Case Name: KERR-McGEE CORPORATION, a Delaware corporation, et al., Plaintiffs-Respondents, v. ADMIRAL INSURANCE COMPANY, et al., Defendants-Petitioners
Court: Oklahoma Supreme Court
Jurisdiction: Oklahoma
Decision Date: 1995-10-03
Citations: 905 P.2d 760
Docket Number: No. 81294
Parties: KERR-McGEE CORPORATION, a Delaware corporation, et al., Plaintiffs-Respondents, v. ADMIRAL INSURANCE COMPANY, et al., Defendants-Petitioners.
Judges: Concur: KAUGER, V.C.J., and HODGES, LAVENDER, SIMMS, SUMMERS and WATT, JJ.
Reporter: Pacific Reporter 2d
Volume: 905
Pages: 760–769

Head Matter:
KERR-McGEE CORPORATION, a Delaware corporation, et al., Plaintiffs-Respondents, v. ADMIRAL INSURANCE COMPANY, et al., Defendants-Petitioners.
No. 81294.
Supreme Court of Oklahoma.
Oct. 3, 1995.
Rehearing Denied Nov. 16, 1995.
Covington & Burling by Peter J. Nickles and Douglas E. Phillips, Washington, DC, Crow & Dunlevy by Andrew M. Coats, Richard C. Ford and Leanne Burnett, Oklahoma City, for Kerr-MeGee Corporation.
Stewart & Elder by A.T. Elder, Jr., Oklahoma City, for Admiral Insurance Co.
Harwood Lloyd by Victor C. Harwood, III, Brian J. Coyle, Edward Zampino, Peter E. Mueller, Hackensack, NJ, Huckaby, Fleming, Frailey, Chaffin & Dárrah by F. Thomas Cordell, Jr., John Dexter Marble, Chickasha, for Aetna Casualty & Surety Co.
Mills, Whitten, Mills, Mills & Hinkle by Earl D. Mills, Oklahoma City, Mudge, Rose, Guthrie Alexander & Ferdon, New York City, for California Union Insurance.
Hall, Estill, Hardwick, Gable, Golden & Nelson by Michael D. Graves and Susan L. Gates, Tulsa, for The Hardage Steering Committee Members.
Riggs, Abney, Neal & Turpén by Melvin Hall, Oklahoma City, for Oklahoma State Chamber of Commerce & Industry.
Wiley, Rein & Fielding by Laura A. Fog-gan, Carol A. Barthel, and William A. McGrath, Washington, DC, Derryberry, Quigley, Parrish, Solomon & Blankenship by Larry Derryberry and Bert E. Marshall, Oklahoma City, for Insurance Environmental Litigation Association.

Opinion:
HODGES, Justice.
The question certified by the trial court is whether a pollution exclusion clause in a general liability insurance contract applies to the long-term disposal of hazardous waste. This Court holds that the exclusion applies and bars coverage.
Kerr-McGee Corporation and related entities (Kerr-McGee) brought this action against 29 American insurance companies, plus certain underwriters at Lloyd's of London and certain London market insurance companies. These companies provided general liability coverage to Kerr-McGee between 1958 and 1985. Kerr-McGee seeks reimbursement of its share of the costs to clean up accumulated contamination at nine sites in five states. Four of the sites were Kerr-McGee plant facilities and five sites were where Kerr-MeGee regularly disposed of its industrial waste. It also seeks to recoup the attorney fees it incurred defending claims brought by government agencies who forced the clean-ups.
The insurance companies raised five defenses to coverage. On cross motions for summary judgment, the trial court held that the pollution exclusion clause did not bar coverage. The question was certified for immediate review pursuant to section 952(b)(3) of title 12. This Court granted certiorari review of this issue which will affect a substantial part of the merits of the claims concerning each site. This opinion addresses only the legal effect of the pollution exclusion clause in the policies.
The trial court has decided to try the claims separately for each site. The first site is the Hardage superfund site in McClain County, Oklahoma.
