State Farm Fire & Cas. Co. v. Dantzler

Decisions of the Nebraska Court of Appeals
564 21 NEBRASKA APPELLATE REPORTS
CONCLUSION
Upon our de novo review of the record, we find that the
evidence presented was sufficient to warrant termination of
Wayne’s parental rights to Jaidyn and that termination is in
Jaidyn’s best interests. Therefore, we affirm.
Affirmed.
State Farm Fire & Casualty Company, appellee, v.
Jerry Dantzler, appellant, and David Chuol,
individually and as father and next friend
to Chuol Geit, and Chuol Geit, appellees.
___ N.W.2d ___
Filed December 17, 2013. No. A-12-1042.
1. Summary Judgment: Appeal and Error. An appellate court will affirm a lower
court’s grant of summary judgment if the pleadings and admitted evidence show
that there is no genuine issue as to any material facts or as to the ultimate infer-
ences that may be drawn from the facts and that the moving party is entitled to
judgment as a matter of law.
2. ____: ____. In reviewing a summary judgment, an appellate court views the
evidence in the light most favorable to the party against whom the judgment was
granted, and gives that party the benefit of all reasonable inferences deducible
from the evidence.
3. Contracts: Appeal and Error. The construction of a contract is a matter of law,
and an appellate court has an obligation to reach an independent, correct conclu-
sion irrespective of the determinations made by the court below.
4. Insurance: Contracts. A pollution exclusion is unambiguous when it bars
coverage for injuries caused by all pollutants, not just traditional environmen-
tal pollution.
Appeal from the District Court for Douglas County:
K imberly Miller Pankonin, Judge. Reversed and remanded
for further proceedings.
Michael A. Nelsen, of Marks, Clare & Richards, L.L.C.,
for appellant.
David J. Stubstad and Patrick S. Cooper, of Fraser Stryker,
P.C., L.L.O., for appellee State Farm Fire & Casualty
Company.
Decisions of the Nebraska Court of Appeals
STATE FARM FIRE & CAS. CO. v. DANTZLER 565
Cite as 21 Neb. App. 564Moore, Pirtle, and Bishop, Judges.
Pirtle, Judge.
INTRODUCTION
State Farm Fire & Casualty Company (State Farm) brought
a declaratory judgment action to determine whether a rental
dwelling insurance policy issued to Jerry Dantzler covered
lead-based-paint claims made against him by his tenants David
Chuol and Chuol Geit. The district court for Douglas County
found that the policy excluded coverage of the claims against
Dantzler based on a “pollution exclusion,” and granted sum-
mary judgment in favor of State Farm. We conclude that
there is a genuine issue of material fact as to whether there
was a “discharge, dispersal, spill, release or escape” of the
lead, as required for the policy’s pollution exclusion to apply.
Therefore, we reverse the judgment of the district court and
remand the cause for further proceedings.
BACKGROUND
Dantzler owns a rental property in Omaha, Nebraska. In
September 2006, Chuol and his minor child, Geit, moved into
the property. In March 2011, Chuol filed a lawsuit against
Dantzler in his own behalf and on behalf of his son, alleging
that Geit was “exposed to high levels of lead poisoning” in
the rental property due to high levels of lead paint contamina-
tion on the walls and elsewhere in the rental property, caus-
ing him serious and permanent injury. In the lawsuit, Chuol
asserted claims for negligence, breach of implied warranty
of habitability, nuisance, intentional infliction of emotional
distress, negligent infliction of emotional distress, and a vio-
lation of 42 U.S.C. § 4852(d) (2006). At the time the lawsuit
was filed against Dantzler, he had a “Rental Dwelling Policy”
of insurance with State Farm for the rental property. Dantzler
tendered defense of the claims against him to State Farm pur-
suant to his policy.
