Lititz Mut. Ins. Co. v. Steely

• Decision Date: 28 December 1999
• Citation: 746 A.2d 607
• Parties: LITITZ MUTUAL INSURANCE CO., Appellant (at 1719), v. Clifford STEELY, Barbara Steely, Steven Brown, Minor, by Ethel Brown, Guardian, Jack Yeager and Shirley Yeager, Appellees. Lititz Mutual Insurance Co., Appellee, v. Clifford Steely, Barbara Steely, Steven Brown, a minor, by Ethel Brown, his guardian, Jack Yeager and Shirley Yeager. Appeal of Clifford and Barbara Steely (at 28).
• Court: Pennsylvania Superior Court

746 A.2d 607

LITITZ MUTUAL INSURANCE CO., Appellant (at 1719), v. Clifford STEELY, Barbara Steely, Steven Brown, Minor, by Ethel Brown, Guardian, Jack Yeager and Shirley Yeager, Appellees.

Lititz Mutual Insurance Co., Appellee, v. Clifford Steely, Barbara Steely, Steven Brown, a minor, by Ethel Brown, his guardian, Jack Yeager and Shirley Yeager.

Appeal of Clifford and Barbara Steely (at 28).

Superior Court of Pennsylvania.

Argued September 1, 1999.

Filed December 28, 1999.

Reargument denied March 10, 2000.

Timothy J. Huber, Lebanon, for Lititz.

Rory O. Connaughton, Lancaster, for Steely.

Paul F. Lantieri, Philadelphia, for Yeager.

Peter R. Kohn, Philadelphia, for Brown.

John A. MacDonald, Philadelphia, amicus curiae.

Before JOHNSON, JOYCE and TAMILIA, JJ.

JOYCE, J.:

¶ 1 These consolidated appeals arise from the order entered October 21, 1998. This order granted Clifford and Barbara Steely's (Steely) as well as Jack and Shirley Yeager's (Yeager) motion for summary judgment as it related to policy coverage questions and the duty to defend. It also dismissed without prejudice the parties' request for relief and indemnification.¹ Lititz Mutual Insurance Co. (Lititz) appeals that portion of the order granting Steely and Yeager summary judgment. Both Steely and Yeager cross-appeal that portion of the order dismissing Lititz's duty to indemnify.² For the following reasons, we reverse and remand for further proceedings consistent with this opinion. Because we reverse the trial court's order granting summary judgment, the ruling regarding the duty to indemnify is rendered moot. Before addressing the merits of Appellant's claim, we will briefly recount the pertinent facts and procedural history of this case.

¶ 2 From February 27, 1988 to June 29, 1993, Steven Brown a minor, resided in a rental property owned by the Steelys. From July of 1993 to March of 1995, Steven resided in property owned by the Yeagers. While living in these rental properties, Steven suffered lead poisoning through the inhalation/ingestion of lead-based paint dust/chips. As a result, on November 25, 1996, Steven's mother, Ethel Brown, instituted suit against the Steelys and the Yeagers, alleging negligence, breach of implied warranty of habitability and misrepresentation.

¶ 3 Appellees were insured under a commercial liability policy issued by Appellant. The policy contained a pollution exclusion clause. Appellee informed Appellant of the suit brought by the Browns and sought coverage. Appellant denied coverage and refused to defend. Appellant sought a declaratory judgment that they did not owe insurance coverage to the Appellees in the underlying lead-based paint poisoning action because of the policy's pollution exclusion. Appellant then moved for summary judgment.

¶ 4 The trial court found the insurance contract ambiguous both as to the term "pollutant" and the terms "discharge, dispersal, release or escape of pollutants." As the court found these terms to be ambiguous, it construed the contract to the benefit of the insured. Accordingly, the court denied Appellant's motion for summary judgment.

¶ 5 Thereafter, Appellees and Yeagers filed motions for summary judgment against Appellant. On October 21, 1998, following oral argument, the trial court granted their motions for summary judgment as to the coverage issue and the duty to defend. However, the court dismissed without prejudice that part of the motion dealing with Appellant's duty to indemnify. Appellant timely appealed. Appellees cross-appealed that part of the order dismissing without prejudice the trial court's ruling on the duty to indemnify.

In examining this matter, as with all summary judgment cases, we must view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. In order to withstand a motion for summary judgment, a non-moving party must adduce sufficient evidence on an issue essential to his case and on which he bears the burden of proof such that a jury could return a verdict in his favor. Failure to adduce this evidence establishes that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Finally, we stress that summary judgment will be granted only in those cases which are clear and free from doubt. Our scope of review is plenary.

Washington v. Baxter, 553 Pa. 434, 441, 719 A.2d 733, 737 (1998) (citations and quotation marks omitted).

