The Pollution Exclusion Saga Continues: Does It Apply to Indoor Releases?

Lisa G. Youngblood and Thomas K. Bick

Editors' Summary: This Article addresses how courts have applied the sudden and accidental and absolute pollution exclusions of insurance policies to indoor air pollution claims. The authors focus on how a majority of the courts have found that the pollution exclusions do not preclude coverage for damages that result from the release of pollutants to the indoor environment. The authors first discuss the types of claims that are associated with indoor air pollution and then go on to provide general information about the sudden and accidental and the absolute pollution exclusions. The authors then examine how the courts have applied the two pollution exclusions in the context of indoor air pollution. The authors point out that although the courts have reached their conclusions through differing analyses, their conclusions have been surprisingly similar.

Lisa G. Youngblood is a senior associate at the Atlanta, Georgia, office of Kilpatrick Stockton LLP. Her practice includes a variety of transactional work. Superfund and other toxic tort litigation, insurance coverage counseling and litigation, and regulatory compliance counseling. Ms. Youngblood has lectured and published articles on topics ranging from environmental due diligence, the Georgia Hazardous Site Response Act, and insurance coverage for environmental claims.

Thomas K. Bick is a partner in the Environmental and Natural Resources Practice Group in the Washington, D.C., office of Kilpatrick Stockton LLP. He has over 17 years of experience in environmental counseling and litigation, and representing policyholders in environmental insurance coverage disputes.

[28 ELR 10021]

For those who have grown attached to the pollution exclusion debate, we have good news: a new universe of debate is on the rise, namely the application of insurance policies' sudden and accidental and absolute pollution exclusions to indoor releases of pollutants. Indoor air pollution is an issue affecting a multitude of parties, including owners, tenants, and lessors of buildings; architects, remodelers, maintenance companies, contractors, and subcontractors performing work inside or immediately surrounding a building; and manufacturers and installers of building materials and ventilation systems. Consequently, the application of any exclusion precluding insurance coverage for indoor air pollution is significant.

This Article addresses how courts throughout the country have decided the issue of the application of pollution exclusions to claims resulting from indoor air pollution. Interestingly, a considerable majority of courts have found that coverage for damages resulting from the release of pollutants to the indoor environment is not precluded by the sudden and accidental or the absolute pollution exclusion. Most of the courts have reasoned that, although the pollution exclusion may have been intended to preclude coverage for damages to the natural environment, it was not intended to preclude coverage for damages resulting from the release of pollutants within the confines of buildings or homes. Although the courts have reached their conclusions through differing analyses, their conclusions have been surprisingly similar, especially in the insurance context where courts have a long history of discord with one another.

Background

Debate over the application of the pollution exclusion is not new. In fact, the pollution exclusion has been the subject of extensive litigation over the past two decades. A vast majority of these cases, however, has dealt with third-party bodily injury or property damage claims arising in connection with the release of hazardous substances to the natural environment. The outcome of these cases tends to turn on two issues. First, is the applicable exclusion an "absolute" exclusion or a "sudden and accidental" exclusion? If the exclusion is the former, coverage is unlikely.¹ If the applicable pollution exclusion is a sudden and accidental exclusion, then the second issue is the interpretation of the exclusion under applicable state law.² As a general rule, if the courts in a particular state interpret the term "sudden and accidental" to mean "unexpected and unintended" from the insured's standpoint, or at least determine that such an interpretation would be reasonable, then the insured is likely to prevail.³ Conversely, if the courts interpret [28 ELR 10022] the term to mean "short in duration," then usually the carrier will prevail, at least when dealing with the more typical gradual environmental pollution.⁴ As is often the case in the insurance arena, the states are fairly evenly divided on this issue.

