UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 12-2059

ROSS DEVELOPMENT CORPORATION,

 Plaintiff,

and

FIREMAN’S FUND INSURANCE COMPANY; UNITED STATES FIRE 

INSURANCE COMPANY,

 Defendants - Appellees,

v.

PCS NITROGEN INCORPORATED,

 Defendant and 3rd-Party Plaintiff - Appellant.

No. 12-2454

ROSS DEVELOPMENT CORPORATION,

Plaintiff - Appellant,

v.

FIREMAN’S FUND INSURANCE COMPANY; UNITED STATES FIRE 

INSURANCE COMPANY,

Defendants - Appellees,

and
2

PCS NITROGEN INCORPORATED,

Defendant and 3rd-Party Plaintiff.

Appeals from the United States District Court for the District 

of South Carolina, at Charleston. Margaret B. Seymour, Senior 

District Judge. (2:08-cv-03672-MBS)

Argued: May 15, 2013 Decided: June 6, 2013

Before WILKINSON, MOTZ, and SHEDD, Circuit Judges.

Affirmed by unpublished per curiam opinion. 

ARGUED: Daniel S. McQueeney, Jr., PRATT-THOMAS WALKER, PA, 

Charleston, South Carolina; Michael Howard Ginsberg, JONES DAY, 

Pittsburgh, Pennsylvania, for Appellants. Michael Anthony 

Kotula, RIVKIN RADLER, LLP, Uniondale, New York; Jay Russell 

Sever, PHELPS DUNBAR, New Orleans, Louisiana, for Appellees. ON 

BRIEF: G. Trenholm Walker, PRATT-THOMAS WALKER, PA, Charleston, 

South Carolina, for Ross Development Corporation. Amy K. Pohl, 

JONES DAY, Pittsburg, Pennsylvania; Kirby D. Shealy, III, ELLIS, 

LAWHORNE & SIMS, P.A., Columbia, South Carolina; Sandra 

Kaczmarczyk, ALTON ASSOCIATES PLLC, Washington, D.C., for PCS 

Nitrogen, Incorporated. H. Michael Bowers, SMITH MOORE 

LEATHERWOOD LLP, Charleston, South Carolina, for Fireman’s Fund 

Insurance Company; Steven W. Ouzts, TURNER PADGET GRAHAM & 

LANEY, P.A., Columbia, South Carolina, Jonathan B. Womack, 

PHELPS DUNBAR LLP, New Orleans, Louisiana, for United States 

Fire Insurance Company.

Unpublished opinions are not binding precedent in this circuit.
3

PER CURIAM:

Ross Development Corporation brought this action seeking a 

declaratory judgment that its insurers had duties to defend and 

indemnify Ross, its shareholders, and former directors in 

lawsuits arising out of the cleanup of environmental 

contamination from a site formerly owned by Ross. The district 

court granted the insurers’ motions for summary judgment, 

holding that they had no duty to defend or indemnify. Ross and 

its judgment creditor from one of the underlying cases, PCS 

Nitrogen, Inc., appeal. We affirm.

I.

This dispute concerns insurers’ asserted duties arising out 

of the cleanup of environmental contamination from a site that 

Ross had formerly owned. See PCS Nitrogen Inc. v. Ashley II of 

Charleston LLC, 714 F.3d 161 (4th Cir. 2013). The following 

facts are undisputed.

Beginning in 1906, Planters Fertilizer and Phosphate 

Company (now Ross) operated a phosphate fertilizer manufacturing 

facility at a forty-three-acre site in Charleston, South 

Carolina. Planters manufactured fertilizers by burning pyrite 

ore as fuel and reacting sulfuric acid with phosphate rock. The 

process generated a pyrite slag byproduct containing high 

concentrations of arsenic and lead. Over the years, Planters 
4

used this slag byproduct on the site as fill material and to 

stabilize roads. In 1963, a fire destroyed a large portion of 

Planters’ acid plant. After constructing a modernized acid 

plant and resuming fertilizer production, Planters sold the site 

and its equipment in 1966.

Years after selling the site, Ross bought the insurance 

policies at issue in this appeal. Ross purchased primary 

insurance coverage from Fireman’s Fund Insurance Company 

(“FFIC”) for the period from 1973 through 1992, and excess 

coverage from United States Fire Insurance Company (“USFIC”) for 

the period from 1979 through 1984. As relevant to this appeal, 

each policy provides basic coverage for liability for unexpected 

and unintentional damages to third-party property, including 

those damages arising out of past activities on Ross’s thenowned, now-alienated properties, like the Charleston site. The 

policies, however, can be divided into two groups based on the 

extent to which they exclude from coverage liability arising out 

of damages caused by pollution.

