American States Ins. Co. v. FHS, INC.

• Decision Date: 03 February 1994
• Docket Number: Civ. A. No. J92-0644(L)(N).
• Citation: 843 F. Supp. 187
• Parties: AMERICAN STATES INSURANCE COMPANY, Plaintiff, v. F.H.S., INC., Defendant.
• Court: U.S. District Court — Southern District of Mississippi

843 F. Supp. 187

AMERICAN STATES INSURANCE COMPANY, Plaintiff, v. F.H.S., INC., Defendant.

Civ. A. No. J92-0644(L)(N).

United States District Court, S.D. Mississippi, Jackson Division.

February 3, 1994.

Mark Carlson, McCoy, Wilkins, Stephens & Tipton, Jackson, MS, Dennis Cantrell, Bingham, Summers, Welch & Slipiman, Indianapolis, IN, for plaintiff.

Carl Montgomery, Montgomery, Smith-Vanez & McGraw, Canton, MS, Rebecca Cowan, Montgomery, Smith-Vanez & McGraw, John S. Knowles, III, Brantley & Knowles, Jackson, MS, for defendant.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on the motion of plaintiff American States Insurance Company (American States) for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Defendant F.H.S., Inc. has responded to the motion and has filed a cross-motion for summary judgment. The court has considered the memoranda of authorities, together with attachments, submitted by the parties and concludes that plaintiff's motion is well taken and should be granted. The court thus concludes that defendant's motion should be denied.

This case involves an insurance policy issued to F.H.S. by American States providing coverage for commercial property and bodily injury liability. The parties' dispute centers around a pollution exclusion contained in the policy which provides:

This insurance does not apply to:

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

(a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented to or loaned to, any insured;

(b) At or from any premises, site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing or treatment of waste;

(c) Which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for any insured or any person or organization for whom the named insured may be legally responsible; or

(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;

(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; or

(ii) if the operations are to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants.

(2) Any loss, or expense arising out of any

(a) Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to or assess the effects of pollutants; or

(b) Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of pollutants.

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

F.H.S. owns and operates a cold storage warehouse and in connection with its operation of that warehouse, secured from American States the policy containing the above-quoted exclusion. The policy was effective April 16, 1992 through April 16, 1993. On July 8, 1992, ammonia leaked from a pressure relief valve on F.H.S.'s refrigeration system at the warehouse. The valve was designed to vent the building in the event of excessive pressure but on that particular occasion, the valve failed and vented when the amount of pressure in the system did not require the valve to operate.

As a result of this ammonia leak, a number of people in the surrounding area were treated at local hospitals and fifteen people made claims against F.H.S. for injury. Thereafter, on October 30, 1992, certain persons claiming to have suffered bodily injury as a result of the ammonia leak filed suit against F.H.S. seeking damages as a result of this incident. F.H.S. made demand on American States for defense and indemnity against the claims against it arising from the July 1992 incident, including the claims in the lawsuit against F.H.S. American States refused F.H.S.'s demand, asserting that the policy did not provide coverage for the claims against F.H.S., and on October 16, 1992, brought the present declaratory judgment action seeking an adjudication that it has no duty under its policy to defend or indemnify F.H.S. for any claims arising out of the July 1992 incident.

The sole issue presented by the parties' motion is whether or not the claims against F.H.S. are excluded from coverage by virtue of the pollution exclusion quoted above. American States argues that the exclusion clearly and unambiguously excludes coverage for the claims; F.H.S., on the other hand, insists that the exclusion, when considered as a whole and when considered in light of the purpose of the exclusion, is ambiguous, and should therefore be strictly construed against American States so as to provide coverage for the claims. It claims, therefore, that it has properly invoked American States' duty to defend and indemnify. It is the court's opinion, having reviewed the parties' briefs and the authorities they have cited, that the exclusion is unambiguous and by its clear terms excludes coverage for the claims at issue.

There is no question here but that the injuries for which claims have been made against F.H.S. are based on an incident involving the "escape or release of' ammonia "from a premises, site or location which ... was ... owned by an insured." The issue, then, is whether ammonia is a pollutant within the meaning of that term as defined by the policy. The policy defines "pollutants" to include any "gaseous ... irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." It is undisputed that ammonia is a gaseous substance. And it is specifically claimed by those alleging that they were injured by the ammonia release that they...