Although the issue of the pollution exclusion's application to releases to the natural environment alone deserves pages, it is fairly safe to say that most jurisdictions have decided this issue, and its day as a hot issue is coming to an end. Consequently, this Article addresses the pollution exclusion debate in the context of indoor releases, and one thing is certain: the issues have changed. In fact, it might be a good idea to forget everything previously known about the application of the pollution exclusions. It is a new ball game now. The distinction between the sudden and accidental and the absolute pollution exclusions may no longer be outcome-determinative. Or, at least, the presence of an absolute pollution exclusion does not mean there is little to no likelihood of coverage. In fact, a majority of the courts interpreting even the comprehensive absolute pollution exclusion have found that it was intended only to vitiate coverage for injuries resulting from the pollution of the natural, and not the indoor, environment.

What Is Indoor Air Pollution?

Indoor air pollution is, at its core, an amorphous concept. It may result from the release of thousands of individual or combined contaminants, of which some are known to be hazardous to humans while others are considered harmless if releases occur within a properly ventilated area. The most common of these substances are carbon monoxide, dioxide, asbestos, benzene, formaldehyde, radon, microbiological contaminants (i.e., viruses, bacteria, and molds), metals and gases (i.e., lead and chlorine), pesticides, and tobacco smoke.⁵ Without doubt, indoor air quality has received greater and greater attention from regulators and regulated communities, and claims for damages from indoor air pollution are finding their way into the judicial system with increasing frequency.

Indoor air pollution is sometimes referred to as acute building sickness. As a technical matter, acute building sickness is a label for three distinct types of claims. These claims are referred to as sick building syndrome, building-related illness, and multiple chemical sensitivity.⁶ Of these three categories, the first, sick building syndrome, is most often the subject of litigation.

Sick building syndrome claims are often associated with the general condition of the building rather than an identifiable, isolated release. These claims are becoming increasingly common.⁷ Generally, an individual suffering from sick building syndrome will complain of adverse health effects, including headaches, eye irritation, ear, nose, and throat discomfort, or nausea, which persist only while the individual is in the building.⁸ Once the individual leaves, the symptoms will typically disappear.

Interestingly, sick building syndrome is often associated with buildings built during or after the 1970s. These buildings were designed at the time of a perceived energy crisis, when the desire to conserve energy typically took precedence over the need to maintain a healthy ventilation system. In fact, most modern buildings have windows that do not open and ventilation systems that operate almost exclusively with indoor air. The lack of ventilation traps the contaminants inside, often resulting in indoor air pollution.

One of the first sick building syndrome cases actually involved indoor air problems at the U.S. Environmental Protection Agency's (EPA's) Washington, D.C., headquarters. In Bahura v. S.E.W. Investors,⁹ a jury awarded five of the plaintiffs nearly $ 1 million to compensate them for respiratory and neurological problems they suffered as a result of exposure to fumes produced in connection with the installation of new carpeting. Because of poor ventilation, the fumes could not escape the workplace.

In sick building syndrome cases, it is often difficult to specify the source or sources of the problem. Consequently, plaintiffs tend to sue everyone involved in the building's design, construction, and maintenance. These suits can include everyone from the architects, general contractors, and owners of the building to the manufacturers and installers of building materials and ventilation systems.¹⁰

The second category of acute building sickness claims, building-related illness, is sometimes caused by the same factors giving rise to sick building syndrome claims. The symptoms usually include infections, fevers, and other clinical signs and patterns of pathology.¹¹ What makes this category unique is that the source of the indoor air pollution is identifiable, and the effects on the individual typically persist after leaving the confined area. "The most common forms of … [building-related illness] are Legionnaires' disease, humidifier fever, hypersensitivity pneumonitis, and symptoms of chemical exposure."¹² "The building's mechanical ventilation system is central to the transmission of … [building-related illness]: contaminated water sources in humidifiers and air conditioning units have been repeatedly linked to Legionnaires' disease, tuberculosis, and hypersensitivity pneumonitis."¹³

The third category of acute building sickness, multiple chemical sensitivity, is a rather amorphous and highly controversial [28 ELR 10023] category. While an entire article could be written on whether there is any medical validity to this sickness, for purposes of this Article suffice it to say that this type of claim deals with a highly sensitive individual and may be related to the ambient air, to psychological factors, or both. These claims, however, have not been a significant source of litigation and, consequently, deserve little attention in this Article.

