MEMORANDUM AND ORDER
This is a declaratory judgment action brought by Plaintiff, Lapolla Industries, Inc. (“Plaintiff’ or “Lapolla”), seeking a judgment declaring that the Defendant insurers are obligated to defend and indemnify Plaintiff in connection with a personal injury action now pending in this court (the “Underlying Action”). Presently before the court is the motion of Defendants, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the complaint on the ground that insurance policies they issued do not cover the claims made in the Underlying Action. For the reasons that follow, the motion is granted.
BACKGROUND
I. The Parties
Lapolla, a Delaware corporation with its principle place of business in the state of Texas, is engaged in the manufаcture and distribution of spray foam insulation. Defendant Aspen Specialty Insurance Company is a North Dakota Corporation. Aspen Specialty Insurance Management, Inc. is a Massachusetts corporation. Both Defendants, referred to herein collectively as “Aspen,” maintain a principle place of business in Boston, Massachusetts. They are subsidiaries of Aspen Insurance Holdings Limited, the ultimate parent corporation of a group engaged in the global specialty insurance and reinsurance businesses.
II. Policies and the Relevant Exclusion
The policies at issue here are: (1) a commercial general liability (“CGL”) policy of insurance (the “Primary Policy”) and (2) an excess policy of insurance (the “Excess Policy”) (collectively the “Policies”). The Policies cover the period of November 11, 2011 through November 11, 2012, and provide insurance for general liability claims made against Lapolla that may arise throughout the world. Both policies speak expressly, as discussed in greater detail below, to the exclusion of coverage with respect to claims arising out of exposure to, or requiring clean-up of “pollution” or “pollutants.”
The Primary Policy contains an endorsement modifying coverage for damage allegedly attributable to “pollution.” This endorsement, commonly referred to as a “total pollution exclusion” clause, states that coverage is not provided for:
Pollution
(1) “Bodily injury” or “property damage” which would not have occurred in whole or part but for the actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants” at any time.
(2) Any loss, cost or expense arising out of any:
(a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of “pollutants”;
The Primary Policy defines the term “pollutants” to mean:
any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
By its terms, the Excess Policy provides coverage subject to the terms, conditions and exclusions of the Primary Policy. Additionally, the Excess Policy contains its own specific exclusion with respect to pol
A. Pollution, [including any]
1. Claim, suit, demand of Loss that alleges injury or damage that, in any way, in whole or in part, arises out of, relates to or results from any:
a. Request, demand, order or statutory or regulatory requirement, or any other action authorized or required by law, that any Insured or others investigate, abate, test for, monitor, clean up, remove, contain, treat, detoxify, neutralize, remediate or dispose of, or in any way respond to, or assess the effects of Pollutants as well as any Loss, sanctions arising out of, relating thereto or resulting therefrom.
The Excess Policy contains the same definition of “pollutants” as the Primary Policy.
The Policies were issued to Lapolla through CRC Insurance Services, Inc., a broker for Defendants that is located in Birmingham, Alabama. Lapolla, identified as the named insured party with a Houston, Texas mailing address, made payment on the Policies to CRC. Each of the Policies contain language referencing the laws of the Stаte of Texas. That language advises Lapolla, inter alia, that the insurer is not authorized to transact business within the State of Texas, and advising the insured as to the procedure for obtaining information about the insurer through the Texas Department of Insurance. Neither of the Policies contain a choice of law provision.
III. The Underlying Action
The allegations of the action for which insurance coverage is sought are important to determine the coverage question at issue. The court therefore details below the allegations of the Underlying Action, which was commenced against Lapolla in this court, and assigned to a different District Judge, on September 14, 2012, by Neil and Christina Markey (the “Markeys”) (hereinafter the “Markey Lawsuit”). The Mar-key Lawsuit, styled as a class action, seeks compensation for personal injury and property damage allegedly attributable to the application of Lapolla’s spray polyurethane foam (“SPF”) insulation product.
