Kerr-McGee v. Georgia Cas. & Sur. Co.

Decision Date01 May 2002
Docket NumberNo. A02A0302.,A02A0302.
Citation256 Ga. App. 458,568 S.E.2d 484
CourtGeorgia Court of Appeals


Ellis, Painter, Ratterree & Bart, Ryburn C. Ratterree, Savannah, King & Spalding, Paul J. Murphy, Michael R. Powers, Atlanta, for appellants.

Mabry & McClelland, DeeAnn B. Waller, Atlanta, for appellee.


Kerr-McGee Corporation f/k/a Kemira, Inc. was sued by Alvin Finch, an employee of Tek-Wal Industrial Contractors, Inc., for injuries suffered while working on the premises of Kerr-McGee when another subcontractor's employee negligently caused him to become exposed to the unintended release of the industrial chemical titanium tetrachloride wholly within Kerr-McGee's plant and without any escape of the industrial chemical into the environment caused or contributed to by Tek-Wal. Kerr-McGee settled with Finch and sued Tek-Wal, among others, for indemnification under its construction contract with Tek-Wal to recover such expenses; however, Tek-Wal filed bankruptcy. Tek-Wal was insured by Georgia Casualty & Surety Company, and Georgia Casualty brought this declaratory judgment action to determine whether or not its total pollution exclusion endorsement applied. This exclusion stated, "[t]his insurance does not apply to `[b]odily injury' or `property damage' which would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time." The exclusion defined pollutant to "mean[ ] any solid, liquid, gaseous, or thermal irritant or contaminant including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste. Waste includes material to be recycled, reconditioned or reclaimed." The trial court granted summary judgment to Georgia Casualty, holding that the pollution exclusion applied and that there was no ambiguity in the exclusion. We reverse the grant of summary judgment, because the exclusion under the facts of this case was ambiguous in that "discharge, dispersal, seepage, migration, release or escape of pollutants" is ambiguous by not specifying where such must occur or who has caused it to result in noncovered damages.

The exclusion states that "discharge, dispersal, seepage, migration, release or escape of pollutants at any time" is excluded; this limits where the pollution occurs to atmosphere, soil, or water which is the external environment to the chemical plant. However, in specifying release to atmosphere, soil, and water, the exclusion does not specify where in regard to a chemical plant: inside the plant, outside the plant, under the plant, or anywhere within the plant in an uncontained state where there is no threat of escape of pollutants into the atmosphere, soil, or water.

This raises the question of whether in the exclusion the chemicals as "pollutants" are discharged, released, etc. when they are contained in mixing vats and troughs as part of the production process or in a transport piping system inside a chemical plant in a controlled state; or whether the chemicals become a "pollutant" when, in an uncontrolled, uncontained, and unregulated state inside a chemical plant, titanium tetrachloride overflows a mixing vat, runs down the vat, and pools on the floor of the plant without escape or threat of escape to atmosphere, soil, or water. Industrial chemicals when used as intended and released from a container may be used in a production process to etch, to strip, to clean, to degrease, to polish, to act as a solvent, to paint, to coat, to act as a mastic, or to surface. At what point in time does a "discharge, dispersal, seepage, migration, release or escape" of industrial chemicals outside a container or containment system occur? How would containment be defined, i.e., used as intended outside a container, contained within the plant, or merely outside its container? For example, carbon tetrachloride, reported in many cases of maintenance slip and fall cases as a common industrial solvent/degreaser, when used on the floor of a restaurant or fast food business to remove food spills, would come within Georgia Casualty's overly broad exclusion language if it caused someone to slip and fall. This definition of the escape of pollutants is overly broad and demonstrates ambiguity that would cause a reasonable person to be unsure of what is excluded and what is covered by insurance.

Titanium tetrachloride, in the state intended by Kerr-McGee within the contained confines of its plant, never escaped or discharged outside the plant into the atmosphere, soil, or water or threatened to do so. Such language as to when a pollutant is not covered causes a reasonable person to be unsure of what appears at first blush to be plain and unambiguous but, upon examination under the facts of this case, is ambiguous.

