Opinion ID: 2585539
Heading Depth: 1
Heading Rank: 6

Heading: The Meaning of the Pollution Exclusion

Text: Therefore, in order to ascertain the scope of an exclusion, we must first consider the coverage language of the policy. (See Gray v. Zurich Insurance Co., supra, 65 Cal.2d at p. 273, 54 Cal. Rptr. 104, 419 P.2d 168; Ponder v. Blue Cross of Southern California, supra, 145 Cal.App.3d at pp. 720-721, 193 Cal.Rptr. 632.) MacKinnon's CGL policy obligated the insurer to pay all sums for which [the insured] become[s] legally obligated to pay as damages caused by bodily injury, property damage or personal injury. We said of similar language that it connotes general protection for alleged bodily injury caused by the insured. ( Gray v. Zurich Ins. Co., supra, 65 Cal.2d at p. 272, 54 Cal.Rptr. 104, 419 P.2d 168.) This language establishes a reasonable expectation that the insured will have coverage for ordinary acts of negligence resulting in bodily injury. (Id. at p. 273, 54 Cal.Rptr. 104, 419 P.2d 168.) Coverage will therefore be found unless the pollution exclusion conspicuously, plainly and clearly apprises the insured that certain acts of ordinary negligence, such as the spraying of pesticides in this case, will not be covered. (Id, at pp. 271, 273, 54 Cal.Rptr. 104, 419 P.2d 168.) Truck Insurance contends that the pollution exclusion, read literally, would plainly and clearly extend to virtually all acts of negligence involving substances that can be characterized as irritants or contaminants, that is, are capable of irritating or contaminating so as to cause personal injury. Specifically, they argue that pesticides are chemicals capable of causing irritation and can therefore be defined as an irritant and a pollutant. The spraying of pesticides can be described as a discharge or dispersal. But Truck Insurance's reading of the clause is predicated on a basic fallacy, one shared by many of the courts on which it relies: the conclusion that the meaning of policy language is to be discovered by citing one of the dictionary meanings of the key words, such irritant or discharge. (See American States Ins. Co. v. Nethery (5th Cir.1996) 79 F.3d 473, 476; Peace, supra, 596 N.W.2d at p. 438; Deni Assoc., supra, 711 So.2d at p. 1139.) Although examination of various dictionary definitions of a word will no doubt be useful, such examination does not necessarily yield the ordinary and popular sense of the word if it disregards the policy's context. ( Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1265, 10 Cal.Rptr.2d 538, 833 P.2d 545.) Rather, a court properly refusing to make `a fortress out of the dictionary,' ( Russian Hill Improvement Assn. v. Board of Permit Appeals (1967) 66 Cal.2d 34, 42, 56 Cal.Rptr. 672, 423 P.2d 824, quoting Justice Learned Hand's dictum in Cabell v. Markham (2d Cir.1945) 148 F.2d 737, 739) must attempt to put itself in the position of a layperson and understand how he or she might reasonably interpret the exclusionary language. ( AIU Ins. Co., supra, 51 Cal.3d at p. 822, 274 Cal.Rptr. 820, 799 P.2d 1253.) The unreasonableness of Truck Insurance's interpretation becomes clear when its full implications are considered. Virtually any substance can act under the proper circumstances as an irritant or contaminant. (See City of Pittsburg, Kans., supra, 768 F.Supp. at p. 1470.) The court in Pipefitters, supra, 976 F.2d at page 1043 stated: Without some limiting principle, the pollution exclusion clause would extend far beyond its intended scope, and lead to some absurd results. The hypothetical allergic reaction to pool chlorine, proposed by the Pipefitters court, illustrates this absurdity. Chlorine certainly contains irritating properties that would cause the injury. Its dissemination throughout a pool may be literally described as a dispersal or discharge. Our research reveals no court or commentator that has concluded such an incident would be excluded under the pollution exclusion. The response of two leading insurance industry attorneys has simply been to state that there are no decisions reporting denials arising from ... swimming pool chlorine under the [pollution] [exclusion. (Shelley & Mason, supra, 33 Tort & Ins. L.J. at p. 772.) Truck Insurance's counsel took a similar position at oral argument. Other such hypothetical can be imagined. The application of iodine onto a cut through an eyedropper may be literally characterized as a discharge or release of an irritant. Truck Insurance's interpretation would therefore bar coverage for injury caused by the misapplication of iodine, or its application on someone who was hypersensitive or has an allergic reaction. A child's accidental ingestion of a pesticide or other toxic substance negligently left in an empty soft drink bottle would be barred. Yet few if any would think of these injuries as arising from pollution in any recognizable sense of that term. Courts interpreting the pollution exclusion broadly have acknowledged that their interpretation may yield results that no one would consider