IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-41625

LONGHORN GASKET AND SUPPLY COMPANY; ET AL,

 Plaintiffs

TRINITY LLOYD’S INSURANCE COMPANY; TRINITY UNIVERSAL 

INSURANCE COMPANY, 

 Intervenor Plaintiffs - Appellees Cross-Appellants

v.

UNITED STATES FIRE INSURANCE COMPANY, 

 Defendant - Appellant Cross-Appellee

Appeals from the United States District Court 

for the Eastern District of Texas

USDC No. 2:07-CV-399

Before REAVLEY, ELROD, and GRAVES, Circuit Judges.

PER CURIAM:*

This case involves two insurance companies debating coverage for 

various asbestos-related claims. Because we conclude that the pollution 

exclusion contained within the defendant’s excess policies applies, we VACATE 

 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

August 18, 2017

Lyle W. Cayce

Clerk

 Case: 15-41625 Document: 00514121738 Page: 1 Date Filed: 08/18/2017
No. 15-41625

2

the district court’s judgement. We REMAND to the district court for a 

determination of the applicability of the “sudden and accidental” exception to 

the pollution exclusion. 

I.

Longhorn Gasket and Supply Company, et al. (“LGS”) manufactured and 

sold gaskets throughout the 1980s and 1990s, some of which contained 

asbestos. As a result, LGS has been the defendant in numerous asbestos and 

mixed dust cases in Texas regarding damage that occurred over many years—

including years in which intervenors Trinity Lloyd’s Insurance Company and 

Trinity Universal Insurance Company (“Trinity”) provided primary 

comprehensive general liability insurance policies. This case concerns LGS’s 

primary and excess policy coverage, as provided by Trinity and United States 

Fire Insurance Company (“U.S. Fire”), between May 21, 1983 and February 1, 

1986. 

Trinity’s primary policies and U.S. Fire’s excess policies overlapped from 

May 21, 1983 through February 1, 1986. Trinity’s primary insurance policies 

were effective May 21, 1983 through May 21, 1988, and each had an annual 

limit of $500,000 per occurrence and in the aggregate. U.S. Fire’s excess 

policies at issue were effective February 1, 1983 through February 1, 1986, and 

had policy limits of $5 million. 

On September 12, 2007, LGS sued U.S. Fire, alleging breach of contract 

and insurance code violations for U.S. Fire’s alleged refusal to acknowledge the 

applicability of coverage, to provide settlement authority, to negotiate, and to 

eliminate LGS’s exposure in the outstanding asbestos lawsuits. Dkt. No. 1 at 

4. LGS also sought a declaratory judgment that U.S. Fire’s excess policies were 

activated, enforceable, and applicable to the claims being made against LGS in 

the asbestos lawsuits. Id.

 Case: 15-41625 Document: 00514121738 Page: 2 Date Filed: 08/18/2017
No. 15-41625

3

Trinity filed an unopposed motion to intervene in November 2008, 

alleging that its policies from 1983–1988 were exhausted and that as a result, 

U.S. Fire was obligated to indemnify and defend the claims against LGS during 

the time when U.S. Fire provided excess policies. Trinity contends it has paid 

a total of $2,432,556.44 in indemnity payments to asbestos claimants on LGS’s 

behalf, and that it has expended another $3,171,028.61 defending LGS against 

asbestos claims. Trinity sought reimbursement for all of the defense and 

indemnity payments it made on behalf of LGS under the theory that, once its 

1980–1983 policies1 were exhausted, U.S. Fire was obligated to defend and 

indemnify LGS from the claims that Trinity defended and settled. 

All parties moved for summary judgment, and these motions were 

granted in part and denied in part in an initial order and an order on a Motion 

for Clarification and Reconsideration in May 2011. In June 2011, LGS filed its 

second and Trinity filed its second and third motions for partial summary 

judgment. U.S. Fire filed a motion for summary judgment based on the policies’

pollution exclusion. The district court denied U.S. Fire’s motion in March 2012, 

saying first that asbestos was not a pollutant, and therefore the pollution 

exclusion did not apply to the underlying claims. In the alternative, the district 

court held that a fact issue existed regarding the sudden and accidental 

exception, making summary judgment improper. 