State Farm filed the instant declaratory judgment action
seeking a declaration that the insurance policy does not pro-
vide coverage for claims made against Dantzler arising out
of exposure to lead-based paint. Dantzler filed an answer and
Decisions of the Nebraska Court of Appeals
566 21 NEBRASKA APPELLATE REPORTS
counterclaim seeking an order declaring that the policy at issue
provides coverage for the claims against him which State Farm
had wrongfully denied.
The rental dwelling policy of insurance issued to Dantzler
by State Farm contains a “pollution exclusion,” which excludes
from coverage, in pertinent part: “bodily injury or property
damage arising out of the actual, alleged or threatened dis-
charge, dispersal, spill, release or escape of pollutants . . . at
or from premises owned, rented or occupied by the named
insured.” As used in the exclusion, the term “pollutants” is
defined as “any solid, liquid, gaseous or thermal irritant or con-
taminant, including smoke, vapor, soot, fumes, acids, alkalis,
chemicals and waste.”
Both Dantzler and State Farm filed motions for summary
judgment. Dantzler alleged that there were no genuine issues
of material fact in regard to whether the insurance policy pro-
vided coverage for the claims made against Dantzler because
lead-based paint is not a “pollutant” under the policy. State
Farm alleged that there were no genuine issues of material
fact because the pollution exclusion precluded coverage of the
claims asserted in the lawsuit against Dantzler.
The trial court found that the pollution exclusion was unam-
biguous and that lead is a pollutant within the meaning of the
exclusion. It further found that Geit could have been exposed
to the lead only if it was “‘discharged, dispersed, released, or
escaped’” from its location. Therefore, the trial court found
that the pollution exclusion precluded coverage of the claims
against Dantzler. The court granted summary judgment in
favor of State Farm and denied Dantzler’s motion for sum-
mary judgment.
ASSIGNMENT OF ERROR
Dantzler assigns that the trial court erred in finding that the
lead-based-paint claims made against him were excluded from
coverage under State Farm’s insurance policy.
STANDARD OF REVIEW
[1,2] An appellate court will affirm a lower court’s grant
of summary judgment if the pleadings and admitted evidence
Decisions of the Nebraska Court of Appeals
STATE FARM FIRE & CAS. CO. v. DANTZLER 567
Cite as 21 Neb. App. 564show that there is no genuine issue as to any material facts
or as to the ultimate inferences that may be drawn from the
facts and that the moving party is entitled to judgment as a
matter of law. Sutton v. Killham, 285 Neb. 1, 825 N.W.2d 188(2013). In reviewing a summary judgment, an appellate court
views the evidence in the light most favorable to the party
against whom the judgment was granted, and gives that party
the benefit of all reasonable inferences deducible from the
evidence. Id.[3] The construction of a contract is a matter of law, and
an appellate court has an obligation to reach an independent,
correct conclusion irrespective of the determinations made by
the court below. Model Interiors v. 2566 Leavenworth, LLC, 19
Neb. App. 56, 809 N.W.2d 775 (2011).
ANALYSIS
Pollution Exclusion.
The issue in this case is whether it can be decided as a
matter of law that the pollution exclusion in State Farm’s
insurance policy excludes the lead-based-paint claims made
against Dantzler from coverage. In determining this issue, we
must first decide whether lead is a “pollutant” as defined in
the policy. In making this determination, we are guided by
the Nebraska Supreme Court’s decision in Cincinnati Ins. Co.
v. Becker Warehouse, Inc., 262 Neb. 746, 635 N.W.2d 112(2001), a case involving a pollution exclusion similar to the
one at issue.
