Quadrant Corp. v. American States Ins. Co.
| Decision Date | 22 September 2003 |
| Docket Number | No. 50647-1-I.,50647-1-I. |
| Citation | 76 P.3d 773,118 Wash. App. 525 |
| Court | Washington Court of Appeals |
| Parties | The QUADRANT CORPORATION, a Washington corporation; Equity Residential Properties Trust, a Maryland corporation; and Roy Street Associates, a Washington general partnership, Appellants, v. AMERICAN STATES INSURANCE COMPANY, a foreign corporation, and State Farm Fire and Casualty Company, a foreign corporation, Respondents. |
Dan'L W. Bridges, Bellevue, WA, for Appellants.
Mary R. DeYoung, Seattle, WA, for Respondents.
In this insurance coverage case, The Quadrant Corporation, Equity Residential Properties Trust, and Roy Street Associates (collectively Insureds) appeal from summary judgment dismissal of their complaint against American States Insurance Co. and State Farm Fire and Casualty Co. (collectively Insurers). The Insureds sought coverage for injuries suffered by a tenant when fumes from a liquid waterproofing material used by a company they hired entered the tenant's unit and caused personal injury and property damage. At issue is whether the policies' pollution exclusions preclude coverage. Because the underlying injury and cause of action are the result of a pollutant acting as a pollutant, as opposed to a claim that is rooted in negligence, the exclusions apply. We therefore affirm.
The relevant facts are not in dispute—the parties stipulated to them. The underlying claim involves allegations by Delores Kaczor, a tenant in an apartment building owned by the Insureds. Kaczor suffered personal injuries and property damage by exposure to toxic fumes emitted by a liquid waterproofing sealant applied by a contractor, Pacific Restoration and Waterproofing Inc., which was doing repair work on the building. The fumes entered Kaczor's unit as the waterproofing material dried.
The underlying claim was brought in two separate but related liability lawsuits against the Insureds. Both suits involved claims by or on behalf of Kaczor alleging the Insureds, through their contractor, were negligent in applying the weatherproofing solution and in failing to warn the tenant of its danger.
The Insurers denied coverage for the claim. In April 2002, the parties filed cross-motions for summary judgment. The cross-motions raised a single issue: whether coverage was precluded by the policies' pollution exclusions. The trial court granted summary judgment in favor of the Insurers, ruling that the policies did not cover the loss because the pollution exclusions precluded coverage.
There are two insurance policies at issue. Both are comprehensive general liability policies that contain essentially the same language. They exclude damage caused by pollutants. The American States policy provides in relevant part:
This insurance does not apply to:
. . . .
f. Pollution
(1) "Bodily injury" or "property damage" arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of pollutants[.]1
For purposes of this exclusion, the policy contains the following definition:
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.
The State Farm policy exclusion provides in relevant part:
Under Coverage L, this insurance does not apply:
. . . .
6. to any:
(a) bodily injury, property damage, personal injury or advertising injury arising out of the actual, alleged or threatened discharge, seepage, migration, dispersal, spill, release or escape of pollutants[.]2
For purposes of this exclusion, the policy defines pollution as:
[P]ollutants 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[.]3
The Insureds assert the exclusions do not apply to these facts.
The trial court dismissed the Insureds' claim against the Insurers under CR 56(c). Summary judgment is proper when there is no genuine issue about any material fact and the moving party is entitled to judgment as a matter of law.4 This court conducts the same inquiry as the trial court in reviewing a summary judgment order.5 We review summary judgment orders de novo,6 and view all evidence in the light most favorable to the nonmoving party.7
Interpretation of an insurance policy is a question of law, and summary judgment is appropriate if the contract has only one reasonable meaning when viewed in light of the parties' objective manifestations.8 Insurance policies are to be construed as a whole, with force and effect given to each clause.9 "Overall, a policy should be given a practical and reasonable interpretation rather than a strained or forced construction that leads to an absurd conclusion, or that renders the policy nonsensical or ineffective."10
The issue is whether the insurance policies exclude coverage for claims arising from the waterproofing material's fumes; that is, do the fumes constitute "pollutants," as defined by the policies. Both insurance contracts contain pollution exclusions, and the Insurers relied on those exclusions to deny coverage for claims related to the tenant's injuries. The Insurers contend the fumes from the waterproofing material constitute pollution plainly excluded from coverage.