The first group of policies -- FFIC’s primary coverage 

policies issued for the period from 1973 through 1987 and all of 

USFIC’s excess coverage policies -- include a “qualified 

pollution exclusion.” This provision excludes from coverage, in 

pertinent part, liability “arising out of the discharge . . . of 

. . . waste materials or . . . pollutants into the land.” The
5

exclusion is “qualified” because it does not apply if the 

“discharge . . . is sudden and accidental.”

The second group of policies -- those issued by FFIC for 

the period from 1987 through 1990 -- include an “absolute 

pollution exclusion.” This provision excludes from coverage 

liability for property damage “arising out of the actual, 

alleged or threatened discharge, dispersal, release or escape of 

pollutants,” including waste, with a defined connection to the 

insured. This exclusion does not contain an exception for 

“sudden and accidental” discharges, but does except all 

liability for third-property damage arising out of an otherwiseexcluded pollutant discharge if that discharge is “caused by 

heat, smoke or fumes from a hostile fire.”1

In the 2000s, Ashley II of Charleston, the current owner of 

a large portion of the site, began to remediate environmental 

contamination at the site. The district court summarized the 

site’s present conditions as follows:

There are four conditions at the Site that the 

remediation seeks to correct: arsenic contamination, 

lead contamination, low pH, and carcinogenic 

polyaromatic hydrocarbon (“cPAH”) contamination. 

Arsenic and lead contamination are found across the 

entire Site. There are two “hot spots” for cPAHs on 

the Site. . . . The source of the cPAH contamination 

was a fire that destroyed a major portion of the acid 

plant in 1963. The cost of remediation is directly 

 1 Although FFIC continued insuring Ross beyond 1990, those 

policies are not at issue in this appeal.
6

related to the volume of contaminated soil on the 

Site. The predominant factors contributing to the 

costs of the clean-up are the amount of hazardous 

materials and the spread of these hazardous materials 

throughout the Site. . . . Ross, formerly known as 

Planters, is the only known Site owner that burned 

pyrite ore and generated pyrite slag. Pyrite slag is 

the source of the vast majority of the arsenic and 

much of the lead contamination at the Site.

Ross Dev. Corp. v. Fireman’s Fund Ins. Co., No. 2:08-3672-MBS, -

- F. Supp. 2d --, 2012 WL 5897245, at *2 (D.S.C. Nov. 15, 2012)

(internal citations omitted). No party disputes that Planters’ 

use of pyrite slag provides the source of most of the arsenic 

and lead contamination at the site. The parties do debate,

however, how quickly arsenic and lead from the slag leached into 

surrounding soils and when this contamination migrated to and 

damaged surrounding third-party properties.

In September 2005, Ashley filed an action against PCS (a 

successor-in-interest to a former owner of the site) seeking a 

declaratory judgment that PCS was jointly and severally liable 

for response costs incurred in remediating contamination at the 

site under the Comprehensive Environmental Response, 

Compensation, and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601–

9675 (2006). In January 2007, PCS filed third-party 

contribution claims against other parties with past and present 

connections to the site, including Ross. PCS’s third-party 

complaint alleged that Ross was liable under CERCLA for 

“environmental impacts . . . associated with [Ross’] phosphate 
7

fertilizer manufacturing facilities at the Charleston site 

includ[ing] elevated levels of metals . . . in soil, 

groundwater, and sediment.”

II.

In July 2007, Ross requested a defense of the CERCLA action 

from FFIC and USFIC. In November 2007, FFIC agreed to defend 

Ross in the CERCLA action, but reserved the right to withdraw 

that defense. USFIC did not reply to Ross’s request for 

defense.

In June 2008, FFIC notified Ross that it would be 

withdrawing its defense under its view that the site was not an 

“insured premises” under the policies because Ross did not own 

it during any of the policy periods at issue. However, FFIC did 

not formally withdraw its defense at that time. On October 13, 

2008, Ross informed FFIC by e-mail of new information that “one 

of the sources of contaminants [was] the fire in 1963 that 

burned down . . . parts of the [acid] plant.” Ross concluded 

that “[t]his fire would certainly come within the exception to 

the [pollution] exclusion.” FFIC formally withdrew its defense 

of Ross in the CERCLA action the next day.