The case was immediately stayed and administratively closed for an 

interlocutory appeal, which this court denied in May 2012. After this denial, 

LGS’s second motion for partial summary judgment was reinstated upon 

motion in September 2013. Trinity’s second and third motions for summary 

judgment were reinstated upon motion in April 2014. 

 

1 These policies were technically provided by ACE, an earlier iteration of Trinity.

 Case: 15-41625 Document: 00514121738 Page: 3 Date Filed: 08/18/2017
No. 15-41625

4

In October 2014, the district court appointed a special master, who 

prepared a report and recommendation on these motions for partial summary 

judgment in March 2015. After this report, Trinity filed its fourth motion for 

partial summary judgment, and U.S. Fire filed a cross-motion for partial 

summary judgment. In June 2015, LGS and U.S. Fire settled, LGS dismissed 

its claims with prejudice, and was removed from the lawsuit altogether. 

The district court ordered the special master to file a second report and 

recommendation, which was filed in August 2015 and adopted in October 2015. 

Before the court were Trinity’s fourth motion for partial summary judgment 

and U.S. Fire’s cross-motion, U.S. Fire’s motion for partial summary judgment 

on subrogation, and responses and objections to each. The special master 

recommended granting in part and denying in part Trinity’s motion and U.S. 

Fire’s cross-motion for partial summary judgment, denying U.S. Fire’s motion 

on subrogation, and overruling certain objections. 

The special master’s report and recommendation reiterated the 

following: the cause of the injuries in the underlying claims was exposure to 

LGS’s gaskets with asbestos, LGS did not have to horizontally exhaust its 

primary coverage, and U.S. Fire’s excess policies were triggered upon 

exhaustion of any of the underlying primary policies for the same policy period, 

that exposure to asbestos constituted injury-in-fact (thus triggering coverage 

under Texas law), and that all claimants exposed “at the same time and 

location” constituted one “occurrence.” The report addressed the parties’

arguments regarding settlement payments, defense costs, and equitable 

subrogation. As a result, the district court determined that Trinity was entitled 

to $903,638.52 in settlement payments and $1,564,334.47 in defense costs from 

U.S. Fire. 

The district court denied U.S. Fire’s motion for reconsideration and U.S. 

Fire appealed. The district court then entered a final judgment, adopting the 

 Case: 15-41625 Document: 00514121738 Page: 4 Date Filed: 08/18/2017
No. 15-41625

5

report and recommendation, after which U.S. Fire timely amended its notice 

of appeal. On April 5, 2016, the district court granted Trinity’s Bill of Costs 

and ordered that U.S. Fire pay all taxable costs, which U.S. Fire has also 

appealed.

U.S. Fire now appeals the final judgment as well as several of the district 

court’s rulings. On appeal, U.S. Fire has presented many arguments as to why 

its excess policies are not triggered and why it should not have to pay anything. 

It argues that: (1) horizontal, rather than vertical, exhaustion of the primary 

policies must occur before U.S. Fire’s excess policies are triggered; (2) in the 

alternative, even under vertical exhaustion, U.S. Fire is entitled to subrogation 

from Trinity; (3) the policies were never triggered because injury-in-fact cannot 

be determined; (4) the policies were never triggered because there is 

insufficient proof that the claimants were exposed to asbestos during the 

relevant time; (5) the district court should not have awarded Trinity costs; (6) 

the excess policies’ pollution exclusion bars asbestos claims; or (7) in the 

alternative, Trinity has failed to demonstrate a fact issue as to the applicability 

of the “sudden and accidental” exception to the pollution exclusion. 

Trinity, for its part, argues the opposite in favor of its position that U.S. 

