Western Alliance Ins. Co. v. Gill

• Decision Date: 10 November 1997
• Citation: 686 N.E.2d 997,426 Mass. 115
• Parties: WESTERN ALLIANCE INSURANCE COMPANY v. Jarnail Singh GILL & others. 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 997

686 N.E.2d 997

426 Mass. 115

WESTERN ALLIANCE INSURANCE COMPANY v. Jarnail Singh GILL & others. ¹

Supreme Judicial Court of Massachusetts Middlesex.

Argued Oct. 6, 1997.

Decided Nov. 10, 1997.

Rodney E. Gould (Craig S. Harwood, with him), Framingham, for Katya Fels.

Owen P. McGowan, Boston, for plaintiff.

Laura A. Foggan, Daniel E. Troy, Cara B. Moylan, Washington, DC, and Rosanna Sattler, Boston, for Insurance Environmental Litigation Association, amicus curiae, submitted a brief.

Irene Warshauer and Whitman G.S. Knapp, New York City, and Amy Bach, San Francisco, CA, for United Policyholders, amicus curiae, submitted a brief.

Before WILKINS, C.J., and ABRAMS, LYNCH, GREANEY, MARSHALL and IRELAND, JJ.

GREANEY, Justice.

The plaintiff, Western Alliance Insurance Company (Western Alliance), commenced an action in the Superior Court seeking a declaration that, under the "pollution exclusion" provision in its general liability policy, it was not obligated to defend or indemnify its insureds, the owners and operators of a restaurant in Cambridge known as the India Gate Restaurant. The declaratory judgment proceedings were triggered by an action in tort and contract brought by Katya Fels against the insureds, after she was exposed to carbon monoxide fumes ² while dining at the restaurant. ³ Cross motions for summary judgment were filed by Western Alliance and by Fels, who, as has been noted, is a named defendant in the declaratory judgment action. A judge in the Superior Court granted Western Alliance's motion for summary judgment. Fels appealed from a judgment declaring that Western Alliance had no duty to defend or indemnify its insureds, and we transferred the case to this court on our own motion. We now vacate the judgment and order the entry of a judgment declaring that there is coverage under the policy.

The pollution exclusion provision at issue is set forth in the margin. ⁴ In Atlantic Mut. Ins. Co. v. McFadden, 413 Mass. 90, 595 N.E.2d 762 (1992), we considered an identical pollution exclusion provision, relied upon by the insurer to excuse its duty to defend or indemnify its insured against an action for damages arising out of the lead poisoning of children in a private residence that the insured leased to the children and their mother. We applied the established principle that, "[w]hen construing language in an insurance policy, we 'consider what an objectively reasonable insured, reading the relevant policy language, would expect to be covered.' " Id. at 92, 595 N.E.2d 762, quoting Hazen Paper Co. v. United States Fid. & Guar. Co., 407 Mass. 689, 700, 555 N.E.2d 576 (1990). See Hakim v. Massachusetts Insurers' Insolvency Fund, 424 Mass. 275, 282, 675 N.E.2d 1161 (1997); Slater v. United States Fid. & Guar. Co., 379 Mass. 801, 803, 400 N.E.2d 1256 (1980). In concluding that the insurer could not disclaim its obligations under the policy, we further stated: "We conclude that an insured could reasonably have understood the provision at issue to exclude coverage for injury caused by certain forms of industrial pollution, but not coverage for injury allegedly caused by the presence of leaded materials in a private residence. See West Am. Ins. Co. v. Tufco Flooring East, 104 N.C.App. 312, 321-326 (1991) (construing substantially same pollution exclusion). There simply is no language in the exclusion provision from which to infer that the provision was drafted with a view toward limiting liability for lead paint-related injury. The definition of 'pollutant' in the policy does not indicate that leaded materials fall within its scope. Rather, the terms used in the pollution exclusion, such as 'discharge,' 'dispersal,' 'release,' and 'escape,' are terms of art in environmental law which generally are used with reference to damage or injury caused by improper disposal or containment of hazardous waste. West Am. Ins. Co., supra at 324 ." Atlantic Mut. Ins. Co. v. McFadden, supra.

There is a difference between lead paint poisoning and carbon monoxide poisoning, and between a private residence and a business. Nonetheless, we think that the construction given to the exclusion in McFadden also applies in this case. In addition to inclusion of the terms "discharge," "dispersal," "release," and "escape," the exclusion's definition of "pollutants" endeavors to particularize the more general words "irritant or contaminant" by reference to "smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." Each of the latter words brings to mind products or byproducts of industrial production that may cause environmental pollution or contamination. While Western Alliance may have expected the provision to sweep broadly, and in clause (1)(a) to apply to premises used as a residence or a business, the exclusion has to be interpreted and applied in a commonsense manner with due attention to the circumstances of the accident giving rise to a coverage claim.

