Apana v. Tig Insurance Company

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BILL H. APANA, Personal 
Representative of the Estate of
Corrine Apana; CORRINE APANA, No. 08-15369
executor, D.C. No.
Plaintiffs-Appellants,
v.  CV-06-00653-
JMS/LEK
TIG INSURANCE COMPANY; JOHN District of Hawai’i,
DOES 1-10; JANE DOES 1-10; DOE Honolulu
CORPORATIONS 1-10,
Defendants-Appellees.

BILL H. APANA, Personal 
Representative of the Estate of No. 08-15550
Corrine Apana; CORRINE APANA, D.C. No.
executor, 1:06-CV-00653-
Plaintiffs-Appellees, JMS-LEK
v. District of Hawai’i,
TIG INSURANCE COMPANY,  Honolulu
Defendant-Appellant, ORDER
CERTIFIED
and
QUESTION
JOHN DOES 1-10; JANE DOES 1-10; HAWAI’I
DOE CORPORATIONS 1-10, SUPREME COURT
Defendants.

Filed July 15, 2009
8847
8848 APANA v. TIG INSURANCE COMPANY
Before: Alex Kozinski, Chief Judge, Jay S. Bybee and
Consuelo M. Callahan, Circuit Judges.
ORDER
The present case involves the application of a provision in
the standard commercial general liability policy known as the
“total pollution exclusion.” The scope of this exclusion has
been described as “one of the most hotly litigated insurance
coverage questions” to arise over the past three decades. See
Madison Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d
100, 106 (Pa. 1999) (internal quotation marks omitted).
Indeed “[r]arely has any issue spawned as many [court deci-
sions], and as variant in rationales and results, . . . as has the
pollution-exclusion clause.” Porterfield v. Audubon Indem.
Co., 856 So. 2d 789, 800 (Ala. 2002). To date, Hawai’i courts
have not expressed a position on the scope of this exclusion.
Accordingly, we respectfully ask the Hawai’i Supreme Court
to exercise its discretion to accept and decide the certified
question below.1
I. STATEMENT OF FACTS
A. Underlying Dispute in Hawai’i State Court
On July 2, 2003, Corrine Apana and her husband Bill filed
suit against Dennis Marugame and H. Marugame Plumbers,
Inc. (“HMP”) in Hawai’i Circuit Court. The complaint alleged
that on March 21, 2002, Dennis Marugame, a plumber
employed by HMP, went to Walmart to service a clogged
floor drain. He allegedly poured an “extremely strong drain
1
Hawaii’s Rules of Appellate Procedure request a “statement of facts
showing the nature of the cause,” “a statement of prior proceedings in the
case,” “the circumstances out of which the [certified] question arises,” and
“the question of law to be answered.” HAW. R. APP. P. 13. We proceed
accordingly.
APANA v. TIG INSURANCE COMPANY 8849
cleaner” down the drain, which generated “noxious fumes”
within the store. Corrine, a Walmart employee who was
working nearby, breathed in these fumes and left the store
bleeding from her nose and mouth. The Apanas sought dam-
ages for lost wages, pain and suffering, and loss of consortium.2
On August 10, 2003, HMP tendered a claim for defense to
TIG Insurance Company (“TIG”) under a commercial general
liability policy of insurance that TIG had issued to HMP on
February 7, 2002 (“the Policy”). On August 13, TIG rejected
any obligation to indemnify or defend HMP based on the Pol-
icy’s “Total Pollution Exclusion.”
The Apanas, Marugame, and HMP entered into arbitration
proceedings, which ultimately resulted in a judgment against
Marugame and HMP in the amount of $87,770.27. The
Apanas have apparently not collected on this judgment, but
did obtain an assignment from Marugame and HMP for their
rights against TIG under the Policy.
B. TIG’s Insurance Policy
The Policy issued by TIG to HMP provides the following
coverage:
We will pay those sums that the insured becomes
legally obligated to pay as damages because of “bod-
ily injury” or “property damage” to which this insur-
ance applies. We will have the right and duty to
defend the insured against any “suit” seeking those
damages. However, we will have no duty to defend
2
Corrine Apana died while this action was pending before the Hawai’i
Circuit Court due to unrelated causes. Bill was appointed as the personal
representative of her estate and substituted as the party plaintiff in her
place. This order will refer to Corrine and Bill collectively as the Apanas,
even though this federal suit is technically being brought by Bill individu-
ally and as the representative of Corrine’s estate.
8850 APANA v. TIG INSURANCE COMPANY
the insured against any “suit” seeking damages for
“bodily injury” or “property damage” to which this
insurance does not apply.