The Hardage site was formerly licensed for hazardous waste disposal. Beginning in 1972, Kerr-McGee sent waste for disposal, primarily wastewater from drum rewashing at Cato Oil and Grease. In 1986, the United States sued Kerr-McGee and others who disposed of waste at the Hardage site pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601-9675 (1992). In July 1991, Kerr-McGee paid $2,871,245.00 as its proportionate share of remedy and response costs at the site. It incurred defense costs of $928,984.82 and also faces potential future liability under certain contingencies described in the settlement agreement.
Beginning in 1971, a pollution exclusion clause was included in general liability policies. Two versions of the exclusion appear in the applicable policies. The typical version provides:
In consideration of the premium charged, it is agreed that this insurance does not apply to bodily injury or property damage 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 watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.
(emphasis added). Another version of the clause excludes pollution coverage except for "a sudden, unintended and unexpected happening."
The trial court held the term "sudden" to be ambiguous as a matter of law. It stated that "the clause in question is susceptible to at least two varying constructions and [this court] will adopt the usage most favorable to Kerr-McGee." The trial court did not construe the term "accidental."
The law is settled concerning the subject of ambiguity in contracts. "The interpretation of an insurance contract and whether it is ambiguous is a matter of law for the Court to determine and resolve accordingly." Dodson v. St. Paul Ins. Co., 812 P.2d 372, 376 (Okla.1991). Unless the insurance contract is ambiguous, it should be construed according to its terms, as is true of any other contract. Frank v. Allstate Ins. Co., 727 P.2d 577 (Okla.1986). If the language in the insurance policy is susceptible to two constructions, then the contract will be interpreted consistent with the mutual intent of the parties, with the ambiguity resolved most favorably to the insured and against the insurance carrier. Dodson, 812 P.2d at 376-77; United States Fidelity & Guar. Co. v. Town of Comanche, 114 Okla. 237, 246 P. 238 (1926).
Whether the pollution-exclusion clause bars coverage in a general liability contract is an issue of first impression in this jurisdiction. However, the case law construing the pollution exclusion clause is voluminous. A review of those cases reveals that the arguments advanced by the insurance companies, Kerr-McGee, and the amici are neither new nor being considered for the first time.
I. "SUDDEN"
A number of courts have addressed the issue of whether the pollution exclusion clause is ambiguous. Their holdings differ as to whether the term "sudden" is susceptible to more than one meaning. State high courts addressing the issue are evenly split. Seven have construed "sudden" to mean unexpected, unintended, or unforeseen. That was the conclusion the trial court reached in this matter. Seven state high courts, however, have concluded that "sudden" has a temporal element that connotes abruptness or immediacy. A number of intermediate ap pellate courts have also reached that conclusion. Most federal appellate courts confronted with the issue have held that "sudden" connotes temporal abruptness. That includes the Tenth Circuit Court of Appeals which reached that same conclusion in examining a pollution exclusion clause. See Hartford Accident & Indem. Co. v. United States Fidelity & Guar., 962 F.2d 1484, 1489 (10th Cir.1992). That was also the conclusion reached in five federal district court decisions from the Western District of Oklahoma which construed pollution exclusion clauses in policies covering the same Hardage waste disposal site involved here.
Independent of the differing conclusions of courts, the Oklahoma Statutes provide specific rules of contract interpretation. First, "[t]he whole of a contract is to be taken together, so as to give effect to every part, if reasonably practical, each clause helping to interpret the others." Okla.Stat. tit. 15, § 157 (1991). Second:
The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning, unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which ease the latter must be followed.
Id. at § 160. Thus, the term "sudden" must be viewed in the context of the contract and must be given its plain ordinary meaning. "[N]either forced nor strained construction will be indulged, nor will any provision be taken out of context and narrowly focused upon to create and then construe an ambiguity so as to import a favorable consideration to either party than that expressed in the contract." Dodson 812 P.2d at 376.