The Sudden and Accidental and Absolute Pollution Exclusions

Litigation over the interpretation of an insurance contract is, at its essence, a contract dispute. Therefore, the contract's language should be the controlling factor, as it is the clearest manifestation of the parties' mutual intent in the eyes of the law. Thus, when evaluating a particular pollution exclusion, one should recognize the fundamental distinction between the two basic categories of pollution exclusions: the sudden and accidental pollution exclusion and the absolute pollution exclusion. One should also be able to recognize subtle differences within these particular categories.

The Sudden and Accidental Pollution Exclusion

The most litigated pollution exclusion—at least in dealing with releases to the natural environment—is the sudden and accidental exclusion. Although the authors hesitate to state that there is astandard sudden and accidental—or for that matter absolute—pollution exclusion, there is one that consistently appears in many, and perhaps the majority, of policies. This language is provided if for no other purpose than to remind the reader to carefully examine the language in the insurance policy at issue. A variation in the language of the exclusion, no matter how slight, may be significant, and may, for creative counsel, give rise to arguments as yet unarticulated.

The standard-form sudden and accidental pollution exclusion states:

This insurance does not apply … to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water, but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.¹⁴

The predecessor to today's Insurance Service Office formally introduced this version of the sudden and accidental pollution exclusion in the early 1970s, and it quickly became the industry standard.¹⁵

What has been interesting in evaluating the application of the sudden and accidental pollution exclusion to indoor releases is that, with rare exception, the courts have ignored the "sudden and accidental" language, focusing instead on the language "upon land, the atmosphere or any water course or body of water" or the terms "discharge, dispersal, release or escape."¹⁶ As discussed in greater detail below, this language has allowed the courts to rule that the pollution exclusion, no matter how broad its scope, was intended to apply to outdoor releases. In other words, the exclusion was designed to exclude coverage for damages to the natural environment, meaning the air, water, and land as it exists in nature. It was not, most courts have held, designed to exclude coverage for conditions inside a building—conditions that the layperson may not understand to be related to the atmosphere or the natural environment.

The sudden and accidental language should not, however, be completely discounted in the context of indoor releases, as a small minority of courts have latched onto the language in ruling for the insured. Stated generally, these courts have found that this language means "unexpected and unintended" and thus necessarily implies an intent that could only be relevant to the source of the contamination—for only the source could possibly expect or intend the resulting release. Those entities who were not responsible for the release should not be denied coverage on the basis of an intent-driven pollution exclusion. This argument is not new to the pollution exclusion debate and, in fact, had its genesis in earlier cases interpreting the exclusion in the context of releases to the natural environment.¹⁷

The Absolute Pollution Exclusion

In reaction to the extensive litigation over the scope of the sudden and accidental pollution exclusion, the Insurance Service Office introduced a new version of the exclusion, which it has referred to as the absolute pollution exclusion. This exclusion, or a variation of it, is found in most policies issued after 1986. Not surprisingly, the adoption of the absolute pollution exclusion marked a change in the name of the liability policy from a comprehensive general liability policy to a commercial general liability policy. The primary standard form for the absolute pollution exclusion states that "this insurance does not apply to … bodily injury or property damage arising out of the actual, alleged, or threatened discharge, dispersal, release or escape of pollutants at or from premises you own, rent or occupy."¹⁸ "Pollutants" is typically defined as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed."¹⁹

Counsel should be aware, however, that a second less prevalent, but nonetheless standard, Insurance Service Office-issued exclusion is worded differently, and this difference can be critical. This exclusion reads as follows:

This insurance does not apply … to bodily injury or property damage arising out of the discharge, dispersal, [28 ELR 10024] release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste material or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water, whether or not such discharge, dispersal, release or escape is sudden or accidental.²⁰

As explained below, the presence of the limiting language "into or upon land, the atmosphere or any water course or body of water" may be crucial in coverage litigation.

