MADISON CONSTRUCTION COMPANY v. The HARLEYSVILLE MUTUAL INSURANCE COMPANY, and Nicholas Ezzi, Brian Murtaugh, Kelran Associates, Inc. and Euclid Chemical Company.
678 A.2d 802
Superior Court of Pennsylvania
June 20, 1996
136 Pa. Super. 136
Appeal of the HARLEYSVILLE MUTUAL INSURANCE COMPANY. Argued Feb. 26, 1996.
Order affirmed.
Betz Laboratories Inc., a chemical manufacturer, has filed an amicus curiae brief in support of Madison. Aetna Casualty and Surety Company and The Insurance Environmental Litigation Association have also filed amicus briefs in support of Harleysville.
Alan Greenberg, Philadelphia, for appellee.
Lee M. Epstein, Philadelphia, amicus curiae.
Before McEWEN, President Judge, CAVANAUGH, J., CIRILLO, President Judge Emeritus, and DEL SOLE,
CIRILLO, President Judge Emeritus:
Harleysville Mutual Insurance Company (Harleysville) appeals from an order of the Court of Common Pleas of Chester County granting summary judgment in favor of appellee Madison Construction Company (Madison) and requiring Harleysville to defend and/or pay for the defense of a personal injury claim brought against Madison. We reverse.
Kelran Associates, Inc. (Kelran), a contractor performing construction work at the Boeing/Vertol Helicopters plant (Boeing or Boeing/Vertol), hired Madison, a subcontractor, to prepare concrete utility trenches as a part of its work for Boeing. After pouring the concrete, a Madison employee would add a curing agent, known by its tradename, “Euco-cure” floor сoat,1 to the poured trench. This agent was applied to the concrete in an enclosed area known as a “construction envelope” which consisted of four sides of polyethylene sheeting erected within a Boeing building. Nicholas Ezzi (Ezzi), a machinist employed by Boeing/Vertol, brought the underlying personal injury action after he was injured within this enclosed area. Ezzi was asked to place a fan in the envelope in order to provide better ventilation from the pungent odor of the curing agent. Upon entering the work area with the fan, Ezzi was overcome by the fumes, became dizzy, and fell into a construction trench where he sustained various injuries.
At the time of Ezzi‘s accident, Madison was insured by Harleysville under a comprehensive general liability (CGL) policy. Part of this policy included a “pollution exclusion” provision. Harleysville informed Madison that it would not provide coverage for the lawsuit, claiming that Ezzi‘s accident was excluded by this policy provision. Specifically, Harleysville contended that because Ezzi sustained injuries “as an approximate result of his inhalation of Xylene fumes [from the
Madison subsequently instituted a declaratory judgment action in order to determine whether Harleysville was, in fact, contractually obligated to defend Madison. The parties filed cross-motions for summary judgment and the court granted Madison‘s motion.2 Harleysville then appealed to this court, and, in an opinion authored by the Honorable Peter Paul Olszewski, the panel construed the contract in favor of Madison and affirmed the trial court‘s order.3 Harleysville then petitioned this court for reargument en banc. Harleysville raises the following issues for en banc review:
(1) Whether the plain language of the “аbsolute” pollution exclusion of Harleysville‘s Commercial General Liability insurance policy unambiguously applies to negate a duty of defense or indemnification for a claim of damages for bodily injury alleged to have been caused by the release and migration of noxious fumes by the insured, Madison Construction Company; and
(2) Whether the existence of conflicting judicial authority in foreign jurisdictions establish ipso facto an ambiguity in the “absolute” pollution exclusion so as to confer insurance coverage for liability arising out of the release of noxious fumes notwithstanding the plain language of the insurance policy?
When we review the grant of a motion for summary judgment made under
Harleysville claims that the pollution exclusion provision is not ambiguous and must be read strictly, so as to preclude its obligation to cover Madison in the underlying action. We agree.
Harleysville‘s CGL policy includes the following exclusionary language:
2. Exclusions.
* * *
This insurance does not apply to:
* * *
f. (1) “Bodily injury” ... arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants:
(a) At or from any premises, site, or location which is or was at any time owned or occupied by, or rented or loaned to, any insured;
* * *
(d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured‘s behalf are performing operations:
(i) if the pollutants are brought on or to the premises, site or location in connection with such operations by such insured, contractor or subcontractor; * * *
The term “pollutant” is defined in the policy as:
[A]ny 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.