The ordinary and popular meaning of "sudden" necessarily includes an element of time. Decisions finding ambiguity have focused on technical distinctions crafted by lawyers rather than the ordinary understanding of the word. A finding of ambiguity requires that the term "sudden" be lifted from its context in the policy and scrutinized so closely that any plain meaning is no longer dis-cernable. "An appellate court should not strain to create an ambiguity where, in common sense, there is none." Farm Bureau Mut. Ins. Co. v. Laudick, 18 Kan.App.2d 782, 859 P.2d 410, 412 (1993) (citing Bell v. Patrons Mut. Ins. Ass'n, 15 Kan.App.2d 791, 816 P.2d 407, 409 (1991). Clearly, the ordinary meaning of "sudden" cannot describe the gradual routine disposal of industrial waste that occurred over a number of years.
Further, the trial court defined "sudden" to mean "unexpected or unintended." But that definition also fits the term "accidental." See United States Fidelity & Guar. Co. v. Briscoe, 205 Okla. 618, 239 P.2d 754, 757 (1951) (accident is an "unexpected event"). The trial court's construction of "sudden" would add nothing to the term "accidental." It would make the term "sudden" mere sur-plusage. In order to give effect to each part of the" contract, "sudden" and "accidental" must be read as two separate conditions for coverage under the policy.
II. "ACCIDENTAL"
The second condition for coverage under the policies is the "accidental" requirement. The insurance companies argue that the term "accidental" applies to the disposal of pollutants. Kerr-McGee argues that it is the damage caused to third parties that must be accidental, even if the disposal was intentional.
The pollution exclusion clauses in the policies state that there is coverage only if the "discharge, dispersal, release or escape [of pollutants] is sudden and accidental" or, in the words of some policies, if "seepage, pollution or contamination is caused by an unintended or unexpected happening." The focus of that language is not on whether the polluter knew its waste could hurt the environment, but rather whether the "discharge, dispersal, release or escape" was unexpected or unintended. Kerr-McGee's long-term disposal of industrial waste was neither sudden nor accidental. The trial court erred in holding otherwise.
Because the terms "sudden" and "accidental" in the pollution exclusion clauses are unambiguous, no extrinsic evidence is needed to determine the intent of the parties at the time the policy was issued. The trial court erred in granting summary judgment to Kerr-McGee and denying summary judgment to the insurance companies. The cause is remanded to the trial court with instructions to enter summary judgment in favor of the insurance companies.
REVERSED AND REMANDED WITH INSTRUCTIONS.
Concur: KAUGER, V.C.J., and HODGES, LAVENDER, SIMMS, SUMMERS and WATT, JJ.
HARGRAVE, J., Concurs in Result.
WILSON, C.J., and OPALA, J., dissent.
. Hecla Mining Co. v. New Hampshire Ins. Co., 811 P.2d 1083, 1092 (Colo.1991); Claussen v. Aetna Casualty & Sur. Co., 259 Ga. 333, 380 S.E.2d, 686, 690 (1989); Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill.2d 90, 180 Ill.Dec. 691, 705, 607 N.E.2d 1204, 1218 (1992); Greenville County v. Insurance Reserve Fund, 443 S.E.2d 552, 553 (S.C.1994); Queen City Farms, Inc. v. Central Nat'l Ins. Co., 126 Wash.2d 50, 882 P.2d 703, 720 (1994); Joy Technologies, Inc. v. Liberty Mut. Ins. Co., 187 W.Va. 742, 421 S.E.2d 493, 500 (1992); Just v. Land Reclamation, Ltd., 157 Wis.2d 507, 456 N.W.2d 570, 578 (1990)!
. Dimmitt Chevrolet, Inc. v. Southeastern Fidelity Ins. Corp., 636 So.2d 700, 704 (Fla.1993); Lumbermens Mut. Casualty Co. v. Belleville Indus., Inc., 407 Mass. 675, 555 N.E.2d 568, 572 (1990); Protective Nat'l Ins. Co. v. City of Woodhaven, 438 Mich. 154, 476 N.W.2d 374, 376 (1991); Board of Regents v. Royal Ins. Co. of America, 517 N.W.2d 888, 892 (Minn.1994); Waste Manage- merit of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 340 S.E.2d 374, 382 (1986); Morton Int'l, Inc. v. General Accident Ins. Co. of America, 134 N.J. 1, 629 A.2d 831, 847 (1993); Bybud Equipment Corp. v. Sphere Drake Ins. Co., 64 Ohio St.3d 657, 597 N.E.2d 1096, 1102 (1992) cert. denied 507 U.S. 987, 113 S.Ct. 1585, 123 L.Ed.2d 152 (1993).