As a practical matter, the absolute pollution exclusion, free of the sudden and accidental language, solved the insurance industry's problem in the industrial pollution context. Few courts were willing to find this language ambiguous, at least in the context of releases to the environment.²¹ As discussed below, however, courts have been willing to find an ambiguity even in the absolute pollution exclusion if the release at issue is inside a building rather than to the environment. Thus, the saga continues.

Indoor Releases and the Sudden and Accidental Pollution Exclusion

When indoor pollution, itself a difficult concept, collides with the insurance arena, mayhem—and litigation—result. Creativity abounds, and words that are normally self-explanatory become ambiguous in the most bizarre sense of the word. As a practical matter, counsel for the insured need only prove that either the pollution exclusion generally was not meant to apply to indoor releases, or the language, as it applies to specific types of indoor releases, is ambiguous or susceptible to more than one reasonable interpretation.²² Counsel for the carrier must, of course, prove the opposite: the exclusion has but one reasonable interpretation—to exclude coverage for all pollution that is not sudden and accidental regardless of its origination or location.

Courts are split almost evenly on the sudden and accidental pollution exclusion's application in the industrial pollution arena. But this is not the case in the context of indoor releases. A substantial majority of the courts interpreting the sudden and accidental pollution exclusion in the latter context have ruled in favor of the insured. The opinions are, however, both factually driven and analytically distinct. As such, counsel should carefully examine and evaluate the specific language of the contract, taking note of any deviation from the standard language. In addition, counsel should keep in mind that a majority of these cases are decided in the context of the carrier's duty to defend, a duty which is much broader than the carrier's corresponding duty to indemnify.²³

The Location of the Pollution: The Land, the Atmosphere, or Any Water Course or Body of Water

The first and by far the most prevalent argument that the sudden and accidental pollution exclusion does not apply to indoor releases is based on the language "into or upon the land, the atmosphere, or any water course or body of water." The argument is that implicit in this language is a requirement that the release be to the outdoor natural environment. In eloquent prose, the court in Board of Regents v. Royal Insurance Co.²⁴ supplied a road map for this analysis.

In Board of Regents, the insured, a building owner, brought an action against its supplier's carrier, Royal Insurance Company, to enforce a settlement it had reached with its supplier. The supplier had installed fireproofing material in a building the insured owned that ultimately released asbestos fibers into the building. Royal had issued primary and excess policies to the supplier, all of which were at issue in the litigation.

The primary policies contained the standard-form sudden and accidental pollution exclusion, which excluded coverage for the release of all pollutants "into or upon the land, the atmosphere, or any water course or body of water unless the release is sudden and accidental."²⁵ The primary issue framed by the court was whether the pollution exclusion would apply to indoor releases. While the insured raised several arguments as to why the pollution exclusion should not apply, the court accepted only one—there had not been a release "to the atmosphere."²⁶ Contrary to the lower court's determination that the distinction between air inside and outside a building is arbitrary, the court explained that to a layperson, the distinction is anything but arbitrary and is far greater than a game of semantics:

"Atmosphere" (in its ordinarily understood physical sense) is another name for "air," but—and this is what is important—it is air thought of as being in a particular place. We would not say that the atmosphere in a room is stuffy, but rather that the air is stuffy. We think of atmosphere as the air surrounding our planet, as when Hamlet spoke of "this most excellent canopy, the air." (Act II, scene ii.) So it is that we speak of releasing a balloon into the atmosphere but letting the air out of a tire.²⁷

