Plaintiffs appeal as of right, and defendant Travelers Indemnity Company cross appeals, from an order granting Travelers summary disposition, pursuant to MCR 2.116(C)(10), in this garnishment action. We affirm.
Plaintiffs William F. McKusick and Faye L. Tietz were employed by Polaris Industries in Osceola, Wisconsin.
1
In the course of their employment, a high-pressure hose delivery system
Thereafter, plaintiffs filed separate products liability actions against Hi-Tech in the state of Wisconsin. Hi-Tech notified its insurer, Travelers, of the pending lawsuits and Travelers denied coverage on
Before the resolution of the declaratory judgment action, plaintiffs and Hi-Tech entered into a settlement agreement regarding the products liability actions that included Hi-Tech’s admission of liability, a judgment in favor of plaintiffs, an agreement by Hi-Tech to pay a portion of the judgment, and an assignment to plaintiffs of Hi-Tech’s indemnification rights against Travelers. Plaintiffs then filed this garnishment action against Travelers to collect the balance owed on their Wisconsin judgment against Hi-Tech.
Subsequently, Travelers filed a motion for summary disposition with regard to Hi-Tech’s declaratory judgment action. After considering the claims filed against Hi-Tech in the underlying lawsuit, the trial court held that plaintiffs’ claims were precluded from coverage by the pollution exclusion endorsement and granted Travelers summary disposition. Travelers then filed a motion for summary disposition with regard to this garnishment action. The trial court granted the motion, holding that Travelers owed no duty to insure or defend Hi-Tech in the underlying lawsuit, thus Hi- Tech had no indemnification rights to assign to plaintiffs, and that the assignment without Travelers’ consent was invalid.
On appeal, plaintiffs argue that the trial court erred in summarily disposing of their claims against Travelers because the pollution exclusion endorsement did not apply to plaintiffs’ products liability claims. We disagree. Travelers cross appeals arguing that res judicata barred plaintiffs’ garnishment action; however, we need not address this issue.
This Court reviews a trial court’s grant of a motion for summary disposition de novo.
Spiek, v Dep’t of Transportation,
An insurance policy is a contract that should be read as a whole to determine what the parties intended to agree on.
Auto-Owners Ins Co v Churchman,
First, plaintiffs argue that the pollution exclusion provision contained in Travelers’ insurance policy did not bar coverage
In this case, the pollution exclusion endorsement to the CGL policy provides, in pertinent part:
This insurance does not apply to:
f. (1) “Bodily injury” or “property damage’ ” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants:
* * *
(d) Which arises out of “your work” . . . ; or
(e) Which arises out of “your product.”
* * *
Pollutants means 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.
The CGL policy defines “your product” as follows:
a Any goods or products, other than real property!,] manufactured, sold, handled, distributed or disposed of by:
(1) You;
.1: * *
b. Containers (other than vehicles), materials, parts or equipment furnished in connection with such goods or products.
This type of pollution exclusion has generally been known as an “absolute pollution exclusion” and was implemented by the insurance industry “to eliminate all pollution claims.”
McGuirk Sand & Gravel, Inc v Meridian Mut Ins Co,
In Lumbermens, supra, an employee of the defendant, S-W Industries, Inc., suffered injuries after years of exposure to toxic cements and solvents and various congestive dusts created during rubber fabrication processing. In holding that the pollution exclusion did not preclude coverage, the Lumbermens court focused on the terms “ ‘discharge, dispersal, release or escape’ ” and held that the fumes and dust that caused the employee’s injuries had not been discharged, dispersed, or released and had not escaped within the plain meaning and intent of those terms. 4 Lumbermens, supra at 981-982.
Plaintiffs primarily argue that
West American Ins Co v Tufco Flooring East, Inc,
104 NC App 312;
However, these cases are factually distinguishable from the case at issue. First, the pollution exclusion provision in this case is more broad than the exclusions contemplated in these, as well as most other, cases because this exclusion applies when pollutants arise from the insured’s work or products. Second, in this case, plaintiffs were not harmed by the inadvertent exposure to vapors and fumes from
Plaintiffs urge us to construe the pollution exclusion provision so as to require that contamination by a pollutant be widespread, making the exclusion applicable only to claims of environmental pollution, i.e., land, air, water, and other natural resource contamination. However, we are bound by well-estab
lished principles of contract construction, including that an insurance contract is not ambiguous if it fairly admits of only one interpretation.
