N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT

W ESC O INSUR

A NC E C OM PANY, a De la wa re c o rpora tion, Pla i ntiff-Appe lle e ,
v. B R AD INGR

AM C ONSTR

U C TION, De fe nda n t-Appe l la

nt. No. 22-16584

D.C . No. 3:21-c v-05682-W HO
M EM O R ANDUM *

Appe a l from

the Unite d

Sta t e s Distric t C ourt for the Northe rn Distric t of C a lifornia W illia m Horsle y Orric k, Distric t Judge , Pre siding Argue d a nd Subm i tte d Nove m

be r 13, 2023 Sa n Fra n c isc o , C a lifornia B e fore : S.R . THOM A S, FOR R EST, a n d M ENDOZA, C irc uit Judge s. Disse n t by

Judge FOR

R EST. B ra d Ingra

m C onstruc tion (“ Ingra m ” ) a ppe a l s the distric t c ourt’ s judgm e nt tha t Ingra m ’ s insure r, W e sc o Insura nc e C om pa ny (“ W e sc o” ), doe s not ha

v e a duty to de fe nd Ingra

m in c onne c tion with injurie s c a use d by a i rborne wildfire de bris. 

# F IL ED
JAN 23 2024 M OLLY C. DW Y ER, CLERK U

. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public a t ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.The sole que stion on a ppe a l is whe the r, unde r C a lifornia la w, the re wa s a ny pote ntia l for c ove ra ge g i ve n the pollution e xc lusion provision in Ingra m ’ s insura nc e polic y . 1 B e c a

use we c onc lude tha

t the re wa s a pote n t ia l for c o v e ra ge , we
re ve rse . W e ha ve jurisdic tion pursua nt to 28 U.S.C . § 1291. W e re vie w the distric t
c ourt’ s gra

nt of sum m a ry judgm e nt de novo. Flore s v . C ity of San Gabrie l , 824 F.3d 890, 897 (9th C ir. 2016). Like wise , “ the inte rpre ta tion of [a n] insura nc e polic y is a que stion of la

w for the c ourt a

nd is re vie we d d

e nov o ” a s we l l. Mc

Hugh

v . Unite d Se rv . Auto. Ass’n , 164 F.3d 451, 454 (9th C ir. 1999). B e c a use the pa rtie s a re fa m ilia r with the fa c t s a

nd the proc e dura l history , we will not re c ount the m

he re . I Unde r C a lifornia

la w, insura nc e polic ie s a

re c onstrue d in a c c orda

n c e with

“ ge ne ra l rule s of c ontra c t inte rpre ta t ion” tha t a im to “ give e ffe c t to the ‘ m

utua l inte ntion’ of the pa

rtie s.” Mac

K innon v . Truc k

Ins. Ex c h. , 73 P.3d 1205, 1212 (C a l. 2003) (quoting C a l . C iv. C ode § 1636). “ The de te rm ina tion whe the r [a n]

1 The provision in que stion e xc lude s c o ve ra ge for “ ‘ B odily injury ’ or ‘ p rope rty da m a ge ’ whic h

would not ha

ve oc c urre d in whole or pa rt but for the a c tua l, a lle ge d

or thre a te ne d disc ha

rge , dispe rsa l, se e pa ge , m igra tion, re le a s e or e sc a pe of ‘ polluta

n ts’ a t a ny tim e .” 2insure r owe s a duty to de fe nd usua lly is m a d e in the first insta

nc e by c om pa ring the

a lle ga tions . . . with the

te rm s of the polic y .” Horac e Mann Ins. C o . v . Barbara B. , 846 P.2d 792, 795 (C a l . 1993). C ove ra ge provisions a re “ inte rpre te d broa dly

