Deni Associates of Florida, Inc. v. State Farm Fire & Cas. Ins. Co.

• Decision Date: 29 January 1998
• Docket Number: Nos. 89115,89300,s. 89115
• Citation: 711 So.2d 1135
• Parties: 23 Fla. L. Weekly S59, 28 Envtl. L. Rep. 21,069 DENI ASSOCIATES OF FLORIDA, INC., Petitioner, v. STATE FARM FIRE & CASUALTY INSURANCE COMPANY, Respondent. E.C. FOGG, III, et al., Petitioners, v. FLORIDA FARM BUREAU MUTUAL INSURANCE COMPANY, Respondent.
• Court: Florida Supreme Court

Page 1135

711 So.2d 1135

23 Fla. L. Weekly S59, 28 Envtl. L. Rep. 21,069

DENI ASSOCIATES OF FLORIDA, INC., Petitioner, v. STATE FARM FIRE & CASUALTY INSURANCE COMPANY, Respondent.

E.C. FOGG, III, et al., Petitioners, v. FLORIDA FARM BUREAU MUTUAL INSURANCE COMPANY, Respondent.

Nos. 89115, 89300.

Supreme Court of Florida.

Jan. 29, 1998.

Rehearing Denied June 11, 1998.

Scott A. Mager of Kluger, Peretz, Kaplan & Berlin, P.A., Fort Lauderdale, Gary S. Gaffney of the Law Offices of Gary S. Gaffney, Davie, for Petitioner Deni Associates of Florida, Inc.

Cromwell A. Anderson of Fowler, White, Burnett, Hurley, Banick & Strickroot, P.A., Miami, for Petitioners E.C. Fogg, III, et al.

Elizabeth K. Russo and Kimberly L. Boldt of Elizabeth Russo & Associates, P.A., Miami, and Green & Ackerman, P.A., Fort Lauderdale, for Respondent State Farm Fire & Casualty Insurance Company.

Bonita Kneeland Brown of Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., for Respondent Florida Farm Bureau Mutual Insurance Company.

David K. Miller of Broad and Cassel, Tallahassee, and Samantha Boge of Stowell Anton & Kramer, Tallahassee, for Amicus Curiae Associated Builders and Contractors, Inc.

Daniel Y. Sumner and Elizabeth G. Arthur of the Florida Department of Insurance, Tallahassee, for Amicus Curiae The Florida Department of Insurance.

Raymond T. Elligett, Jr. and Amy S. Farrior of Schropp, Buell & Elligett, P.A., Tampa, for Amicus Curiae Academy of Florida Trial Lawyers.

Betsy E. Gallagher of Gallagher & Howard, Tampa, for Amicus Curiae Florida Defense Lawyers Association.

Ronald L. Kammer of Hinshaw & Culbertson, Miami; Laura A. Foggan and John C. Yang of Wiley, Rein & Fielding, Washington, D.C., for Amicus Curiae Insurance Environmental Litigation Association.

Keith E. Hope of Keith Hope, P.A., Key Biscayne, for Amicus Curiae the Florida Fruit & Vegetable Association.

Joseph J. Gleason, Lakeland, for Amicus Curiae Florida Citrus Mutual.

GRIMES, Senior Justice.

We review State Farm Fire & Casualty Insurance Co. v. Deni Associates of Florida, Inc., 678 So.2d 397, 404 (Fla. 4th DCA 1996), in which the court certified the following as a question of great public importance:

Where an ambiguity is shown to exist in a CGL policy, is the court limited to resolving the ambiguity in favor of coverage, or may the court apply the doctrine of reasonable expectations of the insured to resolve ambiguities in CGL policies?

We have jurisdiction under article V, section 3(b)(4) of the Florida Constitution. In addressing this question, the court below decided two unrelated cases which involved the same issue.

Deni Associates of Florida, Inc. (Deni), an architectural engineering firm, was one of several tenants in a two-story commercial building. In the course of moving equipment in the building, ammonia was accidentally spilled from a blueprint machine. Responding to a 911 call, the fire department evacuated the building, set up ventilators, and broke windows in order to expedite ventilation. The building was turned back over to the building manager six hours later. Thereafter, claims were made against Deni for personal injuries sustained from inhalation of the ammonia fumes. Claims were also made by several cotenants seeking reimbursement for loss of income due to evacuation of the building. Deni carried a comprehensive general liability (CGL) policy with State Farm Fire and Casualty Insurance Company.

E.C. Fogg and others, doing business as the partnership of Land-O-Sun Groves (Land-O-Sun), contracted with Colony Services, Inc. (Colony) to aerially spray chemical insecticide furnished by Land-O-Sun on its citrus groves. In the course of spraying, the helicopter splashed insecticide on two men who were standing on adjacent property. The two men subsequently sued Land-O-Sun and Colony for injuries allegedly suffered as a result of being exposed to the insecticide. Land-O-Sun carried a CGL policy with Florida Farm Bureau Mutual Insurance Company.

