Title: City of Chesapeake v. States Self-Insurers Risk Retention Group

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and 
Lemons, JJ., and Compton,∗ S.J. 
 
CITY OF CHESAPEAKE 
 
v.  Record No. 051986  
OPINION BY JUSTICE DONALD W. LEMONS 
 
 
 
April 21, 2006 
STATES SELF-INSURERS 
RISK RETENTION GROUP, INC. 
 
UPON A QUESTION OF LAW CERTIFIED BY  
THE UNITED STATES DISTRICT COURT FOR  
THE EASTERN DISTRICT OF VIRGINIA 
 
 
Pursuant to Article VI, Section 1 of the Constitution of 
Virginia and our Rule 5:42, the United States District Court 
for the Eastern District of Virginia (“district court”), by 
its order entered September 22, 2005, certified to this Court 
a single question of law relating to coverage questions under 
an insurance policy: 
 
Was coverage excluded under the pollution 
exclusion in the Policy for claims made in suits 
filed by 213 women who alleged that they suffered 
one or more miscarriages resulting from exposure 
to THMs in the City's water supply? 
 
By order entered on November 1, 2005, we accepted the 
certified question. 
I.  Background 
This certified question is the epilogue to City of 
Chesapeake v. Cunningham, 268 Va. 624, 604 S.E.2d 420 (2004).  
Helen Cunningham ("Cunningham") was the lead plaintiff of a 
                     
∗ Senior Justice Compton participated in the hearing and 
decision of this case before his death on April 9, 2006. 
 
2
combined group of 214 plaintiffs who alleged that their 
miscarriages were caused by exposure to trihalomethanes 
("THMs") in the City of Chesapeake's water system on various 
dates from 1984 through 2000.  These cases were combined for 
pretrial proceedings under the Virginia Multiple Claimants 
Litigation Act, Code §§ 8.01-267.1 through -267.9.  Cunningham 
sought recovery for, among other things, an alleged bodily 
injury due to the consumption of toxic drinking water provided 
by the City of Chesapeake ("the City").  Cunningham, 268 Va. 
at 627, 604 S.E.2d at 422.  We held that the alleged claims 
against the City were barred by sovereign immunity.  Id. at 
640, 604 S.E.2d at 430.  The certified question now before the 
Court addresses whether the City may obtain insurance coverage 
and reimbursement for its legal fees incurred as a result of 
the litigation in Cunningham.  These fees and costs totaled 
$2,413,959.08. 
 
The case is currently pending in the United States 
District Court for the Eastern District of Virginia (Norfolk 
Division), awaiting resolution of the motion to dismiss for 
failure to state a claim under Federal Rule of Civil Procedure 
12(b)(6) filed by States Self-Insurers Risk Retention Group, 
Inc. ("States Insurance").  If the certified question is 
answered in the affirmative, there is no coverage and the City 
is not entitled to reimbursement of its legal fees and costs.  
 
3
If the certified question is answered in the negative, then 
the federal district court must determine various issues, 
including the amount to which the City may be entitled from 
States Insurance. 
II.  Analysis 
 
The City contracted with States Insurance for a "Public 
Entity Excess Liability Insurance Policy."  The dispute, and 
the certified question, involve the exclusion provision in 
Section I.B.9.a of that Policy, which states in relevant part 
that coverage does not apply to any damages for: 
Bodily injury or property damage arising out of 
the actual, alleged or threatened discharge, 
dispersal, seepage, migration, release or 
escape of pollutants: 
 
(1)  at or from any premises, site or 
location which is or was at any time owned 
or occupied by, or rented or loaned to, 
any "Insured"; 
 
(2)  at or from any premises, site or 
location which is or was at any time used 
by or for any "Insured" or others for the 
handling, storage, disposal, processing or 
treatment of waste; 
 
(3)  which are or were at any time 
transported, handled, stored, treated, 
disposed of, or processed as waste by or 
for any "Insured" or any person or 
organization for whom any "Insured" may be 
legally responsible; or 
 
(4)  at or from any premises, site or 
location on which any "Insured" or any 
contractors or subcontractors working 
 
4
directly or indirectly on any "Insured's" 
behalf are performing operations: 
 
(a)  if the pollutants are brought on 
or to the premises, site or location 
in connection with such operations by 
such "Insured", contractor or 
subcontractor; or 
 
(b)  if the operations are to test 
for, monitor, clean up, remove, 
contain, treat, detoxify or 
neutralize, or in any way respond to, 
or assess the effects of pollutants. 
 
