United States Court of Appeals

Fifth Circuit

FILED

August 15, 2007

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________________

No. 06-20335

_______________________

UNITED NATIONAL INSURANCE COMPANY,

Plaintiff-Appellee,

versus

HYDRO TANK, INC., ET AL,

Defendants,

MOTIVA ENTERPRISES, L.L.C.,

Defendant-Appellant.

On Appeal from the United States District Court

for the Southern District of Texas

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

Judges.

EDITH H. JONES, Chief Judge:

This insurance coverage dispute requires the

interpretation of an insurance policy’s Pollution Exclusion clause

and a Contractors Limitation Endorsement Clause. Finding no error

in the district court’s conclusion that coverage was barred by the

first clause and not resurrected by the latter one, we AFFIRM.

I. BACKGROUND

Three Hydro Tank workers were injured in July 2002 while

removing petroleum-byproduct sludge from a mixing tank owned and

operated by Appellant Motiva Enterprises at its Port Arthur, Texas,
1 United National has stipulated that the American Equity CGL policy

“provides valid and collectible coverage to Motiva for the claims of the Duriso

plaintiffs and for Hydro Tank’s liability to Motiva.” Moreover, for purposes of

this suit, United National does not dispute Motiva’s contention that the CGL

policy is enforceable against Hydro Tank and that Hydro Tank agreed to indemnify

Motiva against the Duriso Plaintiffs’ claims.

2

refinery. Shortly after entering the tank, two of the workers were

overcome by fumes and fell face-first into the sludge. The

stricken men were courageously pulled out of the tank by Jimmy

Duriso, their coworker. All three were hospitalized and survived.

The injured Hydro Tank workers (collectively, the “Duriso

Plaintiffs”) sued Motiva in Texas state court, alleging severe

brain and cardio-pulmonary damage from exposure to “toxic levels of

hydrogen sulfide and/or other chemicals and vapors.” Motiva

settled the lawsuit.

The sludge removal in which the Duriso Plaintiffs were

injured was conducted pursuant to a March 2002 contract between

Motiva and Hydro Tank, in which Hydro Tank agreed to indemnify

Motiva against any claims arising out of the tank cleaning and to

procure an umbrella liability insurance policy naming Motiva as an

“additional insured.” Hydro Tank accordingly obtained a onemillion-dollar commercial general liability (“CGL”) policy from

American Equity Insurance and a five-million-dollar umbrella policy

from Appellee United National Insurance Company. Both policies

were effective on the date of the incident, but only the coverage

of the United National policy is at issue in this appeal.1
2 Although the underlying American Equity policy only covered indemnity

up to one million dollars, Hydro Tank did not limit the amount of its

indemnification obligation to Motiva in the May 2002 agreement. 

3

The umbrella policy extends to Motiva the same degree of

coverage offered by Hydro Tank pursuant to its indemnity agreement

with Motiva.2 After settling the Duriso suit, Motiva sought

indemnity from United National up to the policy limit. 

United National denied Motiva’s claim and sued Motiva in

the Southern District of Texas, requesting a declaratory judgment

that it owed Motiva nothing. The district court granted summary

judgment to United National based on the policy’s Pollution

Exclusion clause, interpreting it to bar Motiva’s indemnification

claim. Motiva appeals. 

II. DISCUSSION

This court reviews a summary judgment grant de novo,

applying the same standards as the district court. Adams v.

Travelers Indem. Co., 465 F.3d 156, 163 (5th Cir. 2006). Summary

judgment is proper if “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to a judgment

as a matter of law.” FED. R. CIV. P. 56(c).

In this case, governed by Texas law, United National

contended that it has no contractual responsibility for Motiva’s

defense costs or to indemnify Motiva for the settlement. Texas
4

follows the “eight-corners” rule of insurance contract

interpretation. See, e.g., GuideOne Elite Ins. Co. v. Fielder Rd.

Baptist Church, 197 S.W.3d 305, 308 (Tex. 2006). The “insurer’s

duty to defend is determined by the underlying plaintiff’s

pleadings, considered in light of the policy provisions, without

regard to the truth or falsity of those allegations.” Liberty Mut.

Ins. Co. v. Graham, 473 F.3d 596, 599 (5th Cir. 2000). If the

pleadings allege facts stating a cause of action potentially

falling within the insurance policy’s scope of coverage, the

insurer has a duty to defend. Id. at 600. Doubtful cases will be

resolved in favor of the insured. Nat’l Union Fire Ins. Co. of

Pittsburgh v. Merchants Fast Motor Lines, Inc., 939 S.W.3d 139, 141

(Tex. 1997). The insured party bears the initial burden of showing

that there is coverage, while the insurer bears the burden of

showing that any exclusion in the policy applies. Lincoln General

Ins. Co. v. Reyna, 401 F.3d 347, 350 (5th Cir. 2005).

