American States Ins. Co. v. Nethery

• Decision Date: 09 April 1996
• Docket Number: No. 95-60175,95-60175
• Citation: 79 F.3d 473
• Parties: AMERICAN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. Mary Jane NETHERY, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 473

79 F.3d 473

64 USLW 2708

AMERICAN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. Mary Jane NETHERY, et al., Defendants-Appellees.

No. 95-60175.

United States Court of Appeals Fifth Circuit.

April 9, 1996.

Dennis F. Cantrell, Robert G. Mork, Bingham, Summers, Welsh & Spilman, Indianapolis, IN, Mark Christian Carlson, McCoy, Wilkins, Stephens & Tipton, Jackson, MS, for plaintiff-appellant.

Stephen Holace Morris, Mitchell, Voge, Beasley & Corban, Tupelo, MS, for Nethery.

George E. Dent, Soper, Dent and Logan, Tupelo, MS, for DAPA, Inc., Miles and Servicemaster Co.

Oscar Clark Carr, III, William R. Bradley, Jr., Glankler Brown, Memphis, TN, for Servicemaster Company, Limited Partnership, defendant-appellee.

Frank Jay Winston, Jr., Walter J. Andrews, Elizabeth A. Eastwood, Wiley, Rein & Fielding, Washington, DC, for United States Fidelity and Guaranty Company amicus curiae.

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

Before POLITZ, Chief Judge, and JONES and BENAVIDES, Circuit Judges.

EDITH H. JONES, Circuit Judge:

American States Insurance Company ("American States") filed suit seeking a declaration of rights under its policy relating to claims brought against its insureds, painting and repair contractors and a franchisor, by customer Mary Jane Nethery ("Nethery"). The district court granted partial judgment as a matter of law to the insureds, and American States appeals. We hold that Nethery's claim that her hypersensitivity to chemicals was inflamed by fumes from standard paint and glue materials is excluded by the absolute pollution exclusion from American States's comprehensive general liability policy. Accordingly, we reverse and render judgment for American States.

I. BACKGROUND

The facts are not disputed. In 1991, Nethery, through her insurer, hired DAPA, Inc. d/b/a ServiceMaster of Tupelo, Mississippi ("DAPA"), to paint portions of the interior walls and replace sections of the floor of her home. Because of Nethery's "chemical hypersensitivity," she alleged that she explicitly contracted for the repairs to be made with special paint and glue that would be "non-toxic" to her. DAPA, nonetheless, repaired Nethery's home with regular industry standard paint and glue.

Nethery contends she is allergic to the chemical 1,1,1 trichloroethane ("1,1,1 tca") in the regular paint and glue and that fumes from these materials injured her and caused the loss of the use of part of her home. In state court, she sued DAPA, its president Danny Miles, its franchisor, The ServiceMaster Limited Partnership ("ServiceMaster") (collectively, "the insureds"), and others not parties to the instant case, alleging breach of contract, gross negligence, and intentional infliction of emotional distress. The insureds made demand upon American States for defense and coverage of Nethery's claims. American States defended under a reservation of rights and filed this declaratory action.

Responding to cross-motions, the district court granted partial judgment as a matter of law to American States and held that the insurer did not have a duty to defend against Nethery's claims for breach of contract and intentional infliction of emotional distress. The court also held, however, that American States had a duty to defend against Nethery's gross negligence claim and that such claim was not barred from coverage by the pollution exclusion.

American States has appealed, contending that the district court erred in concluding that its policy covers gross negligence, and contending that the absolute pollution exclusion does apply to bar Nethery's claim. We need not reach the former argument, because the latter one is dispositive.

II. DISCUSSION

We review the district court's grant of summary judgment and its interpretation of American States's insurance policy de novo, applying the same standards as the district court. Constitution State Ins. Co. v. Iso-Tex, Inc., 61 F.3d 405, 407 (5th Cir.1995). Under Mississippi law, courts interpret insurance policies according to contract law. Aero Int'l, Inc. v. United States Fire Ins. Co., 713 F.2d 1106, 1109 (5th Cir.1983) (applying Miss. law). This interpretation is limited to the written terms of the policy. Id. If the policy is unambiguous, its terms must be given their plain meaning and enforced as written. Id. Only if the policy is ambiguous will it be interpreted in the light most favorable to the insured. Nationwide Mut. Ins. Co. v. Garriga, 636 So.2d 658, 662 (Miss.1994).

