Pollution Exclusion: 8th Cir. Holds Exclusion May Apply to Sealant Fumesshoke2013
The United States 8th Circuit Court of Appeals, applying Missouri law, held that sealant fumes fall within the parameters of an absolute pollution exclusion. In the case before the court, Titan Contractor Services, Inc. (Titan) had been sued for negligence based on allegations stemming from its use of TIAH, an acrylic concrete sealant. Titan’s commercial general liability insurer, United Fire and Casualty Company (United) filed a declaratory judgment action seeking a declaration that it did not owe Titan a duty to defend or indemnify for the pending claims because they were barred under the policy’s absolute pollution exclusion. The district court granted summary judgment in favor of the insureds and held that TIAH did not fall within the definition of a pollutant. The insurers appealed the district court’s ruling.
The United policy excludes coverage for “’[b]odily injury’ or ‘property damage’ which would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ at any time.” The policy defines “pollutant” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids alkalis, chemicals and waste.” The policy does not define “irritant” and, therefore, the appellate court looked to the ordinary meaning of the word. The court referred to the dictionary definition of irritant, the material safety data sheet for TIAH, the promotional materials from TIAH’s manufacturer, and the federal Clean Air Act to determine that TIAH constitutes an “irritant” and, therefore, a pollutant under the policy.
Titan and the dissent argued that an ordinary person of average understanding, purchasing the policy at issue would not consider TIAH to fall unambiguously within the definition of “pollutant” and be excluded under the policy. The dissent contended that because Titan is in the business of sealing concrete floors it is unreasonable to think that the commercial liability policy it purchased would exclude coverage for the sealant it uses to conduct its business. The majority disagreed, finding that the precedent Titan and the dissent relied upon was a minority position that was commonly rejected, that sealing floors was only 25% of Titan’s business, and that there were other sealants that Titan could use which do not include TIAH. Moreover, the appellate court asserted that its ruling did not render the policy useless because there are many other risks that Titan faces that would be covered by the insurance policy. The appellate court noted that it is aware of the concern over limitless pollution exclusions, but stated that the exclusion itself imposes limitations on its own scope separate from the definition of “pollutant”: “[T]he interpretive principles, grounded in the text of the policy, substantially limit the scope of the absolute pollution exclusion without deviating radically from its actual language.” The appellate court vacated and remanded the district court’s decision. United Fire & Cas. Co. v. Titan Contractors Serv., Inc., No. 13-1307 (8th Cir. May 13, 2014).