Emphasis added.
The goal of interpreting an insurance policy is to “ascertain the intent of the parties as manifested by the language of the written instrument.” Gene & Harvey Builders v. Pa. Mfrs. Ass‘n, 512 Pa. 420, 426, 517 A.2d 910, 913 (1986) (citation omitted). Where a provision of a policy is ambiguous, the provision is to be construed in favor of the insured and against the insurer, the drafter of the policy. Id. When a provision of an insurance policy contains language which is clear and unambiguous, however, a court is required to give effect to that language. Standard Venetian Blind Co. v. American Empire Ins., 503 Pa. 300, 469 A.2d 563 (1983). In order to determine whethеr a term or language in a policy provision is ambiguous, the term or language must be considered in the context of the entire policy. Garber v. Travelers Ins. Companies, 280 Pa.Super. 323, 421 A.2d 744 (1980).
The seminal Pennsylvania Supreme Court case regarding the interpretation of contract language is Gianni v. Russell & Co., Inc., 281 Pa. 320, 126 A. 791 (1924). The Gianni court determined that an alleged oral agreement regarding an exclusive right to sell beverages under a tenant-lessee contract would not be upheld when the written contract did not evidence such a stipulation, as “the writing [was] not only the best, but the only evidence of [the parties‘] agreement.” Id. (emphasis added). Similarly, in Standard Venetian Blind, supra, despite the insured‘s lаck of knowledge and/or understanding of an exclusion clause in an insurance liability policy,
[A]n insurer may draft a policy with explicit exclusions and the Court will uphold the plain meaning of the exclusions since a policyholder cannot reasonably expect unlimited coverage in the face of an explicit, unambiguous limitation.
Huffman v. Aetna Life & Cas. Co., 337 Pa.Super. 274, 282, 486 A.2d 1330, 1334 (1984) (emphasis added).
It is important to distinguish the Harleysville-Madison exclusionary provision from pollution exclusion provisions found in many other insurance policies. Other prоvisions often contain the language “into the atmosphere” when describing the area into which a pollutant must escape so that the exclusion applies. Such language, when given its technical effect, will most likely preclude insurance companies from denying coverage for accidents occurring within a confined area because such an occurrence does not result in the release of pollutants “into the atmosphere.” See generally Gamble Farm Inn, Inc. v. Selective Ins. Co., 440 Pa.Super. 501, 656 A.2d 142 (1995) (holding that “atmosphere” within meaning of pollution exclusion in CGL policy did not include the rеlease of the pollutant into the air within the insured‘s building). Additionally, many courts have held this term to be ambiguous, and the exclusion inapplicable, thus resulting in a verdict against the insurer. Id.
Many of these same policies also contain provisions which carve out an exception in applying the pollution exclusion when the manner in which the pollutants are emitted is “sudden and accidental.” See Lower Paxton Township v. U.S. Fidelity and Guaranty Co., 383 Pa.Super. 558, 557 A.2d 393 (1989) (when evidence of release of pollutants did not support jury finding that there had been a “sudden” discharge, dispersal, release or escape of methane gas from Township landfill into adjoining property owner‘s home, suit brought by Township against its insurer, for policy coverage of damage to property owner‘s home, was reversed by court and a judgment
Madison states that the true public policy behind a pollution exclusion provision is to prevent the escape of pollutants “into the environment.” Consistent with this assertion, it claims that because Ezzi‘s accident did not involve the escape of fumes into the environment, the exclusionary provision should not be read to apply to the instant case. We follow in the footsteps of this and other jurisdictions that have consistently declined to accept such an argument when the policy language is clear and unambiguous. See O‘Brien Energy Systems v. American Employers’ Ins., Co., 427 Pa.Super. 456, 629 A.2d 957 (1993), allocatur denied, 537 Pa. 633, 642 A.2d 487 (1994); Lower Paxton, 383 Pa.Super. at 566-67, 557 A.2d at 397 (citing Broadwell Realty Services, Inc. v. Fidelity & Casualty Co., 218 N.J.Super. 516, 528 A.2d 76 (1987), overruled on other grounds by Morton Int‘l, Inc. v. General Accident Ins. Co. of Am., 134 N.J. 1, 28, 629 A.2d 831, 847 (1993)). Additionally, because the Harleysville-Madison provision contains no such “into the environment” language, we, as a court, will not “convolute the plain meaning of a writing merely to find an ambiguity.” See O‘Brien Energy, 427 Pa.Super. 456, 462, 629 A.2d 957, 960 (1993).