In both instances, the insurance companies disputed coverage based upon a pollution exclusion provision in their respective policies. In the ensuing declaratory judgment actions, the trial courts in both cases entered summary judgments against the insurance companies. Sitting en banc, the Fourth District Court of Appeal unanimously reversed the judgment in favor of Land-O-Sun and by a split decision reversed the judgment in favor of Deni.

Both pollution exclusion clauses are substantially the same. They exclude from liability coverage any personal injury or property damage "arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants." ¹ Further, each policy contained the following language:

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

In its opinion, the court rejected a rule of construction employed in many jurisdictions known as the doctrine of reasonable expectations. The court pointed out that this doctrine had not been adopted in Florida and that in any event because there was no ambiguity in the exclusions, there was no reason to analyze the expectations of the insureds. However, the court chose to pose the certified question with respect to the doctrine of reasonable expectations.

At the outset, we note that the certified question presupposes an ambiguity, whereas the court held that no such ambiguity existed. Notwithstanding, we believe that the legal efficacy of the pollution exclusion is an important issue which should be decided by this Court.

Apparently, the language of this pollution exclusion, sometimes called the absolute pollution exclusion, is in widespread use throughout the country because many courts have addressed the same arguments contained in the briefs filed in the instant cases. A substantial majority of these courts have concluded that the pollution exclusion is clear and unambiguous so as to preclude coverage for all pollution related liability. ² See, e.g., Economy Preferred Ins. Co. v. Grandadam, 275 Ill.App.3d 866 212 Ill.Dec. 190, 192, 656 N.E.2d 787, 789 (1995) ("The vast majority of courts that have examined 'absolute pollution exclusions' have found them to be clear and unambiguous."); McGuirk Sand & Gravel, Inc. v. Meridian Mut. Ins. Co., 220 Mich.App. 347, 559 N.W.2d 93, 97 (1996) ("There is a definite national trend to construe such exclusions as clearly and unambiguously precluding coverage for claims arising from pollution."); Tri County Serv. Co. v. Nationwide Mut. Ins. Co., 873 S.W.2d 719, 721 (Tex.App.1993) ("[V]irtually all courts in other jurisdictions which have considered such an exclusion have found that it precludes all coverage of any liability arising out of the release of pollutants.").

We, too, agree that the pollution exclusion clause is clear and unambiguous. In State Farm Mutual Automobile Insurance Co. v. Pridgen, 498 So.2d 1245 (Fla.1986), this Court announced the rule to be followed in the interpretation of exclusionary clauses in insurance policies:

[E]xclusionary provisions which are ambiguous or otherwise susceptible to more than one meaning must be construed in favor of the insured, since it is the insurer who usually drafts the policy. See Excelsior Insurance Co. v. Pomona Park Bar & Package Store, 369 So.2d 938, 942 (Fla.1979). However, "[o]nly when a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of construction is the rule apposite. It does not allow courts to rewrite contracts, add meaning that is not present, or otherwise reach results contrary to the intentions of the parties."

Id. at 1248.

We cannot accept the conclusion reached by certain courts that because of its ambiguity the pollution exclusion clause only excludes environmental or industrial pollution. E.g., Westchester Fire Ins. Co. v. City of Pittsburg, 768 F.Supp. 1463 (D.Kan.1991); South Cent. Bell Tel. Co. v. Ka-Jon Food Stores, 644 So.2d 357 (La.1994); West American Ins. Co. v. Tufco Flooring East, Inc., 104 N.C.App. 312, 409 S.E.2d 692 (1991). In responding to such an argument, the court in American States Insurance Co. v. F.H.S., Inc., 843 F.Supp. 187, 190 (S.D.Miss.1994), stated:

F.H.S. asks that this court, in essence, ignore the policy definition of "pollutants" or, perhaps more accurately, limit the term so that it is defined in the manner employed by environmental engineers, and thereby create coverage not provided by the policy. The court reiterates that it is not free to rewrite the terms of the insurance contract where that contract is not ambiguous. In this case, regardless of what is or might be a preferable definition from F.H.S.'s standpoint, or what would be the definition of choice from [an environmental engineer expert's] perspective, or the perspective of the scientific community, the policy definition of "pollutant," and the pollution exclusion construed as a whole is clear and unambiguous. Moreover, the claims that have been asserted against F.H.S. fall well within the exclusion.

(Footnote omitted.)

The United States District Court for the Middle District of Florida addressed a similar argument in West American Insurance Co. v. Band & Desenberg, 925 F.Supp. 758 (M.D.Fla.1996), when it said:

Band also argues that the pollution exclusion should apply only to "environmental" pollution. Band again relies on cases interpreting older versions of the pollution exclusion for this argument. In those cases, the courts first looked to the historical purpose of the pollution exclusion and held that the drafters intended the exclusion to limit coverage for clean-up costs imposed by EPA legislation. The courts then looked at the language requiring the discharge to be "onto land, into the atmosphere, or into water" and interpreted that to mean that the exclusion was applicable only when the pollutants were discharged into the...