Present: Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and
Lemons, JJ., and Compton,∗ S.J.
CITY OF CHESAPEAKE
v. Record No. 051986 OPINION BY JUSTICE DONALD W. LEMONS
April 21, 2006
STATES SELF-INSURERS
RISK RETENTION GROUP, INC.
UPON A QUESTION OF LAW CERTIFIED BY
THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF VIRGINIA
Pursuant to Article VI, Section 1 of the Constitution of
Virginia and our Rule 5:42, the United States District Court
for the Eastern District of Virginia (“district court”), by
its order entered September 22, 2005, certified to this Court
a single question of law relating to coverage questions under
an insurance policy:
Was coverage excluded under the pollution
exclusion in the Policy for claims made in suits
filed by 213 women who alleged that they suffered
one or more miscarriages resulting from exposure
to THMs in the City's water supply?
By order entered on November 1, 2005, we accepted the
certified question.
I. Background
This certified question is the epilogue to City of
Chesapeake v. Cunningham, 268 Va. 624, 604 S.E.2d 420 (2004).
Helen Cunningham ("Cunningham") was the lead plaintiff of a
∗
Senior Justice Compton participated in the hearing and
decision of this case before his death on April 9, 2006.
combined group of 214 plaintiffs who alleged that their
miscarriages were caused by exposure to trihalomethanes
("THMs") in the City of Chesapeake's water system on various
dates from 1984 through 2000. These cases were combined for
pretrial proceedings under the Virginia Multiple Claimants
Litigation Act, Code §§ 8.01-267.1 through -267.9. Cunningham
sought recovery for, among other things, an alleged bodily
injury due to the consumption of toxic drinking water provided
by the City of Chesapeake ("the City"). Cunningham, 268 Va.
at 627, 604 S.E.2d at 422. We held that the alleged claims
against the City were barred by sovereign immunity. Id. at
640, 604 S.E.2d at 430. The certified question now before the
Court addresses whether the City may obtain insurance coverage
and reimbursement for its legal fees incurred as a result of
the litigation in Cunningham. These fees and costs totaled
$2,413,959.08.
The case is currently pending in the United States
District Court for the Eastern District of Virginia (Norfolk
Division), awaiting resolution of the motion to dismiss for
failure to state a claim under Federal Rule of Civil Procedure
12(b)(6) filed by States Self-Insurers Risk Retention Group,
Inc. ("States Insurance"). If the certified question is
answered in the affirmative, there is no coverage and the City
is not entitled to reimbursement of its legal fees and costs.
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If the certified question is answered in the negative, then
the federal district court must determine various issues,
including the amount to which the City may be entitled from
States Insurance.
II. Analysis
The City contracted with States Insurance for a "Public
Entity Excess Liability Insurance Policy." The dispute, and
the certified question, involve the exclusion provision in
Section I.B.9.a of that Policy, which states in relevant part
that coverage does not apply to any damages for:
Bodily injury or property damage arising out of
the actual, alleged or threatened discharge,
dispersal, seepage, migration, release or
escape of pollutants:
(1) 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";
(2) at or from any premises, site or
location which is or was at any time used
by or for any "Insured" or others for the
handling, storage, disposal, processing or
treatment of waste;
(3) which are or were at any time
transported, handled, stored, treated,
disposed of, or processed as waste by or
for any "Insured" or any person or
organization for whom any "Insured" may be
legally responsible; or
(4) at or from any premises, site or
location on which any "Insured" or any
contractors or subcontractors working
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directly or indirectly on any "Insured's"
behalf are performing operations:
(a) if the pollutants are brought on
or to the premises, site or location
in connection with such operations by
such "Insured", contractor or
subcontractor; or
(b) if the operations are to test
for, monitor, clean up, remove,
contain, treat, detoxify or
neutralize, or in any way respond to,
or assess the effects of pollutants.
The policy defines "bodily injury" as "bodily injury, sickness
or disease sustained by a person, including death by any of
these at any time." The policy defines "pollutants" as "any
solid, liquid, gaseous or thermal irritant or contaminant,
including but not limited to smoke, vapor, soot, fumes, acids,
alkalis, chemicals and waste. Waste includes materials to be
recycled, reconditioned or reclaimed."
The interpretation of a contract presents a question of
law. Bentley Funding Group, L.L.C. v. SK&R Group, L.L.C., 269
Va. 315, 324, 609 S.E.2d 49, 53 (2005). The contract is
construed as written, without adding terms that were not
included by the parties. Wilson v. Holyfield, 227 Va. 184,
187, 313 S.E.2d 396, 398 (1984). When the terms in a contract
are clear and unambiguous, the contract is construed according
to its plain meaning. Bridgestone/Firestone, Inc. v. Prince
William Square Assocs., 250 Va. 402, 407, 463 S.E.2d 661, 664
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(1995). "Words that the parties used are normally given their
usual, ordinary, and popular meaning. No word or clause in
the contract will be treated as meaningless if a reasonable
meaning can be given to it, and there is a presumption that
the parties have not used words needlessly." D.C. McClain,
Inc. v. Arlington County, 249 Va. 131, 135-36, 452 S.E.2d 659,
662 (1995).
By definition, the THMs involved in Cunningham are
"contaminants." See 42 U.S.C. § 300g-1 (2000); 40 C.F.R.
§§ 141.2 and 142.2 (2005); see also Cunningham, 268 Va. at
628-29, 604 S.E.2d at 423 (explaining that THMs have been
regulated as contaminants under the Federal Safe Drinking
Water Act and its implementing regulations since 1979).
Therefore, according to the plain language of the insurance
policy in the instant case, because they are "contaminants,"
THMs are "pollutants."
The parties have engaged each other and this Court in
analysis of the meaning of the various words used in their
contract: "discharge, dispersal, seepage, migration, release
or escape." For example, the City argues that THMs are
"created" by the chemical combination of chlorine and organic
matter contained in the water. Because THMs are "created,"
they are not pre-existent and, consequently, cannot be subject
to "discharge, dispersal, seepage, migration, release or
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escape." However, the City did concede at oral argument that
the THMs, however created, were "released" by the City when a
customer turned on the faucet in a residence or business.
While the City's concession alone would resolve this
controversy, we need look no further than the underlying
motion for judgment in Cunningham to reach the same
conclusion. In her motion for judgment, Cunningham alleged
bodily injury due to exposure to THMs because "THMs are a
poisonous byproduct of disinfection that are disposed of and
released into the domestic water at or about the City's water
treatment facility or facilities as a result of the process of
water treatment and disinfection employed by the City."
Cunningham also alleged a "discharge" of THMs by the City.
These allegations bring the underlying suit, and its
associated legal fees and costs at issue in this certified
question, into the ambit of the exclusion provision now before
the Court because the legal fees and costs were from a suit
involving "[b]odily injury . . . arising out of the actual,
alleged or threatened discharge, dispersal, seepage,
migration, release or escape of pollutants." (Emphasis
added.)
III. Conclusion
In their respective arguments, the parties asked the
Court to examine how other jurisdictions have resolved similar
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insurance contract disputes. It is unnecessary to do so,
however, because the law of this Commonwealth and the plain
language of the insurance policy provide the answer to the
certified question. We hold that coverage was excluded under
Section I.B.9.a of the Policy for claims made in suits filed
by 214 women who alleged that they suffered one or more
miscarriages resulting from exposure to THMs in the City of
Chesapeake's water supply. Accordingly, we answer the
certified question in the affirmative.
Certified question answered in the affirmative.
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