Madison makes the additional argument that the “fumes” which caused Ezzi to faint and injure himself are not “pollutants,” and, therefore, this accident does not fall within the exclusion provision. Specifically, Madison claims that the sealant, a commonly used “membrane-forming”4 construction material which it brought onto the helicopter plant in self-contained canisters, was neither an irritant nor a contaminant. In support of its argument, Madison relies on a North Carolina Court of Appeals case, West American Insurance v. Tufco Flooring, 104 N.C.App. 312, 409 S.E.2d 692 (1991). West American, which carries no precedential value, held that under a pollution exclusion provision, fumes emanating from a commonly used construction product are not considered irritants or pollutants, and therefore, should not apply to preclude coverage for the insured. We not only disagree with this holding, but we also refuse to provide such a broad exception simply because a product or material is commonly used in construction.
Specifically, we find no merit in Madison‘s argument which declines to recognize the floor sealant‘s Xylene fumes as a pollutant. The prior panel of this court, which addressed this same issue, came to the proper conclusion that:
While the floor-covering material [the Euco Floor Coat] itself was a necessary instrument of Madison‘s work, the vapors, however unavoidable, were not. They were an unwanted irritating waste product of the floor covering, and thus could be construed to fit within the policy‘s definition of pollution.
This court simply cannot construe the policy language any way other than by finding that the fumes in the instant case were pollutants. First, the language оf the exclusion provision clearly states that “fumes” are regarded as a “pollutant.” Second, when canisters of a liquid or other compound are brought onto a premises, opened, and the material, upon exposure to the air or after application to a surface, causes noxious fumes to emanate and make persons dizzy, the fumes are clearly pollutants.5 Fumes are a reactionary product of a
Based upon the policy terms, which are the controlling means to discern the intent behind the contract, Gianni, supra, we find that the pollution exclusion provision is clear and unambiguous. Ezzi incurred bodily injury from the release of pollutant-fumes at Madison‘s working site from a product which Madison brought onto the helicopter plant in connection with its contractual obligations with Kelran. We find no need to look further to ascertain the parties’ intent in drafting the contract, Rusiski v. Pribonic, 511 Pa. 383, 515 A.2d 507 (1986), or determine if the exclusion provision is reasonably susceptible to different constructions and interpretations. Gamble Farm, supra. To do so would unnecessarily create an ambiguity for this court‘s resolution as well as add extrinsic language to the existing policy between Harleysville and Madison. O‘Brien Energy, supra.6 Beсause we find that that the primary route of exposure of the sealant is through “inhalation and splashing.” The above data directly contradicts Madison‘s argument that it did not bring fumes or vapors onto the worksite where Ezzi was injured. In fact, Madison brought a material, classified as a liquid “aromatic,” onto the Boeing/Vertol premises which was inhaled by Ezzi, causing him to fall and sustain injuries.
Order granting summary judgment reversed. We remand and direct the trial court to enter summary judgment in favor of Harleysville Mutual Insurance Company. Jurisdiction is relinquished.
DEL SOLE, J., files a Dissenting Opinion which is joined by CAVANAUGH and BECK, JJ., and McEWEN, President Judge, concurs in the result of Dissenting Opinion by DEL SOLE, J.
DEL SOLE, Judge, dissenting.