In Cincinnati Ins. Co., Becker Warehouse, Inc., owned a
building where food products owned by various entities were
stored. While constructing an addition to the warehouse, the
construction company hired by Becker Warehouse applied a
sealant to the concrete floor. The owners of the food products
filed lawsuits against Becker Warehouse, alleging that xylene
fumes from the sealant contaminated their food products. Becker
Warehouse sought indemnity and defense from its insurer, the
Cincinnati Insurance Company (Cincinnati). Cincinnati filed
a petition for declaratory judgment seeking a declaration that
Becker Warehouse’s insurance policy did not provide coverage
for the alleged contamination because of a pollution exclusion
Decisions of the Nebraska Court of Appeals
568 21 NEBRASKA APPELLATE REPORTS
clause and that Cincinnati was not obligated to defend Becker
Warehouse. Both parties filed motions for summary judgment,
and the trial court sustained Cincinnati’s motion and overruled
Becker Warehouse’s motion. The insurance policy issued to
Becker Warehouse by Cincinnati contained a pollution exclu-
sion nearly identical to the one at issue in the present case. The
definition of “pollutants” in the Cincinnati policy included the
same language as that found in the State Farm policy at issue,
followed by an additional sentence which stated, “‘Pollutants
include but are not limited to substances which are generally
recognized in industry or government to be harmful or toxic
to persons, property or the environment.’” Id. at 749, 635
N.W.2d at 116.
On appeal, Becker Warehouse alleged that the pollution
exclusion in the policy was ambiguous, arguing in part that
the exclusion applied only to traditional environmental claims.
The Nebraska Supreme Court recognized that state and fed-
eral courts are split on whether an insurance policy’s absolute
pollution exclusion bars coverage for all injuries caused by
pollutants or whether it applies only to injuries caused by
traditional environmental pollution. It noted, however, that
a majority of state and federal jurisdictions have held that
absolute pollution exclusions are unambiguous as a matter
of law and, thus, exclude coverage for all claims alleging
damage caused by pollutants. Cincinnati Ins. Co. v. Becker
Warehouse, Inc., supra, citing Nat’l Elect. Mfrs. v. Gulf
Underwriters Ins., 162 F.3d 821 (4th Cir. 1998) (applying
District of Columbia law); Technical Coating v. U.S. Fidelity
& Guaranty, 157 F.3d 843 (11th Cir. 1998) (applying Florida
law); Certain Underwriters at Lloyd’s v. C.A. Turner Const.,
112 F.3d 184 (5th Cir. 1997) (applying Texas law); American
States Ins. Co. v. Nethery, 79 F.3d 473 (5th Cir. 1996) (apply-
ing Mississippi law); Brown v. American Motorists Ins. Co.,
930 F. Supp. 207 (E.D. Pa. 1996); City of Salina, Kan. v.
Maryland Cas. Co., 856 F. Supp. 1467 (D. Kan. 1994);
Madison Const. v. Harleysville Mut. Ins., 557 Pa. 595, 735
A.2d 100 (1999); Deni Associates v. State Farm Ins., 711 So.
2d 1135 (Fla. 1998); Truitt Oil & Gas Co. v. Ranger Ins. Co.,
231 Ga. App. 89, 498 S.E.2d 572 (1998); City of Bremerton
Decisions of the Nebraska Court of Appeals
STATE FARM FIRE & CAS. CO. v. DANTZLER 569
Cite as 21 Neb. App. 564v. Harbor Ins. Co., 92 Wash. App. 17, 963 P.2d 194 (1998);
TerraMatrix, Inc. v. U.S. Fire Ins. Co., 939 P.2d 483 (Colo.
App. 1997).
The Supreme Court concluded as a matter of law that
Cincinnati’s pollution exclusion, though quite broad, was
unambiguous. In response to Becker Warehouse’s argument
that the exclusion applied to only traditional environmental
pollution claims, the court held as follows:
The language of the policy does not specifically limit
excluded claims to traditional environmental damage;
nor does the pollution exclusion purport to limit mate­
rials that qualify as pollutants to those that cause tradi-
tional environmental damage. . . . An occurrence such
as the release of xylene fumes in [Becker Warehouse’s]
warehouse clearly falls under Cincinnati’s broad exclu-
sion—to find otherwise would read meaning into the
policy that is not plainly there. The language of an
insurance policy should be read to avoid ambiguities, if
possible, and the language should not be tortured to cre-
ate them.