. See Shell Oil Co. v. Winterthur Swiss Ins. Co., 12 Cal.App.4th 715, 15 Cal.Rptr.2d 815, 840-41 (1993); ACL Technologies, Inc. v. Northbrook Property & Casualty Co., 17 Cal.App.4th 1773, 22 Cal.Rptr.2d 206, 212 (1993); Barmet of Indiana, Inc. v. Security Ins. Group, 425 N.E.2d 201, 203 (Ind.Ct.App.1981); Borg-Warner Corp. v. Insurance Co. of North America, 174 A.D.2d 24, 577 N.Y.S.2d 953, 957 (1992); Technicon Elecs. Corp. v. American Home Assurance Co., 74 N.Y.2d 66, 544 N.Y.S.2d 531, 533, 542 N.E.2d 1048, 1049-50 (1989); Transamerica Ins. Co. v. Sunnes, 77 Or.App. 136, 711 P.2d 212, 214 (1985); Lower Paxon Township v. United States Fidelity & Guar. Co., 383 Pa.Super. 558, 557 A.2d 393, 398 (1989); Techalloy Co. v. Reliance Ins. Co., 338 Pa.Super. 1, 487 A.2d 820, 827 (1984).
. See Aeroquip v. Aetna Casualty & Sur. Co., 26 F.3d 893, 894 (9th Cir.1994); Aetna Casualty & Sur. Co. v. General Dynamics Corp., 968 F.2d 707, 710 (8th Cir.1992); Ogden Corp. v. Travelers Indem. Co., 924 F.2d 39, 42 (2d Cir.1991); A. Johnson & Co. v. Aetna Casualty & Sur. Co., 933 F.2d 66, 72 (1st Cir.1991); Northern Ins. Co. v. Aardvark Assocs., Inc., 942 F.2d 189, 193 (3d Cir.1991); FL Aerospace v. Aetna Casualty & Sur. Co., 897 F.2d 214, 219 (6th Cir.1990).
Those federal appellate court decisions holding to the contrary have been bound by state law precedent or unusual state law rules governing policy interpretation. See Broderick Investment Co. v. Hartford Accident & Indem. Co., 954 F.2d 601 (10th Cir.1992) (following Colorado law found in Hecla Mining, 811 P.2d 1083); CPC Int'l v. Northbrook Excess & Surplus Ins. Co., 962 F.2d 77 (1st Cir.1992) (following New Jersey law found in Broadwell Realty Serv., Inc. v. Fidelity & Casualty Co., 218 N.J.Super. 516, 528 A.2d 76 (App.Div.1987). See also New Castle County v. Hartford Accident & Indem. Co., 933 F.2d 1162 (3d Cir.1991) (Delaware rules of policy interpretation allowing extrinsic evidence surrounding meaning of what appears to be cl^ar and unambiguous language).
.See Oklahoma Publishing Co. v. Kansas City Fire & Marine Ins. Co., 805 F.Supp. 905, 909 (W.D.Okla.1992) appeal dismissed, No. 92-6391 (10th Cir. June 8, 1993); Magnetic Peripherals, Inc. v. Hartford Ins. Co., No. CIV-92-1651-W (W.D.Okla. Apr. 20, 1993); United States v. Hardage, No. CIV-86-1401-W (W.D.Okla. Mar. 29, 1993); Macklanburg-Duncan v. Aetna Casualty & Sur. Co., No. CIV-92-1650-A (W.D.Okla. Mar. 29, 1993); Downtown Airpark, Inc. v. Continental Ins. Co., No. CIV-91-673-L (W.D.Okla. Mar. 22, 1993).