The duty to indemnify, however, is separate from, and

narrower than, the duty to defend. See Lincoln General Ins. Co. v.

Aisha's Learning Cent., 468 F.3d 857, 858 (5th Cir. 2006).

Liability is not based solely on the pleadings, but rather on the

facts actually established in the underlying suit. GuideOne,

197 S.W.3d at 310. 

A. Pollution Exclusion
3 The relevant policy language states:

2. Exclusions

This insurance does not apply to: 

(...)

F. (1) “Bodily injury” or “property damage” which would not

have occurred in whole or in part but for the actual,

alleged or threateded [sic] discharge, seepage,

migration, dispersal, release or escape of “pollutants”

at any time. . . .

“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.

5

United National contends that Motiva is not entitled to

recover under the umbrella policy because the injuries arising out

of the tank-cleaning incident fall within the policy’s Pollution

Exclusion clause.3 United National argues that since the Duriso

Plaintiffs allege injury by a pollutant – namely, hydrogen sulfide

gas – it has no duty to indemnify. Motiva, conversely, argues that

the pleadings can be read to allege that the workers were not

injured by chemicals that constitute pollutants within the meaning

of the exclusion, and therefore its claim is covered. 

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
4 Motiva does not dispute that hydrogen sulfide is per se a pollutant

within the meaning of the policy. 

6

damage.” Motiva argues that use of the conjunction “and/or”

creates two injury scenarios: one in which the workers were injured

by hydrogen sulfide gas, a pollutant,4 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. 

Motiva’s interpretation ignores the policy’s plain

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).

Motiva’s argument amounts to the converse of the policy

language. Motiva claims that if any aspect of an allegation

includes a claim that injury did not arise as a result of a

pollutant, then coverage is permitted. This patently contradicts

the policy’s language. Even assuming that Motiva’s view of the

complaint’s language is plausible, the phrase “toxic levels of
5 The Vaulting court determined that, in the phrase “in no event shall

Diebold be liable to Subcontractor for indirect, incidental, consequential or

similar damages, lost profits, [sic] lost business opportunities,” the adjectival

series “indirect, incidental, consequential, or similar” modified only “damages”

and not the subsequent nouns. 1999 WL 1068257, at *2.

7

hydrogen sulfide” alleges that the Duriso Plaintiffs’ injuries

arose at least in part from exposure to a pollutant.

A second textual argument Motiva employs in support of

its interpretation also fails. 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.5

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 most reasonable interpretation of the

pleadings is that the phrase “toxic levels of” modifies both

“hydrogen sulfide” and “other chemicals and vapors,” particularly
6 “Of the same kind.”

8

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 generis6

canon). Accordingly, the most natural reading of 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. 

2. Is properly stored sludge a pollutant?

Next, Motiva argues that a plausible reading of the

complaint suggests that the Duriso Plaintiffs were injured not by

hydrogen sulfide gas, but by the sludge itself, which Motiva

contends is not a pollutant because it was properly stored in the

mix tank. Motiva claims that since the workers do not allege the

particular mechanism of their exposure to hydrogen sulfide, it is

possible that they were injured by skin-to-sludge contact, rather

than by inhalation of a gas. If the workers were overcome, for

example by heatstroke or a non-pollutant chemical, and subsequently
9

fell into the sludge only then to be injured by contact with

hydrogen sulfide, they could not allege injury by a pollutant

because heat is not a pollutant under the policy, and any injury

sustained would have been caused only by direct contact with the

sludge, which Motiva also claims is not a pollutant. 

Citing Certain Underwriters at Lloyd’s London v. C.A.

Turner Construction Co., 112 F.3d 184, 186-88 (5th Cir. 1997),

Motiva contends that the “common-sense approach” used in this

circuit to define what constitutes a pollutant within the meaning

of a pollution exclusion clause permits indemnification. Under

that approach, the terms of a pollution exclusion clause must be

given their ordinary meaning so that the clause is not illogically

or impermissibly broadened. See, e.g., id. at 188 (explaining that

although Drano is toxic, slipping on the contents of a spilled

Drano bottle is not a pollutant-related injury). Motiva suggests

that since “petroleum products are not pollutants when they are

stored where they belong,” a hydrogen-sulfide-related injury caused

by direct skin-to-sludge contact in the storage tank cannot be

considered injury by a pollutant. 

Although clever, this argument is legally incorrect.

Importantly, the policy at issue in Certain Underwriters did not

define the term “pollutant,” see id. at 186, whereas the policy at

issue here does define “pollutant” and does so broadly, see supra,

note 3. Additionally, the Certain Underwriters court held that the

pollution exclusion in that case did apply because the emission of
10

harmful fumes from gas in a welding pipe is distinguishable from a

small spill of Drano. Certain Underwriters, 112 F.3d at 188.