The Markey Lawsuit describes in detail the identity of the toxic chemicals allegedly offgassed after installation of Lapolla’s product. It concludes that аs a result of “exposure to the toxins, carcinogens, and VOC’s [volatile organic compounds] off-
The Markeys state the foregoing facts in support of state law causes of action alleging negligence, strict liability, breach of warranty, unjust enrichment and violation of the New York State consumer protection legislation contained in Sections 349 and 350 of the New York State General Business Law. The Markey Lawsuit seeks compensatory and punitive damages as well as injunctive relief in the form of repair and remediation of homes, rescission of contracts, and an order that corrective notices to be sent to homeowners. Plaintiffs also seek to have Lapolla bear the cost of continued testing and monitoring of the homes of class members, as well as their continuing health.
IV. The Disclaimer of Coverage
Aspen was advised of the Markey Lawsuit in October of 2012. On October 24, 2012, Aspen denied coverage under the Primary Policy pursuant to, inter alia, the total pollution exclusion clause referred to above. Coverage under the Excess Policy was denied pursuant to the language incorporating the exclusion of the Primary Policy, as well as the pollution exclusion language contained in the Excess Policy. Lapolla requested reconsideration of the decision denying coverage and Aspen reiterated the denial. Aspen did, however, offer to provide a conditional defense to Lapolla. That defense was conditioned on Lapolla’s agreement to litigate a declaratory judgment action as to coverage in a Texas court. Lapolla did not agree to participate in such an action and, instead, instituted this lawsuit.
V. The Motion to Dismiss
Aspen moves to dismiss on the ground that it properly denied coverage based upon the pollution exclusion clauses. The issue of whether coverage is excluded in this case depends upon state law interpreting such clauses. As noted, the Policies do not cоntain a choice of law provision. Both parties recognize: (1) that the court must apply the law of the forum state, i.e. New York, to determine which law to apply and (2) that upon such application, this matter will be governed either by the laws of the State of New York or those of the State of Texas.
Aspen moves to dismiss on the ground that the Policies are governed by Texas law which, according to Aspen, holds unequivocally that the claims alleged in the Markey Lawsuit fall within those excluded from coverage by the pollution exclusion clauses. Lapolla seeks to have New York law apply, which in Lapolla’s view, would not exclude coverage for the claims alleged in the Markey Lawsuit. In support of its argument, Lapolla argues that there is no actual conflict between the laws of Texas and New York and therefore, principles of conflicts of laws dictate that New York law govern the coverage issue. Lapolla argues further that even if there is a conflict between the laws of New York and Texas, New York law should nonetheless be chosen as the state law to apply.
The court turns now to outlining relevant conflict of laws, and state law princi
DISCUSSION
I. Legal Principles
A. Standards on Motion to Dismiss
To survive a motion to dismiss made pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure a plaintiff is required to allege facts to state a claim to relief that is “plausible on its face.” Starr v. Sony BMC Music Entertainment,
When deciding a Rule 12(b)(6) motion, the court “accept[s] as true all factual statements alleged in the complaint and draw[s] all reasonable inferences in favor of the non-moving party.” Davis,
B. Common State Law Standards for Interpretation of Insurance Policies
The question of whether there is an ambiguity in an insurance policy is considered to be a question of law by the courts of both the states of Texas and New York. See Noble Energy, Inc. v. Bituminous Cas. Co.,
II. Applicable Conflicts of Law Principles
It is well settled that in a diversity action this court must look to the law of the State of New York to determine the choice of law issue. Klaxon v. Stentor Elec. Mfg. Co.,
Generally, New York courts apply a “center of gravity” or “grouping of contacts” approach to choice of law determinations. Lumbermens Mutual,
With these conflicts of laws principles in mind, the court turns to determine first, whether there is a conflict between the laws of the States of Texas and New York as to application of the total pollution exclusion clause. Next, if necessary, the court will determine which state law to apply.
III. Conflict Between Texas and New York Law
Thе highest courts of the States of Texas and New York, as well as Federal Courts sitting in diversity, have had occasion to construe the application of pollution exclusion clauses in circumstances similar to those presented here. Specifically, courts have been called upon to determine whether coverage is excluded for injuries alleged to arise from exposure to pollutants in contexts other than traditional widespread environmental pollution. This issue turns on whether the court interprets the pollution exclusion clause as clear on its face, or ambiguous.
