Sullins v. Allstate Insurance

MURPHY, Chief Judge. This case comes to us from the United States District Court for the District of Maryland pursuant to the Maryland Uniform Certification of Questions of Law Act, Maryland Code (1974, 1995 Repl.Vol.) §§ 12-601—12-609 of the Courts and Judicial Proceedings Article. The question of state law certified for our determination is: Whether an insurance company has a duty to defend and/or indemnify its insured in an action alleging injury from exposure to lead paint where the insurance policy excludes coverage for: bodily injury which results in any manner from the discharge, dispersal, release, or escape of: a) vapors, fumes, acids, toxic chemicals, toxic liquids or toxic gasses; b) waste materials or other irritants, contaminants or pollutants. I The certified facts disclose that on September 14, 1990, the Allstate Insurance Company (Allstate) issued a Deluxe Homeowners Policy to Reverend D. Paul Sullins and Patricia H. Sullins (Sullinses).

Under the heading “Losses We Do Not Cover,” the policy contained the following exclusion: We do not cover bodily injury or property damage which results in any manner from the discharge, dispersal, release, or escape of: ⁵⁰⁷ a) vapors, fumes, acids, toxic chemicals, toxic liquids or toxic gasses; b) waste materials or other irritants, contaminants or pollutants. On November 15, 1990, Allstate issued an endorsement to the policy adding liability coverage to the Sullinses’ rental properties, including the property located at 30 South Fulton Avenue in Baltimore. In July, 1993, Esther Ames, a tenant residing in the Sullinses’ rental property and mother of Deonta Ames, filed a complaint against the Sullinses in the Circuit Court for Baltimore City; the complaint alleged that Deonta Ames, her infant child, sustained injuries from ingesting lead paint at the 30 South Fulton Avenue property. The Sixth Count of the Complaint alleges: 3. ... the Defendant ... allowed said paint [containing lead pigment] to chip and flake thereby rendering the dwelling unsafe____ 4. ... the infant ingested and consumed paint containing lead and lead pigment____ 5.

That the injuries, illness and infirmities of the infant Plaintiff were due to: a) The violation by the Defendant of ... City Code ... requiring every dwelling ... to be fit for human habitation and of the Rules ... prohibiting the use of paint for interior painting of any dwelling unit unless such paint is free from any lead pigment____ d) ... in failing to undertake suitable means to eradicate the aforesaid danger caused by the flaked condition of the paint____ 7. That as a result thereof and of the ingestion and consumption by the infant Plaintiff, of the paint in the dwelling, the infant Plaintiff contracted and was caused to suffer lead poisoning. Allstate thereafter filed a complaint in the United States District Court for the District of Maryland alleging: ⁵⁰⁸ Plaintiffs in the Ames suit allege that due to the dispersal or release of toxic lead paint particles at the 30 S. Fulton Avenue property, Plaintiff Deonta Ames contracted lead poisoning____ Because the facts alleged in the Complaint in the Ames suit establish indisputably that the alleged injury to Deonta Ames fell within an express exclusion in the policy, Allstate, as a matter of law, has no duty to provide a further defense to the Sullinses in the Ames suit, or to indemnify them for any judgment, settlement or other costs in that case.

II In Maryland, insurance policies, like other contracts, are construed as a whole to determine the parties’ intentions. Cheney v. Bell National Life, 315 Md. 761, 766-67 , 556 A.2d 1135 (1989). Words are given their “customary, ordinary, and accepted meaning,” unless there is an indication that the parties intended to use the words in a technical sense. Id., see also Chantel Associates v. Mt.

Vernon, 338 Md. 131, 142 , 656 A.2d 779 (1995). “A word’s ordinary signification is tested by what meaning a reasonably prudent layperson would attach to the term.” Bausch & Lomb v. Utica Mutual, 330 Md. 758, 779 , 625 A.2d 1021 (1993). If the language in an insurance policy suggests more than one meaning to a reasonably prudent layperson, it is ambiguous. Collier v. MD-Individual Practice, 327 Md. 1 , 607 A.2d 537 (1992); Pacific Indem. v. Interstate Fire & Cas., 302 Md. 383 , 488 A.2d 486 (1985). A term which is clear in one context may be ambiguous in another.

