Opinion ID: 1989584
Heading Depth: 2
Heading Rank: 2

Heading: The Majority's Reliance on Supposed Terms of Art and a Need for a Limiting Principle to Find Ambiguity in the Absolute Pollution Exclusion is Misguided

Text: The majority advances two textual reasons, which I now shall address in turn, why the perceived clarity of the absolute pollution exclusion is superficial. Ante at 329. First the majority contends that the use of terminology of environmental law, or terms of art, makes the exclusion ambiguous. Ante at 325-29. Second, the majority claims that the unreasonable results of a plain language reading require an adventitious limiting principle. Ante at 329-31. In each instance, the majority's analysis is flawed; neither reason justifies its conclusion that the exclusion is ambiguous as applied to Ms. Richardson's claim.
In its effort to show that the absolute pollution exclusion is ambiguous, the majority argues that the exclusion is replete with language used in environmental statutes and regulations of the kind that generated the absolute exclusion's adoption. Ante at 326. According to the majority, the definition of pollutants uses words that collectively bring to mind byproducts of industrial pollution, and the exclusion employs terminology of environmental law and other environmental terms of art. Ante at 325, 327 & 328. The majority concludes that the environmental terms together create at least an ambiguity as to the intended meaning of the words used in the pollution exclusion clause. Ante at 329. I recognize that some other courts have accepted this terms of art argument (while other courts have rejected it). Compare Nautilus Ins. Co. v. Jabar, 188 F.3d 27, 30 (1st Cir.1999) (accepting terms of art argument) with Nat'l Elec. Mfrs. Ass'n v. Gulf Underwriters Ass'n, 162 F.3d 821, 825 (4th Cir.1998) (rejecting terms of art argument). But there are several things wrong with the argument. To begin with, it impermissibly ignores the longstanding rule governing the construction of insurance contracts in this jurisdiction. As stated earlier, [u]nless it is obvious that the terms used in an insurance contract are intended to be used in a technical connotation, we must construe them consistently with the meaning which common speech [i]mports. Cameron, 733 A.2d at 968. The majority concedes that it is far from obvious that the terms in the pollution exclusion have a technical connotation. See, e.g., ante at 329 ([A]ssuming, arguendo, that the word `fumes' as used in the exclusion today appears on the surface to be unambiguous, a review of the entire clause and of its history and context suggests that the perceived clarity is superficial. . . .). The typical commercial general liability policyholder has no inkling of the history and context of the pollution exclusion, the arcana of environmental law, or the terminology of that esoteric field. Since the policy does not reference environmental law in any way, the typical policyholder cannot be expected to construe the pollution exclusion with reference to that body of law rather than in its ordinary sense. See Shalimar Contractors, Inc. v. American States Ins. Co., 975 F.Supp. 1450, 1457 (M.D.Ala.1997), aff'd 158 F.3d 588 (11th Cir.1998) (holding that since pollution exclusion should be given the meaning that a person of ordinary intelligence would reasonably think the language had, its terms cannot be defined by resort to the highly technical and specific definitions under environmental laws, such as those contained in the Code of Federal Regulations). Nonetheless, the majority turns the settled interpretive rule on its head and embraces its diametrical opposite by actually preferring a technical connotation of the policy terms drawn from environmental law to the meaning which common speech imports. The majority appears to be mistaken also in its major factual premise, at least judging by the evidence it adduces. The majority supposes that the key terms of the absolute pollution exclusion are drawn from or reflect the terminology of federal environmental laws such as the Water Pollution Control Act, [5] CERCLA, [6] RCRA, [7] and their implementing regulations. See ante at 326-27. That supposition is not accurate. When it was developed in the late 1960's and first published in 1970, [8] the first incarnation of the pollution exclusion already denied coverage for harms caused by the  discharge, dispersal, release or escape of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants.  (I have italicized the terms which the majority suspects derived from the federal laws). Congress did not enact CERCLA until 1980, however, see Pub.L. 96-510, 94 Stat. 2767 (1980), and RCRA did not come into being until 1976. See Pub.L. 94-580, 90 Stat. 2795 (1976). The insurance industry assuredly did not draft the pollution exclusion in (or before) 1970 with an eye to either of those laws. It is true that the Water Pollution Control Act, which preceded the pollution exclusion of 1970, addressed the discharge of polluting matter into interstate waters. [9] But this Act did not contain the other key terms of the exclusiondispersal, release, escape, irritant, contaminant. The pollution exclusion therefore did not draw those terms from that Act or any of the laws that the majority cites. [10] Since the key terms of the absolute pollution exclusion were not taken from the laws that the majority cites, the meaning of those terms cannot be circumscribed by those laws. But to make that point is to touch on another peculiarity of the majority's argument that should not go unremarked. Although the majority thinks that the absolute pollution exclusion should be interpreted in light of federal environmental laws, the majority makes no effort whatsoever to ascertain whether those laws are limited to industrial pollution or in fact might apply to non-industrial indoor air pollution. This omission undermines the credibility of the majority's positionespecially since federal environmental law in fact does address