Ambiguity exists when a contract term or condition is indistinct, uncertain of meaning or expression, and duplicitous. Taylor v. Estes, 85 Ga.App. 716, 718(1), 70 S.E.2d 82 (1952). Stated another way, "a word or phrase is ambiguous only when it is of uncertain meaning, and may be fairly understood in more ways than one. An ambiguity, then, involves a choice between two or more constructions of the contract." (Citations and punctuation omitted.) Burden v. Thomas, 104 Ga.App. 300, 302, 121 S.E.2d 684 (1961). In construing a contract to ascertain the intent of the parties, the court should give a term or phrase in the contract its ordinary meaning or common signification as defined by dictionaries, because they supply the plain, ordinary, and popular sense unless the words are terms of art. OCGA § 13-2-2(2); State Farm Fire &c. Co. v. American Hardware Mut. Ins. Co., 224 Ga. App. 789, 792(3), 482 S.E.2d 714 (1997); Henderson v. Henderson, 152 Ga.App. 846, 847(1), 264 S.E.2d 299 (1979). Terms of art or words connected to a particular trade are given the signification attached to them by experts in such art or trade as a rule of construction. Asa G. Candler, Inc. v. Ga. Theater Co., 148 Ga. 188, 193(5) 96 S.E. 226 (1918). However, in this case, there was no such special meaning in the policy exclusion, because the insurance contract had not been issued for a chemical processing plant.

In applying the rules of construction to an insurance contract, "the test is not what the insurer intended its words to mean, but rather what a reasonable person in the insured's position would understand them to mean." Gulf Ins. Co. v. Mathis, 183 Ga. App. 323, 324, 358 S.E.2d 850 (1987). "[E]xclusions to [an insurance policy] require a narrow construction on the theory that the insurer, having affirmatively expressed coverage through broad promises, assumes a duty to define any limitations on [the] coverage in clear and explicit terms." (Citations and punctuation omitted.) Alley v. Great American Ins. Co., 160 Ga.App. 597, 600, 287 S.E.2d 613 (1981). When the language of an insurance contract is ambiguous and subject to more than one reasonable construction, the policy must be construed in the light most favorable to the insured, which provides him coverage. Claussen v. Aetna Cas. &c. Co., 259 Ga. 333, 334(1), 380 S.E.2d 686 (1989) (involved an earlier sudden pollution exclusion held to be ambiguous); Alley v. Great American Ins. Co., supra at 600, 287 S.E.2d 613. Thus, an exclusion sought to be invoked by the insurer will be liberally construed in favor of the insured and strictly construed against the insurer when it is not clear and unequivocal, as in this case. First Ga. Ins. Co. v. Goodrum, 187 Ga.App. 314, 315, 370 S.E.2d 162 (1988); see also U.S. Fidelity &c. Co. v. Park `N' Go of Ga., 66 F.3d 273, 278 (11th Cir.1995).

If a policy of insurance is so drawn as to require an interpretation, and is fairly susceptible of two different constructions, the one will be adopted ... favorable to the insured. Policies of insurance will be liberally construed in favor of the object to be accomplished, and conditions and provisions therein will be strictly construed against the insurer, as they are issued upon printed forms, prepared by experts at the insurer's instance, in the preparation of which the insured has no voice.

(Citation and punctuation omitted.) Davis v. United American Life Ins. Co., 215 Ga. 521, 527(2), 111 S.E.2d 488 (1959); accord First Ga. Ins. Co. v. Goodrum, supra at 315, 370 S.E.2d 162.

In the definition, contained and waste chemical byproducts of manufacturing and chemical processes that are waste in gaseous, liquid, or solid states are pollutants but come within the exclusion only when discharged into atmosphere, soil, and water. Gaseous waste contaminants in the exclusion definition include smoke, vapor, soot, or fumes, which escape into the atmosphere by implication. The exclusion does not apply to "acids, alkalis, chemicals" which have not escaped into the environment.

The exclusion applies only when pollutants escape outside the containment area of the chemical plant into atmosphere, soil, or water and are not excluded when they have not escaped into the environment outside the physical plant, i.e., above, below, or around the outside of the physical plant. Thus, the exclusion must be given a narrow construction. The exclusion specifically listed as a pollutant thermal irritant and harmful gases, i.e., smoke, vapor, soot, and fumes with particularity, which cannot be contained within the physical plant outside a controlled container system.

The unintentional "discharge, dispersal, seepage, migration, release or escape of pollutants" into atmosphere, soil, or water indicated that the exclusion had no application to a contained location by its choice of verbs, which import a setting free as "unexpected and unintended." Claussen v. Aetna Cas. &c. Co., supra at 336(2), 380 S.E.2d 686. Thus, to constitute a pollutant to the...

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