The Policy also contains a “Total Pollution Exclusion” which
provides:
This insurance policy does not apply to:
f. Pollution
(1) “Bodily injury” or “property damage”
which would not have occurred in whole or
part but for the actual, alleged or threatened
discharge, dispersal, seepage, migration,
release or escape of “pollutants” at any
time.
The Policy defines “pollutants” as follows:
“Pollutants” mean any solid, liquid, gaseous or ther-
mal irritant or contaminant, including smoke, vapor,
soot fumes, acids, alkalis, chemicals and waste.
Waste includes materials to be recycled, recondi-
tioned or reclaimed.
Combining these various provisions, the Policy excludes cov-
erage for any bodily injury resulting from the “discharge, dis-
persal, seepage, migration, release or escape” of “any solid,
liquid, gaseous or thermal irritant or contaminant, including
smoke, vapor, soot fumes, acids, alkalis, chemicals and
waste.”
II. PRIOR PROCEEDINGS
On November 13, 2006, the Apanas filed suit against TIG
in Hawai’i Circuit Court alleging TIG had breached its con-
tract by failing to defend or indemnify Marugame and HMP
APANA v. TIG INSURANCE COMPANY 8851
in the underlying action. TIG removed the case to federal dis-
trict court and then filed a motion for summary judgment
based on the Total Pollution Exclusion. On August 16, 2007,
the district court granted in part and denied in part TIG’s
motion. Apana v. TIG Ins. Co., 504 F. Supp. 2d 998 (D. Haw.
2007). The court held that TIG had no duty to indemnify but
did have a duty to defend. Id. at 1007-08.
On August 22, 2007, the Apanas moved for partial sum-
mary judgment on TIG’s duty to defend. The district court,
following the logic of its August 16 order, granted the motion.
The Apanas filed a timely appeal regarding TIG’s duty to
indemnify and TIG filed a timely cross-appeal regarding its
duty to defend.
III. LEGAL CIRCUMSTANCES
On appeal to the Ninth Circuit, the Apanas have asserted
that the district court erred in finding that TIG did not owe a
duty to indemnify. The Apanas argue that the Hawai’i
Supreme Court would not apply the Total Pollution Exclusion
to situations, such as this, that are not commonly thought of
as environmental pollution. TIG argues that the language of
the Total Pollution Exclusion is clear and the Hawai’i
Supreme Court would apply its terms literally.
A. Two Sides of the National Debate
The scope of the total pollution exclusion has been repeat-
edly litigated, spawning conflicting judicial decisions
throughout the country. See Porterfield, 856 So. 2d at 800
(“[T]here exists not just a split of authority, but an absolute
fragmentation of authority.”). Most State courts fall roughly
into one of two broad camps. See MacKinnon v. Truck Ins.
Exch., 73 P.3d 1205, 1208-09 (Cal. 2003) (explaining the
division of authority).
Some courts apply the exclusion literally because they find
the terms to be clear and unambiguous. See Whittier Props.,
8852 APANA v. TIG INSURANCE COMPANY
Inc. v. Ala. Nat. Ins. Co., 185 P.3d 84, 89-92 (Alaska 2008);
TerraMatrix, Inc. v. U.S. Fire Ins. Co., 939 P.2d 483, 487-88
(Colo. Ct. App. 1997); Heyman Assocs. No. 1 v. Ins. Co. of
State of Pa., 653 A.2d 122, 129-33 (Conn. 1995); Deni
Assocs. of Fla., Inc. v. State Farm Fire & Cas. Ins. Co., 711
So. 2d 1135, 1137-41 (Fla. 1998); Reed v. Auto-Owners Ins.
Co., 667 S.E.2d 90, 92 (Ga. 2008); Bituminous Cas. Corp. v.
Sand Livestock Sys., Inc., 728 N.W.2d 216, 220-22 (Iowa
2007); McKusick v. Travelers Indem. Co., 632 N.W.2d 525,
529-32 (Mich. Ct. App. 2001); Auto-Owners Ins. Co. v. Han-
son, 588 N.W.2d 777, 779-81 (Minn. Ct. App. 1999); Her-
inger v. Am. Family Mut. Ins. Co., 140 S.W.3d 100, 102-06
(Mo. Ct. App. 2004); Sokoloski v. Am. W. Ins. Co., 980 P.2d
1043, 1044-45 (Mont. 1999); Cincinnati Ins. Co. v. Becker
Warehouse, Inc., 635 N.W.2d 112, 118-21 (Neb. 2001); Bitu-
minous Cas. Corp. v. Cowen Constr., Inc., 55 P.3d 1030,
1033-35 (Okla. 2002); Madison Constr. Co. v. Harleysville
Mut. Ins. Co., 735 A.2d 100, 106-08 (Pa. 1999); S.D. State
Cement Plant Comm’n v. Wausau Underwriters Ins. Co., 616
N.W.2d 397, 405-07 (S.D. 2000); Nat’l Union Fire Ins. Co.
of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 521-22
(Tex. 1995); City of Chesapeake v. States Self-Insurers Risk
Retention Group, Inc., 628 S.E.2d 539, 541 (Va. 2006); Peace
ex rel. Lerner v. Nw. Nat’l Ins. Co., 596 N.W.2d 429, 438-46
(Wis. 1999).
