The plaintiff-appellant, LaFarge Corporation (“LaFarge”), initiated this action seeking a declaratory judgment that Travelers Indemnity Co. (“Travelers”) and a number of other insurance companies 1 were under a duty to defend and indemnify it against claims by the United States Environmental Protection Agency (“EPA”) concerning the maintenance of a toxic waste disposal site in Tampa, Florida. The parties eventually filed cross-motions for summary judgment relating to the question of the defendants’ liability to defend LaFarge. The district court granted the defendants’ motion for summary judgment and denied LaFarge’s motion. The court concluded that Florida substantive law governed this dispute and that, under the law of Florida, the defendants did not breach any duty to defend or indemnify LaFarge for the alleged environmental damage at issue here. LaFarge filed this appeal from the final summary judgment. For the reasons stated herein, we affirm the judgment of the district court.
I. FACTS
For a period of time in the 1970’s, the disposal facility was operated as a “borrow pit” from which sand was excavated and sold. The owners thereafter allowed it to be used as a depository area for various waste materials. At about the same time, LaFarge’s predecessor in interest, General Portland, Inc. (“GPI”), contracted with Jernigan Tracking Company (“Jernigan”) for hauling away waste from its cement operations. Jernigan told GPI that the waste would be hauled to a proper landfill but, for five or six months in 1973, diverted the material to the Tampa location because the owners did not charge for its permanent disposal there. Responding to complaints from nearby property owners, Hillsborough County ordered the Tampa site’s owners to cease all dumping in 1976. In state court litigation over contamination from the Tampa site filed in 1978 and made a part of the record in this case, Jernigan was adjudged to be GPI’s agent.
At least by 1982, the EPA had begun investigating and preparing for a cleanup at the Tampa pit. LaFarge acquired GPI in 1983. In July, 1988, LaFarge was notified by the EPA that it was being investigated as a generator of toxic wastes at the location. Subsequently, in October, 1990, the EPA informed LaFarge that it had been named a party potentially responsible for the costs of investigating and cleaning up the pollution at the Tampa site under the mandate of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. § 9607 et seq.
From January 1, 1972 through April 1, 1985, Travelers had issued a series of com *1514 prehensive general liability insurance policies to GPI and LaFarge. From January 1, 1972 through April 1, 1984, the remaining defendants had sold various umbrella and excess general liability insurance policies to GPI and LaFarge. LaFarge notified Travelers of the EPA proceedings against it in November 1990 and also notified the excess insurance carriers of the EPA’s claims.
The insurance contracts issued by Travelers in effect for calendar years 1972 and 1973 and from April 1, 1981 through April 1, 1984 contained the following “expected or intended” pollution exclusion:
[T]his insurance does not apply:
to bodily injury or property damage arising out of any emission, discharge, seepage, release or escape of any liquid, solid, gaseous or thermal waste or pollutant
if such emission, discharge, seepage, release or escape is either expected or intended from the standpoint of any insured or any person or organization for whose acts or omissions any insured is liable.
With one exception, the policies covering the remaining years included the following “sudden and accidental” pollution exclusion:
This insurance does not apply:
to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalized, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.
The 1984 policy encompassed the following “non-sudden or gradual” language:
This insurance does not apply:
to bodily injury or property damage arising out of any emission, discharge, seepage, release or escape of any liquid, solid, gaseous or thermal waste or pollutant if such emission, discharge, seepage, release or escape is non-sudden or gradual from the standpoint of any insured or any person or organization for whose acts of omissions any insured is liable.
In response to LaFarge’s notification of the EPA’s potential charges against it, Travelers replied that these pollution exclusion clauses relieved it of any duty to defend LaFarge.
LaFarge then brought this action against Travelers and the excess coverage companies—Appalachian Insurance Co., First State Insurance Co., Gibraltar Casualty Co., Highlands Insurance Co., Northbrook Insurance Co. and Puritan Insurance Co.—seeking a declaration that the defendants had an obligation to defend and indemnify it against the EPA’s claims and damages for breach of contract. As stated earlier, Travelers and LaFarge eventually filed cross-motions for summary judgment on the issue of the defendants’ liability to defend LaFarge. Appalachian Insurance Co., Gibraltar Casualty Co. and Northbrook Insurance Co. eventually adopted Travelers’ motion for summary judgment. On stipulations of the parties, LaFarge’s causes of action against First State Insurance Co., Highland Insurance Co. and Puritan Insurance Co. 2 were dismissed. The district court granted the defendants’ motions for summary judgment 3 on the liability issues, denied LaFarge’s motion and entered judgment accordingly. LaFarge filed this appeal from the final summary judgment.
