Amer States Ins Co v. Nethery

United States Court of Appeals,

Fifth Circuit.

No. 95-60175.

AMERICAN STATES INSURANCE COMPANY, Plaintiff-Appellant,

v.

Mary Jane NETHERY, et al., Defendants-Appellees.

April 9, 1996.

Appeal from the United States District Court for the Northern
District of Mississippi.

Before POLITZ, Chief Judge, and JONES and BENAVIDES, Circuit
Judges.

EDITH H. JONES, Circuit Judge:

American States Insurance Company ("American States") filed

suit seeking a declaration of rights under its policy relating to

claims brought against its insureds, painting and repair

contractors and a franchisor, by customer Mary Jane Nethery

("Nethery"). The district court granted partial judgment as a

matter of law to the insureds, and American States appeals. We

hold that Nethery's claim that her hypersensitivity to chemicals

was inflamed by fumes from standard paint and glue materials is

excluded by the absolute pollution exclusion from American States's

comprehensive general liability policy. Accordingly, we reverse

and render judgment for American States.

I. BACKGROUND

The facts are not disputed. In 1991, Nethery, through her

insurer, hired DAPA, Inc. d/b/a ServiceMaster of Tupelo,

Mississippi ("DAPA"), to paint portions of the interior walls and

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replace sections of the floor of her home. Because of Nethery's

"chemical hypersensitivity," she alleged that she explicitly

contracted for the repairs to be made with special paint and glue

that would be "non-toxic" to her. DAPA, nonetheless, repaired

Nethery's home with regular industry standard paint and glue.

Nethery contends she is allergic to the chemical 1,1,1

trichloroethane ("1,1,1 tca") in the regular paint and glue and

that fumes from these materials injured her and caused the loss of

the use of part of her home. In state court, she sued DAPA, its

president Danny Miles, its franchisor, The ServiceMaster Limited

Partnership ("ServiceMaster") (collectively, "the insureds"), and

others not parties to the instant case, alleging breach of

contract, gross negligence, and intentional infliction of emotional

distress. The insureds made demand upon American States for

defense and coverage of Nethery's claims. American States defended

under a reservation of rights and filed this declaratory action.

Responding to cross-motions, the district court granted

partial judgment as a matter of law to American States and held

that the insurer did not have a duty to defend against Nethery's

claims for breach of contract and intentional infliction of

emotional distress. The court also held, however, that American

States had a duty to defend against Nethery's gross negligence

claim and that such claim was not barred from coverage by the

pollution exclusion.

American States has appealed, contending that the district

court erred in concluding that its policy covers gross negligence,

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and contending that the absolute pollution exclusion does apply to

bar Nethery's claim. We need not reach the former argument,

because the latter one is dispositive.

II. DISCUSSION

We review the district court's grant of summary judgment and

its interpretation of American States's insurance policy de novo,

applying the same standards as the district court. Constitution

State Ins. Co. v. Iso-Tex, Inc., 61 F.3d 405, 407 (5th Cir.1995).

Under Mississippi law, courts interpret insurance policies

according to contract law. Aero Int'l, Inc. v. United States Fire

Ins. Co., 713 F.2d 1106, 1109 (5th Cir.1983) (applying Miss. law).

This interpretation is limited to the written terms of the policy.

Id. If the policy is unambiguous, its terms must be given their

plain meaning and enforced as written. Id. Only if the policy is

ambiguous will it be interpreted in the light most favorable to the

insured. Nationwide Mut. Ins. Co. v. Garriga, 636 So.2d 658, 662

(Miss.1994).

With regard to insurance, Mississippi is a "decision-poor"

state. Mississippi state courts have not interpreted any pollution

exclusions. We are thus left to make an "Erie guess" about the

instant policy's coverage.

American States's absolute pollution exclusion provides in

pertinent part:

This policy 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;

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 * * * * * *

(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;

* * * * * *

Pollutants means any solid, liquid, gaseous or thermal
irritant or contaminant, including smoke, vapor, soot, fumes,
acids, alkalis, chemicals and waste.

The district court concluded this exclusion was unambiguous

and that it did not exclude Nethery's claim. The court reasoned

that paint and glue fumes do not constitute pollutants because they

do not "normally inflict injury." It explained that, under the

exclusion, "all pollutants are irritants. But that does not make

all irritants pollutants."

While acknowledging the exclusion is unambiguous, American

States rejects the district court's reasoning that not all

irritants are pollutants. It contends that the exclusion defines

a pollutant as "any ... irritant." Therefore, it argues, the

district court impermissibly altered the policy's terms by defining

a pollutant as only a substance which normally inflicts injury.

See Maryland Cas. Co. v. Southern Farm Bureau Cas. Ins. Co., 235

F.2d 679, 683 (5th Cir.1956) (Mississippi law prohibits courts from

re-writing unambiguous insurance exclusions).

We agree with American States; the absolute pollution

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exclusion does unambiguously exclude coverage for Nethery's claim.

