Auto-Owners Ins. Co. v. Reed

• Decision Date: 16 July 2007
• Docket Number: No. A07A0338.,A07A0338.
• Citation: 649 S.E.2d 843
• Parties: AUTO-OWNERS INSURANCE COMPANY v. REED et al.
• Court: Georgia Court of Appeals

649 S.E.2d 843

AUTO-OWNERS INSURANCE COMPANY v. REED et al.

No. A07A0338.

Court of Appeals of Georgia.

July 16, 2007.

Talley, French & Kendall, Michael C. Kendall, Decatur, for appellant.

Johnston, Owen & Bullard, William G. Johnston III, Beck, Owen & Murray, Charles D. Jones, Griffin, for appellees.

ANDREWS, Presiding Judge.

Auto-Owners Insurance Company filed this declaratory judgment action contending that Lessie Reed's claim of carbon monoxide poisoning against her landlord, C. Melvin Waldrop, is excluded from coverage under Waldrop's commercial general liability ("CGL") policy. The trial court denied Auto-Owners' motion for summary judgment and we granted Auto-Owners' application for interlocutory appeal. For the reasons that follow, we reverse.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56(c). We apply a de novo standard of review and view the evidence in the light most favorable to the nonmovant. Matjoulis v. Integon Gen. Ins. Corp., 226 Ga.App. 459(1), 486 S.E.2d 684 (1997).

So viewed, the record shows that Auto-Owners issued a CGL policy to Waldrop with an applicable policy period of January 12, 2002 through January 12, 2003. Reed filed a complaint alleging that on December 27, 2002, she suffered carbon monoxide poisoning inside the home she rented from Waldrop as a result of his failure to keep the premises in repair and free from defects. After Waldrop provided notice of the claim to Auto-Owners, the insurer began defending Waldrop under a reservation of rights.

Waldrop's policy provided in pertinent part:

We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies....

2. Exclusions.

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 or loaned to, any insured....

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.

Auto-Owners contends that the damages Reed seeks are excluded under the unambiguous terms of Waldrop's policy because Reed's claim satisfies all of the following conditions: (1) she alleges that her damages arose from the discharge, dispersal, or release of carbon monoxide; (2) she alleges that the discharge, dispersal, or release of carbon monoxide occurred at property Waldrop owned; and (3) carbon monoxide is a pollutant as defined in the policy.

Reed and Waldrop conceded that the first two conditions were satisfied. They argued below and now on appeal that the breadth of the definition of "pollutants" renders the pollution exclusion ambiguous.

The trial court, without explanation, denied Auto-Owners' motion for summary judgment. This appeal followed.

The words used in policies of insurance, as in all other contracts, bear their usual and common significance, and policies of insurance are, as in all other contracts, to be construed in their ordinary meaning. An unambiguous policy, as here, requires no construction, and its plain terms must be given full effect even though they are beneficial to an insurer and detrimental to the insured. The natural, obvious meaning of a policy provision is to be preferred over any curious, hidden meaning which nothing but the exigency of a hard case and the ingenuity of a trained and acute mind would discover.

(Citations and punctuation omitted.) Truitt Oil & Gas Co. v. Ranger Ins. Co., 231 Ga. App. 89, 90, 498 S.E.2d 572 (1998).

The policy in this case excludes coverage for damages resulting from the "discharge, dispersal, seepage, migration, release or escape of pollutants" defined as "any solid, liquid, gaseous or thermal irritant or contaminant," including "fumes." Reed's claim is that she has been injured by the discharge of carbon monoxide at the insured property. There is no dispute that carbon monoxide is a fume and a gaseous irritant or contaminant. Therefore, it falls clearly within the policy exclusion.

Although, as the dissent discusses, there are some states that have found to the contrary, this issue has already been decided in Georgia and therefore other state's case law is not persuasive. In American States Ins. Co. v. Zippro Constr. Co., 216 Ga.App. 499, 455 S.E.2d 133 (1995), the home became contaminated after asbestos fibers in the kitchen flooring were released into the air. The construction company that sanded the floors, thereby causing the asbestos to be released into the home, was insured by a policy with a "pollution exclusion" provision identical to the one in this case. The court held that "[t]here is little question that asbestos constitutes a pollutant as unambiguously defined in the exclusion." Id. at 501, 455 S.E.2d 133.