Other courts have limited the exclusion to situations involv-
ing traditional environmental pollution, either because they
find the terms of the exclusion to be ambiguous or because
they find that the exclusion contradicts policyholders’ reason-
able expectations. See Porterfield v. Audubon Indem. Co., 856
So. 2d 789, 805-07 (Ala. 2002); Keggi v. Northbrook Prop. &
Cas. Ins. Co., 13 P.3d 785, 790-92 (Ariz. Ct. App. 2000);
Minerva Enters., Inc. v. Bituminous Cas. Corp., 851 S.W.2d
403, 404-06 (Ark. 1993); MacKinnon v. Truck Ins. Exch., 73
P.3d 1205, 1208-18 (Cal. 2003); Danbury Ins. Co. v. Novella,
727 A.2d 279, 281-83 (Conn. Super. Ct. 1998) (distinguishing
Heyman Assocs. No. 1 v. Ins. Co. of State of Pa., 653 A.2d
APANA v. TIG INSURANCE COMPANY 8853
122 (Conn. 1995), listed above); Am. States Ins. Co. v.
Koloms, 687 N.E.2d 72, 75-82 (Ill. 1997); Am. States Ins. Co.
v. Kiger, 662 N.E.2d 945, 948-49 (Ind. 1996); Motorists Mut.
Ins. Co. v. RSJ, Inc., 926 S.W.2d 679, 680-82 (Ky. Ct. App.
1996); Doerr v. Mobil Oil Corp., 00-0947 (La. 12/19/00); 774
So. 2d 119, 125-28, 134-36; Sullins v. Allstate Ins. Co., 667
A.2d 617, 620-24 (Md. 1995); W. Alliance Ins. Co. v. Gill,
686 N.E.2d 997, 999-1001 (Mass. 1997); W. Am. Ins. Co. v.
Tufco Flooring E., Inc., 409 S.E.2d 692, 697-98 (N.C. Ct.
App. 1991), overruled on other grounds by Gaston County
Dyeing Mach. Co. v. Northfield Ins. Co., 524 S.E.2d 558, 565
(N.C. 2000); Weaver v. Royal Ins. Co. of Am., 674 A.2d 975,
977-78 (N.H. 1996); Nav-Its, Inc. v. Selective Ins. Co. of Am.,
869 A.2d 929, 932-39 (N.J. 2005); Belt Painting Corp. v. TIG
Ins. Co., 795 N.E.2d 15, 18-21 (N.Y. 2003); Andersen v.
Highland House Co., 757 N.E.2d 329, 332-34 (Ohio 2001);
Kent Farms, Inc. v. Zurich Ins. Co., 998 P.2d 292, 294-96
(Wash. 2000); Gainsco Ins. Co. v. Amoco Prod. Co., 53 P.3d
1051, 1062-66 (Wyo. 2002).3
This question is dispositive of the present case. Applying
the first rule, as the district court did, would result in a finding
that TIG did not owe a duty to defend—the Apanas’ injuries
clearly resulted from the “discharge” and “dispersal” of a
“gaseous” “vapor” or “chemical[ ].” Applying the latter
approach would lead to the opposite result either because the
provision is ambiguous or is contrary to policyholders’ rea-
sonable expectations—using a plumbing-liquid to clear a
drain appears to be a localized use of a toxic product in the
ordinary course of business that would not normally be con-
sidered environmental pollution.
3
We have only referenced a representative decision from each state that
has considered the scope of the total pollution exclusion. For a more com-
prehensive collection of cases, see Claudia G. Catalano, What Constitutes
“Pollutant,” “Contaminant,” “Irritant,” or “Waste” Within Meaning of
Absolute or Total Pollution Exclusion in Liability Insurance Policy, 98
A.L.R. 5th 193 (2002) (electronic version updated weekly).
