Opinion ID: 1584356
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Heading: Whether the Pollution Exclusions are Ambiguous

Text: We begin with our rules of contract interpretation peculiar to insurance policies. The cardinal principle in the construction and interpretation of insurance policies is that the intent of the parties at the time the policy was sold must control. Except in cases of ambiguity, the intent of the parties is determined by the language of the policy. An ambiguity exists if, after the application of pertinent rules of interpretation to the policy, a genuine uncertainty results as to which one of two or more meanings is the proper one. Because of the adhesive nature of insurance policies, their provisions are construed in the light most favorable to the insured. Exclusions from coverage are construed strictly against the insurer. LeMars Mut. Ins. Co. v. Joffer, 574 N.W.2d 303, 307 (Iowa 1998) (citations omitted). [W]hen an insurer has affirmatively expressed coverage through broad promises, it assumes a duty to define any limitations or exclusionary clauses in clear and explicit terms. Grinnell Mut. Reins. Co. v. Jungling, 654 N.W.2d 530, 536 (Iowa 2002) (citing Amco Ins. Co. v. Haht, 490 N.W.2d 843, 845 (Iowa 1992)). Words that are not defined in the policy are given their ordinary meaning, one that a reasonable person would understand them to mean. Id. (citing A.Y. McDonald Indus. v. Ins. Co. of N. Am., 475 N.W.2d 607, 619 (Iowa 1991)). This is because we interpret insurance policies from the standpoint of an ordinary person, not a specialist or expert. Id. (citing Haht, 490 N.W.2d at 845). Where the meaning of terms in an insurance policy is susceptible to two interpretations, the one favoring the insured is adopted. However, the mere fact that parties disagree on the meaning of terms does not establish ambiguity. The test is an objective one: Is the language fairly susceptible to two interpretations? N. Star Mut. Ins. Co. v. Holty, 402 N.W.2d 452, 454 (Iowa 1987) (citations omitted). Bituminous argues the pollution exclusions unambiguously apply to the facts of this case. It claims carbon monoxide is a pollutant as defined by the policy and Gossage's death was clearly due to dispersal, release, or escape of this pollutant. The exclusions define pollutant as any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. According to Bituminous, [t]here is nothing in this broad definition which would exclude carbon monoxide. Bituminous characterizes carbon monoxide as a gaseous irritant or contaminant. Carbon monoxide is defined in the dictionary as a colorless odorless very toxic gas. Webster's Third New International Dictionary 336 (unabr. ed. rev. 2002). We agree with Bituminous that carbon monoxide falls within the extremely broad language of the policies' definition of pollutants. It is difficult to say the exclusions are fairly susceptible to two interpretations, which is required for us to find the exclusions ambiguous. Mrs. Gossage argues the exclusion is ambiguous because it is unclear whether the exclusion extends beyond traditional environmental pollution. She claims her position is supported by the original purpose of pollution exclusions. One commentator explained the available evidence most strongly suggests that the absolute pollution exclusion was designed to serve the twin purposes of eliminating coverage for gradual environmental degradation and government-mandated cleanup such as Superfund response cost reimbursement. Jeffrey W. Stempel, Reason and Pollution: Correctly Construing the Absolute Exclusion in Context and in Accord with Its Purpose and Party Expectations, 34 Torts & Ins. L.J. 1, 32 (Fall 1998); see Am. States Ins. Co. v. Koloms, 177 Ill.2d 473, 227 Ill.Dec. 149, 687 N.E.2d 72, 81 (1997) (Our review of the history of the pollution exclusion amply demonstrates that the predominate motivation in drafting an exclusion for pollution-related injuries was the avoidance of the `enormous expense and exposure resulting from the explosion of environmental litigation.'); Bernhardt v. Hartford Fire Ins. Co., 102 Md.App. 45, 648 A.2d 1047, 1049-50 (1994) (detailing the evolution of pollution exclusions). But the plain language of the exclusions at issue here makes no distinction between traditional environmental pollution and injuries arising from normal business operations. See Cincinnati Ins. Co. v. Becker Warehouse, Inc., 262 Neb. 746, 635 N.W.2d 112, 120 (2001). The Supreme Court of Illinois, which analyzed a nearly identical exclusion, acknowledged: A close examination of this language reveals that the exclusion (i) identifies the types of injury-producing materials which constitute a pollutant, i.e., smoke, vapor, soot, etc., (ii) sets forth the physical or elemental states in which the materials may be said to exist, i.e., solid, liquid, gaseous or thermal, and (iii) specifies the various means by which the materials can be disseminated, i.e., discharge, dispersal, release or escape. To that extent, therefore, the exclusion is indeed quite specific, and those courts wishing to focus exclusively on the bare language of the exclusion will have no difficulty in concluding that it is also unambiguous. Koloms, 227 Ill.Dec. 149, 687 N.E.2d at 79. Although the court in Koloms looked beyond the bare language of the exclusion to find ambiguity, we find it inappropriate and unwise to do so. An ambiguity exists only if the language of the exclusion is susceptible to two interpretations. Holty, 402 N.W.2d at 454. We may not refer to extrinsic evidence in order to create ambiguity. Becker Warehouse, 635 N.W.2d at 120; Quadrant Corp. v. Am. States Ins. Co., 154 Wash.2d 165, 110 P.3d 733, 742 (2005). Instead, we must enforce unambiguous exclusions as written. Leuchtenmacher v. Farm Bureau Mut. Ins. Co., 461 N.W.2d 291, 294 (Iowa 1990). The plain language in the exclusions encompasses the injury at issue here because carbon monoxide is a gaseous irritant or contaminant, which was released from the propane power washer. See Assicurazioni Generali, S.p.A. v. Neil, 160 F.3d 997, 1006 (4th Cir.1998) (finding pollution exclusion unambiguously barred coverage for carbon monoxide poisoning); Essex Ins. Co. v. Tri-Town Corp., 863 F.Supp. 38, 41 (D.Mass.1994) (same); Bernhardt, 648 A.2d at 1052 (same).