Cincinnati Ins. Co. v. Becker Warehouse, Inc., 262 Neb. 746,
755-56, 635 N.W.2d 112, 120 (2001). The Nebraska Supreme
Court further concluded:
The broad nature of the pollution exclusion may cause
a commercial client to question the value of portions of
its commercial general liability policy, but, as an appel-
late court reviewing terms of an insurance contract, we
cannot say that the language of the pollution exclusion is
ambiguous in any way. The language in the instant pol-
lution exclusion is clear and susceptible of only one pos-
sible interpretation.
Id. at 756-57, 635 N.W.2d at 120.
[4] Based on the holding in Cincinnati Ins. Co., we con-
clude that the pollution exclusion at issue in this case is
unambiguous in that it bars coverage for injuries caused by
all pollutants, not just traditional environmental pollution. The
Cincinnati Ins. Co. court concluded that Cincinnati’s pollu-
tion exclusion, including the definition of “pollutant,” was
unambiguous. The pollution exclusion in Cincinnati’s policy
Decisions of the Nebraska Court of Appeals
570 21 NEBRASKA APPELLATE REPORTS
is nearly identical to State Farm’s policy, and the definition of
“pollutant” in Cincinnati’s policy includes the exact language
found in State Farm’s policy. While the definition of “pollut-
ant” in Cincinnati’s policy had additional language not found
in State Farm’s policy, that does not change the fact that the
court in Cincinnati Ins. Co. found the entire definition of “pol-
lutant” to be unambiguous. We conclude that even without
the additional language found in the Cincinnati policy, State
Farm’s definition of “pollutant” is clear, is susceptible of only
one possible interpretation, and, thus, is unambiguous.
Lead as Pollutant.
We determine, as the trial court did, that lead is a pol-
lutant as defined in State Farm’s policy. The policy defines
“pollutant” as “any solid, liquid, gaseous or thermal irritant
or contaminant, including smoke, vapor, soot, fumes, acids,
alkalis, chemicals and waste.” A chemical toxicologist testi-
fied by affidavit that lead exposure is known to have adverse
effects on humans and that children are more vulnerable
to lead poisoning than adults. He also testified that lead
is defined as a pollutant by the Environmental Protection
Agency, the Nebraska Department of Environmental Quality,
the Occupational Safety and Health Administration, the Omaha
Municipal Code, and various regulatory agencies. There was
no evidence offered to refute the chemical toxicologist’s tes-
timony. We conclude as a matter of law that the definition
of “pollutant” in State Farm’s policy unambiguously encom-
passes lead found in paint.
“Discharge, Dispersal, Spill, Release
or Escape” of Pollutant.
Next, we consider whether the exclusion’s requirement of
a “discharge, dispersal, spill, release or escape” of the pollut-
ant is unambiguous as it relates to how the lead-based paint
became available for ingestion and/or inhalation. Dantzler
argues that this is where Cincinnati Ins. Co. v. Becker
Warehouse, Inc., 262 Neb. 746, 635 N.W.2d 112 (2001), can
be distinguished from the present case. Dantzler contends that
Cincinnati Ins. Co. involved a “‘discharge’” of pollutants,
Decisions of the Nebraska Court of Appeals
STATE FARM FIRE & CAS. CO. v. DANTZLER 571
Cite as 21 Neb. App. 564whereas in the present case, there is no evidence that there
was a “‘discharge, dispersal, spill, release, or escape of pol-
lutants.’” Brief for appellant at 12.
The pollution exclusion at issue excludes from coverage
bodily injury arising out of the actual, alleged, or threatened
“discharge, dispersal, spill, release or escape” of pollutants.
The pollution exclusion in Cincinnati Ins. Co. contained simi-
lar language.