Tucker v. Fireman’s Fund Ins. Co., 308 Md. 69, 74 , 517 A.2d 730 (1986); Bentz v. Mutual Fire, 83 Md.App. 524, 537 , 575 A.2d 795 (1990). Where terms are ambiguous, extrinsic and parol evidence may be considered to ascertain the intentions of the parties. Cheney, supra, 315 Md. at 766-67 , 556 A.2d 1135 . “Maryland does not follow the rule, adopted in many jurisdictions, that an insurance policy is to be construed most strongly against the insurer.” Id.

Nevertheless, “if no extrinsic or ⁵⁰⁹ parol evidence is introduced, or if the ambiguity remains after consideration of the extrinsic or parol evidence that is introduced, it will be construed against the insurer as the drafter of the instrument.” Id.; see also, e.g., Collier, supra, 327 Md. at 5-6 , 607 A.2d 537 ; Mut. Fire, Marine & Inland Ins. v. Vollmer, 306 Md. 243, 251 , 508 A.2d 130 (1986); St Paul Fire & Mar. Ins. v. Pryseski, 292 Md. 187, 193-96 , 438 A.2d 282 (1981); Truck Ins. Exch. v. Marks Rentals, 288 Md. 428, 435 , 418 A.2d 1187 (1980); Aragona v. St. Paul Fire & Mar.

Ins., 281 Md. 371, 375 , 378 A.2d 1346 (1977). Our cases hold that an insurer has a duty to defend its insured if there is a potentiality that the claim may be covered by the policy; that obligation is ordinarily determined by the allegations in the underlying tort action. If the plaintiff in the tort suit alleges a claim covered by the policy, the insurer has a duty to defend where the potentiality exists that the claim could be covered by the policy. In this regard, to determine whether there is a potentiality of coverage, we look to the policy, the complaint, and extrinsic evidence, if any is adduced.

See Aetna v. Cochran, 337 Md. 98, 108 , 651 A.2d 859 (1995); Chantel Associates, supra, 338 Md. at 141 , 656 A.2d 779 ; Brohawn v. Transamerica Ins. Co., 276 Md. 396, 407-08 , 347 A.2d 842 (1975). Ill The terms in the exclusion, 1 “contaminants” and “pollutants,” are susceptible of two interpretations by a reasonably prudent layperson. By one interpretation, these terms encompass lead paint; by another interpretation, they apply only to cases of environmental pollution or contamination, and not to products such as lead paint.

Since no extrinsic evidence appears in the record at this time to clarify the intentions of the parties in using these terms, the policy must be construed ⁵¹⁰ against Allstate as the drafter of the policy. Cheney, supra, 315 Md. at 766-67 , 556 A.2d 1135 . While lead is clearly “toxic,” a reasonably prudent layperson may not view lead as a “chemical.” Webster’s Dictionary defines “chemical” as “a substance (as an acid, alkali, salt, synthetic organic compound) obtained by a chemical process, prepared for use in chemical manufacture, or used for producing a chemical effect.” Webster’s Third New International Dictionary 384 (1981) [hereinafter “Webster’s ”]. Similarly, a reasonably prudent layperson may not generally think of lead as an “irritant.” Webster’s Dictionary defines “irritant” as “something that irritates or excites” and “irritated” as “roughened, reddened, or inflamed.” Webster’s, supra, at 1197.

There is nothing before us to indicate that lead “irritates” or that it is generally considered an “irritant.” Cf. A-1 Sandblasting & Steamcleaning Co. v. Baiden, 53 Or.App. 890 , 632 P.2d 1377 (1981), aff'd, 293 Or. 17 , 643 P.2d 1260 (1982) (paint in common understanding is not generally thought of as an irritant). Contra, St. Leger v. American Fire and Cas. Ins.

Co., 870 F.Supp. 641 (E.D.Pa.1994). A reasonably prudent layperson may, however, consider lead to be a “contaminant.” Webster’s Dictionary defines “contaminant” as “something that contaminates” and “contaminate” as “to soil, stain, corrupt, or infect by contact or association” or “make inferior or impure by mixture.” Webster’s, supra, at 291. Thus, the term “contaminant” may encompass lead. See, e.g., U.S. Liab.

Ins. Co. v. Bourbeau, 49 F.3d 786, 788 (1st Cir.1995); St. Leger, supra, 870 F.Supp. at 643 . Similarly, a reasonably prudent layperson may consider lead to be a “pollutant.” Webster’s Dictionary defines “pollutant” as “something that pollutes” and “pollute” as “to make physically impure or unclean.” Webster’s, supra, at 1756. The term “pollutant” may reasonably include lead paint.