On May 27, 2011, after a bench trial, the district court 

found Ross liable to PCS for forty-five percent of the 

environmental response costs at the site, see Ashley II of 
8

Charleston, LLC v. PCS Nitrogen, Inc., 791 F. Supp. 2d 431 

(D.S.C. 2011), and we affirmed, see PCS Nitrogen Inc., 714 F.3d 

161.

In the meantime, PCS had brought two additional actions to 

recover money it believed Ross would owe from the underlying 

CERCLA case. First, in September 2008, PCS filed a shareholder 

action in state court seeking contribution from thirty-two 

former Ross shareholders who received distribution of assets 

during Ross’s winding up of its affairs between 1997 and 2006. 

Second, in December 2009, PCS filed a fraudulent conveyance 

action in federal court against six individuals that acted as 

Ross’s directors between 1992 and 2006. Ross sought FFIC’s and 

USFIC’s defense of its former shareholders and directors, but 

the insurers denied this request.

Before the district court in this case was Ross’s twiceamended action seeking a declaration that the FFIC and USFIC 

insurance policies provided coverage for liabilities from the 

underlying CERCLA action, as well as the related shareholder and 

fraudulent conveyance suits. Ross also sought a declaration 

that FFIC and USFIC had breached their duties to defend Ross, 

its shareholders, and its directors in the three underlying 

suits. In August 2011, after becoming Ross’s judgment creditor 

in the underlying CERCLA action, PCS filed cross-claims against 

FFIC and USFIC, also seeking to establish coverage under the 
9

policies for liabilities arising out of the three underlying 

actions.

The district court granted summary judgment to the 

insurers, holding that the absolute and qualified pollution 

exclusion provisions excluded any coverage for liability arising 

out of the underlying CERCLA action and, by relation, the 

shareholder and fraudulent conveyance suits. The court further

held that the complaints in the underlying actions did not 

trigger the insurers’ duties to defend Ross. Ross, and PCS as 

its judgment creditor, (“Appellants”) timely appeal.

III.

We review a grant of summary judgment de novo. Henry v. 

Purnell, 652 F.3d 524, 531 (4th Cir. 2011) (en banc). “Summary 

judgment is appropriate only if taking the evidence and all 

reasonable inferences drawn therefrom in the light most 

favorable to the nonmoving party, no material facts are disputed 

and the moving party is entitled to judgment as a matter of 

law.” Id. (internal quotation marks omitted).

Under South Carolina law, “[c]ourts interpret insurance 

policy language in accordance with its plain, ordinary, and 

popular meaning, except with technical language or where the

context requires another meaning.” M & M Corp. of S.C. v. AutoOwners Ins. Co., 701 S.E.2d 33, 35 (S.C. 2010). “Policies are 
10

construed in favor of coverage, and exclusions in an insurance 

policy are construed against the insurer.” Id. However, an 

insured party bears the burden of proving an exception to an 

exclusion. Helena Chem. Co. v. Allianz Underwriters Ins. Co., 

594 S.E.2d 455, 460 n.5 (S.C. 2004).

An insurer owes its insured two inter-related duties -- the 

duty to indemnify (i.e., provide coverage) and the duty to 

defend. While an insurer’s duty to indemnify its insured is 

determined by applying the facts of an underlying judgment to 

the policy language, an insurer’s duty to defend generally is 

determined by the underlying complaint. City of Hartsville v. 

S.C. Mun. Ins. & Risk Fin. Fund, 677 S.E.2d 574, 578 (S.C. 

2009). Thus, “[i]f the underlying complaint creates a 

possibility of coverage under an insurance policy, the insurer 

is obligated to defend.” Id.

After carefully considering the record, the briefs, and the 

applicable law, and having the benefit of oral argument from the 

parties, we affirm the judgment in favor of the insurers for the 

reasons well-stated by the district court. Given the clear and 

detailed analysis of the district court, we need only address

certain principles that Appellants appear to misunderstand.

First, it is clear that the underlying CERCLA action (and, 

by relation, the shareholder and fraudulent conveyance actions)

initially triggered the policies at issue by imposing liability 
11

on Ross for environmental damages to third-party property, 

namely groundwater and tidal marshlands around its former site.