non-industrial indoor air pollution, as I have noted already in Section I.A of this dissent. This is not an idle point. Without belaboring it, and simply to illustrate, the requirements of CERCLA are by no means applicable only to industrial pollution. The definition of a hazardous substance in CERCLA, see 42 U.S.C. § 9601(14), makes no distinction dependent upon whether the substance's source was industrial, commercial, municipal or household. Whether the substance is a consumer product, a manufacturing byproduct, or an element of a waste stream is irrelevant. B.F. Goodrich Co. v. Murtha, 958 F.2d 1192, 1200 (2nd Cir. 1992). Similarly, potentially responsible parties under CERCLA may include individuals, municipalities, universities, and other entities besides industrial polluters. Id.; see also United States v. Alcan Aluminum Corp., 990 F.2d 711, 725 (2nd Cir. 1993) (holding that Cornell University may be liable under CERCLA). Moreover, [q]uantity or concentration [of the hazardous substance] is not a factor either. B.F. Goodrich, 958 F.2d at 1200. [E]ven minimal amounts of pollution are within CERCLA's purview. Alcan Aluminum, 990 F.2d at 720. The majority is also mistaken when it asserts as a fact that the words smoke, vapor, soot, fumes, acids, alkalis, chemicals and wastethe non-exclusive examples included in the definition of pollutants used in the absolute pollution exclusion collectively bring to mind byproducts of industrial pollution. Ante at 325. The majority's wish is the father of that thought. It is equally true that the words in question may bring to mind byproducts of agricultural pollution, municipal pollution, vehicular pollution, and virtually any other form of pollutioneasily including pollution from improperly maintained furnaces or other causes (notably including poor waste disposal practices) in apartment, office, or other buildings of every description. It is not a coincidence, ante at 328, that the words used in the pollution exclusion are words commonly used elsewhere in connection with pollution, including in environmental legislation. As the heading of the exclusion states, its subject is pollution, so naturally its drafters employed words that are associated with that subject such as release, escape, dispersal, and contaminant. But these words are not terms of art connoting only a specific type of pollution. [11] See National Elec. Mfrs. Ass'n v. Gulf Underwriters Ins. Co., 162 F.3d 821, 825 (4th Cir.1998) (noting that the pollution exclusion contains neither technical terms nor terms of art). The terminology of the absolute pollution exclusion is as appropriate for discussing non-industrial indoor air pollution as it is for discussing industrial pollution or whatever else the majority may consider traditional environmental pollution. The drafters of the absolute pollution exclusion could have used words of limitation to exempt non-industrial indoor air pollution from its purview, but they did not do so. The implication is that they did not include the corresponding limitations either. When the words of the absolute pollution exclusion are given their plain meaning, the exclusion is broad but it is not ambiguous. It applies unambiguously to all forms of environmental pollution, whether in or out of doors, on or off the insured's premises, industrial or non-industrial, large-scale or small-scale, traditional or novel. Ironically, it is the majority that renders the exclusion ambiguous when it rejects its plain meaning in favor of a specialized meaning that is supposedly (if not actually) drawn from the complex body of the nation's environmental laws and regulations. It is not helpful to be told that the pollution exclusion refers only to traditional polluters, ante at 338, or that the exclusion does not apply to everyday activities gone slightly, but not surprisingly, awry. Ante at 331. With respect, formulations such as these are so vague as to be meaningless. [12] The interpretive burden they will impose on policy-holders, insurance companies, claimants and courts is staggering. Consider Doerr v. Mobil Oil Corp., 774 So.2d 119 (La.2000), one of the leading cases that the majority expressly chooses to follow. See ante at 331. Doerr arose out of the discharge of hydrocarbons from a refinery into the Mississippi River and thence into the St. Bernard Parish water system. The Parish's insurer invoked the absolute pollution exclusion in its policy to disclaim coverage of claims filed by thousands of persons who drank or otherwise used the water. On a plain language reading of the exclusion, I dare say everyone would agree that it applied to injuries arising from the discharge of hydrocarbons (chemicals and contaminants, and hence pollutants) into the river and their ensuing dispersal or migration into the Parish water system. The Supreme Court of Louisiana rejected a plain language reading, however. See Doerr, 774 So.2d at 135. Like the majority here, the Louisiana court construed the exclusion to apply only to pollution of the sort targeted by CERCLA and other environmental laws. That construction, the court held, necessitates an extensive factual inquiry to ascertain whether the exclusion bars coverage in any given case, including the seemingly straightforward case before it. To begin with, the court said, the determination of whether an insured is a `polluter,' is a fact-based conclusion that should encompass consideration of a wide variety of factors, including, the nature of the insured's business, whether that type of business presents a risk of pollution, whether the insured has a separate policy covering the disputed claim, whether the insured should have known from a read of the exclusion that a separate policy covering pollution damages would be necessary for the insured's business, who the insurer typically insures, any other claims made under the policy, and any other factor the trier of fact deems relevant to this conclusion. Id. Second, the court said, the determination of whether the injury-causing