The court then noted that the pollution exclusion is directed—at least it was initially—at claims involving the pollution of the natural environment.²⁸ This purpose, the court explained, resulted in a broadly worded exclusion designed "to encompass the natural resources of this planet in their natural setting, namely, land, the atmosphere, and bodies of water. It is less clear, however, whether the exclusion was meant to include contamination of these resources outside their natural setting."²⁹ Focusing on the wording itself and the connotations associated with such words, the court stated:

Significantly, the pollution exclusion does not use the generic term "water" but rather the phrase "any water-course or body of water," a description indicative of water in streams, ponds or lakes. The use of the term "land," [28 ELR 10025] instead of "property," whether real or personal, likewise appears directed at land as a natural resource. And, within this context, the term "atmosphere," we think, refers to the ambient air.³⁰

Although acknowledging that the air outside and the air inside a building do not differ physically, the court stated that "within the context of the pollution exclusion, the distinction is not in the air itself but where the air happens to be."³¹ When the air inside a building becomes contaminated, it is harmful to the controlled environment within that building, but not to the outside surrounding natural environment.³² This distinction, the court held, is critical and mandates a ruling in favor of the insured.³³ Importantly, this case was decided in the context of both the carrier's duty to defend and its duty to indemnify.

Similarly, the court in Continental Casualty Co. v. Synalloy Corp.³⁴ held that under Georgia law the standard-form sudden and accidental pollution exclusion does not apply to the direct exposure of employees to toxic chemicals in an enclosed working environment.³⁵ In Synalloy, the insured sought coverage for bodily injury claims allegedly resulting from exposure to a known carcinogen, BNA, on the insured's premises. The carrier argued that the bodily injury claims were vitiated by the applicable pollution exclusion. Dismissing the carrier's argument in a footnote, the court stated that "this exclusion does not apply to direct exposures of employees to toxic chemicals in an enclosed working environment, as alleged in the underlying complaints," because such releases did not occur into or upon the land.³⁶ Thus, the court held that coverage was not precluded by the pollution exclusion.³⁷

Although the above authorities allow an insured to argue that the sudden and accidental pollution exclusion does not apply to indoor emissions, these cases can only be applied to pollution exclusions that contain the limiting language "into or upon the land, the atmosphere, or any water course or body of water." While this language is not necessarily unique to the sudden and accidental pollution exclusion, it is frequently absent from the absolute pollution exclusion, especially the later versions of that exclusion. Consequently, counsel should carefully examine the specific language of the exclusion before relying on this argument, especially where the pollution exclusion at issue is absolute.

The Method of Pollution: Release, Dispersal, or Discharge

Some of the cases interpreting the sudden and accidental pollution exclusion have far greater reach, for they are decided on the basis of the terms in the exclusion describing the method of pollution, such as discharge and dispersal, and are typically found in both the sudden and accidental and the absolute pollution exclusions. One such method-driven pollution exclusion case is Continental Casualty Co. v. Rapid American Corp.³⁸

In Rapid American, the court held that the insurance policy's pollution exclusion did not apply to indoor asbestos exposure. The court reasoned that the asbestos releases contemplated by the exclusion must be "to the environment," which, the court held, was an ambiguous phrase as applied to the indoors.³⁹ The court explained that the purpose of the clause is "to exclude coverage for environmental pollution …."⁴⁰ The court found this purpose inevitable in light of the "terms used in the exclusion to describe the method of pollution—such as 'discharge' and 'dispersal'—[which] are terms of art in environmental law used with reference to damage or injury caused by disposal or containment of hazardous waste."⁴¹ Thus, relying on the terms of the pollution exclusion describing the method of the release, the court concluded that indoor pollution should not fall within the parameters of the pollution exclusion.⁴²

Pollution Resulting From a Product Rather Than a Pollutant Not Covered by the Pollution Exclusion

Insureds have also successfully argued that pollution resulting from a "product" introduced into the stream of commerce is not covered by the pollution exclusion, simply [28 ELR 10026] because a product cannot be considered an irritant, contaminant, or pollutant. The product argument appears to be the most well received in the asbestos context.