Fire must provide indemnification for the underlying asbestos claims. It argues

that: (1) the district court properly applied vertical exhaustion, exhausting 

policy coverage by year rather than by type, which would implicate U.S. Fire’s 

excess policies; (2) U.S. Fire is not entitled to subrogation; (3) the district court 

correctly determined that the injury-in-fact trigger was “exposure” to asbestos, 

thereby triggering U.S. Fire’s excess policies; (4) there was sufficient evidence 

that claimants were exposed to asbestos during the relevant time; (5) the 

district court properly awarded Trinity costs; (6) the district court properly 

concluded that the pollution exclusion did not apply; or (7) in the alternative, 

the pollution exclusion does not apply to product liability claims; or (8) as a 

 Case: 15-41625 Document: 00514121738 Page: 5 Date Filed: 08/18/2017
No. 15-41625

6

second alternative, the district court properly concluded Trinity had raised a 

genuine issue of material fact on the applicability of the “sudden and 

accidental” exception. 

Although the parties both start with the exhaustion theory as the 

threshold inquiry as to whether U.S. Fire’s excess policies are triggered, we 

start with the pollution exclusion clause. If the district court is mistaken and 

the pollution exclusion does apply, then by its own policy terms, U.S. Fire’s 

excess policy would not cover the underlying claims. If, however, the “sudden 

and accidental” exception to the pollution exclusion applies, the policy may be 

implicated according to horizontal or vertical exhaustion—or one of the other 

theories.

II.

“We review a district court’s grant of summary judgment de novo, 

applying the same legal standards that the district court applied,” viewing the 

evidence in the light most favorable to the nonmoving party. Gilbane Bldg. Co. 

v. Admiral Ins. Co., 664 F.3d 589, 593 (5th Cir. 2011). We affirm “only if there 

is no genuine issue of material fact and one party is entitled to prevail as a 

matter of law.” Cedyco Corp. v. PetroQuest Energy, LLC, 497 F.3d 485, 488 (5th 

Cir. 2007). 

“In this diversity action, we must apply Texas law as interpreted by 

Texas state courts.” Gilbane, 664 F.3d at 593 (quoting Mid–Continent Cas. Co. 

v. Swift Energy Co., 206 F.3d 487, 491 (5th Cir. 2000)). We “are bound by our 

own precedent interpreting Texas law unless there has been an intervening 

change in authority.” Id. at 594 (quoting Lee v. Frozen Food Express, Inc., 592 

F.2d 271, 272 (5th Cir. 1979)). Under Texas law, an insurer may have two 

separate and distinct responsibilities relating to coverage: the duty to defend 

and the duty to indemnify. Id.; see also D.R. Horton–Tex., Ltd. v. Markel Int’l 

Ins. Co., 300 S.W.3d 740, 743 (Tex. 2009). An insurer’s duty to defend is 

 Case: 15-41625 Document: 00514121738 Page: 6 Date Filed: 08/18/2017
No. 15-41625

7

governed by the “eight-corners rule,” which limits a court’s review to the 

insurance policy and the third-party plaintiff’s pleadings in the underlying 

litigation. Gilbane, 664 F.3d at 594. Texas courts construe the language 

according to “the ordinary, everyday meaning of the words to the general 

public.” U.S. Fid. & Guar. Co. v. Goudeau, 272 S.W.3d 603, 607 (Tex. 2008). 

The duty to indemnify, however, depends “on the facts and 

circumstances of the alleged injury-causing event,” and parties may “introduce 

evidence during coverage litigation to establish or refute the duty to 

indemnify.” D.R. Horton–Tex., 300 S.W.3d at 741. The factual allegations, not 

the legal theories, control. See id. at 744. The pleadings are construed liberally,

with any doubts construed in favor of the insured. Nat’l Union Fire Ins. Co. v. 

Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997). However, the 

“facts actually established in the underlying suit control the duty to 

indemnify.” D.R. Horton-Tex., 300 S.W.3d at 744. Thus, the “duty to indemnify 

depends on the facts proven and whether the damages caused by the actions 

or omissions proven are covered by the terms of the policy.” Id.

If the insured meets his burden and proves coverage, the insurer is liable 

unless he can prove the loss is within an exclusion. Gilbert Tex. Const., L.P. v. 

Underwriters at Lloyd’s London, 327 S.W.3d 118, 124 (Tex. 2010). If the insurer 

proves that an exclusion applies, the burden shifts back to the insured to show 

that an exception to the exclusion can bring the claim back within coverage. 