¶ 6 The sole issue raised by Appellant is whether the trial court properly granted summary judgment on the issue of coverage and the duty to defend because it found the terms of the insurance policy ambiguous. In addition, Appellees claim that the trial court erred in its determination that it is premature to rule on the issue of the duty to indemnify. While this court has addressed the pollution exclusion clause as it relates to other issues, we have not yet considered whether the exclusion precludes coverage for injury resulting from a lead-based paint poisoning claim. Our Supreme Court's recent holding in Madison Construction Co. v. Harleysville Mutual Ins. Co., 557 Pa. 595, 735 A.2d 100 (Pa.1999), serves to guide us in our interpretation of the current case.³ While the present case deals with lead-based paint poisoning and Madison dealt with injury arising from exposure to fumes from a floor coating, Madison is similar in that it analyzes an aspect of the pollution exclusion clause previously not addressed by the courts of Pennsylvania. Accordingly, Madison provides a road map for this and any other challenge to the pollution exclusion clause.⁴

¶ 7 The exclusion upon which Appellant relies provides that coverage does not apply:

(1) [T]o bodily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants;

(a) at or from premises owned, rented or occupied by the named insured;

Policy at endorsement IL 09280685. The policy further defines pollutants to mean "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." Id.

¶ 8 Appellant has asserted the exclusion as an affirmative defense and thus bears the burden of proving such a defense. Madison Constr. Co. v. Harleysville Mut. Ins. Co., 557 Pa. at 604-06, 735 A.2d at 106. To meet its burden, Appellant must prove that the language of the contract is clear and unambiguous; otherwise, the provision will be construed in favor of the insured. Id. The terms used in the pollution exclusion will be considered ambiguous if they are subject to more than one reasonable interpretation when applied to a particular set of facts. Id.

¶ 9 Appellees argue that the exclusion is ambiguous as to whether or not lead-based paint is a pollutant. Citing Pipefitters Welfare Educational Fund v. Westchester Fire Insurance Co., 976 F.2d 1037 (7 th Cir.1992), Appellees contend that under the terms of the exclusion, every substance in existence qualifies as a pollutant, thus making the clause ambiguous. Steely Brief, at 15-16 and 22. As our Supreme Court has stated:

The pertinent inquiry is not, ..., whether the policy's definition of "pollutant" is so broad that virtually any substance, including many useful and necessary products, could come within its ambit. Rather, guided by the principle that ambiguity (or the lack thereof) is to be determined by reference to a particular set of facts, we focus on the specific product at issue.

Madison, 557 Pa. at 606-07,735 A.2d at 107.

¶ 10 With regard to the product at issue, i.e. lead-based paint, we find instructive the affidavits from Ellen K. Silbergeld, Ph.D., James Girard, Ph.D., and James W. Shockley, all of whom are experts on the subject of lead poisoning and lead-based paint. The affidavits explain that lead-based paint poisoning occurs when children are exposed to paint chips/dust, containing lead, that have deteriorated, flaked or abraded from the surface to which it was applied. Silbergeld Affidavit, at paragraph 5; Girard Affidavit, at paragraph 3; Shockley Affidavit, at paragraph 4. Research in the mid-seventies showed that lead poisoning, via paint that contains lead, could occur through the contamination of household dust with small/microscopic particles of paint dust that are shed from a painted surface by the process of exfoliation. Silbergeld Affidavit, at paragraph 6. Finally, lead was a common ingredient used extensively to pigment paint until the late 1970's. Silbergeld Affidavit, at paragraph 8; Girard Affidavit, at paragraph 5; Shockley Affidavit, at paragraph 6.

¶ 11 Ingestion of household dust containing lead from deteriorating or abraded lead-based paint is the most common cause of lead poisoning in children. St. Leger v. American Fire and Casualty Insurance Company, 870 F.Supp. 641 (E.D.Pa.1994); 42 U.S.C. § 4851(4). Exposure to lead from lead-contaminated paint/dust that would result in adverse human health effects is labeled a "hazard" in the Residential Lead Based Paint Hazard Reduction Act of 1992. St. Leger, supra ; 42 U.S.C. § 4851 b(15). Lead has been identified as a pollutant in the context of ambient air quality mandated by the Clean Air Act. St. Leger, supra ; 40 C.F.R. §§ 50.2, 50.12.

¶ 12 Thus, lead-based paint is not innocuous; exposure to lead in lead-based paint has been extensively studied and its deleterious effects are well known. Indeed, it is for this very reason that in 1978 regulations banned the use of lead in residential paint. Accordingly, the definition of pollutant clearly and unambiguously applies to lead-based paint. See Madison, 557 Pa. at 606-08, 735 A.2d at 107 (1999) (finding a floor coating consisting of xylene, cumene and styrene to be a pollutant under the exclusion clause).

¶ 13 Appellees assert...