Cincinnati Ins. Co. involved a sealant that was applied to
the floor of an addition to a warehouse. Although the treated
area was separated from the area where food was stored with
layers of heavy plastic sheeting, xylene fumes from the seal-
ant contaminated the food. The Supreme Court concluded that
the only logical explanation for the alleged damage is that the
xylene fumes “‘discharged, dispersed, released or escaped’”
from its intended location at the warehouse addition into the
original part of the warehouse where food products were
stored. 262 Neb. at 760, 635 N.W.2d at 122.
However, the application of the words “discharge, disper-
sal, spill, release or escape” with regard to lead-based paint
on the walls of a home is not as clear as the xylene fumes in
Cincinnati Ins. Co. The analytical framework in Cincinnati
Ins. Co. provides guidance, but we must determine whether the
clause is clear and unambiguous as applied to the particular
facts of this case.
The question of whether exposure to lead-based paint con-
stitutes a “discharge, dispersal, spill, release or escape” of pol-
lutants is an issue of first impression in Nebraska. In looking
to other jurisdictions, there is a split of authority on this issue.
However, we find the analysis in Danbury Ins. Co. v. Novella,
45 Conn. Supp. 551, 727 A.2d 279 (Conn. Super. 1998), per-
suasive and applicable to the instant case.
In Danbury Ins. Co., 45 Conn. Supp. at 561-62, 727 A.2d at
284, the Connecticut court stated:
Under the terms of the policy, coverage is excluded
only for damages resulting from the “actual, alleged
or threatened discharge, dispersal, release or escape of
pollutants.” These terms limit the ways “by which the
Decisions of the Nebraska Court of Appeals
572 21 NEBRASKA APPELLATE REPORTS
pollutant must travel from a contained place to the injured
person’s surroundings and then cause injury.” Lefrak
Organization, Inc. v. Chubb Custom Ins. Co., supra, 942
F.Supp. at 953. As applied to personal injuries alleged to
have been caused by exposure to toxic levels of lead in
lead-based paint, there is more than one reasonable inter-
pretation of these terms. Although “it is arguable, and
several courts have found, that the presence of lead dust
or chips in an apartment qualifies as ‘discharge,’ ‘disper-
sal,’ or even more generally, as ‘release,’”; id., at 954; it
is not necessarily clear that lead needs to be released into
an apartment’s environment for a child to be exposed. For
example, a child may ingest lead by chewing on intact
painted surfaces. As the Sphere Drake court observed:
“These terms do not ordinarily encompass the type of
‘movement’ associated with lead paint poisoning.” Sphere
Drake Ins. Co. v. Y.L. Realty Co., supra, 990 F.Supp. at
243. See Generali-U.S. Branch v. Caribe Realty Corp.,
supra, 160 Misc.2d at 1062, 612 N.Y.S.2d 296 (“to the
extent that Daniel Diaz suffered lead poisoning from
eating paint chips, this court is not convinced that his
injuries arise out of the discharge, disposal, seepage,
migration, release or escape of a pollutant.”) Cf. Weaver
v. Royal Ins. Co. of America, 140 N.H. 780, 783, 674
A.2d 975 (1996) (“Whether the transporting of lead dust
from the work site to the Weavers’ car and home was the
‘discharge, dispersal, release or escape’ of a pollutant is
not clear.”) Since ambiguity exists regarding this aspect
of the clause’s application, Danbury cannot prevail on its
motion for summary judgment.
Furthermore, Danbury has not come forward with sup-
porting documentation; see Practice Book § 17-45; dem-
onstrating the absence of a genuine issue of material fact
regarding the method by which the minor plaintiff in the
underlying action was exposed to toxic levels of lead to
satisfy the court that the exposure would fall within the
clause’s limitations if the clause were not ambiguous.