Id. “If an insurance contract uses unambiguous language, [a court] must 

enforce it as written.” Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 

S.W.3d 20, 23 (Tex. 2008). If, however, a contract is susceptible to more than 

one reasonable interpretation, a court will resolve any ambiguity in favor of 

coverage. Id. “Policy terms are given their ordinary and commonly understood 

meaning unless the policy itself shows the parties intended a different, 

technical meaning.” Id. “No one phrase, sentence, or section of the policy should 

 Case: 15-41625 Document: 00514121738 Page: 7 Date Filed: 08/18/2017
No. 15-41625

8

be isolated from its setting and considered apart from the other provisions.” Id. 

In addition, a court “must give the policy’s words their plain meaning, without 

inserting additional provisions into the contract.” Id.

III.

The district court determined that the pollution exclusion did not apply 

for two reasons. First, it “decline[d] to find that asbestos is a pollutant subject 

to the pollution exclusion” because U.S. Fire “has not cited and the [district 

c]ourt has not found any cases where asbestos is considered a ‘pollutant’ and 

subject to the pollution exclusion in an umbrella policy.” Alternatively, the 

district court determined that “even if asbestos is a pollutant and the pollution 

exclusion applies to the [u]nderlying [c]laims, there still remains a question of 

material fact with respect to the ‘sudden and accidental’ exception to the 

pollution exclusion,” which would make a grant of summary judgment to U.S. 

Fire improper. 

A.

In relevant part, the U.S. Fire excess policies each contain the following 

pollution exclusion:

The Policy shall not apply:

. . . 

under [coverage for bodily injury liability or property damage 

liability] to liability arising out of the discharge, dispersal, release 

or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic 

chemicals, liquids or gases, waste materials or other irritants, 

contaminants or pollutants into or upon land, the atmosphere or 

any water course or body of water; but this exclusion does not apply 

if such discharge, dispersal, release or escape is sudden and 

accidental . . . .

According to the plain language of U.S. Fire’s excess policy, the pollution 

exclusion bars claims for the following: (1) a bodily injury or property damage 

liability claim; (2) arising out of the discharge, dispersal, release, or escape into 

or upon the land, the atmosphere or any water course or body of water; (3) of 

 Case: 15-41625 Document: 00514121738 Page: 8 Date Filed: 08/18/2017
No. 15-41625

9

smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, 

waste materials or other irritants, contaminants or pollutants. The order of 

burden shifting is as follows: if Trinity pleaded facts showing coverage, then 

the burden shifts to U.S. Fire to show that the pollution exclusion applied to 

the underlying claims. Gilbert, 327 S.W.3d at 124. If U.S. Fire shows the 

pollution exclusion applied to the underlying claims, then the burden shifts to 

Trinity to prove that an exception to the exclusion covers the claims. Id.

The parties’ arguments focus on the third prong: whether asbestos is a 

pollutant.2 U.S. Fire emphasizes that asbestos is a pollutant, specifically one 

that must first be released into the air to cause the injuries alleged in the 

underlying claims.3 Trinity replies that asbestos is not a pollutant. We address 

each argument in turn. 

Neither this court nor the Texas Supreme Court has ever determined 

whether asbestos is a pollutant. Thus, we start with the plain language of the 

 

2 After oral argument, Trinity raised a new argument that the asbestos was not 

released into the “atmosphere,” and thus fell outside the pollution exclusion. Trinity raised 

this issue for the first time in its supplemental letter brief. The “failure to raise specific issues 

or arguments . . . operates as a waiver of those issues or arguments for appeal.” United States 

v. Scroggins, 599 F.3d 433, 448 (5th Cir. 2010). Further, Trinity’s cited case does not limit 

“atmosphere” to an outdoor context, but instead distinguishes the terms “workplace” and 

“environment.” See Cooper Indus., LLC v. Precision Castparts Corp., No. H-15-0576, 2016 WL 

4939565, at *8 (S.D. Tex. Sept. 14, 2016) (unpublished). Indeed, the clause at issue in that 

case, as U.S. Fire noted, did not even contain the word “atmosphere,” let alone conclusively 

define it. Id. at *13.