II. STANDARD OF REVIEW
Our review of the district court’s grant of summary judgment is plenary, and we apply the same legal standards as those used by the district court.
Hoffman v. Allied Corp.,
III. DISCUSSION
A. Choice of Law.
In this diversity action, the federal courts must apply the substantive law of the forum state, Florida.
Erie Railroad v. Tompkins,
LaFarge stressed in the district court that, under Florida conflicts of law principles, matters concerning the validity and substantive obligation of contracts are determined by the law of the place where the contract is made
(“lex loci contractus
”). Consequently, since the last act necessary to complete these contracts took place in Texas, the law of Texas applies to this case. Travelers, on the other hand, maintained that Florida would apply the “significant relationship” test here and would hold that Florida law governs the interpretation of the contracts at issue. The district court concluded that the Florida Supreme Court would apply the significant relationship test because all these contracts involve insurance on real property. “Florida has the most significant relationship with this transaction and the parties. The principal risk insured is located in Florida and was contemplated to remain unchanged. Indeed, Florida’s interest in adjudicating interests related to pollution damage occurring in the state is substantial. Accordingly, Florida substantive law should govern.... ”
On appeal, LaFarge asserts that the district court erred in its finding that Florida law governs this case because recent decisions from this court and the Florida courts confirm that the Florida Supreme Court would adhere to the principle of lex loci contractus to resolve the conflicts of law issue here. It repeats its contention that since the contracts at issue here were finalized in Texas, the law of Texas governs the substantive issues before us. Even if this be true, LaFarge concedes that, on most of the contract law principles implicated by this case, Florida and Texas law are identical. In any event, Travelers urges that the district court correctly followed Florida law in this dispute involving insurance contracts on real property.
Florida courts have traditionally adopted the
lex loci contractus
rule to conflicts of law problems in contract eases and have, thus, looked to the law of the state where the contract was made or was to be performed.
See Goodman v. Olsen,
LaFarge correctly points out that a more recent decision from this court held that Florida would use the traditional
lex loci contractus
test in a dispute involving a life insurance policy.
See Fioretti v. Massachusetts General Life Insurance Co.,
Even if we were not bound by the Shapiro court’s conclusion that the Florida courts would apply the significant relationship test to a contract of insurance on real property in Florida, we find it persuasive and adopt it here. Accordingly, we hold that the district court correctly applied the law of Florida to this dispute over a contract insuring real property in that state. 4
Before proceeding to the merits, we note that, under the applicable Florida law, a liability insurer’s obligation to defend a claim made against its insured must be determined from the allegations of the complaint.
Baron Oil Co. v. Nationwide Mutual Fire Insurance Co.,
Florida law places on the insured the burden of proving that a claim against it is covered by the insurance policy.
Hudson Insurance Co. v. Double D Management Co., Inc.,
B. Pollution Exclusion Clauses.
1. Sudden and Accidental Exclusion.
The district court found that the policies containing the sudden and accidental exclusion were not ambiguous and provided coverage for the discharge of pollutants only if the discharge was sudden and accidental. The court found that the initial dumping of the wastes at issue was clearly not sudden and accidental and that alone barred coverage. Even accepting LaFarge’s insistence that it was the subsequent seepage of pollutants rather than the initial disposal of wastes which must be sudden and accidental, the district court found that the actual contamination from the Tampa site was not sudden and accidental and, therefore, there was no coverage for LaFarge’s disposal activities at the site under these circumstances.
On appeal, LaFarge reiterates that the critical event for determining the coverage of this and all the pollution exclusion clauses is not, as the district court found, the initial deposit of wastes at the site but the subsequent release and threatened release of pollutants into the environment. It argues that, if the provision is so construed, Travelers owes it a duty to defend because the EPA complaint did not specify whether the pollution from the site was abrupt or gradual. As noted above, however, the district court found that neither the initial deposit of wastes nor the subsequent seepage of pollution from the site was sudden and accidental. Furthermore, this reasoning is foreclosed by this court’s interpretation of a similar provi
*1517
sion under Florida law, that “it is the actual discharge, not the resulting damages or contamination, which must be sudden and accidental in order to fall within the exception to the pollution exclusion clause.”