Similarly, the Duriso Plaintiffs allege they were exposed to such

high levels of toxic substances that brain damage resulted – not a

slight exposure that would ordinarily cause no harm. 

Motiva ignores entirely the substantial body of caselaw

holding that substances need not be released into the surrounding

environment to qualify as pollutants for purposes of a pollution

exclusion clause. See, e.g., id. at 188 (pollution exclusions are

not limited “to only those discharges causing environmental harm”);

Hamm v. Allstate Ins. Co., 286 F. Supp. 2d 790, 794-95 & n.2 (N.D.

Tex. 2003) (pollution exclusion barred insurer’s duty to defend

when injury resulted from indoor accumulation of toluene fumes

during an office renovation); Zaiontz v. Trinity Universal Ins.

Co., 87 S.W.3d 565, 571-72 (Tex. App. 2002) (injury caused by “odor

eliminator” chemical that was confined to its proper area of

application triggered pollution exclusion). Thus, a pollution

exclusion clause applies whenever a pollutant causes harm by a

physical mechanism enumerated in the policy, irrespective of where

the injury took place or whether the pollutant was released into

the environment. Here, as in Zaiontz and Hamm, the area in which

the pollutant was properly confined was itself the site of the

injury. The fortuity that the locus of storage and injury happen

to coincide does not negate the Pollution Exclusion in this

instance. 
11

3. Causation

Finally, Motiva contends that since the Duriso Plaintiffs

do not specifically explain the causal mechanism by which they were

injured, their damages are not excludable under the clause. 

Texas law recognizes two types of causation relevant to

interpretation of the pleading language at issue here. In cases

involving “separate and independent causation, the covered event

and the excluded event each independently cause the plaintiff’s

injury, and the insurer must provide coverage despite the

exclusion.” Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co.,

141 S.W.3d 198, 204 (Tex. 2004) (citing Guaranty Nat’l Ins. Co. v.

N. River Ins. Co., 909 F.2d 133, 137 (5th Cir. 1990)). Conversely,

in cases involving “concurrent causation, the excluded and covered

events combine to cause the plaintiff’s injuries. Because the two

causes cannot be separated, the exclusion is triggered.” Id.

(citing Travelers Indem. Co. v. Citgo Petroleum Corp., 166 F.3d

761, 771-72 (5th Cir. 1999)). 

Motiva argues that there are two independent and discrete

events at issue in the Duriso Plaintiffs’ suit: (1) the Plaintiffs’

being “overcome”; and (2) the Plaintiffs’ contact with the sludge.

Motiva claims that the first event is not excludable under the

policy because the Plaintiffs have not specifically alleged that

they were overcome by a pollutant; heatstroke or a non-pollutant

could also be to blame. The second event, says Motiva, is not an
7 The relevant CLE language states:

III. Except insofar as coverage is available to the insured in

valid and collectible ‘underlying insurance’ [i.e., the American

Equity policy]...and then only for such liability for which coverage

is afforded under the ‘underlying insurance’ for the full limit

shown, this insurance does not apply to: 

(a) Any liability assumed by any insured under any contract

or agreement;...

12

excludable injury because properly stored sludge cannot be a

pollutant. Thus, since the pleadings can be read to indicate that

Plaintiffs’ injuries were independently caused by an event not

covered by the policy, United National has a duty to indemnify.

Motiva’s causation argument fails because the pleadings

unambiguously allege, as we have noted, that the injuries were

sustained both by exposure to excluded pollutants and by direct

contact with the sludge. Although the mechanism of injury is not

explicitly described, the pleadings allege that the pollutantrelated injuries arose concurrently out of inhalation and contact

with the sludge. Thus, the concurrent causation doctrine precludes

United National’s duty to indemnify.

B. Contractors Limitation Endorsement 

Motiva additionally cites the umbrella policy’s

Contractors Limitation Endorsement (“CLE”) clause, arguing that the

CLE provides coverage even if the Pollution Exclusion applies. The

CLE excludes Motiva from coverage for any tort liability assumed by

Hydro Tank under its contract with Motiva, unless coverage for the

assumed liability is available pursuant to the underlying CGL

policy.7 Motiva argues that since Hydro Tank assumed liability for
13

the Duriso claims under its contract with Motiva, and those losses

were covered by the CGL, the umbrella policy therefore adopts the

coverage of the CGL with regard to Motiva’s liability. As a

result, says Motiva, the Pollution Exclusion is irrelevant to the

entire indemnity question because the CLE permits coverage for the

Duriso claims irrespective of the Pollution Exclusion. In

contrast, United National argues that the CLE does not nullify the

Pollution Exclusion and that the CLE cannot be read to create

coverage that does not otherwise exist.

