1

United States Court of Appeals,

Fifth Circuit.

No. 96-20698.

CERTAIN UNDERWRITERS AT LLOYD'S LONDON, London & Hull Maritime

Insurance Company Ltd., Commercial Union Assurance Company,

Northern Assurance Company Ltd. No. 6 A/C, The Prudential Assurance

Company Ltd., Ocean Marine Insurance Company Ltd., Hansa Marine

Insurance Company (UK) Ltd., Vesta (UK) Insurance Company Ltd.,

Bishopsgate Insurance PLC, Minster Insurance Company Ltd.,

Plaintiffs-Appellees,

v.

C.A. TURNER CONSTRUCTION COMPANY, INC. and T.C.I., Inc.,

Defendants-Appellants.

May 8, 1997.

Appeal from the United States District Court for the Southern

District of Texas.

Before DAVIS, SMITH and DUHÉ, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

C.A. Turner Construction Company and its subsidiary, T.C.I.,

Inc., appeal a declaratory judgment that a clause in their

insurance policy excludes coverage for a personal injury suit

arising from the discharge of chemical fumes. Because the

exclusion clause unambiguously applies, we affirm the district

court's summary judgment order.

I.

This declaratory judgment action arises from a March 14, 1990,

incident in which William Galbreath, a pipe-fitter for T.C.I., was

injured while welding pipe at a Texaco chemical plant in Port

Neches, Texas. At the time, Galbreath and two other employees were

outdoors engaged in welding two flanges onto the ends of a
 

1After the district court granted summary judgment, the

underlying state litigation filed by Galbreath against Texaco, C.A.

Turner, and T.C.I. was settled for $85,000. Pursuant to its

contractual indemnity obligations to Texaco, C.A. Turner paid the

entire settlement. Texaco has elected not to participate in this

2

separated pipe. The workers were standing on scaffolding that was

enclosed in a plastic tent to protect them and the pipe under

repair from rain. Rags had been stuffed into the pipe to prevent

chemical leakage. When the rags were removed from the pipe, either

the rags or the chemical in the pipe made contact with the hot pipe

that had just been welded; as a result, a cloud of phenol gas was

created. Galbreath testified that he dove toward the entrance of

the plastic tent to escape the gas and suffered injuries through

inhalation of the gas and the fall.

On January 15, 1992, Galbreath instituted a state court

lawsuit for damages against C.A. Turner, T.C.I., and Texaco. C.A.

Turner requested that its insurance carrier, Certain Underwriters

at Lloyd's London, et al. (Underwriters), undertake the legal

defense and indemnify C.A. Turner for any damages. In response,

Underwriters denied that it provided coverage for the claim and

denied any duty to defend. According to Underwriters, an "absolute

pollution exclusion" clause in its insurance policy excluded

coverage for claims arising out of pollution-related bodily

injuries.

On September 5, 1995, Underwriters brought this action seeking

a declaratory judgment that its denial of coverage was proper. The

district court granted Underwriters' motion for summary judgment.

C.A. Turner and T.C.I. appeal that order.1
appeal. 

3

II.

This court reviews the district court's grant of summary

judgment and its interpretation of an insurance contract de novo.

American States Ins. Co. v. Nethery, 79 F.3d 473, 475 (5th

Cir.1996). The parties agree that Texas law governs this case.

Under Texas rules of contractual interpretation, if an insurance

contract is expressed in unambiguous language, its terms will be

given their plain meaning and it will be enforced as written.

Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex.1984). If,

however, a contract is susceptible to more than one reasonable

interpretation, a court will resolve any ambiguity in favor of

coverage. Id.

The pollution exclusion clause at issue provides:

[I]t is hereby understood and agreed that this policy is

subject to the following exclusion[ ] and that this policy

shall not apply to:

 . . . . .

Liability for any bodily and/or personal injury to or illness

or death of any person or loss of, damage to, or loss of use

of property directly or indirectly caused by or arising out of

seepage into or onto and/or pollution and/or contamination of

air, land, water and/or any other property and/or any person

irrespective of the cause of the seepage and/or pollution

and/or contamination, and whenever occurring.

Appellants argue that the exclusion clause is inapplicable to the

welding accident because the fumes were confined to the temporary

tent over the scaffolding and only one individual and no property

was injured. According to appellants, the ordinary meaning of

pollution encompasses only widespread releases of hazardous
 

2The National Union policy at issue stated:

This policy does not apply to ... any Personal Injury or

Property Damage arising out of the actual or threatened

discharge, dispersal, release or escape of pollutants,

anywhere in the world; ... "Pollutants" means any solid,

liquid, gaseous or thermal irritant or contaminant,

including smoke, vapor, soot, fumes, acids, alkalis,

chemicals and waste material. Waste materials include

materials which are intended to be or have been recycled,

reconditioned or reclaimed.