reasonable. For example, the Florida Supreme Court, adopting a broad interpretation similar to Truck Insurance's, responded to various unspecified hypothetical by affirming that insurance policies will not be construed to reach an absurd result. ( Deni Assocs., supra, 711 So.2d at p. 1140; see also Peace, supra, 596 N.W.2d at p. 442.) Yet an interpreting an exclusionary clause so broadly that it logically leads to absurd results, in conjunction with an affirmation in the abstract that it will not be interpreted to yield such results, is a recipe for judicial confusion. (See Stempel, supra, 34 Tort & Ins. L.J. at p. 22.) Our conclusion that Truck Insurance's interpretation is overly broad is bolstered by a closer examination of the connotations of the terms discharge, dispersal, release or escape in the context of the present case. A `release' is defined as `the act of liberating or freeing: discharge from restraint.' (Webster's 3d New Internat. Diet. (2002) p.1917.) An escape is defined as an evasion of or deliverance from what confines, limits, or holds. (Id. at p. 774.) These terms connote some sort of freedom from containment, and it would be unusual to speak of the normal, intentional application of pesticides as a release or escape of pesticides. To disperse is defined, variously, as to cause to become spread widely, to dissipate, dispel, to spread or distribute from a fixed or constant source, or to cause to break up and go in different ways. (Webster's 3d New Internat. Diet., supra, at p. 653, italics added.) The notion of dispersal as a substantial dissemination is reinforced by its use with the term pollutant. Indeed, the word dispersal, when in conjunction with pollutant, is commonly used to describe the spreading of pollution widely enough to cause its dissipation and dilution. (See, e.g., Milloy, Northeast Blowing Smoke on Cause of Its Pollution, Chicago Sun Times (Dec. 16, 2002) p. 53 [beyond 100 to 200 miles, air pollutants are dispersed]; Sanchez, In Calif, A Crackling Controversy over Smog, Washington Post (Feb. 16, 2003) p. Al [ the valley ... is bordered on three sides by mountain ranges and cannot naturally disperse ... the pollution it creates].) Knowledge of common usage does not lead us to believe that the term disperse pesticides is generally used as a substitute for spray or apply pesticides, except perhaps when the pesticides are being spread throughout a large area. (See, e.g., Ritter, Pesticide Trucks Go After Mosquitoes, Chicago Sun-Times (Sept. 9, 2002) p. 4 [referring to one teaspoon of the pesticide sumiturin ... dispersed over an area the size of a football field; Simmons, Tanzania Begins to Deal with Toxic Wasteland, L.A. Times (Mar. 30, 2000) [referring to some cataclysmic meteorological event that would wash or disperse large quantities of ... persistent pesticide[s] into the environment].) In the present case, the application of pesticides in and around an apartment building does not plainly signify to the common understanding the dispersal of a pollutant. (See Kellman, supra, 197 F.3d at p. 1185 [strains the meaning of discharge, dispersal, seepage, dispersal, release or escape to apply it to localized toxic injury occurring in the vicinity of intended use]; see also Lumbermens, supra, 39 F.3d at p. 1336; Center for Creative Studies, supra, 871 F.Supp. at pp. 946-947; Steely, supra, 785 A.2d at p. 982.) Discharge is defined most pertinently as to send forth or to give outlet to: pour forth. (Webster's 3d New Internat. Diet., supra, at p. 644.) Although the application of pesticides could literally be described as a discharge of pesticides, that term is rarely used in this manner. In fact, a LexisNexis Allnews [5] search of pesticide in the same sentence with discharge reveals that the two words are used together almost invariably to describe the runoff of pesticides into water or soil, often with other effluents. (See, e.g., McChesney, Future of Farming in California's Central Valley, All Things Considered (Nov. 12, 2002) [radio broadcast referring to pesticide discharges to surface waters and other agricultural pollutants]; Rogers, Deal Set to Upgrade Mexican Sewage Treatment Is Set, San Diego Union Tribune (July 17, 2002) p. B-1 [referring to industrial plant that discharges ... effluent containing] ... pesticides ... into the ocean]; Kay, Growers Sued over Pollution; Suit Says Pesticides Contaminated Water, S.F. Chronicle (Feb. 22, 2002) p. A21 [referring to discharging] pesticide-laden irrigation runoff']; Gold, A Looming Ecological Mistake, L.A. Times (Sept. 9, 2001) [referring to discharge [of] harmful pesticides into nearby creek].) In other words, the term discharge is commonly used with pesticides to describe pesticide runoff behaving as a traditional environmental pollutant rather than pesticides being normally applied. [6] In short, because Truck Insurance's broad interpretation of the pollution exclusion leads to absurd results and ignores the familiar connotations of the words used in the exclusion, we do not believe