substance is a `pollutant' is also a fact-based conclusion that should encompass a wide variety of factors. Id. Among the factors the court enumerated were the nature of the injury-causing substance, its typical usage, the quantity of the discharge, ... whether the substance is one that would be viewed as a pollutant as the term is generally understood, and another factor the trier of fact deems relevant to that conclusion. Id. Finally, the court concluded, the determination of whether there was `discharge, dispersal, seepage, migration, release or escape' is likewise a fact-based conclusion that must result after a consideration of all relevant circumstances . . . [including] whether the pollutant was intentionally or negligently discharged, the amount of the injury-causing substance discharged, whether the actions of the alleged polluter were active or passive, and any other factor the trier of fact deems relevant. Id. at 135-36. Doerr 's elaboration of the consequences of the majority's terms of art construction of the absolute pollution exclusion graphically demonstrates how that construction fails to clarify the exclusion and instead renders it ambiguous and unwieldy. One can only guess at the amount of unnecessary litigation the majority's interpretation will engender. Having repeatedly told insurers that exclusions must be spell[ed] out in plainest terms . . . understandable to the man in the street, Cameron, 733 A.2d at 968, this court should reject a construction that so thoroughly contradicts that goal. [C]ourts are enjoined not to create ambiguity where none exists. Washington Props. v. Chin, Inc., 760 A.2d 546, 548 (D.C.2000).
Aside from the supposed use therein of industrial and environmental terminology, the absolute pollution exclusion is ambiguous, the majority argues, because, if its language is read `literally' in the manner here favored by Nationwide, it leads to results that can fairly be characterized as unreasonable. Ante at 328, 330. According to the majority: To take but two simple examples, reading the clause broadly would bar coverage for bodily injuries suffered by one who slips and falls on 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), quoted ante at 329-30. [13] To avoid such absurd results, the majority contends, we need a limiting principle that is not in the plain text of the pollution exclusion itselfwhat the majority calls an external limiting principle. Ante at 330. The correct external limiting principle, the majority concludes, is that the exclusion applies only to traditional industrial pollution. A few other courts (though not the Pipefitters court itself [14] ) have reasoned similarly, as the majority notes. Reductio ad absurdum arguments frequently are untrustworthy, and this one should be examined with care. Cf. J. Parreco & Son, 567 A.2d at 46 (warning against judicial overeagerness to invoke the absurd result doctrine as a guide to construction). The question before the court is only whether the absolute pollution exclusion is ambiguous in its application to the facts of this case, not whether the exclusion would be ambiguous in its potential application to other facts. Accord, Pipefitters, 976 F.2d at 1044. The fact ... that terms of a policy of insurance may be construed as ambiguous where applied to one set of facts does not make them ambiguous as to other facts which come directly within the purview of such terms. COUCH ON INSURANCE 3D § 21:14, at 21-26 (citations omitted). It might be absurd to apply the pollution exclusion to a slip on spilled Drano or an allergic reaction to chlorine in a swimming pool, but that is not the inquiry before us. It is not absurd to apply the exclusion to indoor air pollution. Since the exclusion unambiguously does apply to such air pollution if its plain terms are given their ordinary English meaning, that is the end of the matter. I do not rest with that point, however, because the majority's reductio ad absurdum argument fails on its own terms. The argument works only if (1) the pollution exclusion, when read literally, does apply to such events as slips on spilled Drano and allergic reactions to swimming pool chlorine; and (2) the limiting principle offered by the majority to avoid such application is a permissible and reasonable one. Neither of those requirements is met here. Read literally, the pollution exclusion applies to pollution. That is what its heading says. By saying so, the exclusion gives the ordinary reader to understand in no uncertain terms that it does not apply to events that do not involve pollutioneven if those events do happen to involve interactions with substances that are capable of acting as contaminants or irritants. But as the Seventh Circuit itself said in discussing the hypothetical slip on spilled Drano and the allergic reaction to chlorine in a swimming pool, one would not ordinarily characterize these events as pollution. Pipefitters, 976 F.2d at 1043. Indeed one would not, and so one who reads the absolute pollution exclusion literally would not read it to apply to such events. To put it another way, by incorporating an explicit restriction to occurrences that involve pollution, the plain text of the exclusion contains the limiting principle that the majority thinks is needed. [15] Since the text of the exclusion contains the necessary limiting principle, there is no justification for going outside the text to look for one. But the alternative limiting principle that the majority and some other courts adopt is unacceptable for additional reasons. To be acceptable, a proposed limiting principle at least must be consistent with the text of the exclusion and clear enough in its meaning to furnish real interpretive guidance. A limitation to industrial or traditional environmental pollution meets neither of these minimal conditions. As I have explained above, such a limitation is contrary to the text of the exclusion and is too vague to be useful. The majority's limiting principle is thus neither permissible nor reasonable.