so a s to a fford the gre a te s t possible prote c tion to the

insure d,” whe re a s “ e xc lusiona ry
c la use s a re inte rpre te d na

rrowly a ga inst the insure r.” Mac K innon , 73 P.3d a

t 1213 (quoting W

hite v . W . Title Ins. C o. , 710 P.2d 309, 313 (C a l. 1985)). “ [T] he burde n is on the insure r to prove the c la im is spe c ific a lly

e x c lude d.” Ay din C

orp. v . First State Ins. C o. , 959 P.2d 1213, 1215 (C a l. 1998). Apply ing the se princ iple s in Mac K innon , the C a lifornia Supre m e C ourt he ld tha t a pollution e xc l usion a

p plie s only

to “ injurie s a

rising from

e ve nts c om

m only thought of a s pollution, i.e . e nvironm e nta l pollution . . . .” Mac K innon , 73 P.3d a

t 1216. To de te rm ine whe the r a pollution e ve nt ha s oc c u rre d , the re v ie wing c ourt should c onside r both the c h a ra c te r of the injurious substa nc e a nd whe the r e x posure
oc c urre d due to a

m e c ha nism spe c ifie d in the polic y . Id

. a t 1213–16. Unde r Mac K innon , ne ithe r the substa

n c e nor the m e c ha

nism of e xposure is dispositive ; the y a re to be c onside re d “ in c onjunc tion” with one a nothe r. Id

. a t 1215. Se e Garame ndi v

. Golde n Eagle Ins. C o. , 25 C a l . R

ptr. 3d 642, 646–48 (C a l . C t. App. 2005); Orte

ga Roc k Quarry v . Golde n Eagle Ins. C orp ., 46 C a l. R

ptr. 3d 517, 525–26 (C a l. C t. App. 2006); C old C re e k C ompost, Inc . v . State

Farm Fire & C

as.
3C

o. , 68 C a l. R

ptr. 3d 216, 224–25 (C a l. C t. App. 2007); The Villa Los Alamos Home ow ne rs Assn. v . State Farm Ge n. Ins. C o. , 130 C a l. R

ptr. 3d 374, 383–85 (2011); J RK Prop. Holdings, Inc . v . C o lony Ins. C o , 313 C a l. R

ptr. 3d 895, 905–09 (C a l. C t. App. 2023). In a ddition, unde r C a lifornia la w, a n insure r’ s duty

to de fe nd a

nd its duty

to inde m nify a re not sy

n ony m ous. C e rtain Unde r

w rite rs at Lloy d ’s of London v

. Supe rior C

t. , 16 P.3d 94, 102–03 (C a l. 2001). The duty to de fe n d is broa de r tha

n the d uty to inde m nify

. Id. “ An insure r ha s a duty to de fe n d whe n the polic y is

a m biguous a nd the insure d would re a sona bly e xpe c t the insure r to de fe nd him or he r a ga inst the suit ba se d on the na ture a nd kind of risk c ove re d by the polic y , or whe n the unde rly ing suit pote ntia lly se e ks da m a ge s within the

c o ve ra ge of the polic y .” Foste r -Gardne r

, Inc . v . N at’l Union Fire

Ins. C o . , 959 P.2d 265, 273 (C a l. 1998).

“ To pre va i l in a

n a c tion se e king de c la

ra tory re lie f on the que stion of the duty to de fe nd, the insure d m

u st prove the e xiste n c e of a pote ntial for c o v e r age , while the i nsure r m

ust e sta blish the abse nc e of any suc h pote ntial . In othe r words, the insure d ne e d only

show tha t the unde rly ing c l a im

m a y fa l l within polic y

c ove ra ge ; the i nsure r m

ust prove it c a nnot. The duty to de fe nd e xists if the

insure r be c om e s
a wa re of, or if the third pa rty la wsuit ple a ds, fa c ts giving rise to the pote ntia l for

4c ove ra ge unde r the insuring a gre e m e nt.” De lgado v . Inte rinsuranc e Ex c h. of Auto.