Matakas v Citizens Mut Ins Co, 202
Mich App 642, 649-650;
In this case, the pollution exclusion endorsement unambiguously provided that no coverage would be afforded for damage claims resulting from the discharge, dispersal, seepage, migration, release, or escape of pollutants, as defined by the policy, arising out of Hi-Tech’s products. There are no exceptions to the exclusion and no limitations regarding its scope, including the location or other characteristics of the discharge. Although we recognize that other jurisdictions have considered the terms “discharge,” “dispersal,” “release,” and “escape” to be environmental terms of art, thus requiring the pollutant to cause traditional environmental pollution before the exclusion is applicable, we cannot judicially engraft such limitation. This Court must enforce the insurance policy in accordance with its terms as interpreted in light of their commonly used, ordinary, and plain meanings.
Bianchi v Automobile Club of Michigan,
Plaintiffs next argue that Hi-Tech was led to a reasonable expectation of coverage for products liability claims like the one at issue in this case. We disagree. As discussed earlier, the pollution exclusion clearly and unambiguously provided that no coverage would be afforded for damage claims resulting from the discharge of a pollutant arising from Hi-Tech’s products. The urethane machinery and high-pressure hose delivery system were Hi-Tech’s products. Further, the primary change to Travelers’ CGL policy resulting from the pollution exclusion endorsement was the addition of provisions excluding coverage for damages resulting from the discharge of a pollutant that “arises out of ‘your work’ ” or that “arises out of ‘your product.’ ” Hi-Tech could have discovered the clause on examination of the contract endorsement. See Nikkel, supra at 569. Consequently, any alleged expectation of coverage in circumstances involving the discharge of a pollutant from Hi-Tech’s products was unreasonable.
Next, plaintiffs argue that coverage for their injuries is provided under the products/completed operations hazard provision of the CGL policy because that
provision overrides the pollution exclusion endorsement. We disagree. The pollution exclusion endorsement specifically indicated that it modified coverage under the cgl coverage form. While the products/ completed operations hazard provision suggests coverage generally for negligence resulting in damages arising from Hi-Tech’s completed product or work, the pollution exclusion clearly provided an exception to that coverage when a pollutant was the cause of such damages. Clear and specific exclusions must be enforced.
Churchman, supra
at 567. Further, conflicts between the terms of an endorsement and the form provisions of an insurance contract are resolved in favor of the terms of the endorsement.
Hawkeye-Security Ins Co v Vector Constr Co,
Next, plaintiffs argue that neither the pollutant nor their injuries arose out of Hi-Tech’s product as required by the pollution exclusion clause. First, plaintiffs contend that their injuries did not arise out of Hi-Tech’s product because their injuries occurred when they were attempting to clean up the tdi spill, not during the initial spill. Second, plaintiffs contend that the pollution did not arise out of Hi-Tech’s product because plaintiffs were injured by the tdi. We reject both arguments. A count cannot create ambiguity where none exists.
Churchman, supra.
While the term “arising out of” does not appear to have been defined in the context of a CGL policy, it has been interpreted in the areas of worker’s compensation and automobile insurance law. To establish that an injury arose out of employment, the employee must illustrate that the injury occurred “as a circumstance of or incident to the employment relationship.”
MacDonald
v Michigan Bell Telephone Co,
Finally, plaintiffs argue that Travelers breached its duty to defend Hi-Tech because at least some of the allegations in plaintiffs’ complaints arguably came within policy coverage. This issue was not preserved for appeal because it was not decided by the trial court.
Fast Air, Inc v Knight,
In sum, the trial court properly granted summary disposition in favor of Travelers pursuant to MCR 2.116(C)(10). In consideration of our holding, we need not address the res judicata issue raised by Travelers’ cross appeal.
Affirmed.
Notes
Plaintiffs Tammy K. McKusick and Robert Tietz alleged loss of consortium caused by their spouses’ injuries. Because their claims are derivative, the term “plaintiffs” refers only to William F. McKusick and Faye L. Tietz.
See
Protective Nat’l Ins Co of Omaha v Woodhaven,
See also
Center for Creative Studies v Aetna Life & Casualty Co,
The Lumbermens court did not characterize the terms as environmental terms of art, but merely assigned the terms their dictionary definitions. Lumbermens, supra at 981-982.