In National Union Fire Ins. Co. of Pittsburgh, PA v. CBI Industries, Inc.,
The underlying lawsuit in National Union followed an accident that caused the rupture of a tank containing hydroflouric acid. The issue was whеther claims arising out of exposure to the ensuing acid cloud were within the pollution exclusion clause. National Union,
The National Union court recognized the conflict among courts regarding construction of pollution exclusion clauses, but noted its agreement with those courts holding that such clauses are “clear and unambiguous,” stating that “[t]he pollution exclusion is just what it purports to be— absolute.” Id. at 522, quoting, Alcolac Inc. v. California Union Ins. Co.,
Similarly, in Certain Underwriters at Lloyd’s London v. C.A. Turner Const. Co., Inc.,
Guided by the Texas Supreme Court decision in National Union, and a prior Fifth Circuit opinion denying coverage for injuries alleged to have been caused by radioactive waste, see Constitution State Ins. Co. v. Iso-Tex Inc.,
Like the court in National Union, the Fifth Circuit in Certain Underwriters noted that jurisdictions differ as to whether workplace accidents fall within the pollution exclusion clause, but again, placed Texas among those states holding the clauses to be unambiguous in barring coverage. Id. at 188 (noting the National Union court’s holding that pollution exclusion clauses “unequivocally deny coverage for damage resulting from pollutants, howevеr the damage is caused,” quoting, National Union,
Unlike cases decided under Texas law, New York courts have long held the total pollution exclusion clause to be ambiguous when applied outside of the context of lаwsuits arising from traditional environmental pollution. For example in Stoney Run Co. v. Prudential-LMI Commercial Ins. Co.,
In Belt Painting Corp. v. TIG Ins. Co.,
, Similar to the comment by the Texas Supreme Court noting , disagreement among jurisdictions, New York’s highest court stated that application of the clause has “engendered litigation, and divergent results.” Id. at 793,
Following the decision in Belt Painting, New York courts have held consistently that the pollution exclusion clause is ambiguous when applied outside of the traditional environmental pollution scenario. E.g., Ocean Partners, LLC v. North River Ins. Co.,
As demonstrated, New York and Texas courts have interpreted substantially identical pollution exclusion clauses to reach different results. The Texas Supreme Court’s decision in National Union is thus completely at odds with that of the New York Court of Appeals in Belt Painting, creating a clear conflict of laws. Plaintiff, however, in an effort to show that there is no conflict, seeks to harmonize New York and Texas law. Upon close scrutiny of Plaintiffs arguments, as discussed below, the court finds no such harmony between the two states’ decisions.
First, Plaintiff seizes upon language in Certain Underwriters in supрort of the argument that Texas law is somehow flexible or “unsettled,” on the meaning of pollution exclusion clauses. The language relied upon notes the potential for difficulty in applying the clause “when the damage-causing incident involves a commonly used chemical or when only a slight amount of substance is released.” Certain Underwriters,
In an additional attempt to show the lack of a conflict between the laws of Texas and Nеw York, Plaintiff cites to Evanston Ins. Co. v. Adkins,
The thin reed upon which the Adkins court declared some sort of a “general reasonableness” test does not put Texas law in accord with that of New York. Nor, in this court’s view, does Plaintiffs broad interpretation of Adkins represent the law of the State of Texas as pronounced by its highest court. Instead, that court, speaking to what is the “last word” in Texas law has held quite clearly that no such general test of reasonableness applies. Indeed, as noted, in all but the most absurd cases, Texas law holds that the total pollution exclusion clause is unambiguous in barring coverage in both traditional environmental and other personal injury actions. Accord Zaiontz,
Moreover, even if the “common sense” interpretation of the clause advanced by Plaintiff were required in some limited category of cases, that case is not presented here. An unambiguous application of the clause in this case will not lead to the absurd result envisioned by the Fifth Circuit in Certain Underwriters, and in no way detracts from that court’s unequivocally strict interpretation of the total pollution exclusion clause. As stated therein, the clause unambiguously bars coverage where injuries follow a discharge of pollutants that, while not amounting to a widespread environmental disaster, is nonetheless grеater than that following an isolated discharge of a commonly-used household product.