See Helena Chem. Co., 594 S.E.2d at 457 (holding “environmental 

cleanup costs” constitute “property damages”). However, it is 

equally clear that the qualified or absolute pollution 

exclusions in each policy exclude this liability from coverage. 

This is so because Ross’s liability for third-party property 

damages in the CERCLA action “arises out of” its “discharge” --

use as fill material -- of “waste” or a “waste material” -- the 

pyrite slag byproduct -- on the site. Thus, the only question 

as to the insurers’ duties to indemnify is whether any exception 

to the pollution exclusions apply.

Appellants first argue that 1972-87 policies provide 

coverage notwithstanding the qualified pollution exclusion 

because the pollution damages to third-party property were both 

“sudden” -- meaning unexpected -- and “accidental.” See

Greenville Cnty. v. Ins. Reserve Fund, 443 S.E.2d 552, 553 (S.C. 

1994) (interpreting “sudden” within the “sudden and accidental” 

exception to mean “unexpected”). This argument rests on a 

fundamentally flawed reading of the “sudden and accidental” 

exception. The exception’s plain language requires that the 

discharge, not the pollution damages, be “sudden and 

accidental.” See, e.g., JA 159 (“[T]his exclusion does not 
12

apply if such discharge . . . is sudden and accidental.”

(emphasis added)). 

The contrary interpretation offered by Appellants would 

render the qualified pollution exclusion clause completely 

superfluous. See Liberty Mut. Ins. Co. v. Triangle Indus., 

Inc., 957 F.2d 1153, 1157 (4th Cir. 1992). This is so because 

the policies at issue provide coverage only for “an accident 

. . . which results in . . . property damage neither expected 

nor intended from the viewpoint of the insured.” Appellants’

interpretation of the qualified pollution exclusion as excluding 

“from th[is] basic coverage all releases of pollution except

those which cause [unexpected and] unintended damages simply 

restates th[is] basic coverage and writes the pollution 

exclusion completely out of the contract.” Id. Accordingly, 

because no party disputes the fact that Ross intentionally used 

pyrite slag as fill material (i.e., discharged waste) on the 

site, the “sudden and accidental” exception to the qualified 

pollution exclusion does not apply. Accord id. at 1158.

Appellants’ argument that damages caused by the 1963 acid 

plant fire are excepted from the policies’ pollution exclusions 

similarly fails. Appellants are correct that if the 1963 fire 

resulted in third-party property damages during the policy 

periods at issue here, Ross’s resulting liability would be 

covered both under those policies with qualified pollution 
13

exclusions (because the fire was “unexpected” and “accidental)

and under those policies with absolute pollution exclusions

(because the fire was “hostile”). However, Appellants failed to 

proffer any evidence that the exceptions actually apply here.

See Helena Chem. Co., 594 S.E.2d at 460 n.5. In particular, 

they failed to point to any evidence that the 1963 acid plant 

fire actually caused any third-party property damage, much less

damage during the policy periods at issue in this case. 

Accordingly, the district court did not err in holding that no 

policy before it affords coverage for Ross’s underlying CERCLA 

liability, or the potential liabilities of Ross’s former 

shareholders and directors in the two related actions.

For similar reasons, the district court did not err in 

holding that the insurers did not have a duty to defend Ross, 

its shareholders, or its directors in the underlying actions. 

The complaints in the underlying CERCLA action clearly alleged

third-party property damages arising out of the discharge of 

pollutants or waste materials, triggering each policy’s

respective qualified or absolute pollution exclusion. Further, 

the complaints raised no possibility that the discharge was 

“sudden and accidental,” or, indeed, anything other than 

intentional or part of Ross’s ordinary course of business. As 

South Carolina courts have made clear, “an insurer has no duty 

to defend an insured where the damage was caused for a reason 
14

unambiguously excluded under the policy.” USAA Prop. & Cas. 

Ins. Co. v. Clegg, 661 S.E.2d 791, 797 (S.C. 2008).2 Thus, the 

district court did not err in holding that neither insurer had a 

duty to defend Ross in the underlying CERCLA action, or Ross’s 

former shareholders and directors in the two related cases.

IV.

For these reasons, and for the reasons stated more fully by 

the district court, the judgment of the district court is

AFFIRMED.

 2 Nor did Ross’s notice to FFIC that that 1963 acid plant 

fire was a source of contamination at the site trigger its duty 

to defend. The notice provided no factual indication that the 

fire caused any third-party property damages during the relevant 

policy periods.