"Pollutant" is a defined term in the policy. Whether the policy

definition comports with this court's notion of the usual meaning

of "pollutants" is not the issue; this court has no special

expertise in writing insurance policies. Our judgment about the

reasonable scope of a pollution exclusion—in the absence of

ambiguity—must be tied to the language of the policy. Nethery

contends she suffered bodily injury and property damage from the

"discharge, dispersal ... release or escape of pollutants ... at or

from any premises on which the insured [was] working."

"Pollutants" is defined in the policy as "any ... gaseous ...

irritant or contaminant, including ... vapor ... fumes ... [and]

chemicals." The paint and glue fumes fall under the definition of

gaseous substances, vapors, and fumes, while the 1,1,1 tca in the

paint and glue is plainly a chemical.

Despite the patent applicability of the pollutant exclusion

here, it is contended that paint and glue fumes do not constitute

an "irritant" because they do not normally inflict injury. This

argument might have made sense under a differently worded policy,

but here it does not. Although the policy does not define

"irritant," Webster's Dictionary defines it as "an agent by which

irritation is produced (a chemical)." WEBSTER'S THIRD NEW INTERNATIONAL

DICTIONARY UNABRIDGED 1197 (1981). An irritant is a substance that

produces a particular effect, not one that generally or probably

causes such effects. The paint and glue fumes that irritated

Nethery satisfy both the dictionary definition and the policy

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exclusion of irritants.

The same conclusion was reached by the court in American

States Ins. Co. v. F.H.S., Inc., 843 F.Supp. 187 (S.D.Miss.1994),

interpreting an identical pollution exclusion. The insured in

F.H.S. sought coverage for claims brought by plaintiffs exposed to

ammonia gas released from its warehouse. The amount of ammonia

released, however, was not sufficient to normally cause injury, was

not considered a pollutant by environmental engineers, and did not

violate any environmental or safety regulations. Id. at 189-90.

The insurer argued the plaintiffs' claims were excluded by the

pollution exclusion.

The F.H.S. court agreed. It found the exclusion unambiguous

and concluded that the released ammonia constituted a pollutant,

i.e. a gaseous substance, released from the insured's premises,

which allegedly irritated the plaintiffs. The court rejected the

argument that the ammonia should not be considered a pollutant

because the quantity released was not sufficient to irritate most

persons. That fact was not

relevant in any respect on the issue of whether the policy
exclusion is ambiguous. Though [the environmental expert], or
the scientific community, would define the terms "pollutant"
and/or "pollution" in a way other than that reflected by this
insurance policy, and though the definition the scientific
community would employ would recognize limitations which are
not imposed by the policy under consideration, those facts do
not render the definition in the policy ambiguous or less
clear.... [U]nless the court were to find the exclusion
ambiguous on its face, the court would lack the prerogative to
engraft limitations on the exclusion as it appears in the
policy.

* * * * * *

[The insured] asks that this court, in essence, ignore

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 the policy definition of "pollutants" or, perhaps more
accurately, limit the term so that it is defined in a manner
employed by environmental engineers, and thereby create
coverage not provided by the policy.... [T]he pollution
exclusion construed as a whole is clear and unambiguous.
Moreover, the claims that have been asserted against [the
insured] fall well within the exclusion.

Id. at 190 (footnote omitted).

In the instant case, the district court distinguished F.H.S.

on the basis that "paint fumes do not normally inflict injury, but

[ ] ammonia does." This is unpersuasive. F.H.S. held that the

ammonia constituted a pollutant despite the fact that considering

the amount and circumstances of its release it would not generally

cause injury. Moreover, the chemical 1,1,1 tca in the paint and

glue fumes is listed by the EPA as a hazardous substance.

Comprehensive Environmental Response, Compensation, and Liability

Act of 1980, 42 U.S.C. § 9601 et seq. As the paint and glue

container labels attest, the chemical fumes are not benign and may

inflict injury. The district court's proffered distinction fails

logically and factually.

The insureds, however, urge that the instant pollution

exclusion is not so straightforward and that other courts have

created exceptions to such exclusions in unusual circumstances.

Initially, they and the district court cite Westchester Fire Ins.

Co. v. City of Pittsburg, Kansas, 768 F.Supp. 1463 (D.Kan.1991),

aff'd sub nom., Penn. Nat. Mut. Cas. Ins. Co. v. City of Pittsburg,

Kansas, 987 F.2d 1516 (10th Cir.1993), for the proposition that the

pollution exclusion should not apply to an insured's liability

arising from the normal operations of its business. The vitality

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of that court's holding is questionable, because the Tenth Circuit

affirmed the judgment on explicitly different grounds.1 Be that as

it may, the Westchester Fire court based its conclusion, that the

exclusion did not apply to a plaintiff's claim arising from the

insured city's spraying of pesticides, on grounds not applicable to

the instant case.

One, Westchester Fire was based on the reasonable expectations

of the parties in contracting for insurance. Id. at 1470.