Id. at 519. Two other policies included provisions closer to

the one this court now considers:

Notwithstanding anything to the contrary contained in

this policy, this policy is amended in that it shall not

apply to any claim or claims: For personal injuries or

property damages directly or indirectly caused by seepage

or pollution or contamination of air, land, water or any

other property, however caused and whenever occurring.

Id. 

4

substances into the environment. Because the policy does not

define "pollution," "contamination," or "seepage," they contend,

the terms must be limited to their ordinary meaning.

Applying Texas principles of construction, we must determine

whether the plain language of the pollution exclusion clause

unambiguously barred coverage for injuries related to this chemical

release. A Texas Supreme Court case examining analogous clauses

provides a starting point for our analysis. In National Union Fire

Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517 (Tex.1995), insurers

claimed that absolute pollution exclusions2 barred coverage for an

accidental refinery explosion that produced a toxic hydroflouric

acid cloud over a city. One policy defined "pollutants" as "any

solid, liquid, gaseous or thermal irritant or contaminant,

including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
5

waste material." Id. at 519. Two other policies at issue did not

define pollution; however, like the policy here, they excluded

coverage for injuries caused by seepage, pollution, or

contamination. Id.

The insured argued that the policies contained patent and

latent ambiguities by virtue of the pollution exclusion clauses

because the parties did not intend the exclusions to cover

"accidental" releases. Id. at 521. The court found no patent

ambiguity because the policies' language, on its face, was clear.

Id. Likewise, the court found no latent ambiguity: "Applying the

policies' language to the context of the claim here does not

produce an uncertain or ambiguous result, but leads only to one

reasonable conclusion: the loss was caused by a cloud of

hydrofluoric acid, a substance which is clearly a "pollutant' for

which coverage is precluded." Id. at 521. Because "the policies

unequivocally den[ied] coverage for damage resulting from

pollutants, however the damage is caused," the court refused to

consider extrinsic evidence that could contradict or vary the

meaning of the explicit contractual language. Id. at 521-22.

In Constitution State Ins. Co. v. Iso-Tex Inc., 61 F.3d 405

(5th Cir.1995), this court reached the same conclusion in a case

also arising under Texas law. Iso-Tex, the insured, sought

coverage for claims related to its alleged deposit of radioactive

materials near residences. Iso-Tex contended that because nuclear

material was covered by a separate policy exclusion, nuclear waste

was not clearly a pollutant under the pollution exclusion clause.
 

3See, e.g., Lumbermens Mut. Cas. Co. v. S-W Industries, Inc.,

39 F.3d 1324 (6th Cir.1994); Regional Bank of Colorado v. St. Paul

Fire & Marine Ins. Co., 35 F.3d 494 (10th Cir.1994); Sargent

Const. Co. v. State Auto. Ins. Co., 23 F.3d 1324 (8th Cir.1994);

Island Associates, Inc. v. Eric Group, Inc., 894 F.Supp. 200

(W.D.Pa.1995); Westchester Fire Ins. Co. v. City of Pittsburg,

Kan., 794 F.Supp. 353 (D.Kan.1992), aff'd, 987 F.2d 1516 (10th

Cir.1993); American States Ins. Co. v. Kiger, 662 N.E.2d 945

(Ind.1996); Atlantic Mut. Ins. Co. v. McFadden, 413 Mass. 90, 595

N.E.2d 762 (1992); Continental Cas. Co. v. Rapid-American Corp.,

80 N.Y.2d 640, 593 N.Y.S.2d 966, 609 N.E.2d 506 (1993); Karroll v.

Atomergic Chemetals Corp., 194 A.D.2d 715, 600 N.Y.S.2d 101

(N.Y.App.Div.1993). 

 

4See Park-Ohio Indus., Inc. v. Home Indemn. Co., 975 F.2d 1215

(6th Cir.1992); Brown v. American Motorists Ins. Co., 930 F.Supp.

207 (E.D.Pa.1996); Bituminous Cas. Corp. v. RPS Co., 915 F.Supp.

882 (W.D.Ky.1996); Essex Ins. Co. v. Tri-Town Corp., 863 F.Supp.

38 (D.Mass.1994); Larsen Oil Co. v. Federated Service Ins. Co.,

859 F.Supp. 434 (D.Or.1994), aff'd, 70 F.3d 1279 (9th Cir.1995);

American States Ins. Co. v. Zippro Constr. Co., 216 Ga.App. 499,

6

Id. at 409. The court, construing Texas law and relying largely on

the Texas Supreme Court's decision in CBI, accorded this argument

no weight and concluded that the clause unambiguously excluded

radioactive waste. Id.