Southern Solvents, Inc. v. New Hampshire Insurance Co.,
LaFarge concedes that the Florida Supreme Court has rejected its position on this precise question. In
Dimmitt Chevrolet, Inc. v. Southeastern Fidelity Insurance Corp.,
LaFarge next suggests that the clause at issue is ambiguous and invites our consideration of the regulatory history of the “sudden and accidental” pollution exclusion to determine its meaning. It claims that the insurance industry represented to state regulatory agencies that these pollution exclusion clauses were intended to preclude coverage only for intentional and irresponsible pollution.
Generally, extrinsic evidence may be used as an aid in interpreting contract provisions only when the language contained therein is ambiguous. In this case, the district court correctly concluded that the provision was not ambiguous. The Florida Supreme Court rejected this argument in
Dimmitt.
According to that court, “[because we conclude that the policy language is unambiguous, we find it inappropriate and unnecessary to consider the arguments pertaining to the drafting history of the pollution exclusion clause.”
Finally, LaFarge complains that the district court’s decision, if allowed to stand, would create an absolute pollution exclusion in contravention of the clear language of the policies. This contention is without merit. Even with these pollution exclusion clauses, the policies would cover pollution resulting from a genuine accident at an insured’s plant or involving an insured’s vehicle. Thus, the district court correctly held that the sudden and accidental pollution exclusion clause bars coverage for the claims at issue here.
2. Non-Sudden or Gradual Exclusion.
The 1984 policy excluded coverage for a discharge which was non-sudden or gradual. The district court reasoned that, because the initial discharge and subsequent contamination were both gradual, any damages arising out of such a discharge were not covered under the policy.
On appeal, LaFarge groups this policy with those containing the “sudden and accidental” exclusion and, by implication, makes the same arguments for reversing the district court’s holding with respect to it. Since those arguments have been considered and rejected earlier, the district court’s grant of summary judgment with respect to this policy is affirmed.
3. Expected or Intended Exclusion.
The remaining policies precluded relief if the pollution arose from a discharge of waste which was expected or intended. Noting that there was no Florida appellate opinion construing this particular provision, the district court looked to a decision by the United States District Court for the Northern District of Georgia which addressed similar contract rules. In
Damar, Inc. v. U.S. Fire Insurance Co.,
LaFarge again emphasizes, as it does with respect to the other provisions, that the district couid; focused on the wrong event. In its view, it is not the initial disposal of waste but the subsequent release of pollutants which must be intended or expected to bar coverage. At the outset, Travelers concedes that the courts of Florida and Texas have not authoritatively addressed this particular language. It argues, however, that the Damar court properly focused on the distinction between the discharge and the resulting damage. Travelers contends that it is only the discharge of wastes which must be intended or expected, not the resulting contamination or damage.
This is probably the closest point in the case. It appears, however, that a majority of the courts which have considered the question agree that coverage is barred on similar facts.
See, e.g., Anaconda Minerals Co. v. Stoller Chemical Co.,
The district court’s grant of summary judgment in favor of the defendants is AFFIRMED.
Notes
. The remaining named defendants were Appalachian Insurance Co., First State Insurance Co., Gibraltar Casualty Co., Highlands Insurance Co., Northbrook Insurance Co. and Puritan Insurance Co. Each of these companies had issued an umbrella or excess coverage general comprehensive liability insurance policy to the plaintiff at some point during the relevant time period leading up to this lawsuit.
. By the time of its dismissal from the action, Puritan Insurance Co. was known as Westport Insurance Corporation.
. The district court's summary judgment order and judgment do not expressly refer to Gibraltar Casualty Company. The court had earlier granted, however, the parties' stipulated dismissal of two of LaFarge's three counts against Gibraltar. The third claim was covered by the court's grant of Traveler’s motion for summary judgment because Gibraltar had adopted the motion.
. Moreover, we note that, since the substantive contract law principles applicable to this case appear to be the same in Florida and Texas, the outcome of this case would be the same even if we applied the law of Texas to these facts.