TerraMatrix, Inc. v. U.S. Fire Ins. Co., 95CA2109

• Decision Date: 01 May 1997
• Docket Number: No. 95CA2109,95CA2109
• Citation: 939 P.2d 483
• Parties: 21 Colorado Journal 624 TERRAMATRIX, INC., f/k/a ACZ, Inc., Plaintiff-Appellant, v. UNITED STATES FIRE INSURANCE COMPANY, a New York Corporation, and Reliance National Indemnity Company, a Foreign Corporation, Defendants-Appellees. . IV
• Court: Colorado Court of Appeals

Page 483

939 P.2d 483

21 Colorado Journal 624

TERRAMATRIX, INC., f/k/a ACZ, Inc., Plaintiff-Appellant, v. UNITED STATES FIRE INSURANCE COMPANY, a New York Corporation, and Reliance National Indemnity Company, a Foreign Corporation Defendants-Appellees.

No. 95CA2109.

Colorado Court of Appeals Div. IV.

May 1, 1997.

Holland & Hart, Harry Shulman, Joseph W. Halpern, Fiona W. Ong, Denver, for Plaintiff-Appellant.

Fowler, Schimberg & Cowman, P.C., Daniel M. Fowler, Katherine Taylor Eubank, Denver, for Defendant-Appellee United States Fire Insurance Company.

Hall & Evans, L.L.C., Chris A. Mattison, Alan Epstein, Denver, for Defendant-Appellee Reliance National Indemnity Company.

Wiley, Rein & Fielding, Laura A. Foggan, Daniel E. Troy, N. Christopher Hardee, Washington, DC; Roberts & Zboyan, JoAnne Zboyan, Denver, for Amicus Curiae Insurance Environmental Litigation Association.

Opinion by Judge ROTHENBERG.

In this declaratory judgment action arising out of two insurance policies, plaintiff, TerraMatrix, Inc., appeals the summary judgment entered in favor of defendants, United States Fire Insurance Company (U.S.Fire) and Reliance National Indemnity Company (Reliance). We affirm.

TerraMatrix provides engineering and environmental consulting services. It owns a blueline printing machine, housed in leased office space, that produces blueprint-type documents. During its operation, the machine emits ammonia gas which is vented to the roof of the office building.

In 1994, another tenant of the building in which TerraMatrix maintained its office filed suit against TerraMatrix and others. The tenant alleged that TerraMatrix' printing machine was improperly vented and had released gases including anhydrous ammonia into the tenant's office space located above TerraMatrix' office.

The tenant sought relief for a variety of injuries caused by exposure to ammonia vapors including:

[I]njuries to his eyes, ears, nose and throat, injuries to his respiratory system, a permanent partial disability, physical pain and suffering, emotional distress, loss of enjoyment of life, loss of time ... out-of-pocket storage, moving and other expenses for his relocation of his business to his home and then to a new office space, expenses for the new office space, for new equipment and furnishings, past and future medical bills and expenses for the treatment of the injuries he sustained and such other damages as shall be established at trial....

TerraMatrix held a commercial general liability policy (CGL policy) issued by U.S. Fire and a professional services/pollution liability policy issued by Reliance. TerraMatrix notified both insurers of the tenant's action and sought coverage under both liability policies. Both insurers denied coverage. U.S. Fire maintained that the tenant's alleged injuries resulted from the release of a pollutant and, therefore, were subject to a pollution exclusion in its policy. It also denied coverage under the personal injury section of the policy. Reliance similarly denied coverage, maintaining that the tenant's injuries did not result from TerraMatrix' performance of professional services and that coverage was barred by an "owned or leased property" exclusion.

TerraMatrix then brought this declaratory judgment action against the insurers to determine the scope of coverage under both policies. After the parties had filed cross-motions for summary judgment, the trial court denied TerraMatrix' motion, granted both insurers' motions, and dismissed the complaint. In granting U.S. Fire's motion, the court addressed the applicability of the pollution exclusion, but did not determine whether coverage was available under the personal injury section of the policy.

On appeal, TerraMatrix asserts that: (1) the pollution exclusion in the U.S. Fire policy does not apply; (2) coverage should be provided under the bodily injury/property damage section of the policy; (3) coverage also is available under a personal injury section of the U.S. Fire policy; (4) coverage is available under the Reliance professional services/pollution liability policy; (5) the "owned or leased property" exclusion in the Reliance policy does not apply; and (6) the scope of the applicable coverage under both policies requires U.S. Fire and Reliance to defend and to indemnify TerraMatrix in the underlying action. We reject each contention.