See, e.g., U.S. Liab. Ins. Co., supra, 49 F.3d 786 ; St. Leger, supra, 870 F.Supp. 641 . ⁵¹¹ A reasonably prudent layperson may also interpret the terms “contaminant” and “pollutant” as not including lead paint. The Supreme Judicial Court of Massachusetts affirmed a lower court’s holding that the term “pollutant,” was ambiguous as applied to a lead paint poisoning claim.

The court said: We conclude that an insured could reasonably have understood the provision at issue to exclude coverage for injury caused by certain forms of industrial pollution, but not coverage for injury allegedly caused by the presence of leaded materials in a private residence. There simply is no language in the exclusion provision from which to infer that the provision was drafted with a view toward limiting liability for lead paint-related injury. The definition of “pollutant” in the policy does not indicate that leaded materials fall within its scope. Rather, the terms used in the pollution exclusion, such as “discharge,” “dispersal,” “release,” and “escape,” are terms of art in environmental law which generally are used with reference to damage or injury caused by improper disposal or containment of hazardous waste.

Atlantic Mut. Ins. Co. v. McFadden, 413 Mass. 90 , 595 N.E.2d 762, 764 (1992) [hereinafter “McFadden ”]. In U.S. Liab.

Ins. Co., supra, 49 F.3d 786 , the court held that lead paint is unambiguously a “pollutant” where the paint, stripped from the outside of a building, contaminates the surrounding soil. Distinguishing McFadden , the court said: Most importantly, McFadden was not an environmental pollution case. McFadden concerned personal injury caused by the presence of lead in a household.

This case concerns injury to property caused by the alleged negligent discharge of lead paint onto property. The latter is a classic example of “pollution”—the discharging of a harmful substance onto land—while the former is most demonstrably not. An objectively reasonable person simply would not ascribe the word “pollution” to the presence of lead paint in a house. Id. at 789; accord General Acc.

Ins. Co. of America v. Idbar, 163 Misc.2d 809 , 622 N.Y.S.2d 417, 419 (Sup.Ct.1994); Genera ⁵¹² li-U.S. Branch v. Caribe Realty, 160 Misc.2d 1056 , 612 N.Y.S.2d 296 (Sup.Ct.1994). Some courts have held that products, despite their toxic nature, are not “pollutants” or “contaminants” when used intentionally and legally. The North Carolina Court of Appeals held that styrene resin used to resurface a floor was not a pollutant, but “a raw material used ..! in [the] normal business activity of resurfacing floors.” West American Ins. v. Tufco Flooring, 104 N.C.App. 312 , 409 S.E.2d 692, 698 (1991), review denied, 332 N.C. 479 , 420 S.E.2d 826 (1992); cf. Hydro Systems, Inc. v. Continental Ins.

Co., 717 F.Supp. 700 (C.D.Cal.1989), aff'd, 929 F.2d 472 (9th Cir.1991) (styrene discharged into atmosphere a “pollutant” within the pollution exclusion; not a “product” within “products-completed operations hazard” exception to the pollution exclusion). Similarly, a federal district court held that 88% formic acid used to determine whether a carpet was suitable for dyeing was not a pollutant. Regent Ins. Co. v. Holmes, 835 F.Supp. 579, 582 (D.Kan.1993); see also Karroll v. Atomergic Chemetals Corp., 194 A.D.2d 715 , 600 N.Y.S.2d 101 (App.Div.1993) (pollution exclusion clause does not apply to action by bulldozer operator accidentally sprayed with sulfuric acid); cf. Sargent Constr.

Co. v. State Auto Ins. Co., 23 F.3d 1324 (8th Cir.1994) (meaning of “pollutant” ambiguous with regard to muriatic acid used to prepare a concrete floor); Demakos v. Travelers Ins. Co., 205 A.D.2d 731 , 613 N.Y.S.2d 709 (1994) (cigarette smoke which allegedly seeped into tenant’s premises from pool and billiard club in basement was a “pollutant”). The court in Pipefitters Welfare Educ.

Fund v. Westchester Fire, 976 F.2d 1037 (7th Cir.1992), said that: The terms “irritant” and “contaminant,” when viewed in isolation, are virtually boundless, for “there is virtually no substance or chemical in existence that would not irritate or damage some person or property.” Without some limiting principle, the pollution exclusion clause would extend far beyond its intended scope, and lead to some absurd results. Take but two simple examples, reading the clause broadly would bar coverage for bodily injuries suffered by one who ⁵¹³