Appellants seek to distinguish both CBI and Iso-Tex on the

ground that those cases involved clear instances of traditional

environmental pollution rather than a simple workplace accident.

Certainly, some jurisdictions have distinguished between discharges

that cause environmental harm and discharges that do not and have

concluded that exclusion clauses may be ambiguous when applied

outside the context of environmental pollution.3 On the other

hand, a number of courts, including this one, have examined the

plain language of the same or similar exclusions and concluded that

they preclude coverage of liability arising out of releases that do

not cause widespread environmental harm.4 In American States Ins.
455 S.E.2d 133 (1995); Economy Preferred Ins. Co. v. Grandadam,

275 Ill.App.3d 866, 212 Ill.Dec. 190, 656 N.E.2d 787 (1995);

Bernhardt v. Hartford Fire Ins. Co., 102 Md.App. 45, 648 A.2d 1047

(1994), cert. granted, 337 Md. 641, 655 A.2d 400 (1995); League of

Minnesota Cities Ins. Trust v. City of Coon Rapids, 446 N.W.2d 419

(Minn.App.1989); Demakos v. Travelers Ins. Co., 205 A.D.2d 731,

613 N.Y.S.2d 709 (N.Y.App.Div.1994); Madison Constr. Co. v.

Harleysville Mut. Ins. Co., 451 Pa.Super. 136, 678 A.2d 802 (1996),

appeal granted, --- Pa. ----, 690 A.2d 711 (Pa.1997); Cook v.

Evanson, 83 Wash.App. 149, 920 P.2d 1223 (1996); Donaldson v.

Urban Land Interests, Inc., 205 Wis.2d 404, 556 N.W.2d 100

(Wis.App.1996), review granted, 207 Wis.2d 285, 560 N.W.2d 273

(1996); see also CBI, 907 S.W.2d at 522 n. 8 (citing cases from a

number of jurisdictions concluding that similar absolute pollution

exclusions were clear and unambiguous); Tri County Svc. Co. v.

Nationwide Mut. Ins. Co., 873 S.W.2d 719, 721 (Tex.App.—San Antonio

1993, writ denied) ("On the basis of the plain meaning of the

exclusion in question, virtually all courts in other jurisdictions

which have considered such an exclusion have found that it

precludes all coverage of any liability arising out of the release

of pollutants."). 

7

Co. v. Nethery, 79 F.3d 473 (5th Cir.1996), the plaintiff filed

suit against painting and repair contractors, alleging that fumes

from paint and glue used in her home had injured her. Id. at 474.

The contractors demanded that their insurer, American States,

provide their legal defense, and the insurer, in turn, filed a

declaratory action alleging that the policy's absolute pollution

exclusion barred the claim under Mississippi law. Id. at 475. The

insureds argued that paint and glue fumes did not constitute

pollutants because they do not ordinarily inflict injury. Id. at

476. After reviewing several cases in which similar substances

were held to be pollutants, this court concluded that "[t]he

pollution exclusion at issue encompasse[d] more than traditional

conceptions of pollution" and, therefore, excluded coverage. Id.

at 477.

Guided by the language of the pollution exclusion clause and
8

the Texas Supreme Court's decision in CBI, we conclude that

coverage for damage resulting from the release of phenol gas is

likewise excluded. The clause clearly excludes "[l]iability for

any bodily and/or personal injury ... directly or indirectly caused

by or arising out of seepage into or onto and/or pollution and/or

contamination of air, land, water and/or any other property and/or

any person irrespective of the cause of the seepage and/or

pollution and/or contamination, and whenever occurring." The

clause does not limit its application to only those discharges

causing environmental harm; in contrast, it speaks broadly of

"[l]iability for any bodily or personal injury." This language is

not ambiguous; a plain reading of the clause dictates the

conclusion that all damage caused by pollution, contamination, or

seepage is excluded from coverage. Although the policy itself does

not define these terms, pollution has been defined as

"[c]ontamination of air ... by the discharge of harmful

substances." Webster's II New Riverside University Dictionary 911

(1984). Here, Galbreath's injuries stemmed from the discharge of

phenol gas that contaminated the air inside the tent enclosing the

scaffolding; the release of the toxic chemical allegedly rendered

him unable to breathe. Thus, the phenol gas emission constituted

bodily-injuring pollution or contamination, and coverage for C.A.

Turner's claim is precluded under the pollution exclusion clause.