The exclusion should not reflexively be applied to accidents arising during the course of normal business activities simply because they involve a "discharge, dispersal, release or escape" of an "irritant or contaminant." See American States Ins. Co. v. Koloms, 177 Ill.2d 473, 493, 227 Ill.Dec. 149, 687 N.E.2d 72 (Oct. 17, 1997), slip op. at 16 (noting that the history of the pollution exclusion indicates that the provision was drafted to avoid enormous expense of environmental litigation and stating that "[w]e would be remiss, therefore, if we were to simply look to the bare words of the exclusion, ignore its raison d'etre, and apply it to situations which do not remotely resemble traditional environmental contamination"). For this reason, courts have held that the exclusion, and similar limiting provisions, did not bar coverage for: injuries caused by the ingestion of lead paint, Atlantic Mut. Ins. Co. v. McFadden, supra; Y the death of a man who inhaled poisonous fumes when he applied adhesive to install a carpet on his boat, Bituminous Cas. Corp. v. Advanced Adhesive Tech., Inc., 73 F.3d 335, 337-338 (11th Cir.1996); injuries caused by exposure to fumes from toxic cements and solvents and congestive dusts created by rubber fabricating processes, Lumbermens Mut. Cas. Co. v. S-W Indus., Inc., 23 F.3d 970, 982 (6th Cir.1994); property damage caused by fumes released from muriatic acid used to etch a floor surface, Sargent Constr. Co. v. State Auto. Ins. Co., 23 F.3d 1324, 1327 (8th Cir.1994); injuries caused by the inhalation of chemical fumes from a carpet, Garfield Slope Hous. Corp. v. Public Serv. Mut. Ins. Co., 973 F.Supp. 326, 332-333 (E.D.N.Y.1997); injuries resulting when fumes emanated from cement used to install a plywood floor, Calvert Ins. Co. v. S & L Realty Corp., 926 F.Supp. 44, 46-47 (S.D.N.Y.1996); injuries sustained from exposure to photographic chemical, Center for Creative Studies v. Aetna Life & Cas. Co., 871 F.Supp. 941, 946 (E.D.Mich.1994); injuries to individuals who ingested malathion during a municipal pesticide spraying operation, Westchester Fire Ins. Co. v. Pittsburg, Kan., 768 F.Supp. 1463, 1468-1471 (D.Kan.1991), aff'd. sub nom. Pennsylvania Nat'l Mut. Cas. Ins. Co. v. Pittsburg, Kan., 987 F.2d 1516 (10th Cir.1993); injuries incurred by a United States Department of Agriculture inspector when a gasket failed in a refrigeration system causing an ammonia leak, Ekleberry, Inc. v. Motorists Mut. Ins. Co., No. 3-91-39, 1992 WL 168835 (Ohio Ct.App. July 17, 1992); paint damage to vehicles which occurred during the spray painting of a bridge, A-1 Sandblasting & Steamcleaning Co. v. Baiden, 53 Or.App. 890, 892-893, 632 P.2d 1377 (1981), aff'd, 293 Or. 17, 643 P.2d 1260 (1982); and, with particular relevance to this case, injuries suffered by persons exposed to an excessive accumulation of inadequately ventilated exhaled carbon dioxide in an office building, Donaldson v. Urban Land Interests, Inc., 211 Wis.2d 224, 225-227, 564 N.W.2d 728 (1997), and carbon monoxide released by faulty heating and ventilation systems, Stoney Run Co. v. Prudential-LMI Commercial Ins. Co., 47 F.3d 34, 37-38 (2d Cir.1995); Regional Bank v. St. Paul Fire and Marine Ins. Co., 35 F.3d 494, 497-498 (10th Cir.1994); Thompson v. Temple, 580 So.2d 1133, 1135 (La.Ct.App.1991); American States Ins. Co. v. Koloms, supra, at 494, 227 Ill.Dec. 149, 687 N.E.2d 72. The common thread between these decisions is that "[a]ll involve injuries resulting from everyday activities gone slightly, but not surprisingly, awry," Pipefitters Welfare Educ. Fund v. Westchester Fire Ins. Co., 976 F.2d 1037, 1044 (7th Cir.1992), and in each, the insurer urged a broad reading of the pollution exclusion clause to cover the accident at issue. However, an objectively reasonable insured, reading the language of the typical pollution exclusion, would not expect a disclaimer of coverage for these types of mishaps even though they involve "discharges," "dispersals," "releases," and "escapes" of "contaminants" and "irritants." ⁵

The insureds in this case also would not expect a disclaimer of coverage for the injuries sustained by Fels while she dined at the India Gate Restaurant. The insureds obviously did not contemplate that their ordinary cooking operations would poison patrons while they were enjoying traditional Indian foods and dinners. Surely, when they purchased their policy from Western Alliance, they expected that accidents causing injuries to patrons at the restaurant due to the negligence of employees or the malfunctioning of ovens and other equipment--claims arising during the course of normal business activities--would be covered. A reasonable policyholder "might well understand carbon monoxide is a pollutant when it is emitted in an industrial or environmental setting, [but] would not reasonably characterize carbon monoxide emitted from a [malfunctioning or improperly operated restaurant oven] as 'pollution.' " Stoney Run Co., supra at 38, quoting Regional Bank, supra...