The policy defines "bodily injury" as "bodily injury, sickness 
or disease sustained by a person, including death by any of 
these at any time."  The policy defines "pollutants" as "any 
solid, liquid, gaseous or thermal irritant or contaminant, 
including but not limited to smoke, vapor, soot, fumes, acids, 
alkalis, chemicals and waste.  Waste includes materials to be 
recycled, reconditioned or reclaimed." 
The interpretation of a contract presents a question of 
law.  Bentley Funding Group, L.L.C. v. SK&R Group, L.L.C., 269 
Va. 315, 324, 609 S.E.2d 49, 53 (2005).  The contract is 
construed as written, without adding terms that were not 
included by the parties.  Wilson v. Holyfield, 227 Va. 184, 
187, 313 S.E.2d 396, 398 (1984).  When the terms in a contract 
are clear and unambiguous, the contract is construed according 
to its plain meaning.  Bridgestone/Firestone, Inc. v. Prince 
William Square Assocs., 250 Va. 402, 407, 463 S.E.2d 661, 664 
 
5
(1995).  "Words that the parties used are normally given their 
usual, ordinary, and popular meaning.  No word or clause in 
the contract will be treated as meaningless if a reasonable 
meaning can be given to it, and there is a presumption that 
the parties have not used words needlessly."  D.C. McClain, 
Inc. v. Arlington County, 249 Va. 131, 135-36, 452 S.E.2d 659, 
662 (1995). 
 
By definition, the THMs involved in Cunningham are 
"contaminants."  See 42 U.S.C. § 300g-1 (2000); 40 C.F.R. 
§§ 141.2 and 142.2 (2005); see also Cunningham, 268 Va. at 
628-29, 604 S.E.2d at 423 (explaining that THMs have been 
regulated as contaminants under the Federal Safe Drinking 
Water Act and its implementing regulations since 1979).  
Therefore, according to the plain language of the insurance 
policy in the instant case, because they are "contaminants," 
THMs are "pollutants." 
 
The parties have engaged each other and this Court in 
analysis of the meaning of the various words used in their 
contract: "discharge, dispersal, seepage, migration, release 
or escape."  For example, the City argues that THMs are 
"created" by the chemical combination of chlorine and organic 
matter contained in the water.  Because THMs are "created," 
they are not pre-existent and, consequently, cannot be subject 
to "discharge, dispersal, seepage, migration, release or 
 
6
escape."  However, the City did concede at oral argument that 
the THMs, however created, were "released" by the City when a 
customer turned on the faucet in a residence or business. 
 
While the City's concession alone would resolve this 
controversy, we need look no further than the underlying 
motion for judgment in Cunningham to reach the same 
conclusion.  In her motion for judgment, Cunningham alleged 
bodily injury due to exposure to THMs because "THMs are a 
poisonous byproduct of disinfection that are disposed of and 
released into the domestic water at or about the City's water 
treatment facility or facilities as a result of the process of 
water treatment and disinfection employed by the City."  
Cunningham also alleged a "discharge" of THMs by the City.  
These allegations bring the underlying suit, and its 
associated legal fees and costs at issue in this certified 
question, into the ambit of the exclusion provision now before 
the Court because the legal fees and costs were from a suit 
involving "[b]odily injury . . . arising out of the actual, 
alleged or threatened discharge, dispersal, seepage, 
migration, release or escape of pollutants."  (Emphasis 
added.) 
III.  Conclusion 
 
In their respective arguments, the parties asked the 
Court to examine how other jurisdictions have resolved similar 
 
7
insurance contract disputes.  It is unnecessary to do so, 
however, because the law of this Commonwealth and the plain 
language of the insurance policy provide the answer to the 
certified question.  We hold that coverage was excluded under 
Section I.B.9.a of the Policy for claims made in suits filed 
by 214 women who alleged that they suffered one or more 
miscarriages resulting from exposure to THMs in the City of 
Chesapeake's water supply.  Accordingly, we answer the 
certified question in the affirmative. 
Certified question answered in the affirmative.