In ruling that Harleysville is not required to defend Madison in the underlying suit, the Majority has made a fundamental error by not reviewing the basis for the underlying claim in the personal injury action. It is clear from such a review that who is a “named insured,” this lack of agreement creates “[the convincing] conclusion that the clause in issue is ambiguous as to whether coverage is to be afforded under the fact situation presented.” Id. at 452, 432 A.2d at 599. Our court, in Lower Paxton, 383 Pa.Super. at 573 n. 4, 557 A.2d at 400 n. 4, however, rejected this same argument and refused to hold that where a provision in an insurance policy has been construеd in different ways by various courts, that this alone mandates that we find the provision ambiguous. While we do not invalidate the above reasoning of these cases, we will not improvidently “jump the gun” and avoid analyzing the language of the policy merely because various courts have inconsistently interpreted the policy language. Unlike the facts in Gamble Farm and Cohen, when the terms of the Harleysville-Madison exclusion provision are given their plain and ordinary meaning, Ryan Homes, Inc. v. Home Indenı. Co., 436 Pa.Super. 342, 647 A.2d 939 (1994), we find that the pollution exclusion clearly applies to the circumstances surrounding Ezzi‘s accident. Furthermore, this court believes that in order to increase predictability and uniformity in the interpretation of pollution exclusion provisions, we must predicate our decisions on the application of the language of the exclusionary clauses to the specific facts presented in each case. Rather than relying on the fact that jurisdictions are split over construing the provisions or that one jurisdictional line of reasoning is better than another, courts must remember to invoke the basic tenet of contract law and look to the writing itself first, before otherwisе deciding that a policy is ambiguous. See generally Mark J. Manta, The Absolute Pollution Exclusion: The Inside Story, Mealey‘s Litigation Reports, Vol. 10, No.3 (November 14, 1995).
Initially it must be recalled that a duty to defend is a distinct obligation, which is separate and apart from an insurer‘s duty to indemnify. Erie Ins. Exchange v. Transamerica Ins. Co., 516 Pa. 574, 582, 533 A.2d 1363, 1368 (1987). This obligation to defend arises whenever an injured party files a complaint which may potentially come within the coverage of the policy. Phico Ins. Co. v. Presbyterian Med. Serv., 444 Pa.Super. 221, 225, 663 A.2d 753, 755 (1995) (citing Gedeon v. State Farm Mutual Automobile Ins. Co., 410 Pa. 55, 56, 188 A.2d 320, 321 (1963)). The Majority in this case, has failed to apрreciate that the question of Harleysville‘s duty to defend necessitates an examination of the underlying personal injury claim, as well as the policy. The Majority, accepting Harleysville‘s statement summarizing the underlying claim, concludes that the policy‘s pollution exclusion applies and Harleysville is not responsible to defend a claim for injuries sustained as an approximate result of the inhalation of Xylene fumes. The underlying claim, however, is not a claim for injuries based upon Madison‘s use or release of noxious fumes, rather it is a claim based upon the breach of certain duties including a failure to warn.
Included in the record as Exhibit “A” to Madison‘s Complaint is a copy of the Complaint filed by Nicholas Ezzi which names Madison as a defendant. The Complaint alleges facts which resulted in Ezzi‘s fall, and claims that Madison is responsible for Ezzi‘s injuries for the following reasons.
13. The aforesaid incident and the injuries resulting to the Plaintiff, Nicholas Ezzi, occurred solely as a result of the negligence, carelessness and recklessness of the defendants, Brian Murtaugh, Kelran and Madison, who had exclusive control over the supervision of the Construction Project and the application of the chemical curing agent, which said negligence, carelessness, and recklessness consisted of the following:
a. Failing to properly maintain the construction site in a proper and safe manner for all construction personnel and employees of Boeing helicopters; b. Failing to properly ventilate the work area to avoid the build-up of dangerous fumes that existed;
c. Failing to warn, by either sign or barricade, Boeing Helicopters’ employees, including the Plaintiff of the dangerous condition that existed resulting from the application of the concrete curing agent;
d. Failing to warn Boeing Helicopters’ employees, like the Plaintiff, of the likely effect of inhaling the noxious fumes that existed;
e. Failing to provide Boeing Helicopters’ employees, like the Plaintiff, with protective gear to protect them from the fumes resulting from the application of the curing agent;
f. Failing to provide adequate safeguards to prevent the injury to Plaintiff;
g. Disregarding the safety and rights of the Plaintiff and other persons in the Construction Area;
h. Failing to detect and observe the dangerous condition caused by the application of the concrete curing agent;
i. Failing to properly barricade or plate the hole where Plaintiff fell;
j. Engaging in other liability producing conduct as may become apparent during the course of discovery.
The so-called “pollution” exclusion in the general liability coverage policy issued by Harleysville excludes it from defending or indemnifying claims for “bodily injury” which arise out of the “actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants.” The injuries claimed by Ezzi in his Complaint have not been alleged to have resulted from Madison‘s “discharge” of a pollutant. The claims set forth against Madison in Ezzi‘s Complaint stem from Madison‘s neglect in failing to warn and protect others from the situation, failing to ventilate the area and failing to cover a hole into which Ezzi fell. These alleged negligent acts by Madison are not excluded in the Harleysville policy.