Both Texas insurance law and the language of the umbrella

policy support United National’s argument. An exclusion like CLE

§ III(a) cannot affirmatively grant coverage that would not

otherwise exist under the policy and is to be read independently of

every other exclusion contained therein. See Forbau v. Aetna Life

Ins. Co., 876 S.W.2d 132, 133-34 (Tex. 1994) (coverage excluded

under a specific policy provision cannot be reinstated by another

more general grant of coverage). Moreover, each policy provision

is, to the greatest extent possible, to be given independent

significance and effect. See id. at 133; Barnett v. Aetna Life

Ins. Co., 723 S.W.2d 663, 666 (Tex. 1987). No single provision

should be interpreted in isolation from the rest of the policy.

See Forbau, 876 S.W.2d at 134.
14

Motiva’s CLE claim ignores these maxims. What Motiva’s

argument amounts to is that the prefatory language of CLE § III

creates an exception not only to the exclusions contained in CLE

§ III(a)-(c), but to every exclusion contained in the United

National policy – including the Pollution Exclusion. Put

otherwise, CLE § III overrides all other policy provisions.

Accepting this argument would require this court to disregard the

explicit exclusion provisions that comprise most of the United

National policy, which plainly state that “[t]his insurance does

not apply to” several enumerated types of property damage and

bodily injury, including injury by pollutants. Motiva provides no

legitimate basis upon which the language of CLE § III can be

construed to reach such a sweeping result. 

Moreover, the authority Motiva cites in support of its

expansive reading of the CLE is distinguishable. In XL Specialty

Insurance Co. v. Kiewit Offshore Services, Ltd., 336 F. Supp. 2d

673 (S.D. Tex. 2004), the district court interpreted an umbrella

policy with a CLE clause identical to the instant one to permit the

kind of follow-form coverage Motiva advocates. Id. at 676.

Significantly, however, the CLE at issue in XL Specialty did not

contain additional relevant exclusion clauses, such as a pollution

exclusion. Thus, the XL Specialty court never considered the only

question relevant to Motiva’s argument: whether additional

exclusionary clauses contained in an umbrella policy are trumped by

a CLE exclusion. 
8 Moreover, the court determined that the Gould policy was ambiguous,

and the ambiguity must be resolved in favor of the insured. Id. at 108. Here,

courts have held that so-called “absolute pollution exclusions” substantially

indistinguishable from the instant policy’s are unambiguous as a matter of law.

See Certain Underwriters, 112 F.3d at 186-88; Constitution State Ins. Co. v. IsoTex Inc., 61 F.3d 405, 409 (5th Cir. 1995); Nat’l Union Fire Ins. Co. of

Pittsburgh v. CBI Indus., Inc., 907 S.W.2d 517, 521-22 (Tex. 1995) (per curiam).

15

Motiva also cites Gould, Inc. v. Arkwright Mutual

Insurance Co., 907 F. Supp. 103 (M.D. Pa. 1995). Like the policy

in XL Specialty, the Gould policy contained a CLE that permitted

follow-form coverage according to the terms of the underlying

insurance. See id. at 106. Unlike United National’s CLE language,

however, the policy language found to grant coverage in Gould was

part of a specific exception to the pollution exclusion clause.

See id. at 106-07 (“This policy shall not apply, unless insurance

is provided by a policy listed in the schedule of underlying

insurance...to any liability of any insured arising out of the

discharge, dispersal, release or escape of...pollutants.”).8 The

instant policy contains no such exception. Accordingly, the

district court correctly noted that applying the logic of Gould to

the instant policy would “be at odds with the Texas canons of

interpretation.” 

A recent decision of the Texas Supreme Court further

contradicts Motiva’s claim. In Fiess v. State Farm Lloyds,

202 S.W.3d 744 (Tex. 2006), the court interpreted a homeowners’

policy that excluded any “loss caused by mold,” but permitted any

“ensuing loss” for water damage that would otherwise be covered
16

under the policy. Because mold-related losses were explicitly

barred by the mold exclusion, the court opined that the “ensuing

loss” clause could not create mold-loss coverage even though the

mold damage arose in part because of water damage. See id. at 748-

52. In so ruling, the court reaffirmed the general interpretive

maxim that a general clause permitting coverage cannot render

ineffective another clause that contains a specific and unambiguous

coverage exclusion. See Forbau, 876 S.W.2d at 133-34. Motiva’s

reading of the United National CLE would require this court to hold

that an exception to an exclusion contained in an umbrella policy’s

CLE can impliedly neutralize all other specific exclusions to

coverage. We decline to reach this anomalous result.

III. CONCLUSION

The Duriso plaintiffs alleged that they were injured, in

whole or in part, by the release of hydrogen sulfide, a pollutant.

Thus, the policy’s Pollution Exclusion is invoked. Because the CLE

cannot trump explicit exclusions and create coverage where it would

otherwise not exist, Motiva’s claim for indemnification must also

fail.

AFFIRMED.