C lub of S. C

al. , 211 P.3d 1083, 1086 (C a l. 2009) (inte rna l c ita t ions a nd quota tions

om i tte d). II In this c a se , a

truc k drive r wa s a lle ge dly injure d by

“ e xpos[ure ] . . . to c louds of toxic dust during the

loa ding a nd unloa ding of his truc k.” The a lle ga tions do not spe c ify

the c om position of the

dust e xc e pt to sa

y tha t the wildfire wa ste
c onsiste d of “ a sh, de bris, m e ta l, c onc re te , a nd c onta m ina te d soil.” As to the

m e c ha nism of e xposure , the drive r a lle ge s tha t onsite worke rs “ stirre d up” the dust de posite d in the e nvironm e nt by the fire while “ l oa d [ing] de bris” a n d a ga in whe n the d e bris wa s unc ove re d a nd “ dum p[e d] ” a t the wa ste fa c i lity . W e c onc lude tha t while wildfire de bris m a y be c o nside re d a

“ polluta nt” in c e rta i n c irc um sta

nc e s, the

m e c ha nism of e xposure de sc ribe d in the c o m pla int doe s not c le a rly

c onstitute

a n

“ e v e nt c o m

m only thought of a s pollution.” Mac K innon , 73 P.3d a

t 1216 (e m

pha sis

a dde d). Mac K innon note d tha

t “ t e rm s suc h

a s ‘ c om m only thought of a s pollution,’ or ‘ e nvironm e nta l pollution,’ a re not pa ra gons of pre c ision.” Id . a t 1217. The re is no C a lifornia

c a se dire c tly

on point a s to dust c re a te d or disburse d by a na tura lly

oc c urring e ve nt. C a lifornia c ourts ha ve note d tha

t, in c onside ring a

m a t te r of first

5im

pre ssion, c ourts should be c a utious of re lie ving a

n insure r of its dutie s unde r the polic y . Orte

ga Roc k Quarry , 46 C a l. R

ptr. 3d a t 528 ( quoting Pa. N

at'l Mut. C

as. Ins. C o. v . Triangle Pav ing, Inc ., 973 F. Supp. 560, 566–67 (E.D.N.C . 1996)).

“ Any doubt a s to whe the r the fa c ts e sta blish the e xiste nc e of the de fe nse duty m ust be re s olve d

in the insure d ’ s fa vor.” Montrose v . Supe r ior C

t
. , 861 P.2d 1153, 1160 (C a l. 1994); a c c ord Anthe m Ele c s ., Inc . v . Pac

. Emps. Ins. C o. , 302 F.3d 1049, 1054 (9th C ir. 2002). Give n the te st in Mac K innon , whic h ha s not be e n
a pplie d in suffic ie ntly

a na l ogous c a s e s, a

nd the fa c t tha

t the pollution e xc lusion doe s not a pply una m b iguously to the drive r’ s injurie s, the re e x iste d a pote ntia l for

c ove ra ge unde r the insura nc e polic y , a

nd W e sc o ha d a

duty to de fe nd the litiga

tion. W e do not opine

a s to whe the r W e sc o would ha v e ha d a duty to inde m nify , if da m a ge s we re a wa rde d. RE V E RSE D.

6Wesco Insurance Company v. Brad Ingram Construction , No. 22

- 16584

Forrest, J., dissenting: While I agree with the majority’s statement of the governing legal standard, I disagree with its application of that standard. As the majority explains, th e California Supreme Court has held that a pollution exclusion like the one at issue here appl ies only to “injuries arising from events commonly thought of as pollution , i.e. environmental pollution .” MacKinnon v. Truck Ins. Exch. , 73 P.3d 1205 , 1216 ( Cal. 2003), as modified on denial of reh’g (Sept. 17, 2003). I n determining whether an event would be understood as an act of pollution , courts consider two factors: the substance (alleged pollutant) and the mechanism of exposure of the substance ; neither factor is itself dispositive

