Court Opinion

ID: 9658090
Source: CourtListenerOpinion
Date Created: 2023-08-23 20:46:24.673105+00
Date Added: 2024-06-11T18:13:51.437213
License: Public Domain

Cavanagh, C.J.
(dissenting). The Court of Appeals in this case held that "it is arguable that the pollution exclusion clause does not apply. . . . [W]e conclude that plaintiff breached its duty to defend and that summary disposition should have been granted in favor of defendant.” Unpublished opinion per curiam of the Court of Appeals, decided September 28, 1988 (Docket No. 101968), p 5. I would affirm the decision of the Court of Appeals, but for different reasons.1
As in Polkow v Citizens Ins Co of America, 438 *168Mich 174; 476 NW2d 382 (1991), a companion to this case, the threshold issue is whether the insurer had a duty to provide a defense to the suit. The duty to defend is broader than the duty to indemnify and arises where coverage is even arguably possible. Allstate Ins Co v Freeman, 432 Mich 656; 443 NW2d 734 (1989). I am convinced that Protective National Insurance had a duty to defend at least to the point of proving that this ordinary business operation of spraying for insects is the type of operation excluded by the pollution-exclusion clause, in other words, proof that Pratt 505K, the insecticide used, is an "irritant, contaminant or pollutant” as intended by the pollution-exclusion clause.2
In focusing upon the "sudden and accidental” exception to the pollution-exclusion clause, rather than examining the actual pollution-exclusion clause itself, the lower court overlooked basic rules of contract interpretation and evidence. If the pesticide is not in the class of substances intended to be excluded by the pollution-exclusion clause, then the exclusion does not apply and there is no need to examine the sudden and accidental exception to the exclusion. Therefore, until the fact-finder determines whether the pesticide satisfied *169the exclusion clause, the insurer has a duty to defend.
For the pollution-exclusion clause to apply, the action complained of must be the type of occurrence intended by the parties to the contract.3 The very title of the clause is instructive, both sides in this matter refer to it as a "pollution exclusion.”4 In addition, many commentators have defined the purpose of the pollution-exclusion clause as a reaction to litigation for environmentally related losses.5 It seems basic that the exclusion, therefore, should apply only to acts of pollution. It is significant that the claims against the city do not arise out of acts of environmental pollution, but rather they relate to a personal injury allegedly suffered by one person in reaction to a normal city operation. There are no allegations of long-term exposure to the pesticide nor any allegations of environmental damage. The determination whether the exclusion applies should depend, upon an analysis of the specific facts of the case, not a general sweeping view that would allow the exclusion to encompass any substance that may be considered an "irritant, contaminant or pollutant.” *170See Westchester Fire Ins Co v Pittsburg, Kansas, 768 F Supp 1463 (D Kan, 1991) (pesticide is not intended to be excluded); United States Fidelity & Guaranty Co v Armstrong, 479 So 2d 1164 (Ala, 1985) (overflow of sewage is not the type of pollution encompassed); Sellers v Seligman, 463 So 2d 697 (La App, 1985) (a genuine issue existed whether the inhalation of silica dust was encompassed by the pollution-exclusion clause); A-1 Sandblasting & Steamcleaning Co, Inc v Baiden, 53 Or App 890; 632 P2d 1377 (1981) (a genuine issue existed whether paint that was oversprayed was a liquid under the pollution-exclusion clause); Molton, Allen & Williams, Inc v St Paul Fire & Marine Ins Co, 347 So 2d 95 (Ala, 1977) (sand and dirt from a construction site was not included by the clause). Cf. Barmet of Indiana, Inc v Security Ins Group, 425 NE2d 201 (Ind, 1981) (the regular emissions of gas that obscured visibility and caused an automobile accident was excluded).
The lower court took judicial notice that Pratt 505K is a toxic chemical, but this is not a proper matter for judicial notice. MRE 201(b) states:
A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.
Courts can take judicial notice when the fact so noticed is one of general knowledge.6 In this case, *171it is very doubtful that the toxicity of Pratt 505K can be declared "generally known.” In fact, most persons would not even know what it is, and certainly would be unable to determine its chemical composition. It is also acceptable for the court to take judicial notice of facts that can be accurately determined by sources of unquestionable reliability, for example, statistics. See Fortner v Koch, 272 Mich 273; 261 NW 762 (1935) (the court took judicial notice that Detroit had more than one million inhabitants). But more significantly, courts cannot take judicial notice of what a contract phrase means. Moore v Mitchell, 278 Mich 10, 18; 270 NW 197 (1936) (the court cannot take judicial notice of what constitutes an " 'over the counter transaction’ ” in the brokerage business). The fact that was judicially noticed in this case, that the pesticide is a toxic chemical, does not qualify as a statistic and it is part of a contract clause, i.e., the pollution-exclusion clause. Therefore, this was not a proper fact for judicial notice. While recognizing that the defendant was contesting the judicial notice, the Court of Appeals did not address the issue because it recognized that the "plaintiff concedes that this was irrelevant to the issue of whether the pollution exclusion clause applies . . . .” (Emphasis added.) The plaintiff appeared to be conceding that it is not necessary to show that Pratt 505K is toxic, perhaps because the spray is a "liquid” and thereby included in the exclusion.7 The defendants were not prejudiced by the judicial notice because, even though the judi-*172dally noticed fact caused coverage to be excluded by the pollution-exclusion clause, coverage was in effect reinstated by the "sudden and accidental” exception. The defendants, therefore, were still allowed to recover. Since the majority of this Court reverses that determination under the "sudden and accidental” exception, and prevents the defendants from recovering, it is crucial for some factfinder to determine whether the pesticide is the type of "liquid” intended by the exclusion clause. Only this determination would properly trigger the exclusion and remove the insurer’s liability.
It is axiomatic that contract interpretation must take into account the intention of the parties. The pollution-exclusion clause was likely intended to prevent the ongoing, intentional pollution that occurs from industrial wastes, i.e., when companies dump wastes into the environment. It should not necessarily operate to disallow coverage for all pesticide spraying. While chemical by-products and industrial waste products probably were targeted by the pollution-exclusion clause, it is in no way clear that an ordinary function such as spraying for insects was specifically targeted by the clause. One court, in construing the pollution-exclusion clause demonstrated how such a broad interpretation can lead to absurd results:
"If a child at a city pool complains about the chlorine in his or her eyes, the causative factor is a chemical but the city has not polluted the environment. If a fire hydrant sprays water on a passer-by, that water may be an 'irritant’ to the person, but again the municipality responsible for *173the fire hydrant has not polluted the environment.” [Westchester Fire Ins Co v Pittsburg, supra at 1470.]
If the passer-by in the above example was injured by the water, the insurer should not be heard to claim that coverage is excluded by the pollution-exclusion clause. It may be accurate to conclude that the pesticide is a "toxic chemical,”8 and, viewed in the abstract, the pesticide can be seen as an "irritant.” Nevertheless, a determination whether it was the type of irritant, intended by the parties to the contract, to be excluded from coverage requires factual analysis. Under the expansive interpretation of the majority, everyday business operations such as tree spraying, mosquito removal, weed control, and rodent extermination could never be covered by insurance because they would involve chemicals that are potentially "toxic” and would not involve accidental releases. I am not persuaded that this was the intent of the insurance companies in drafting the pollution-exclusion clause.
Levin, J., concurred with Cavanagh, C.J.

