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

Heading: The applicable principles of construction.

Text: The language of the pollution exclusion at issue in this case is set forth at page 313 and footnote 1 of this opinion. The sentences on which Nationwide relies are relatively simple; indeed, their simplicity is what animates Nationwide's argument. Bodily injury from, inter alia, the release or escape of pollutants is excluded from coverage. Pollutant means, inter alia, any gaseous . . . irritant or contaminant, including fumes. [11] Ms. Richardson claims to have suffered bodily injury directly and proximately caused by the release of carbon monoxide gas fumes at the insured's premises. Therefore, according to Nationwide, the exclusion unambiguously applies. Where insurance contract language is not ambiguous, a written contract duly signed and executed speaks for itself and binds the parties, without the necessity of extrinsic evidence. Cameron, 733 A.2d at 968 (internal brackets and ellipsis omitted) (quoting In re Corriea, 719 A.2d 1234, 1239 (D.C.1998)). An insurance policy is not ambiguous merely because the parties do not agree on the interpretation of the contract provision in question. Byrd v. Allstate Ins. Co., 622 A.2d 691, 694 (D.C.1993) (citation omitted); Corriea, 719 A.2d at 1239. We may not `indulge in forced constructions to create an obligation against the insurer.' Chase, 780 A.2d at 1127 (quoting Cameron, 733 A.2d at 968). But when construing any writing, whether a statute or a contract, [w]e must not, of course, make a fetish out of plain meaning. James Parreco & Son v. District of Columbia Rental Hous. Comm'n, 567 A.2d 43, 46 (D.C.1989). [12] In the words of Judge Learned Hand, it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary. Cabell v. Markham, 148 F.2d 737, 739 (2d Cir.), aff'd, 326 U.S. 404, 66 S.Ct. 193, 90 L.Ed. 165 (1945); [13] Parreco, 567 A.2d at 46 (quoting Cabell ). It is a fundamental rule that in the construction of contracts the courts may look not only to the language employed, but to the subject-matter and the surrounding circumstances, and may avail themselves of the same light which the parties possessed when the contract was made. Merriam v. United States, 107 U.S. 437, 441, 2 S.Ct. 536, 27 L.Ed. 531 (1882); accord, District of Columbia v. North-Eastern Constr. Co., 63 App.D.C. 175, 176, 70 F.2d 779, 780 (1934). Indeed, the meaning of a contract must be ascertained in light of all of the circumstances surrounding the parties at the time the contract was made. 1010 Potomac Assocs. v. Grocery Mfrs. of Am., Inc., 485 A.2d 199, 205 (D.C.1984) (citing RESTATEMENT (SECOND) OF CONTRACTS §§ 202(1), 212(1)(1981)). Nothing in Cameron, Corriea and like cases should be read as excluding from consideration the context in which the words of a contract were written. [14] The meaning of words . . . commonly depends on their context . . . . In interpreting the words and conduct of the parties to a contract, a court seeks to put itself in the position they occupied at the time the contract was made . . . . RESTATEMENT (SECOND) OF CONTRACTS, § 202 cmt. b. Even though words seem on their face to have only a single possible meaning, other meanings often appear when the circumstances are disclosed. Id. at § 214 cmt. b. [15] To paraphrase Hively v. District of Columbia Dep't of Employment Servs., 681 A.2d 1158 (D.C. 1996), even where the words of a [contract] have a `superficial clarity,' [16] a review of the . . . history [of the relevant provision] or an in-depth consideration of alternative constructions that could be ascribed to [contractual] language may reveal ambiguities that the court must resolve. Id. at 1161 (quoting Peoples Drug Stores v. District of Columbia, 470 A.2d 751, 754 (D.C.1983)). [17] These principles are fully applicable to the kind of controversy now before us; as the Supreme Court of California explained in Montrose Chem. Corp. v. Admiral Ins. Co., 10 Cal.4th 645, 42 Cal.Rptr.2d 324, 913 P.2d 878, 891 (1995), [the insurer] contends that evidence of the drafting history of the standardized CGL policy provisions and definitions, and available interpretative materials, are irrelevant and should not have been considered by the Court of Appeals in construing the language of its CGL policies issued to [the insured]. Most courts and commentators have recognized, however, that the presence of standardized industry provisions and the availability of interpretative literature are of considerable assistance in determining coverage issues. ( See, e.g., Maryland Casualty Co. v. Reeder (1990) 221 Cal.App.3d 961, 968, 270 Cal.Rptr. 719.) Such interpretative materials have been widely cited and relied on in the relevant case law and authorities construing standardized insurance policy language. [18] In the words of Justice Oliver Wendell Holmes, [a] word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the times in which it was used. Towne v. Eisner, 245 U.S. 418, 425, 38 S.Ct. 158, 62 L.Ed. 372 (1918). The following hypothetical illustrates our thesis: Suppose that