it is the interpretation that the ordinary layperson would adopt. What then is the plain meaning of the pollution exclusion? The key to this inquiry, we believe, turns on the meaning of the term pollutant. Because the definitional phrase any irritant or contaminant is too broad to meaningfully define pollutant, we must turn to the common connotative meaning of that term. This position was well articulated by the court in Regional Bank of Colorado v. St. Paul Fire and Marine Ins. Co. (10th Cir.1994) 35 F.3d 494, interpreting Colorado law, when considering whether carbon monoxide fumes from a residential heater should be considered pollution: A reasonable policy holder would not understand the policy to exclude coverage for anything that irritates. `Irritant' is not to be read literally and in isolation, but must be construed in the context of how it is used in the policy, i.e., defining `pollutant.' [¶] While a reasonable person of ordinary intelligence might well understand carbon monoxide is a pollutant when it is emitted in an industrial or environmental setting, an ordinary policyholder would not reasonably characterize carbon monoxide emitted from a residential heater which malfunctioned as `pollution.' It seems far more reasonable that a policyholder would understand it as being limited to irritants and contaminants commonly thought of as pollution and not as applying to every possible irritant or contaminant imaginable. (Id. at p. 498, 2d italics added; accord, Stoney Run Co. v. Prudential-LMI Commercial Ins. Co. (2d Cir.1995) 47 F.3d 34, 38; Gill, supra, 686 N.E.2d at p. 999.) Limiting the scope of the pollution exclusion to injuries arising from events commonly thought of as pollution, i.e. environmental pollution, also appears to be consistent with the choice of terms discharge, dispersal, release or escape. As one court has observed: The drafters' utilization of environmental law terms of art (`discharge,' `dispersal,' ... `release,' or 'escape' of pollutants) reflects the exclusion's historical objectiveavoidance of liability for environmental catastrophes related to intentional industrial pollution. ( RSJ, Inc., supra, 926 S.W.2d at p. 681; see also Nautilus Ins. Co. v. Jabar, supra, 188 F.3d at p. 30; Center for Creative Studies, supra, 871 F.Supp. at pp. 944-945; Koloms, supra, 227 Ill.Dec. 149, 687 N.E.2d at pp. 81-82.) It may be an overstatement to declare that discharge, dispersal, release or escape, by themselves, are environmental law terms of art. But, as discussed above, these terms, used in conjunction with pollutant, commonly refer to the sort of conventional environmental pollution at which the pollution exclusion was primarily targeted. Moreover, as discussed above, there appears to be little dispute that the pollution exclusion was adopted to address the enormous potential liability resulting from anti-pollution laws enacted between 1966 and 1980. ( Koloms, supra, 227 Ill. Dec. 149, 687 N.E.2d at pp. 79-81; see also Shelly & Mason, supra, 33 Tort & Ins. L.J. at pp. 753-755; Stempel, supra, 34 Tort & Ins. L.J. at pp. 33-40.) On the other hand, neither Truck Insurance nor the considerable number of amicus curiae from the insurance industry writing on its behalf point to any evidence that the exclusion was directed at ordinary acts of negligence involving harmful substances. (See Stempel, supra, 34 Tort & Ins. L.J. at pp. 34-36 [pointing to the lack of evidence supporting the insurers' position despite their greater access to policy drafters' documents].) Nor do they bring to light evidence that the substantial limitation on CGL coverage that an exclusion so interpreted would impose was communicated to the purchasers of insurance or insurance regulators, nor that the significant reduction in coverage was accompanied by a reduction in premiums. (See Fidelity & Dep. Co. of Maryland v. Charter Oak Fire Ins. Co. (1998) 66 Cal.App.4th 1080, 1086, 78 Cal.Rptr.2d 429 [amount of premium paid may be relevant to extent of coverage]; MacDonald, Decades of Deceit: The Insurance Industry Incursion into the Regulatory and Judicial Systems, 7 Coverage (Nov./Dec.1997) No. 6, 3, 8 [pointing out that the adoption of the current pollution exclusion was not accompanied by premium reductions].) The history and purpose of the clause, while not determinative, may properly be used by courts as an aid to discern the meaning of disputed policy language. (See Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 670-671, 42 Cal.Rptr.2d 324, 913 P.2d 878.) Finally, an interpretation limiting the exclusion to environmental pollution appears reasonable in light of the purpose of CGL policieswhich is `to provide the insured with the broadest spectrum of protection against liability for unintentional and unexpected personal injury or property damage arising out of the conduct of the insured's business.' { City of Pittsburg, Kans., supra, 768 F.Supp. at p. 1468, fn. 5, quoting Peters, Insurance Coverage for Superfund Liability: A Plain Meaning Approach to the Pollution Exclusion