RLI Insurance Company v. ICO, Inc.

Case: 10-20298 Document: 00511344384 Page: 1 Date Filed: 01/07/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 7, 2011
No. 10-20298 Lyle W. Cayce
Summary Calendar Clerk
RLI INSURANCE COMPANY,
Plaintiff-Appellee
v.
SYLVIA GONZALEZ; ALMA ALICIA GONZALEZ, Individually and as
Representative of the Estate of Hector Gonzalez and as Next Friend of
I R G G, a Minor; HECTOR GONZALEZ, JR.,
Defendants-Appellants
Appeal from the United States District Court for the
Southern District of Texas
No. 04:09-CV-03862
Before REAVLEY, DENNIS, and CLEMENT, Circuit Judges.
PER CURIAM:*
Appellants, family members of a deceased sandblaster, appeal the district
court’s grant of summary judgment declaring that RLI Insurance Company
(RLI) does not have a duty to indemnify Appellants’ gross negligence claim. We
AFFIRM.
FACTS AND PROCEEDINGS
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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No. 10-20298
Hector Gonzalez, now deceased, was previously employed by ICO, Inc.
(ICO) at its Odessa, Texas facility. In 2002, Gonzalez and his family were
involved in litigation in state court against ICO relating to Gonzalez’s injuries
from silica1 exposure (“the Ector County Suit”). The parties reached a
settlement agreement to the Ector County Suit, and the state court entered an
agreed judgment.
In 2008, Gonzalez died. Appellants, Gonzalez’s surviving spouse and
children, subsequently filed suit against ICO in state court, alleging gross
negligence for Gonzalez’s death (the “Underlying Lawsuit”). The Underlying
Lawsuit alleges that “Hector Gonzalez was exposed to dangerous levels of silica
dust” through sandblasting while employed by ICO from 1983 to 1988. It is
further alleged that Gonzalez’s death “was caused by respiratory failure caused
by silicosis,” a respiratory disease caused by prolonged inhalation of silica dust.
See W EBSTER’S T HIRD N EW INTERNATIONAL D ICTIONARY 2118.
RLI had issued several insurance policies to ICO, including an umbrella
liability policy (“Umbrella Policy”). After receiving the Underlying Lawsuit, ICO
forwarded a copy of the suit to RLI and requested that it defend the lawsuit on
ICO’s behalf under the Umbrella Policy. RLI filed a suit for declaratory
judgment in federal court, asserting that it did not have a duty to defend and or
indemnify ICO against the claims in the Underlying Lawsuit. It later filed a
motion for summary judgment. The district court granted RLI’s motion, holding
that RLI “did not owe either a defense or indemnity under” the Umbrella Policy
for the claims in the Underlying Lawsuit. Appellants timely appealed.
STANDARD OF REVIEW AND APPLICABLE LAW
1
Silica is the second most common mineral in the earth’s crust and the main chemical
compound in sand and quartz. WEBSTER ’S THIRD NEW INTERNATIONAL DICTIONARY 2117
(2002).
2
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No. 10-20298
“This court reviews the district court’s grant of summary judgment and its
interpretation of an insurance contract de novo.” Certain Underwriters at
Lloyd’s London v. C.A. Turner Const. Co., 112 F.3d 184, 186 (5th Cir. 1997)
(citation omitted). Summary judgment is proper “if the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” F ED. R. C IV. P RO. 56(a).
Under Texas rules of contractual interpretation, if an insurance
contract is expressed in unambiguous language, its terms will be
given their plain meaning and it will be enforced as written. If,
however, a contract is susceptible to more than one reasonable
interpretation, a court will resolve any ambiguity in favor of
coverage.
Certain Underwriters at Lloyd’s London, 112 F.3d at 186.
DISCUSSION
The Umbrella Policy contained several endorsements, including a
“Pollution Exclusion Absolute” (“Pollution Exclusion”). The Pollution Exclusion
stated that the Umbrella Policy did not cover bodily or personal injury arising
as a result of the “contamination of the environment by pollutants that are
introduced at any time, anywhere, in any way.” It defined “pollutants” as
“smoke, vapors, soot, fumes, acids, sounds, alkalis, chemicals, liquids, solids,
gases, waste, . . . and all other irritants and contaminants.”
RLI argues that this court should affirm the district court because (1)
Gonzalez contractually released ICO from the claims in the Underlying Lawsuit 2
and (2) the state court’s judgment in the Ector County Lawsuit disposed of any
2
Appellants argue that Gonzalez’s contact is inapplicable because the Underlying
Lawsuit raises an independent claim under the Texas Worker’s Compensation Act (TWCA)
instead of a derivative claim under the Wrongful Death Act. The Texas Courts of Appeal are
divided on whether the TWCA provides an independent cause of action for wrongful death.
Compare Ross v. Union Carbide Corp., 296 S.W.3d 206, 213-17 (Tex. App.—Houston 2009) (no
independent claim) with Zacharie v. U.S. Nat. Res., Inc., 94 S.W.3d 748, 756-57 (Tex.