. Id. at 1216

– 17 ; Villa Los Alamos Homeowners Ass ’ n v. State Farm Gen. Ins. Co. , 130 Cal. Rptr. 3d 374 , 380

– 81 ( Ct. App. 2011). California caselaw indicates that the circumstances at issue here would be commonly understood as a n act of pollution , thus triggering the pollution exclusion , as the district court held . Therefore, I respectfully dissent. I. Turning first to the substance at issue , the underlying complaint alleges that the employee’s injur

y stemmed from exposure to “clouds of toxic dust.” The dust directly resulted from a massive wildfire, but the “clouds” of particles that allegedly 

# FILED
JAN 23 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS2

caused injury were created when the dust was distur bed by the wild fire cleanup project. 1 Even though the dust was originally created by a wildfire and may consist of natural material , that does not prevent it from being part of a pollution event

. California courts have recognized that natural materials can be pollutant s . See Ortega Rock Quarry v. Golden Eagle Ins. Corp. , 46 Cal. Rptr. 3d 517 , 525 ( Ct. App. 2006) (“[H]azardous substances are not rendered non

- polluting by the fact that they are naturally occurring . . . .” (quoting Gold Fields Am. Corp. v. Aetna Cas. & Sur. Co. , 744 N.Y.S. 2d 395, 396 (2002)) )

. In Ortega Rock Quarry , a quarry operator placed fill dirt along a road after highwaters washed out portions of the road. 46 Cal. Rptr. 3d at 519

– 520

. Even though the rocks and dirt were natural materials , the California Court of Appeal held that they were nonetheless a pollutant given the regulat ion of waterways and that these materials were placed by human activity

. Id. at 525

– 26 . Likewise, in C old Creek Compost, Inc. v. State Farm Fire & Cas ualty Co ., the California Court of Appeal held that “ [h]eavy clouds of dust from . . . 18 wheeler double

- wide trucks” triggered the pollution exclusion despite arguments

1 In the opening brief, Appellant Brad Ingram Construction (Ingram) argues that the underlying injury may have been caused by bacteria. The underlying complaint, however, makes no mention of bacteria and instead alleges the injur y was caused by toxic dust and debris. “Determination of the duty to defend depends, in the first instance, on a comparison between the allegations of the complaint and the terms of the policy.” Scottsdale Ins. Co. v. MV Transp

. , 115 P.3d 460 , 466 ( Cal. 2005).3

that “dust is not commonly thought of as a pollutant.” 68 Cal. Rptr. 3d 216 , 220 , 229 ( Ct. App. 2007)

. The court explained that “ [d] ust has been held to be a pollutant within the meaning of the pollution exclusion in California and elsewhere, and dust is recognized and regulated as a form of air pollution under California environmental law

. ” Id. at 229 (citations omitted) ; see also id. at 226 n.5 (applying a pollution exclusion to compost odors from “100% natural, organic materials” and rejecting the suggestion that the odors could not qualify as a pollutant given their “natural” origin); Garamendi v. Golden Eagle Ins. Co. , 25 Cal. Rptr. 3d 642 , 648 ( Ct. App. 2005) (applying the pollution exclusion to silica dust, a “natural product”). These cases establish that s imply because the substance at issue is dus t does not prohibit it from being a pollutant. And the dust alleged here is not simply dirt

— it is toxic dust located in a heavily regulated cleanup area . The context at issue further informs th is analysis. While a wildfire created the toxic dust, t he government required that prime contractors performing the cleanup

“ be certified for hazardous substance removal” because the debris “was known to be a health hazard.” Workers at the cleanup sites wore protective clothing and respirators. On

- site crews were expected to don and doff protective equipment in designated decontamination zones. Air monitoring stations were set up around the community to track airborne toxins.4