The asbestos in the American States case was not an environmental pollutant, it was completely contained inside the house and is indistinguishable from the carbon monoxide in this case. Accordingly, we are bound by that holding. See also Perkins Hardwood Lumber Co. v. Bituminous Cas. Corp., 190 Ga.App. 231, 232, 378 S.E.2d 407 (1989) (no ambiguity as to scope of pollution exclusion); Truitt Oil & Gas, supra at 90-91, 498 S.E.2d 572 (pollution exclusion in insurance policy is not ambiguous).¹

Because there is Georgia law on point, we need not look to other state's case law; however, as the dissent points out, there are numerous jurisdictions which agree with the holding in American States. See, e.g., Matcon Diamond, Inc. v. Penn. Nat. Ins. Co., 815 A.2d 1109 (Penn.Super.Ct.2003) (carbon monoxide fumes released inside store were pollutant for purposes of pollution exclusion in insurance policy); Deni Assoc. of Florida v. State Farm Fire etc. Ins. Co., 711 So.2d 1135 (Fla.1998) (pollution exclusion is unambiguous and does not apply only to environmental pollutants); Bernhardt v. Hartford Fire Ins. Co., 102 Md.App. 45, 648 A.2d 1047 (1994) (pollution exclusion applies to claim for injury due to carbon monoxide in building); League of Minn. Cities Ins. Trust v. City of Coon Rapids, 446 N.W.2d 419 (Minn.Ct.App. 1989) (coverage was properly denied under pollution exclusion provision after nitrogen dioxide was released into ice arena from Zamboni); Assicurazioni Generali, S.p.A. v. Neil, 160 F.3d 997, 1006 (4th Cir.1998) (pollution exclusion barred coverage for injury to hotel guests after release of carbon monoxide); Reliance Ins. Co. v. Moessner, 121 F.3d 895, 901 (3d Cir.1997) (carbon monoxide poisoning fell under the pollution exclusion); Longaberger Co. v. U.S. Fidelity & Guaranty Co., 31 F.Supp.2d 595, 603 (S.D.Ohio 1998) (carbon monoxide released into home from furnace was a pollutant and came under pollution exclusion in policy); West American Ins. Co. v. Band & Desenberg, 925 F.Supp. 758 (M.D.Fla.1996) (rejecting argument that pollution exclusion is ambiguous and holding that the pollution exclusion applied to dispersal of contaminant from building's attic into building's airspace); Essex Ins. Co. v. Tri-Town Corp., 863 F.Supp. 38 (D.Mass.1994) (discharge of carbon monoxide from malfunctioning Zamboni falls within pollution exclusion).

Accordingly, for the reasons discussed above, we conclude that American States controls in this case. The trial court erred in denying Auto-Owners motion for summary judgment.

Judgment reversed.

BLACKBURN, P.J., PHIPPS, MIKELL and ADAMS, JJ., concur.

JOHNSON, P.J., and ELLINGTON, J., dissent.

ELLINGTON, Judge, dissenting.

I would affirm the trial court's order denying Auto-Owners' motion for summary judgment, and, therefore, I respectfully dissent.

The majority ignores the basic precept that a contract is ambiguous if it is susceptible of more than one reasonable construction.² It cannot be seriously doubted that the absolute pollution exclusion upon which Auto-Owners based its denial of coverage³ can reasonably be interpreted in at least two ways, that is, either (1) as including any potentially irritating substance, or (2) as being limited to what is commonly or traditionally considered environmental pollution. Indeed, this exclusion has been interpreted in these two ways by federal and state appellate courts across the country. Compare cases cited in the majority with the cases collected in note 7 and section (b), infra.

Contrary to the majority's opinion, this issue had not already been decided in Georgia. In fact, this is the first time we have been presented with the exact question of whether the pollution exclusion at issue is ambiguous because it defines "pollutants" in terms that can reasonably be interpreted in more than one way — either as including virtually any substance or chemical in existence or as including only environmental pollution. As a result, the cases cited by the majority, in which this Court stated generally that the absolute pollution exclusion is not ambiguous,⁴ do not control our decision in this case.

The "any irritant" definition of pollutants should be read in the context of the full text of the exclusion and in the context of the purpose of the provision and the historical evolution of the text of the standard exclusion. The only defensible conclusion is that the exclusion at issue was intended to apply only to injury or damage caused by what is commonly considered environmental pollution.⁵ Because, as the majority demonstrates, the exclusion can also be read without so limiting the definition of pollutants, the exclusion is patently ambiguous.

Because the exclusion at issue is ambiguous, we are duty bound to apply the relevant rules of construction.⁶ When the exclusion is...