App.—San Antonio 2002) (independent claim).
3
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claims in the Underlying Lawsuit between Appellants and ICO.3 We need not
address these issues because, as discussed below, Appellants’ claim is barred by
the Pollution Exclusion.
Appellants argue that the Pollution Exclusion does not apply to the
injuries alleged in the Underlying Lawsuit, namely death resulting from silica
dust exposure. We disagree. The Pollution Exclusion on its face excludes
injuries arising from exposure to “all . . . irritants and contaminants.” The
Occupational Safety and Health Administration has classified silica dust as an
air contaminant. 29 C.F.R. § 1910.1000. Inhaling silica dust can result in
silicosis, a type of pneumoconiosis. Pneumoconiosis is “a disease of the lungs
caused by the habitual inhalation of irritant material.” W EBSTER’S T HIRD N EW
I NTERNATIONAL D ICTIONARY 1746, 2118. In addition, several district courts have
applied substantially similar pollution exclusions to silica-related claims and
have concluded that they are pollutants. See, e.g., Mt. Hawley Ins. Co v. Write
Materials, Inc., 2005 WL 2805565, at *4 (N.D. Tex. Oct. 27, 2005); Clarendon
Am. Ins. Co. v. Bay, Inc., 10 F. Supp. 2d 736, 744 (S.D. Tex. 1998). Silica dust
is unambiguously a “pollutant” under the language of the Pollution Exclusion.
Appellants nonetheless argue that the Pollution Exclusion is ambiguous
when considered in conjunction with the rest of the Umbrella Policy. Their
arguments are unconvincing. They first argue that the Pollution Exclusion is
patently ambiguous because it is too broad and a reasonable person would not
know what was excluded. But Texas courts only look to the reasonable
expectations of a party if there is an ambiguity; “neither conflicting expectations
3
The judgment stated that the parties had settled and requested entry of a judgment,
which “finally dispose[d] of all the parties’ present and future rights and obligations by, to, and
between each other.” Appellants argue that, as part of the settlement, Alma Gonzalez
expressly reserved her right to sue ICO for any claims covered by the Umbrella Policy. Alma
Gonzalez’s express reservation conflicts with the judgment’s disposition of her right to sue
ICO, and it is possible that the judgment’s disposition of all claims was a scrivener’s error.
4
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nor disputation is sufficient to create an ambiguity.” Forbau v. Aetna Life Ins.
Co., 876 S.W.2d 132, 134 (Tex. 1994). The language in the Pollution Exclusion
unambiguously applies to claims arising from “contamination of any
environment by pollutants that are introduced at anytime, anywhere, in any
way.”
Next, appellants argue that a separate Asbestos Exclusion in the Umbrella
Policy creates an inference that silica dust claims are not included by general
Pollution Exclusion. But “superfluous exceptions are commonplace” in insurance
contracts and “have the effect merely of mak[ing] assurance doubly sure.”
Williamson v. J.C. Penny Ins. Co., 226 F.3d 408, 411 (5th Cir. 2000) (quotation
omitted)(alteration in original). Even if the Pollution Exclusion covers the same
claims as the Asbestos Exclusion, this does not raise an inference that the
Pollution Exclusion does not cover silica dust claims. The existence of a separate
exclusion for asbestos does not create ambiguity in the Pollution Exclusion.
Appellants finally argue that the Umbrella Policy as a whole is ambiguous
because there is a conflict between the Pollution Exclusion Endorsement and the
original Umbrella Policy. In Texas, “[e]ndorsements to a policy generally
supersede and control over conflicting printed terms within the main policy.”
Mid-Continent Cas. Co. v. Bay Rock Operating Co., 614 F.3d 105, 115 (Tex. 2010)
(citation omitted). Because the terms of the Pollution Exclusion supercede any
conflicting language in the original Umbrella Policy, the Pollution Exclusion
unambiguously controls what is covered by the policy.4
4
Appellants also attempt to apply Mesa Operating Co. v. California Union Insurance
Co., 986 S.W.2d 749 (Tex. App.—Dallas 1999), to create an ambiguity in the Umbrella Policy.
Mesa Operating is easily distinguishable. Mesa Operating involved a “following form”
umbrella policy that explicitly adopted the coverage of the underlying insurance, whereas the
Umbrella Policy contains no “following form” provision. Id. at 753. Even if the Umbrella
Policy were a “following form” policy, the Pollution Exclusion would supercede the adopted
coverage to the extent that the original Umbrella Policy conflicted with the endorsement. Mid-
Continent Cas. Co., 614 S.W. 3d at 115.
5
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Silica dust is unambiguously a “pollutant” under the Pollution Exclusion.
Because the Underlying Lawsuit only alleges injuries arising out of the
contamination of air from silica dust, RLI does not have a duty to indemnify ICO
for the claims in the Underlying Lawsuit as a matter of law. The district court
correctly granted summary judgment to RLI.
CONCLUSION
For the reasons described above, the district court’s judgment is
AFFIRMED.
6