 See McNair v State Hwy Dep’t, 305 Mich 181; 9 NW2d 52 (1943); Queen Ins Co v Hammond, 374 Mich 655; 132 NW2d 792 (1965) (when *168the trial judge reaches the right conclusion, it is upheld even if different reasons should have been assigned).

 The exclusion provides:
This policy does not apply:
I. 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 material or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental .... [Emphasis added.]

 It is not persuasive to argue that the intent of the insurance industry is not a part of the record and therefore shielded from the inquiry of this Court. Indeed,, the paucity of the record and the posture of summary disposition in this case is only one more factor militating in favor of imposing a duty to defend until these proofs are admitted into a record which would allow a factfinder to establish the applicability, or inapplicability, of the pollution-exclusion clause and its exception as they relate to the facts of this case.

 Each of the cases cited by the majority deal with substances determined to be a "pollutant.” Ante, p 162. This comports with the statement of the appellant that "[t]he exclusion unambiguously excludes from coverage liability based on all intentional discharges of pollutants . . . .” (Emphasis added.)

 See, e.g., Burke, Pollution exclusion clauses: The agony, the ec-stacy, and the irony for insurance companies, 17 N Ky L R 443, 450 (1990); note, The pollution exclusion clause through the looking glass, 74 Geo L J 1237, 1251, n 73 (1986), and 2 Long, Law of Liability Ins, § 10A.04[2], p 10A-48.

 See, e.g., Kreski v Modern Wholesale Electric Supply Co, 429 Mich 347; 415 NW2d 178 (1987) (it is common knowledge that burning buildings collapse); Firemen’s Ins Co v Sterling Coal Co, 348 Mich 564; 83 NW2d 319 (1957) (the explosive character of dynamite is a matter of general knowledge); Weever v Weiandt, 321 Mich 585; 32 NW2d 897 (1948) (ordinary trucks can, and often do, travel as fast as thirty-two or more miles per hour).

 The appellant declared that "[e]ven if the chemicals at issue . . . were as harmless as milk or sugar, that would not invalidate [the trial court’s] decision.” This argument ignores the requirement that the substance be an "irritant, contaminant or pollutant.”
In the brief filed before this Court, however, the plaintiff seems to retreat from this position and assume that the pesticide is unquestionably a "pollutant.” The summary argument was stated, in part, as follows: "[T]he pollution exclusion [clause] was not . . . triggered by *172the method of the pollutants’ migration .... The focus of the exception is on liability arising out of the 'discharge, release, dispersal or escape’ of pollutants 'into or upon’ the atmosphere or environment.” (Emphasis added.)

 It is important to note, however, that it was not proven to be toxic to humans and the president of Miller Chemical testified that Pratt 505K had been cleared for use by United States Environmental Protection Agency. Furthermore, Pratt 505K is not classified by the Michigan Department of Agriculture as a restricted pesticide requiring special precautions. See affidavit of Robert Mescher, Pesticide Registration Specialist for Michigan Department of Agriculture.