8854 APANA v. TIG INSURANCE COMPANY
B. Hawai’i Case Law
Hawai’i has not weighed in on which approach it would
adopt, and its prior case law does not indicate a preference for
either mode of analysis. On one hand, in Hawai’i “policies are
to be construed in accord with the reasonable expectations of
a layperson,” Guajardo v. AIG Haw. Ins. Co., 187 P.3d 580,
587 (Haw. 2008) (internal quotation marks omitted), “the
objectively reasonable expectations . . . will be honored even
though painstaking study of the policy provisions would have
negated those expectations,” Del Monte Fresh Produce
(Hawaii), Inc. v. Fireman’s Fund Ins. Co., 183 P.3d 734, 745
(Haw. 2007) (internal quotation marks and alterations omit-
ted), and Hawai’i refuses to “apply a mechanistic reading of
insurance contracts,” Guajardo, 187 P.3d at 587. These cases
indicate that Hawai’i might enforce a lay person’s reasonable
expectations even if “painstaking study” of the pollution
exclusion would require a different result.
On the other hand, Hawaiian courts have stated that “the
terms of the policy should be interpreted according to their
plain, ordinary, and accepted sense in common speech unless
it appears from the policy that a different meaning is intend-
ed.” Dairy Rd. Partners v. Island Ins. Co., 992 P.2d 93, 106
(Haw. 2000) (internal quotation marks omitted). Accordingly,
the policyholder’s reasonable expectations are “followed only
when the contract taken as a whole, is reasonably subject to
differing interpretation.” Sturla, Inc. v. Fireman’s Fund Ins.
Co., 684 P.2d 960, 964 (Haw. 1984) (internal quotation marks
and alteration omitted). These cases indicate that Hawai’i
courts might not apply the policyholder’s reasonable expecta-
tions to the total pollution exclusion because its terms are
unambiguous.
Based on prior case law alone, we cannot discern how
Hawai’i would interpret a clause that by its terms excludes
coverage but which might upset a layperson’s reasonable
expectations with regards to a “pollution” exclusion.
APANA v. TIG INSURANCE COMPANY 8855
C. Question’s Impact
This issue is a matter of exceptional importance for Hawai-
ian insurers and insureds. Applying the literal terms of this
provision will exclude a wide range of injuries from coverage;
indeed, it is difficult to say what injuries would be covered for
businesses, such as plumbers, that routinely deal with sub-
stances that are technically “irritants” or “contaminants.” On
the other hand, applying the exclusion in accordance with the
reasonable expectations of a layperson would potentially
increase the cost of all general liability policies and under-
mine the certainty of contract, making the clear terms of an
agreement subject to the vagaries of the “reasonable layper-
son.”
In sum, the present case involves “a question concerning
the law of Hawai’i that is determinative of the cause” and for
which “there is no clear controlling precedent in the Hawai’i
judicial decisions” that would resolve the dispute. HAW. R.
APP. P. 13. Moreover, this question has created a deep split
among other courts that have considered the issue and will
have far-reaching consequences for the people and businesses
of Hawai’i.
IV. CERTIFIED QUESTION
In light of the foregoing discussion, we respectfully certify
the following question to the Hawai’i Supreme Court:
Does a total pollution exclusion provision in a
standard commercial general liability insurance pol-
icy apply to localized uses of toxic substances in the
ordinary course of business (such as when a plumber
uses chemicals to open a clogged drain and an
employee working nearby inhales the fumes and suf-
fers injuries), or is it limited to situations that a rea-
sonable layperson would consider traditional
environmental pollution?
8856 APANA v. TIG INSURANCE COMPANY
We do not intend the form of this question to limit the
Hawai’i Supreme Court’s consideration of the issues relevant
to disposing of this matter. If the Hawai’i Supreme Court
decides to consider this certified question, it may reformulate
the issue in light of the parties’ contentions or other relevant
considerations.
V. ORDER
The clerk of our court is hereby ordered to transmit a copy
of this order to the Hawai’i Supreme Court under official seal
of the United States Court of Appeals for the Ninth Circuit.
See HAW. R. APP. P. 13(c). Moreover, the clerk is ordered to
provide “original or copies of all or any portion of the record”
in this case as “[t]he Hawai’i Supreme Court may, in its dis-
cretion, require.” Id.
Further proceedings in our court on the certified question
are stayed pending the Hawai’i Supreme Court’s decision,
and this case is withdrawn from submission. This panel
retains jurisdiction over further proceedings upon receiving a
decision from the Hawai’i Supreme Court. The parties shall
notify the clerk of this court within one week after the
Hawai’i Supreme Court accepts or rejects certification. If the
Hawai’i Supreme Court accepts the certified question, the
parties shall file a joint status report to our court every six
months after the date of acceptance, or more frequently if cir-
cumstances warrant.
It is so ORDERED.
Chief Judge Alex Kozinski
United States Court of Appeals
for the Ninth Circuit
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