3 Trinity risks pleading itself out of its main claims on this point. Trinity argues that 

U.S. Fire cannot refer to the underlying claims because they are outside of the “eight corners”

rule and that there “is no allegation of or evidence that the movement of asbestos fibers from 

LGS’s product constituted ‘discharge, dispersal, release, or escape of . . . irritants, 

contaminants, or pollutants into or upon the land, the atmosphere or any water course or 

body of water,’ required by U.S. Fire’s policy.” (emphasis added). U.S. Fire points out that in 

attempting to avoid the pollution exclusion, Trinity has undermined its exposure argument—

in other words, if there is no allegation or evidence that asbestos from LGS products 

constituted discharge of pollutants into the atmosphere, then there is no proof that any 

plaintiff was exposed to or injured by any LGS product at any time. U.S. Fire also notes that 

Trinity itself asked the court to accept its characterization of the underlying claims rather 

than relying on those claims’ pleadings. 

 Case: 15-41625 Document: 00514121738 Page: 9 Date Filed: 08/18/2017
No. 15-41625

10

policy. U.S. Fire argues that asbestos falls within the plain meaning of the

policy terms because it is an “irritant,” “contaminant” or “pollutant.”

Specifically, U.S. Fire argues that asbestos irritates the lungs and 

contaminates the atmosphere and body. We interpret this policy language 

according to “the ordinary, everyday meaning of the words to the general 

public,” Goudeau, 272 S.W.3d at 607. We agree with U.S. Fire that asbestos is 

both an irritant and a pollutant. 

An “irritant” is anything “causing irritation; esp. physical irritation.”

Irritant, The American Heritage Dictionary, 2d. College Ed.4 A “contaminant”

is “[s]omething that contaminates;” to contaminate is “to make impure or 

corrupt by contact or mixture.” Conaminant, Contaminate, The American 

Heritage Dictionary, 2d. College Ed. Similarly, a “pollutant” is “[s]omething 

that pollutes, esp. a waste material that contaminates air, soil, or water.”

Pollutant, The American Heritage Dictionary, 2d. College Ed.

The caselaw is varied on this issue, but seems to slightly favor treating 

asbestos as a pollutant, particularly when the pollution exclusion lists 

“irritant, contaminant, or pollutant.” See 3 Allan D. Windt, Insurance Claims 

& Disputes § 11:11 (6th ed.) (noting the “inconsistent manner in which courts 

have handled the question of whether even asbestos is a pollutant for the 

purpose of a pollution exclusion” and noting five cases in which courts have 

found asbestos to be a pollutant and four in which it was not). Many 

jurisdictions have classified asbestos as a pollutant under a pollution 

exclusion. See, e.g., Great N. Ins. Co. v. Benjamin Franklin Fed. Sav. & Loan 

Ass’n, 953 F.2d 1387, 1992 WL 16749, at *1 (9th Cir. 1992) (unpublished)

 

4 Indeed, we have previously used a similar definition of “irritant” to interpret 

“plain language” in an insurance policy. See Nautilus Ins. Co. v. Country Oaks Apartments 

Ltd., 566 F.3d 452, 455–56 & n.3 (5th Cir. 2009) (defining “irritant” as “an agent by which 

irritation is produced (a chemical)” (quoting Webster’s Third New Int’l Dict. Unabridged 1197 

(1981))).

 Case: 15-41625 Document: 00514121738 Page: 10 Date Filed: 08/18/2017
No. 15-41625

11

(“[A]sbestos is a pollutant as defined by the policy because it is a solid 

irritant.”); Bd. of Regents v. Royal Ins. Co. of Am., 517 N.W.2d 888, 893–94 

(Minn. 1994) (“[T]he policy exclusion in the excess policies includes—and 

therefore excludes from policy coverage—the contamination or pollution by 

asbestos fibers of air within a building.”); Am. States Ins. Co. v. Zippro Constr. 

Co., 455 S.E.2d 133, 135 (Ga. Ct. App. 1995) (“There is little question that

asbestos constitutes a pollutant as unambiguously defined in the exclusion.”); 

see also 29 C.F.R. §§ 1910.1000, 1001 (defining asbestos in many forms as an 

air contaminant). 

