In United Fire & Casualty Co. v. Titan Contractors Service, Inc., ___ F.3d ___, 2014 WL 1887365 (8th Cir. 2014), a divided Eighth Circuit, applying Missouri law, vacated the district court’s summary judgment order in favor of the policyholder. The Eighth Circuit ruled that TIAH, an acrylic concrete sealant, was a “pollutant” under the absolute pollution exclusion, and remanded the case for a determination by the lower court of whether the substance was disseminated in a manner excluded by the absolute pollution exclusion.
The policyholder in United Fire provided construction cleanup services, including cleaning and sealing of concrete floors. Id. at *1. Three claimants brought negligence claims against the policyholder alleging that the policyholder applied TIAH to the floor in the office park where they worked and failed to properly ventilate the worksite; and that, as a result of their exposure, they developed chemically-induced asthma and vocal cord dysfunction. Id. The district court held that the insurer owed a duty to defend and indemnify the policyholder on the basis that TIAH did not constitute a “pollutant” under the policy’s absolute pollution exclusion. Id. The Eighth Circuit, however, disagreed noting that “[t]his case turns, . . on whether an ordinary person of average understanding purchasing the policy would consider TIAH to fall unambiguously within the policy’s definition of ‘pollutant.’” Id. at *2.
In analyzing whether TIAH was a “pollutant” under the terms of the policy, the court noted that the policy defined “pollutant” to include an “irritant,” which was undefined. Id. Looking to the dictionary definition of “irritant,” the court found that “[t]here can be little doubt that TIAH falls within [the definition of an irritant],” and further, that the evidence presented showed that TIAH produces irritation. Id. The court ultimately held that “TIAH unambiguously constitutes a pollutant under the absolute pollution exclusion.” Id.
In so doing, the court rejected the policyholder’s argument that an earlier Missouri Court of Appeals decision holding that gasoline was a “product” the policyholder sold, rather than a pollutant, applied in United Fire for two reasons. Id. at *3 (citing Hocker Oil Co. v. Barker-Phillips-Jackson, Inc., 997 S.W.2d 510 (Mo. Ct. App. 1999)). First, the Eighth Circuit ruled that Hocker Oil was “a minority position” that had not even been adopted by Missouri’s appellate courts. Second, the court distinguished Hocker Oil based on “its unique facts.” Id.
The court stopped short of granting summary judgment in favor of the insurer. Instead, the court remanded the case to the district court for a determination of whether the underlying case alleged the “‘discharge, dispersal, seepage, migration, release or escape’ of TIAH.” Id. at *5. The court reasoned that even though TIAH was a “pollutant” under the policy language, it must also be propagated in a manner enumerated by the absolute pollution exclusion in order for the exclusion to apply. Id. at *4-5. Judge Bright issued a dissenting opinion finding that the operative policy language was ambiguous, and stating that the policyholder’s interpretation of the pollution exclusion should therefore apply. Id. at *5-6.
United Fire is significant because it addresses whether a product used in the policyholder’s daily operations constitutes a “pollutant” under the absolute pollution exclusion. The scope of the term “pollutant” under this exclusion may be an important issue in many cases. Further, as a decision by the Eighth Circuit, United Fire may provide guidance for other courts addressing this issue.