Clause (1987) 27 Washburn L.J. 161, 166.) On the other hand, Truck Insurance's interpretation would fundamentally undermine that purpose by cutting a broad and arbitrary swath through CGL protections, excluding virtually all injuries involving substances that cause harm. Neither the language nor the historical purpose of the pollution exclusion supports such a drastic contraction of CGL policy coverage. To be sure, terms such as commonly thought of as pollution, or environmental pollution, are not paragons of precision, and further clarification may be required. But reference to these terms is sufficient to resolve the present case. We conclude that it is far from clear Mac-Kinnon's claim, based on the Denzin action, for injuries arising from the normal, though negligent, residential application of pesticides, would be commonly thought of as pollution. While pesticides may be pollutants under some circumstances, it is unlikely a reasonable policyholder would think of the act of spraying pesticides under these circumstances as an act of pollution. We agree with the observation of the court in Tufco Flooring, supra, 409 S.E.2d at page 698, that the common understanding of the word `pollute' indicates that it is something creating impurity, something objectionable and unwanted. The normal application of pesticides around an apartment building in order to kill yellow jackets would not comport with the common understanding of the word pollute. Amicus curiae London Market Insurers proposes an interpretation of the pollution exclusion that is somewhat less broad than that advocated by Truck Insurance but would encompass the claim in this case. This interpretation is essentially the one adopted by the Wisconsin Supreme Court in Peace. The Peace court sought to distinguish its holding that injury from the ingestion of lead paint chips is excluded, from its previous holding in Donaldson, supra, 211 Wis.2d 224, 564 N.W.2d 728, that injury from sick building syndrome caused by excessive accumulation of carbon dioxide, was not: The [Donaldson] court contrasted exhaled carbon dioxide with the nonexhaustive list of pollutants in the pollution exclusion clause and observed that exhaled carbon dioxide is universally present and generally harmless in all but the most unusual circumstances. [Citation.] The same cannot be said for lead paint chips, flakes, and dust. They are widely, if not universally, understood to be dangerous and capable of producing lead poisoning. The toxic effects of lead have been recognized for centuries. Reasonable owners of rental property under-stand their obligation to deal with the problem of lead paint. (Peace, supra, 596 N.W.2d at p. 443, italics added, fns. omitted.) We doubt a layperson reading the exclusion would interpret it to apply to all injuries arising from substances widely ... understood to be dangerous. This interpretation has no basis in the language of the clause. On the other hand, the interpretation limiting the exclusion to what is commonly thought of as pollution is firmly rooted in the policy's language, based as it is on the recognition that the words pollutant and pollution have definite connotations. The latter interpretation is also in accord with the historical purpose of the pollution exclusion and the purpose of the CGL policy, discussed above. [7] But even if London Market Insurers' interpretation is considered reasonable, it would still not prevail, for in order to do so it would have to establish that its interpretation is the only reasonable one. (See Waller, supra, 11 Cal.4th at p. 18, 44 Cal. Rptr.2d 370, 900 P.2d 619.) [W]e are not required, in deciding the case at bar, to select one `correct' interpretation from the variety of suggested readings. To affirm the trial courts' decisions in favor of claimants, we need not determine that the two interpretations proposed by the insurer are not possible, or even reasonable, interpretations of the clause in question.... Instead, even assuming that the insurer's suggestions are reasonable interpretations which would bar recovery by the claimants, we must nonetheless affirm the trial courts' finding of coverage so long as there is any other reasonable interpretation under which recovery would be permitted in the instant cases. ( State Farm Mut. Auto. Ins. Co. v. Jacober, supra, 10 Cal.3d at pp. 202-203, 110 Cal.Rptr. 1, 514 P.2d 953, fn. omitted.) Thus, assuming arguendo that London Market Insurers' interpretation is reasonable, the interpretation of the pollution exclusion as limited to conventional environmental pollution is at least as reasonable. We therefore cannot say that the exclusion' plainly and clearly excludes the landlord's allegedly negligent use of pesticides in the present case, i.e., the exclusion does not plainly and clearly take away what the CGL coverage provision patently confers. Accordingly, the exclusion must be interpreted in favor of coverage. ( State Farm Mut. Auto. Ins. Co. v. Jacober, supra, 10 Cal.3d at pp. 201-202, 110 Cal. Rptr. 1, 514 P.2d 953.)