on January 1, Ruritania [19] and Illyria, [20] having fought a bitter war, agree to an armistice. The armistice provides that, no later than January 8, Ruritania and Illyria shall release all prisoners. An Illyrian who has been incarcerated in his own country for distributing unlawful drugs brings a lawsuit in which he claims that he is entitled to his freedom. It would surely be incongruous to exclude from evidence in that lawsuit the history that led to the armistice, when that history demonstrates beyond peradventure that the word prisoner as used in that document, although not so limited by its dictionary definition, necessarily refers to a prisoner of war and does not provide solace for dealers in hashish. [21] Similarly, in this case, it would be unreasonable to attempt to ascertain the meaning of the absolute pollution exclusion while ignoring the history that defines its raison d'être, namely, to avoid imposing on insurers the obligation to indemnify industries for the staggering pollution cleanup costs generated by the enactment of CERCLA. Essex Ins. Co., 863 F.Supp. at 39-40. Thus, assuming for the purposes of argument only that the language of the pollution exclusion appears unambiguous today, it may nevertheless have reasonably appeared to have an entirely different context-related meaning to persons who were writing and approving it in the 1980s, when insurers were seeking to avoid unanticipated liability in the billions of dollars for the harm caused by major industrial polluters. In the present case, the parties to the insurance policy itself were REO and Nationwide, but the pollution exclusion, as we have seen, is based on a form contract written and presented to state regulators for their consideration and approval by representatives of the insurance industry after CERCLA became law. See Doerr, 774 So.2d at 126-27; Andersen, 757 N.E.2d at 332-33; Koloms, 227 Ill.Dec. 149, 687 N.E.2d at 81. The meaning of the language of the absolute pollution exclusion in the form contract has not changed since it was introduced, and we must therefore look primarily to the circumstances then existing to determine whether, as Nationwide insists, the words used plainly and unambiguously rule out coverage. [22] If the language of the exclusion was ambiguous when written, then Nationwide's position is indeed difficult to sustain. To negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies to the particular case. Cont'l Cas. Co. v. Rapid-American Corp., 80 N.Y.2d 640, 593 N.Y.S.2d 966, 609 N.E.2d 506, 512 (1993). The insurer must establish not merely that the policy is capable of the construction it favors, but rather that such an interpretation is the only one that can fairly be placed on the language in question. Andersen, 757 N.E.2d at 332 (emphasis added) (citation omitted). It will not suffice for [the insurer] to demonstrate that its interpretation is more reasonable than the policyholder's. Id. at 333 (citation omitted). Rather, Nationwide must show that Ms. Richardson's construction is altogether unreasonable. The burden is on [Nationwide] to prove that the loss falls within an exclusion. Cameron, 733 A.2d at 969 (citing Lang v. F.G. Arwood & Co., 65 A.2d 194, 196 (1949) and New York Life Ins. Co. v. Miller, 65 App.D.C. 129, 134, 81 F.2d 263, 268 (1935)). Moreover, [i]n this jurisdiction, as elsewhere, it has long been a general rule of construction of policies of insurance . . . that any reasonable doubt which may arise as to the meaning or intent of a condition thereof, will be resolved against the insurer. United States Mut. Accident Ass'n of the City of New York v. Hodgkin, 4 App.D.C. 516, 523 (1894), error dismissed, 17 S.Ct. 1002, 41 L.Ed. 1184 (1897). [I]t is the insurer's duty to spell out in plainest termsterms understandable to the man in the street any exclusionary or delimiting policy provisions. Holt v. George Washington Life Ins. Co., 123 A.2d 619, 621 (D.C. 1956) (citation omitted). Failing such unambiguous language, doubt should be resolved in favor of the insured. Id. at 622 (citation omitted). The rule that a real ambiguity in an insurance policy is to be construed against the company is not a rule of convenience or a mere technicality of legalists. Hayes v. Home Life Ins. Co., 83 U.S.App.D.C. 110, 112, 168 F.2d 152, 154 (1948) (Prettyman, J.). On the contrary, this rule is based on sound public policy, for the contracts in question are written by the insurers. Cameron, 733 A.2d at 968. In recognition of these realities, ambiguities in an insurance policy are construed against the insurer and in favor of the reasonable expectations of the purchaser of the policy. Chase, 780 A.2d at 1127 (citation omitted). Finally, we must examine the language of the polic[y] and construe it as a whole. Kent Farms, 998 P.2d at 294 (citation omitted). Put another way, we are required to view the exclusion in light of the whole policy to determine whether, in that context, the exclusion applies. Id. at 295. To that end, we must examin[e] what the exclusion and similar exclusions are intended to accomplish. Id.