Some jurisdictions, however, when interpreting New York law, have 

determined that asbestos is not a pollutant—often combining this conclusion 

with an analysis of terms “atmosphere” or “environment.” The Southern 

District of New York determined that a “special limit endorsement, negotiated 

by the parties, [that] is unique to the[ir] policies and no case has interpreted”

was “ambiguous at least with regard to asbestos” and “nothing in the provision 

suggests that asbestos falls within its terms” because one “would not usually 

associate asbestos with the substances listed in the exclusion, namely, smoke, 

fumes, or waste.” See Maryland Casualty Co. v. W.R. Grace & Co., 794 F. Supp. 

1206, 1229 (S.D.N.Y. 1991), rev’d on other grounds, 23 F.3d 617 (2d Cir. 1993) 

(“Whatever the applicability of the usual pollution clause, we cannot find, as a 

matter of law, that the special limits provision applies to asbestos.” (emphasis 

added)). Relying on New York state and federal cases, the Ohio Court of 

Common Pleas determined that asbestos is not associated with substances like 

“smoke, fumes, or waste,” and determined that the pollution exclusion was 

“aimed at the release of toxic waste causing environmental damage.” OwensCorning Fiberglas Corp. v. Allstate Ins. Co., 660 N.E.2d 746, 751–52 (Ohio 

Misc. 1993). 

 Case: 15-41625 Document: 00514121738 Page: 11 Date Filed: 08/18/2017
No. 15-41625

12

The Ohio Court of Appeals, however, has held the opposite, determining 

in an unpublished opinion that asbestos released during the sanding of a vinyl 

kitchen floor was an “irritant or contaminant” and therefore a pollutant 

because it was classified as a “hazardous substance,” “toxic pollutant,” or 

“hazardous air pollutant” under federal law, and was properly characterized 

as waste. See Selm v. Am. States Ins. Co., No. C-010057, 2001 WL 1103509, at 

*3 (Ohio Ct. App. 1st Dist. Hamilton Cty. 2001). 

The pollution exclusion in U.S. Fire’s excess policies is broad, and applies 

generally to “irritants, contaminants, and pollutants.” Though the case law is 

mixed, we conclude, under the plain language of the policy exclusion, that 

asbestos constitutes a pollutant and an irritant.5 Accordingly, the underlying 

claims fall under the pollution exclusion because they: (1) were for bodily 

injury; (2) arose out of the discharge, dispersal, release, or escape, into the 

atmosphere; (3) and originated with an irritant and pollutant—namely, 

asbestos.

B.

We have concluded that the pollution exclusion applies, and so the 

burden shifts to Trinity to attempt to apply an exception to the exclusion. U.S. 

Fire’s pollution exclusion states that it “does not apply if such discharge, 

dispersal, release or escape is sudden and accidental.” Trinity argues that the 

“sudden and accidental” exception applies, thus negating any effect the 

pollution exclusion would have on coverage.

We do not reach this issue here. Rather, because we have concluded that 

asbestos is encompassed within the pollution exclusion in U.S. Fire’s excess 

 

5 Trinity also argues that the underlying claims are barred because they relate to 

products liability, which is not covered by pollution exclusions. As U.S. Fire notes, however, 

there is no “products liability” language in the exclusion, nor does the exclusion single out 

“environmental” damages as separate from “products” damages. 

 Case: 15-41625 Document: 00514121738 Page: 12 Date Filed: 08/18/2017
No. 15-41625

13

policies, we will remand for the district court to determine in the first instance 

the applicability of the sudden and accidental exception to the pollution 

exclusion. 

IV.

Accordingly, we VACATE the district court’s judgment and REMAND 

for a determination as to the applicability of the sudden and accidental 

exception.6

 

6 Because we are remanding for a decision on the applicability of the sudden and 

accidental exception, we do not address the remaining issues asserted on appeal. The appeal 

from the district court’s award of costs is moot. The remaining issues are not dispositive on 

this record. 

 Case: 15-41625 Document: 00514121738 Page: 13 Date Filed: 08/18/2017