Mississippi courts do not apply this doctrine in interpreting

unambiguous insurance policies. E.g., Cherry v. Anthony, Gibbs,

Sage, 501 So.2d 416, 419 (Miss.1987). Two, the court explained

that the pollution exclusion applies only to "commonly understood

environmental degradation ... such as waste water treatment,

smokestack emissions, or dumping at a landfill." 768 F.Supp. at

1470 & n. 9. We disagree. The pollution exclusion at issue

encompasses more than traditional conceptions of pollution. See

Red Panther Chem. Co. v. Ins. Co. of the State of Penn., 43 F.3d

514 (10th Cir.1994) (applying Mississippi law) (reviewing cases).

Further, the insureds cite Red Panther Chem. Co. v. Ins. Co.

of the State of Penn., 43 F.3d 514 (10th Cir.1994) (applying Miss.

law), for the proposition that the policy is ambiguous. Red

Panther addressed whether the policy excluded coverage when a

1
The Tenth Circuit affirmed the district court's holding
that "the terms of the policy nonetheless provide coverage
[because] the discharge was "sudden or accidental.' " 987 F.2d
at 1519. The circuit court explained "[i]t is unnecessary to
consider [the insurer's] argument that the City was spraying a
"pollutant.' " Id.

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mechanic was injured by breathing fumes from pesticides which had

been spilled by the insured on a car he was inspecting. The court

found the pollution exclusion ambiguous because it was not clear

whether the term "escape" encompassed the series of events leading

to the mechanic's injuries. As the court's reasoning did not reach

the definition of pollutants, it is inapplicable to the instant

case.

Finally, the insureds cite West American Ins. Co. v. Tufco

Flooring East, Inc., 104 N.C.App. 312, 409 S.E.2d 692 (1991), for

the proposition that the pollution exclusion does not apply to the

use of "unadulterated" products in the insured's normal business

operations. The Tufco court found the exclusion did not preclude

coverage for injuries to a food processor's chickens caused by

styrene fumes emanating from floor varnish applied by the insured.

Tufco is, however, distinguishable.

Most significantly, the Tufco court ruled the exclusion was

expressly inapplicable to and overridden by the policy's

supplemental "products-completed operations hazard" clause, which

did cover the plaintiff's claim. 409 S.E.2d at 696. The instant

policy contains no such clause. Tufco also relied on the

reasonable expectations doctrine, which Mississippi courts do not

apply in interpreting unambiguous contracts. Id. at 697.

After finding the pollution exclusion ambiguous, the Tufco

court reasoned that the exclusion did not apply to "pure, useful or

valuable" substances, but only to "something creating an impurity,

something objectionable and unwanted." Id. at 698. It found that,

9
although the styrene fumes were unwanted, the floor varnish from

which they emanated had been deliberately chosen. Such semantics

cannot be applied here. Both the fumes and the "toxic" paint and

glue were unwanted by Nethery. Also, numerous courts have found

substances constituted pollutants regardless of their ordinariness

or usefulness. E.g., U.S. Fire Ins. Co. v. Ace Baking Co., 164

Wis.2d 499, 476 N.W.2d 280, 283 (Ct.App.1981), review denied, 479

N.W.2d 173 (Wis.1991) ("Just as "what is one man's meat is another

man's rank poison,' Lucretius, De Rerum Natura, 293 (W.H.D. Rouse

trans. 3rd ed. 1947), it is a rare substance indeed that is always

a pollutant; the most noxious of materials have their appropriate

and non-polluting uses. Thus, for example, oil will "pollute"

water and thus foul an automobile's radiator, but be essential for

the engine's lubrication.")2

In sum, none of the cases cited by appellees persuades, much

less compels us to conclude that American States's absolute

pollution exclusion is ambiguous and does not exclude Nethery's

claim.

ServiceMaster attempts to appeal the district court's holding

that American States had no duty to defend it against Nethery's

breach of contract and intentional infliction of emotional distress

2
See also Essex Ins. Co. v. Tri-Town Corp., 863 F.Supp. 38
(D.Mass.1994) (carbon monoxide from hockey rink's Zamboni machine
constituted a pollutant); Crabtree v. Hayes-Dockside, Inc., 612
So.2d 249 (La.App.1992), writ denied, 614 So.2d 1257 (La.1993)
(dust escaping during packing operations constituted a
pollutant); Demakos v. Travelers Ins. Co., 205 A.D.2d 731, 613
N.Y.S.2d 709, 710 (1994) (passive cigarette smoke constituted a
pollutant).

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claims. Unfortunately, the franchisor did not file a notice of

cross-appeal and has not shown why its failure to do so should be

excused. "The rule is well established, [ ] that without the

filing of a cross-appeal, an appellee may not attack the decree

with a view either to enlarging his own rights thereunder or of

lessening the rights of his adversary, whether what he seeks is to

correct an error or to supplement the decree with respect to a

matter not dealt with below." Robicheaux v. Radcliff Material,

Inc., 697 F.2d 662, 668 (5th Cir.1983) (internal quotations and

citations omitted). ServiceMaster's arguments are not properly

before this court.

III. CONCLUSION

The judgment of the district court is REVERSED and judgment is

RENDERED for American States.

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