I. Standard of Review

Summary judgment is proper under C.R.C.P. 56(c) when the pleadings, affidavits, depositions, and admissions show there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. The moving party has the burden of establishing that no genuine issue of material fact remains. Continental Air Lines, Inc. v. Keenan, 731 P.2d 708 (Colo.1987).

A material fact is one that affects the outcome of the case. Sender v. Powell, 902 P.2d 947 (Colo.App.1995). Whether a material fact remains is a question of law. Churchey v. Adolph Coors Co., 759 P.2d 1336 (Colo.1988).

In assessing the sufficiency of the evidence for purposes of determining a motion for summary judgment, all inferences from factual averments must be made in favor of the non-moving party. CenCor, Inc. v. Tolman, 868 P.2d 396 (Colo.1994).

II. Duties of U.S. Fire Insurance Company

TerraMatrix first contends the trial court erred in entering summary judgment in favor of U.S. Fire. We disagree.

A trial court may not look beyond the plain words of an insurance contract to interpret it based on the contracting parties' underlying intent unless the contract terms are ambiguous or are used in a special or technical sense not defined in the contract. National Casualty Co. v. Great Southwest Fire Insurance Co., 833 P.2d 741 (Colo.1992).

A document is ambiguous when it reasonably is susceptible to more than one meaning. The fact that the parties disagree about the meaning of a contractual provision is insufficient to establish ambiguity. Kane v. Royal Insurance Co., 768 P.2d 678 (Colo.1989).

The interpretation of an insurance contract and the determination whether that contract is ambiguous are questions of law, and this court need not defer to the trial court's interpretation to determine whether the plaintiff's claims are excluded from coverage. See Union Insurance Co. v. Houtz, 883 P.2d 1057 (Colo.1994).

The duty to defend is broader than the duty to indemnify and should be viewed separately. An insurer seeking to avoid this duty has a heavy burden. Englewood v. Commercial Union Assurance Co., 940 P.2d 948 (Colo.App. No. 93CA1923, July 11, 1996).

In determining whether there is a duty to defend, courts look at the allegations contained in the complaint filed in the underlying action. If those allegations potentially come within policy coverage, or if there is even some doubt, the insurer must defend the claim. The insurer must defend against all claims if some potentially covered claims are alleged. Hecla Mining Co. v. New Hampshire Insurance Co., 811 P.2d 1083 (Colo.1991).

To avoid any policy coverage, an insurer must demonstrate that a policy exclusion applies which is subject to no other reasonable interpretations. An insurer has a duty to defend unless it can show that: (1) the allegations in the complaint against the insured describe only situations which are within the policy exclusions; and (2) there is no factual or legal basis on which the insurer might be held liable to indemnify the insured. Englewood v. Commercial Union Assurance Co., supra.

Determination of the duty to defend depends on the policy terms viewed in light of relevant principles of contract interpretation. If no duty to defend is found, no duty to indemnify can arise. However, even if a duty to defend is found, a duty to indemnify may not arise. See Constitution Associates v. New Hampshire Insurance Co., 930 P.2d 556 (Colo.1996).

The U.S. Fire CGL policy is based on a form agreement used in many insurance agreements. This type of policy has generated an enormous amount of litigation with varying results. See Englewood v. Commercial Union Assurance Co., supra.

Although U.S. Fire provides several types of coverage under this policy, the two relevant provisions cover bodily injury/property damage and personal injury/advertising injury.

A. Bodily Injury/Property Damage Coverage

The Bodily Injury and Property Damage Liability provisions cover such injuries and damages if they are caused by an occurrence. An occurrence is defined in the policy as "an accident, including continuous or repeated exposure to substantially the same generally harmful conditions."

Bodily injury consists of "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time."

Property damages includes:

a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss shall be deemed to occur at the time of the physical injury that caused it; or ...

b. Loss of use of tangible property that is not physically injured. All such loss shall be deemed to occur at the time of the 'occurrence' that caused it.

This form of coverage contains several exclusions. The pollution exclusion exempts U.S. Fire from the duty to defend or to indemnify for:

'Bodily Injury' or 'property damage' arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants....

The policy defines pollutants as:

[A]ny solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fuels, acids, alkalis, chemicals and waste....

According to TerraMatrix, the trial court erred in determining that the pollution exclusion was unambiguous and that it precluded coverage under the bodily injury/property damage section of the policy. We disagree.

Importantly, the pollution exclusion clause at issue is an absolute pollution exclusion clause and differs significantly from the pollution exclusion clause...