IV. Conflicts Analysis
A. There is A Conflict of Laws
In light of the foregoing case law and analysis, the court holds that there is a clear conflict between the views of the courts in the State of Texas and those of New York as to the application of the total pollution exclusion clause. Texas law holds such clauses to be unambiguous in all but the narrowest of cases, where such application would be “absurd.” New York law, on the other hand, holds the clauses to be ambiguous when applied in the context of personal injury lawsuits stemming from non-environmental discharges. Other courts have recognized this disagreemеnt, and agree with this court’s conclusion, placing Texas among those states holding the clause to be unambiguous, and New York among those states reaching the opposite conclusion. See, e.g., Firemen’s Ins. Co. of Washington, D.C. v. Kline & Son Cement Repair, Inc.,
In view of the court’s holding that there is a clear conflict between the laws of the States of Texas and New York as to application of the total pollution exclusion clause, the court turns to consider which state law should apply here.
B. Which Law To Apply
In accord with the legal principles set forth above, the court considers the location of the risk to be insured, as well as general principles of conflicts of laws to determine the proper law to apply.
In support of the argument that the parties understood New York to be the location of the covered risk, Lapolla notes that the Underlying Action was commenced in New York, by New York residents, seeking compensation for a New York-based occurrence. While these factors might be relevant to a choice of law question on the merits of the Underlying Action, they are far less dispositive in this coverage litigation where the court considers the location of the risk insured by the Policies.
Here, the New York contacts relied upon by Plaintiffs would support the argument that New York was the location of the insured risk if Lapolla did business only in New York, and the Poliсies covered only actions arising therein. See, e.g., Lumbermens Mutual,
Where, as here, the spread of risk among world-wide jurisdictions makes it impossible to state a single state as the location of the risk to be insured, New York courts generally consider the insured’s domicile as the place of risk, and apply the law of that state. Wausau Business Ins. Co. v. Horizon Administrative Services LLC,
Applying the foregoing principles to this case, the court reiterates that the risks insured by the Policies are worldwide. While Lapolla has been sued in New York, it has also been named as a defendant in cases commenced in other jurisdiction that allege claims similar to those raised here in New York. The Policiеs apply to all of those lawsuits, and it is impossible to state that a single state was the location of the insured risk.
Turning to other factors, the court notes that Lapolla’s domicile is in the State of Texas. The Policies note their issuance in that state, and refer specifically to Texas law. There is no state, other than Texas, with a similar connection to the insured or the Policies. The court therefore holds that Texas law is the appropriate choice in this matter. Applying that law, the court turns to the merits of the motion.
V. Disposition of the Motion
The Policies here broadly exclude all claims for “bodily injury” or “property damage” that would not have occurred but for “the aсtual, alleged, or threatened discharge ... release or escape” of “pollutants.” The Policies could scarcely be broader in their definition of “pollutants” which includes, inter alia, any “gaseous” “irritant or contaminant,” including “vapor” or “fumes.” As to relief sought, the Policies exclude coverage for the cost and expenses for monitoring or remediation costs.
The allegations of the Markey Lawsuit are centered on allegations of personal and property damages attributable to the “off-gassing” of Lapolla’s SPF product. That lawsuit refers to the nature of the gas expelled, describing it as a toxic irritant. Plainly, these allegations refer tо an alleged discharge of a “gaseous” “irritant,” “vapor” or “fume,” and thus fall squarely
CONCLUSION
Defendant’s motion to dismiss is granted. This court declares that Defendants have no duty to defend or indemnify Plaintiff in connection with the case of Markey v. Lapolla Industries, Inc., No. 12-4622(JS), a matter now pending in this court. The Clerk of the Court is directed to terminate the motion filed under docket entry number 21 in this matter, and to thereafter close the file in this case.
SO ORDERED.
Notes
. The Markey lawsuit also alleges claims against a New York Corporation known as Delfino Insulation Company, Inc. (''Delfino”). Those claims are asserted on behalf of a subclass of Plaintiffs. Because this insurance coverage declaratory action is concerned with policies issued to Lapolla, it does not pertain to the claims alleged against Delfino.