The policy defines pollutants as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” Given the level of precautions here, concluding that th e dust is a pollutant is a far cry from the hypotheticals considered unreasonable in Mac K innon
. See 73 P.3d at 1214 ( noting the absurdity in applying the pollutant label to pool chlorine

— an irritant

— used for its ordinary purpose if it were to cause an alle r gic reaction). II. Turning to the mechanism that caused the alleged injury , s ee Villa Los Alamos , 130 Cal. Rptr. 3d at 383 , t he pol lution exclusion applies where a “discharge, dispersal, seepage, migration, release or escape” of a pollutant occurs. The parties focus on different acts of dispersal or release

. Appellee Wesco Insurance Company (Wesco) contends the cleanup project i s the proper focus , while Ingram focuse s on the wildfire

. But the complaint makes clear that the cleanup project is the proper focus because it allege s the injury stemmed from the cleanup effort “stirr[ing] up” toxic dust. Focusing on the cleanup, Ingram argues that there was no “release” 2 because the toxic material was not contained

— it was “on the ground” and “open to the elements.” Ingram relies on Mac K innon , which stated that a release implies “some

2 Because the district court found a release, it did not consider whether a dispersal occurred. I do the same.5

sort of freedom from containment.” 73 P.3d at 1215 . Ingram further argues, through dictionary definitions, that a release can only occur when there is a “protective barrier” or an escape from “a structure.” This overly restrictive interpretation of

“ release ” is not persuasive. 3 Rather, t he asbestos context is instructive . A California court found a “release” when workers scraped acoustical popcorn off ceiling tiles, which released asbestos into the air. Villa Los Alamos , 130 Cal. Rptr. 3d at 384

– 86

. “When asbestos is disturbed by construction and related activities, the result is commonly referred to as a ‘release’ of asbestos . . . .” Id. at 384 (emphasis added); see also Cal. Lab. Code § 6501.8 (a) (“‘ [A]sbestos

- related work’ means any activity which by disturbing asbestos

- containing construction materials may release asbestos fibers into the air . . . .” (emphasis added)). Here, the toxic dust was on the ground, and it was then “stirred up” by the massive cleanup operation, which released the dust into the air to create “clouds ” of dust particles

. Cf. Cold Creek Compost , 68 Cal. Rptr. 3d at 224

– 25 (finding odors emanating into the air from composting materials to be a release absent discussion or reference to a protective barrier). Th at the underlying complaint alleges only one worker was injured is of no moment. Cf. Am. Cas. Co. of Reading, P a . v. Miller , 71

3 Similarly, the California Supreme Court found it absurd to describe the normal spraying of pesticides in a residential area as a “release.” MacKinnon , 73 P.3d at 1215

– 16 . This was so even though the pesticides were likely sprayed from some sort of containment. Accordingly, a “protective barrier” is not solely determinative when considering a release.6

Cal. Rptr. 3d 571 , 581 ( Ct. App. 2008) (“The test in MacKinnon is not based upon the extent of injury, but upon the type of pollutant and how it is released into the environment.”). Nor does it matter here that the injury involved an employee injured through his employment. Cf. Garamendi , 25 Cal. Rptr. 3d at 644 (applying the exclusion to claims brought by workers injured by silica dust throughout their employment). III. Considering the substance and the mechanism of exposure together, a reasonable insured would view the circumstances alleged to have caused injury to be “an act of pollution.” MacKinnon , 73 P.3d at 1217 . The activity in Villa Los Alamos was “a commercial operation, namely the removal of asbestos

- containing ceiling material by a licensed general contractor, work that is tightly regulated and entails notification, and highly technical protocols for asbestos removal, containment and waste di sposal.” 130 Cal. Rp tr. 3d at 386

. Likewise, here t he wildfire cleanup was a regulated operation in part because of contamination and human health concerns

. Therefore, I would affirm the district court’s conclusion that the pollution exclusion applies, and Wesco does not have a duty to defend Ingram against the underlying action. I respectfully dissent.