The Insureds cite Kent Farms, Inc. v. Zurich Insurance Co.11 in support of their position that the pollution exclusions do not preclude coverage. There, the Washington Supreme Court held that a pollution exclusion did not preclude coverage in a case where a man suffered injuries after being struck by a forceful release of diesel fuel from a tank. The fuel delivery driver delivered diesel fuel to Kent Farms. After filling the farm's fuel storage tanks, he closed the tank's intake valve and started to remove the delivery hose. Because of a faulty intake valve, fuel back-flowed over him. Based on these facts, the court said that the damages resulted not from environmental damage, even though diesel fuel could constitute a pollutant in other situations, but rather from tortious personal injury caused by the faulty intake valve, i.e., the insured's negligence. The Kent Farms court reasoned:
[The injured person] was not polluted by diesel fuel. It struck him; it engulfed him; it choked him. It did not pollute him. Most importantly, the fuel was not acting as a "pollutant" when it struck him any more than it would have been acting as a "pollutant" if it had been in a barrel that rolled over him, or if it had been lying quietly on the steps waiting to trip him....12
The court therefore held that pollution exclusions in insurance contracts do not preclude coverage for all occurrences just because a potential pollutant is in the causal chain.
The Insurers rely primarily on Cook v. Evanson.13 There, we held that an insurance policy's pollution exclusion precluded coverage for damage claims arising from fumes produced by negligent application of a concrete sealant. The sealant was supposed to be applied only to the exterior of the building. The contractors failed to properly seal off the building, and several workers inside became ill from breathing the fumes. We stated that although the fumes were not "traditional environmental pollution," they emanated from the insured party's work site and were connected to the business operations.14
While the Insureds assert that Kent Farms implicitly overruled Cook and the so-called "fumes" line of cases, the Insurers assert Cook is still good law because the two cases are distinguishable. The Insurers are correct.15 In City of Spokane v. United National Insurance Co.,16 the district court for the Eastern District of Washington addressed the same issue. It stated:
Although Plaintiff argues that the Kent Farms case implicitly overruled prior cases holding that odors and fumes do constitute pollutants, the supreme court in Kent Farms did not address any issue relating to odors and gave no indication that its holding would apply to facts such as those at issue in the instant case. Therefore, the Bremerton [v. Harbor Ins. Co., 92 Wash.App. 17, 963 P.2d 194 (1998)] and Cook cases remain binding law in Washington.17
And in Division Three's Kent Farms opinion, the court also distinguished Cook:18
Cook is distinguishable from this case. The sealant at issue was brought to the premises for the purpose of applying it to the exterior of the building. It was a substance that was on the premises for no other purpose and, thus, was inherently toxic or toxic even when applied as intended. However in this case, the alleged "pollutant" was diesel fuel. The fuel was delivered to the farm for use in the operation of the farm. Presumably, the fuel was intended to be used to power farm equipment. In such use, the fuel is not toxic. In other words, the difference between the sealant and diesel fuel is that the latter is not a pollutant when used as intended.19
We agree. Kent Farms and Cook are easily distinguishable. While Kent Farms involves a potential pollutant causing injury for reasons unrelated to its being a pollutant,20 Cook involves a pollutant causing injury because it is a pollutant even when used as intended. We therefore conclude that Kent Farms did not implicitly overrule Cook and the "fumes" line of cases.21
The issue now is to determine whether Kent Farms or Cook applies here. That, in turn, depends on how the injury occurred. The Insureds assert that because the injury was caused by the contractor's negligence and the injury in Kent Farms was also the result of negligence, we should rely on Kent Farms. The Insureds are incorrect. While it is true that Kent Farms held the pollution exclusion did not apply because the injury there was "rooted in negligence,"22 it based that conclusion on the...
To continue reading
Request your trial
-
Quadrant Corp. v. American States Ins. Co.
...this case was instead comparable to Cook, a similar case in which toxic fumes had caused the injury. Quadrant Corp. v. Am. States Ins. Co., 118 Wash.App. 525, 533, 76 P.3d 773 (2003). The Court of Appeals also held that the exclusion was not so broad that it rendered the insurance contracts......
-
CHISHOLM'S VILLAGE PLAZA v. TRAVELERS COMM. INS.
...Plant Com'n v. Wausau Underwriters Ins. Co., 2000 S.D. 116, 616 N.W.2d 397, 407 (S.D. 2000); Quadrant Corp. v. American States Ins. Co., 118 Wash. App. 525, 76 P.3d 773, 777 (Div. 1 2003), aff'd, 154 Wash. 2d 165, 110 P.3d 733 (2005); Peace ex rel. Lerner v. Northwestern Nat. Ins. Co., 228 ......