United Nat. Ins. Co. v. Hydro Tank, Inc.

• Decision Date: 22 April 2008
• Docket Number: No. 06-20335.,06-20335.
• Citation: 525 F.3d 400
• Parties: UNITED NATIONAL INSURANCE COMPANY, Plaintiff-Appellee, v. HYDRO TANK, INC., et al., Defendants, Motiva Enterprises, L.L.C., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

525 F.3d 400

UNITED NATIONAL INSURANCE COMPANY, Plaintiff-Appellee, v. HYDRO TANK, INC., et al., Defendants Motiva Enterprises, L.L.C., Defendant-Appellant.

No. 06-20335.

United States Court of Appeals, Fifth Circuit.

April 22, 2008.

Brian S. Martin, Kevin Frank Risley, Thompson, Coe, Cousins & Irons, Houston, TX, for Plaintiff-Appellee.

Scott Patrick Stolley, Rachelle Hoffman Glazer, Gregory W. Curry, James Michael Heinlen, Thompson & Knight, Dallas, TX, for Defendant-Appellant.

Laura Anne Foggan, Wiley Rein, LLP, Washington, DC, for Amicus Curiae, Complex Ins. Claims Lit. Ass'n.

Robert M. Roach, Jr., Cook & Roach, Houston, TX, for Amici Curiae: Am. Petroleum Institute, BJ Services Co., USA, BP America, Inc., Chicago Bridge & Iron Co., Murphy Oil Corp., Nat. Petrochmical and Refiners Ass'n, Temple-Inland, Inc. and Total Petrochemicals.

On Appeal from the United States District Court for the Southern District of Texas.

ON PETITION FOR REHEARING

(Opinion Aug. 15, 2007, 5th Cir. 497 F.3d 445)

Before JONES, Chief Judge, and BENAVIDES and STEWART, Circuit Judges.

PER CURIAM:

The Court, having considered the Petition for Rehearing filed by Motiva Enterprises, L.L.C. in this case, amends our opinion found at 497 F.3d 445, as follows:

Subsections 1 and 2 of Part II.A. of the opinion are superseded by the following, and subsection 3 is renumbered as "2":

1. Sufficiency of the Pleadings

The Duriso Plaintiffs alleged they "were caused to sustain serious injuries and damages while working in a tank when they were exposed to toxic levels of hydrogen sulfide and/or other chemicals and vapors." As a result, they "became overcome by chemicals and toxins owned by [Motiva] ... causing brain injury and damage." Motiva argues that use of the phrase "and/or" creates two injury scenarios: one in which the workers were injured by hydrogen sulfide gas, a pollutant,¹ and one in which they were injured by "other chemicals and vapors" that are not necessarily pollutants. Under the second scenario, Motiva asserts, the workers have not alleged injury by a pollutant. For purposes of construing the duty to defend, this court must interpret the pleadings liberally. Nat'l Union Fire Ins. Co. of Pittsburgh v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex.1997). But our duty to construe the pleadings liberally does not require us to adopt unreasonable interpretations of plain language, ignore ordinary usage, or set aside the basic tools of construction.

If the phrase "and/or" is conjunctive, Motiva's interpretation contradicts the policy's language. The relevant clause states that coverage will be denied so long as "`bodily injury' ... which would not have occurred in whole or in part but for the ... alleged ... release ... of `pollutants.'" Thus, if a claim alleges that injury arose at least in part from a pollutant, coverage is denied. See, e.g., Amoco Prod. Co. v. Hydroblast Corp., 90 F.Supp.2d 727, 732-33 (N.D.Tex. 1999) (allegation of pollutant-related injury sufficient to trigger pollution exclusion clause); Bituminous Cas. Corp. v. Kenworthy Oil Co., 912 F.Supp. 238, 241 (W.D.Tex.1996) (same).

But even if "and/or" references a disjunctive phrase and thereby states two possible causes of the workers' fainting, either through their exposure to hydrogen sulfide gas or "other chemicals & vapors", Motiva's argument still fails to allege a covered incident. Depending largely on dicta from an unpublished Fifth Circuit opinion interpreting a damages clause in a service contract, Motiva argues that the correct interpretation of the Duriso pleading reads the phrase "toxic levels of" as applying only to "hydrogen sulfide," and not to the latter phrase "other chemicals and vapors." See Vaulting & Cash Servs., Inc. v. Diebold, Inc., 1999 WL 1068257, at *2 (5th Cir., Oct. 22, 1999) (unpublished). The Vaulting court, however, was construing contractual language that is syntactically and semantically dissimilar from the operative language of the Duriso pleading.² Moreover, the panel explicitly stated that "grammatical parsing" is only part of the interpretive process, and the "reasonableness of the interpretation advanced by each party" also plays a significant role. Id.

If anything, the Vaulting decision supports United National's position. The logical interpretation of the pleadings is that the phrase "toxic levels of" modifies both "hydrogen sulfide" and "other chemicals and vapors," particularly in light of the fact that the Duriso Plaintiffs only a few sentences later allege brain injury from "chemicals and toxins." Moreover, when general terms like "chemicals" and "vapors" follow specific terms like "hydrogen sulfide," there is a presumption that the general terms are to be construed to belong to the same class or category as the more specific term. See, e.g., In Re Biloxi Casino Belle Inc., 368 F.3d 491, 499 & n. 8 (5th Cir.2004) (discussing, in an insurance context, the ejusdem generis³ canon). Accordingly, the phrase "toxic levels of hydrogen sulfide and/or other chemicals and vapors" suggests that injury resulted from (1) toxic levels of hydrogen sulfide; (2) toxic levels of other chemicals or vapors; or (3) a combination of both. In any of these situations, the workers were exposed to pollutants according to the policy exclusion.

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