Additionally, while the Texas Supreme Court has not faced the

application of a pollution exclusion clause in this context, our

conclusion that coverage is excluded is consistent with CBI 's
9

broad language. The CBI court specifically stated that the

pollution exclusion clauses in that case "unequivocally deny

coverage for damage resulting from pollutants, however the damage

is caused." CBI, 907 S.W.2d at 522 (emphasis added). This

language does not support a distinction between environmental

pollution and workplace contamination.

We appreciate the difficulty inherent in defining the scope of

a pollution exclusion clause when the damage-causing incident

involves a commonly used chemical or when only a slight amount of

substance is released. As the Seventh Circuit has noted:

The terms "irritant" and "contaminant," when viewed in

isolation, are virtually boundless, for "there is virtually no

substance or chemical in existence that would not irritate or

damage some person or property." Without some limiting

principle, the pollution exclusion clause would extend far

beyond its intended scope, and lead to some absurd results.

To take but two simple examples, reading the clause broadly

would bar coverage for bodily injuries suffered by one who

slips and falls on the spilled contents of a bottle of Drano,

and for bodily injury caused by an allergic reaction to

chlorine in a public pool. Although Drano and chlorine are

both irritants or contaminants that cause, under certain

conditions, bodily injury or property damage, one would not

ordinarily characterize these events as pollution.

Pipefitters Welfare Educ. Fund v. Westchester Fire Ins. Co., 976

F.2d 1037, 1043 (7th Cir.1992) (citations omitted). We agree with

the Seventh Circuit's common-sense approach. However, we do not

believe that our conclusion offends that approach in view of the

substantial nature of the discharge that occurred here. According

to Galbreath's deposition testimony, once the rags were removed

from the pipe, "it was just like somebody .... threw a smoke bomb

in there. I couldn't even see—couldn't see a hand in front of your

face." The emission of the harmful fumes filled up a temporary
 

5That clause provides, in pertinent part:

Seepage and Pollution Buy-Back (168 Hour Clause)

Notwithstanding the absolute seepage and pollution

exclusion contained in this policy, these shall not apply

provided that the assured establishes that [ ] all the

following conditions have been met.

A. The occurrence was sudden and accidental and was neither

expected nor intended by the assured. An accident shall not

be considered unintended or unexpected unless caused by some

intervening event neither expected nor intended by the

assured.

B. The occurrence can be identified as commencing at a specific

time and date during the term of this policy.

C. The occurrence became known to the assured within 168 hours

after its commencement and was reported to Underwriters within

90 days thereafter.

D. The occurrence did not result from the assured's intentional and

willful violation of any government statute, rule or

regulation. 

10

plastic tent that enclosed scaffolding intended to support at least

three people. The scope of this release distinguishes it from the

Seventh Circuit's example of the spill of a bottle of Drano and

supports our conclusion.

Appellants also contend that a "Seepage and Pollution BuyBack Clause" in the insurance policy is ambiguous.5 Under that

provision, coverage of occurrences excluded under the pollution

exclusion clause is reinstated when four conditions are satisfied.

Generally, it allows coverage for some unintentional releases when

proper notice is given the insurer. To satisfy the notice

provision, the insured must show that "[t]he occurrence became

known to the assured within 168 hours after its commencement and

was reported to Underwriters within 90 days thereafter." Because
 

6Under Texas law, notice provisions are enforceable. See,

e.g., Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170,

174-75 (Tex.1995) (holding that insurer was not bound by judgment

against insured where insured failed to notify insurer of pending

lawsuit as policy required and lack of notice prejudiced insurer).

11

appellants failed to comply with this notice requirement, coverage

for the occurrence here was not reinstated.6 Appellants argue,

however, that the clause is ambiguous because nothing in the policy

distinguishes between an occurrence that falls within the scope of

the pollution exclusion—requiring compliance with the special

notice provisions of this clause—and one that does not.

In effect, this argument simply revisits appellants' earlier

contention that the pollution exclusion clause itself is ambiguous

because it does not clearly define what constitutes pollution. The

district court concluded that, like the exclusion clause, "the

language of the "buy-back' clause is unambiguous and must be

enforced according to its "plain meaning.' " Certain Underwriters

at Lloyd's London v. C.A. Turner Constr. Co., 941 F.Supp. 623, 629

(S.D.Tex.1996). We agree. Preliminary language in the buy-back

clause specifically references the pollution exclusion clause;

under the "plain meaning" of the clause, the "occurrence" in the

buy-back clause is the activity discussed in the pollution

exclusion clause. Because we concluded that the pollution

exclusion clause was unambiguous under Texas law, we likewise

conclude that the buy-back clause is subject to only one reasonable

interpretation.

III.
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For these reasons, the district court summary judgment is

AFFIRMED.

AFFIRMED.