Although I would affirm the trial court‘s decision for the reasons stated above, I am compelled to also remark that the Majority misinterprets the exclusionary language in the policy at issue. Particularly I note my disagreement with the Majority‘s conclusion that this case involved the use of a “pollutant,” as that term is defined in the policy.
The definition of “pollutant” included in the policy reads:
[A]ny 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.
The Majority concludes that the “fumes” were a pollutant. However the Majority fails to recognize that the terms “vapor,” “fumes” and “gaseous” modify the words “irritant or contaminant” which are meant to describe the type of material which constitutes a “pollutant.” Unlike the Majority, I would accept the trial court‘s conclusion that the floor coating used in this case was not an “irritant” or “contaminant” because this product was a useful tool for construction. The trial court held that the Euco Floor Coat which was being used by Madison on the work site was а “necessary instrument” and “a tool of the trade,” and that it was not an “irritant” or a “contaminant” because it was neither objectionable nor un-
The West American court considered a strikingly similar situation, with regard to both the product at issue and the policy language. Therein the court was considering whether West American‘s policy applied where chicken was damaged at a Perdue plant by an infiltration of vapors or fumes from a resurfacing product used by Tufco.1 The policy inсluded a definition of pollution identical to the language of the policy at issue here. In concluding that the flooring material was not a “pollutant” under the pollution exclusion clause, the court stated:
Turfco did not bring the vapors or fumes which invaded the chicken to the Perdue plant. Rather, Turfco brought an unadulterated, pure raw material, styrene monomer resin, in one-gallon metal cans with screw-on caps. When this raw material was brought onto the site, it was neither an “irritant or contaminant.” It was a raw material used by Tufco in its normal business activity of resurfacing floors. Yet, to be a “pollutant” under the exclusion, a substance brought onto the site must be precisely that, an “irritant or contaminant.”
Id. at 322, 409 S.E.2d at 698.
For these same reasons I find the product used in this case, a floor sealant, not to be a pollutant as that term is defined in the policy. The sealant cannot be said to be either an “irritant” or a “contaminant.” While many products may have some related irritating results, the product itself is not an
The Majority quickly dismisses the application of West American to this case and finds that it carries “no precedential value.” While true that we are not bound by the holding of this ruling by our sister state, I believe it to be both wise and prudent to consider its rationale under circumstances so similar. Further in view of the fact that it provides sound rationale for its decision, I would rely on its ruling in support of my conclusion that the pollution exclusion is inapplicable in this case.
Unrelated to the above discussion I wish also to add my comments with regard to the Majority‘s discussion of Gamble Farm Inn, Inc. v. Selective Ins. Co., 440 Pa.Super. 501, 656 A.2d 142 (1995). Therein Judge Beck wrote that the term “atmosphere” appearing in a pollution exclusion of a comprehensive general liability policy was ambiguous. The term was then construed in favor of the insured and it was held that the exclusion did not apply to the release of carbon monoxide from a malfunctioning water heater inside a restaurant.
With regard to the Gamble case the Majority first writes that it is distinguishable because it concerns a pollution exclusion which includes the language “into the atmosphere’ when describing the area into which a pollutant must escape so that the exclusion applies.” Opinion at 143. I have no dispute with the determination that the policy language of the two cases differ, however I do have a problem with the Majority‘s lattеr
In footnote five the Majority begins with a comment that it need not consider Harleysville‘s second issue, which asks whether the existence of conflicting judicial authority in foreign jurisdictions established ipso facto an ambiguity in the pollution exclusion. The Majority then recounts the ruling in Gamble which finds that the existence of an ambiguity is demonstrated by the fact that the decisions of other courts have interpreted the term “atmosphere” differently. The Majority writes that it is not “invalidating” the reasoning of Gamble, however it goes on to state: “[r]ather than relying on the fact that jurisdictions are split over construing the provisions оr that one jurisdictional line of reasoning is better than another, courts must remember to invoke the basic tenet of contract law and look to the writing itself first, before otherwise deciding that a policy is ambiguous.” Id.
My reading of this footnote finds that the Majority is in fact attempting to do exactly what it claims not to do -invalidate the reasoning of Gamble. I find this inappropriate to do in a footnote and unnecessary to the resolution of the matter before us.
CAVANAUGH and BECK, JJ., join.
McEWEN, President Judge, concurs in the result.