses do not exclude coverage for the Meanens' claim to have suffered from the "loud and disturbing noises during the night," and "unduly bright night lighting," since excessive noise and bright lights are not "pollutants" under the policies.

The district court, in holding that the Meanens' entire claim fell within the exclusions, did not treat the claim based on light and noise separately from the claim concerning the noxious odors, gases and particulates. The court interpreted the clauses as "essentially intended to exclude coverage under the insurance policy for damages and injuries occurring as a result of pollution related activities of the insured." (Emphasis added.) Since the source of the Meanens' discomfort was a sewage treatment plant, which certainly is a "site or location used ... for the handling, storage, disposal, processing or treatment of waste," the court held the claims were excluded from coverage.

When deciding whether a claim comes within an express exclusion, the question is "whether the ordinary layman in the position of the insured could reasonably be expected to understand that certain exclusions qualified the policy's grant of coverage." New Hampshire Ins. Co. v. Schofield, 119 N.H. 692, 694, 406 A.2d 715, 717 (1979) (quoting Commercial Union Assurance Cos. v. Gollan, 118 N.H. 744, 745, 394 A.2d 839, 841 (1978)). First of all, the exclusion language does not support the district court's understanding of an exclusion for all "pollution related activities." The clauses expressly exclude only bodily and property damage liability "arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants." To read the clauses as excluding all claims for damages from all "pollution related activity" stretches the exception beyond its express language, and provides less coverage than agreed to.

It is undisputed that the sewage treatment plant is "a site ... used ... for the handling, storage, disposal, processing or treatment of waste." What is at issue is whether the excessive light and noise are "pollutants" within the meaning of the policy, so that any injury suffered by the Meanens on account of them is excluded from coverage. The appellees say they are. While we agree that excessive light and noise possibly could be considered "pollutants," as that term is sometimes used, the relevant definition of the word is explicitly provided by the policies. According to the policies, a pollutant is "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." Excessive noise and light may be "irritants," but they are not solid, liquid, gaseous or thermal irritants. ³ Nor are they generally thought of as similar to smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste, the illustrative terms used in the policy definition. Noscitur a sociis. Since the policies' definition of "pollutants" does The appellees try to characterize the Meanens' complaints of excessive light and noise as "peripheral" to their complaints of noxious emissions, and argue they have no duty to defend or indemnify the City for such claims. Whether or not the complaints about light and noise are peripheral is irrelevant. The insurers have a duty, provided by the terms of the respective policies, to defend any suit seeking damages for liability covered by the policies. Joint Appendix at 46, 47 & 98. "It is well-settled law in New Hampshire that an insurer's obligation to defend its insured is determined by whether the cause of action against the insured alleges sufficient facts in the pleadings to bring it within the express terms of the policy, even though the suit may eventually be found to be without merit." United States Fidelity & Guaranty Co., Inc. v. Johnson Shoes, Inc., 123 N.H. 148, 151-52, 461 A.2d 85, 87 (1983) (citing Hersey v. Maryland Casualty Co., 102 N.H. 541, 542-43, 162 A.2d 160, 162 (1960)). If some of the claims against the insured fall within the terms of coverage, and some without, the insured must still defend the entire claim (at least until it is apparent that no recovery under the covered theory can be had) but need only indemnify for liability actually covered. See, e.g., Western Cas. & Sur. v. Intern. Spas of Ariz., 130 Ariz. 76, 79-80, 634 P.2d 3, 6-7 (App.1981); Rimar v. Continental Cas. Co., 50 A.D.2d 169, 376 N.Y.S.2d 309, 312-13 (Ct.App.1975); John Alan Appleman, 7C Insurance Law and Practice, Sec. 4684.01 at 102-07 (Berdal ed. 1979); 41 A.L.R.2d 434 (1980 Supp.). ⁴ Therefore, the appellees are obligated to defend the entire claim brought by the Meanens, but eventually need only indemnify (under the bodily injury and property damage coverage) for bodily injury and property damage arising from the plant's alleged excessive noise and light.

not include excessive noise and light, the policies protect the City from any portion of the Meanens' claim based on liability for bodily injury or property damage due to the noise and light coming from the City's sewage treatment plant.

II.

After arguing that light and noise do not come within the policy definition of the term "pollutant," the City claims the entire definition...