Owens-Corning Fiberglass v. Allstate Insurance Co.⁴³ is probably the leading case on this point.⁴⁴ In Owens-Corning, the insured brought a declaratory judgment action against its excess liability carriers for asbestos-related products liability claims.⁴⁵ The carriers collectively filed a motion for summary judgment seeking a ruling from the court that the insured's claims were barred by the applicable sudden and accidental pollution exclusion clause. The pollution exclusion at issue in Owens-Corning excluded coverage:

Arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.⁴⁶

The carriers first argued that the plain language of the exclusionary clause is unambiguous and bars coverage for the underlying bodily injury claims. The court recognized that if a contract's terms are clear and unambiguous, the "court cannot in effect create a new contract by finding an intent not expressed by the clear language employed by the parties."⁴⁷ Under Ohio law, the "courts are theoretically to employ a basic 'common sense' approach giving words 'their plain and ordinary meaning unless manifest error results or unless some other meaning is clearly intended from the face or overall contents of the instrument.'"⁴⁸ Guided by these general principles, the court posed the first and most obvious question: Is asbestos a pollutant within the plain language of the policy? The court found that the first obstacle to answering this question is that the term "asbestos" is not clearly identified in the exclusion. In spite of the inclusive definition drafted by the carrier, the court stated that "it is far from certain whether asbestos constitutes an 'irritant,' 'contaminant' or 'pollutant' within the meaning of the exclusion."⁴⁹ The court also acknowledged that any ambiguity must be construed "strictly against … [the carriers]."⁵⁰

One particularly interesting aspect of the court's opinion is that the court was willing to consider only limited authority. Although the carriers cited numerous cases, the court stated that it would not consider any authority to be binding—or even persuasive—unless it dealt specifically with the application of the pollution exclusion to indoor releases and asbestos. According to the court, even a case dealing with the application of the pollution exclusion to styrene gas or spilled oil, for example, would be inapposite.⁵¹

The court acknowledged that only a few courts had addressed these issues, but remarked that:

the few authorities [that] … have directly addressed the issue of asbestos compel the court to rule that asbestos is not an "irritant," "pollutant," or "contaminant" within the meaning of the standard pollution exclusion. [Indeed,] plentiful authority exists in support of the proposition that the exclusion is generally aimed at the release of toxic waste causing environmental damage.⁵²

The court agreed with those courts that held that asbestos is not usually associated "with the substances listed in the exclusion, namely smoke, fumes or waste … [which] bear a closer relation to industrial pollution, the usual subject of the ordinary pollution exclusion."⁵³ Accordingly, the court held that asbestos "cannot be categorized as an 'irritant,' 'contaminant,' or 'pollutant' as a matter of law, within the meaning of the exclusion."⁵⁴ Rather, it is more appropriately categorized as a product, which is outside the pollution [28 ELR 10027] exclusion's reach.⁵⁵ This analysis equally applies to the interpretation of the absolute pollution exclusion.

Indoor Releases and the Absolute Pollution Exclusion

Some commentators have argued that the absolute pollution exclusion should unequivocally bar coverage for any pollution, be it inside or outside.⁵⁶ These commentators appear to base their arguments on the absence of limiting language in the absolute pollution exclusion such as "into or upon the land, the atmosphere or any water course or body of water."⁵⁷ According to these commentators, "absent that phrase, there is no basis for the conclusion that the absolute pollution exclusion does not apply to the indoor release of pollutants."⁵⁸ The authors of this Article, and a majority of courts deciding the issue, disagree. As discussed above, the reasoning of several of the cases interpreting the sudden and accidental pollution exclusion in the context of indoor releases equally applies to the absolute pollution exclusion, because the reasoning is premised on language found in both types of pollution exclusions.