With regard to insurance, Mississippi is a "decision-poor" state. Mississippi state courts have not interpreted any pollution exclusions. We are thus left to make an "Erie guess" about the instant policy's coverage.

American States's absolute pollution exclusion provides in pertinent part:

This policy does not apply to:

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

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(d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured's behalf are performing operations:

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(I) if the pollutants are brought on or to the premises, site or location in connection with such operations by such insured, contractor or subcontractor;

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Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.

The district court concluded this exclusion was unambiguous and that it did not exclude Nethery's claim. The court reasoned that paint and glue fumes do not constitute pollutants because they do not "normally inflict injury." It explained that, under the exclusion, "all pollutants are irritants. But that does not make all irritants pollutants."

While acknowledging the exclusion is unambiguous, American States rejects the district court's reasoning that not all irritants are pollutants. It contends that the exclusion defines a pollutant as "any ... irritant." Therefore, it argues, the district court impermissibly altered the policy's terms by defining a pollutant as only a substance which normally inflicts injury. See Maryland Cas. Co. v. Southern Farm Bureau Cas. Ins. Co., 235 F.2d 679, 683 (5th Cir.1956) (Mississippi law prohibits courts from re-writing unambiguous insurance exclusions).

We agree with American States; the absolute pollution exclusion does unambiguously exclude coverage for Nethery's claim. "Pollutant" is a defined term in the policy. Whether the policy definition comports with this court's notion of the usual meaning of "pollutants" is not the issue; this court has no special expertise in writing insurance policies. Our judgment about the reasonable scope of a pollution exclusion--in the absence of ambiguity--must be tied to the language of the policy. Nethery contends she suffered bodily injury and property damage from the "discharge, dispersal ... release or escape of pollutants ... at or from any premises on which the insured [was] working." "Pollutants" is defined in the policy as "any ... gaseous ... irritant or contaminant, including ... vapor ... fumes ... [and] chemicals." The paint and glue fumes fall under the definition of gaseous substances, vapors, and fumes, while the 1,1,1 tca in the paint and glue is plainly a chemical.

Despite the patent applicability of the pollutant exclusion here, it is contended that paint and glue fumes do not constitute an "irritant" because they do not normally inflict injury. This argument might have made sense under a differently worded policy, but here it does not. Although the policy does not define "irritant," Webster's Dictionary defines it as "an agent by which irritation is produced (a chemical)." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY UNABRIDGED 1197 (1981). An irritant is a substance that produces a particular effect, not one that generally or probably causes such effects. The paint and glue fumes that irritated Nethery satisfy both the dictionary definition and the policy exclusion of irritants.

The same conclusion was reached by the court in American States Ins. Co. v. F.H.S., Inc., 843 F.Supp. 187 (S.D.Miss.1994), interpreting an identical pollution exclusion. The insured in F.H.S. sought coverage for claims brought by plaintiffs exposed to ammonia gas released from its warehouse. The amount of ammonia released, however, was not sufficient to normally cause injury, was not considered a pollutant by environmental engineers, and did not violate any environmental or safety regulations. Id. at 189-90. The insurer argued the plaintiffs' claims were excluded by the pollution exclusion.

The F.H.S. court agreed. It found the exclusion unambiguous and concluded that the released ammonia constituted a pollutant, i.e. a gaseous substance, released from the insured's premises, which allegedly irritated the plaintiffs. The court rejected the argument that the ammonia should not be considered a pollutant because the quantity released was not sufficient to irritate most persons. That fact was not

relevant in any respect on the issue of whether the policy exclusion is ambiguous. Though [the environmental expert], or the scientific community, would define the terms "pollutant" and/or "pollution" in a way other than that reflected by this insurance policy, and though the definition the scientific community would employ would recognize limitations which are not imposed by the policy under consideration, those facts do not render the definition in the policy ambiguous or less clear.... [U]nless the court were to find the exclusion ambiguous on its face, the court would lack the prerogative to engraft limitations on the exclusion as it appears in the policy.

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[The insured] asks that this court, in essence, ignore the policy definition of "pollutants" or, perhaps more...