The underlying complaint in the present case alleges only
that Kim, the minor plaintiff, was “exposed to dangerous,
Decisions of the Nebraska Court of Appeals
STATE FARM FIRE & CAS. CO. v. DANTZLER 573
Cite as 21 Neb. App. 564hazardous and toxic levels of lead paint” on intact and
nonintact surfaces and was thereby injured. This court
cannot determine the mechanism of Kim’s exposure to
lead or whether her alleged lead poisoning resulted from
ingesting or inhaling lead dust or lead chips, chewing on
intact surfaces, a combination of these mechanisms or
some other source of exposure.
See, also, Lititz Mut. Ins. Co. v. Steely, 567 Pa. 98, 108,
785 A.2d 975, 980-81 (2001), wherein the Pennsylvania
Supreme Court found the terms “‘discharge, dispersal, release
or escape’” of pollutants to be ambiguous with reference to
the process by which lead-based paint becomes available for
ingestion or inhalation. The court observed that “the process by
which lead-based paint becomes available for human ingestion/
inhalation does not, in the usual case, occur quickly. Rather,
the process of surface degradation occurs continually, but at a
slow rate.” Id. at 109, 785 A.2d at 981.
One would not ordinarily describe the continual, imper-
ceptible, and inevitable deterioration of paint that has
been applied to the interior surface of a residence as a
discharge (“a flowing or issuing out”), a release (“the
act or an instance of liberating or freeing”), or an escape
(“an act or instance of escaping”). . . . Arguably such
deterioration could be understood to constitute a “dis-
persal,” the definition of which (“the process . . . of
. . . spreading . . . from one place to another,” . . .) may
imply a gradualism not characteristic of the other terms.
Any such inconsistency in meaning simply indicates,
however, that the exclusionary language does not clearly
include or exclude the physical process here at issue,
but is, as to that process, ambiguous. Such ambiguity
requires that the language be interpreted in favor of
the insured.
Id. at 109-10, 785 A.2d at 982.
In the instant case, like Danbury Ins. Co. v. Novella, 45
Conn. Supp. 551, 727 A.2d 279 (Conn. Super. 1998), there is
no evidence regarding the method by which the child in the
underlying action was exposed to toxic levels of lead. The
complaint against Dantzler alleges that Geit was “exposed to
Decisions of the Nebraska Court of Appeals
574 21 NEBRASKA APPELLATE REPORTS
high levels of lead poisoning” in the rental property due to
high levels of lead-paint contamination on the walls and else-
where in the rental property. It further states that the Douglas
County Health Department “found and confirmed high levels
of lead-paint contamination in the residence especially on
[the] walls.” The complaint does not allege whether Geit
inhaled lead dust, ingested chipped flakes, or both. Further,
the complaint does not allege that there was a “discharge,
dispersal, spill, release or escape” of the lead. State Farm’s
complaint for declaratory judgment does not make such an
allegation either.
The chemical toxicologist’s affidavit states that children
are exposed to lead by inhaling dust or dirt that is contami-
nated with lead, or by ingesting items contaminated with lead,
such as paint chips. However, this is a general statement and
not specific to the child in this case.
We cannot determine how Geit was exposed to the lead or
whether his alleged lead poisoning resulted from ingesting or
inhaling lead dust or lead chips, chewing on intact surfaces,
a combination of these, or some other source of exposure.
The record does not demonstrate that Geit’s injuries resulted
from a “discharge, dispersal, spill, release or escape” of lead.
Accordingly, there is more than one reasonable interpretation
of these terms. Since ambiguity exists regarding the applica-
tion of this clause, there is a genuine issue of material fact as
to whether there was a “discharge, dispersal, spill, release or
escape” of the lead, as required for the pollution exclusion to
exclude coverage of the claims against Dantzler. As such, sum-
mary judgment in favor of State Farm was not appropriate.
CONCLUSION
Because we conclude that a genuine issue of fact exists in
regard to the application of the pollution exclusion, the trial
court erred in granting summary judgment in favor of State
Farm. The judgment of the district court is reversed, and the
cause is remanded for further proceedings.
R eversed and remanded for
further proceedings.