The Means Justify the End: Focusing on the Method

Interestingly, the majority of New York courts, generally viewed as pro-carrier on many coverage issues, have found the absolute pollution exclusion inapplicable to indoor releases. For example, in LeFrak Organization, Inc. v. Chubb Custom Insurance Co.,⁵⁹ the insured owned, managed, and rented apartment buildings in New York City. In connection with its business, the insured purchased a general liability policy from Chubb Custom Insurance Company. The liability policy at issue contained a comprehensive absolute pollution exclusion.⁶⁰

The underlying claimants, an infant and her mother, leased and resided in an apartment in the insured's building. On November 8, 1994, the claimants filed suit against the insured for the infant's alleged exposure to lead paint. The claimants alleged that the paint inside the apartment contained lead in violation of New York law. They argued that the lead-based paint "seriously, permanently, and catastrophically injured" the infant.⁶¹

The only issue before the court was whether Chubb was under a duty to defend its insured, a duty that the court recognized as exceedingly broad.⁶² The court stated that "it must find in favor of the insured when the allegations in the underlying complaint suggest a 'reasonable possibility' of coverage. When such a reasonable possibility exists, the insurer must defend its insured, regardless of the ultimate determination of the scope of the policy or the merits of the underlying action."⁶³ The court also examined the purpose and scope of the contra proferentum doctrine, explaining that "if the insurance company fails to satisfy its burden of establishing a policy exclusion, the ambiguous language must be construed against the insurer, as the drafter of the contract."⁶⁴ As the court admonished, "the purpose of an insurance policy is to provide protection to the insured. To give effect to that purpose, limitations on coverage must be construed narrowly."⁶⁵

The court focused on the Second Circuit's decision in Stoney Run Co. v. Prudential-LMI Commercial Insurance Co.,⁶⁶ in which the Second Circuit had determined that the release of poisonous gas into an apartment did not constitute environmental pollution simply because it occurred indoors. The LeFrak court agreed with the Second Circuit that the genuine issue is whether the injuries at issue are truly a result of environmental pollution. The court held that the method of the exposure determines the exclusion's application. If the exposure results from a discharge, dispersal, release, migration, or seepage, then it will fall within the confines of the pollution exclusion. If the release occurs indoors, however, it cannot result from any of these methods, for each imply contact with the natural environment.⁶⁷ Taken to its logical conclusion, what the court actually held is that neither the absolute nor the sudden and accidental pollution exclusion would apply to indoor releases, because indoor releases simply do not constitute environmental pollution.⁶⁸

Notably, the court adopted the same reasoning used by other courts that, when interpreting the sudden and accidental exclusion, reached the conclusion that the injury-causing release must be to the natural environment by focusing not on the sudden and accidental language, but rather on the terms that describe the method of the release. These terms, such as discharge, dispersal, release, migration, and [28 ELR 10028] seepage, the court held, imply contact with the natural environment. There is no such contact where the release is confined within an enclosed building.⁶⁹ While many courts have reached this conclusion, few have quite so well articulated their reasoning.⁷⁰

The court in General Accident Insurance Co. v. Naimberg Realty Associates⁷¹ should at least make carriers hesitate before declining any defense obligations for injuries resulting from indoor releases. In Naimberg, the court not only held that the carrier, General Accident Insurance Co. (GA), did not have a reasonable basis on which to avoid its duty to defend its insured in connection with a claim of bodily injury resulting from the ingestion of lead paint, but also held that its failure to do so justified an award of attorneys fees on the insured's behalf.

In Naimberg, the underlying claimant alleged that she suffered injuries from ingesting lead paint in an apartment she rented from the insured, among others. The injury was alleged to have occurred over a 12-year period beginning with her birth and continuing until the complaint was filed in July of 1992. GA argued that it was under no obligation to defend or indemnify its insured, because either there was no occurrence during the policy term or coverage was otherwise vitiated by the pollution exclusion in the applicable policy. Without explaining the basis of its conclusion, the court found that "GA had failed to meet its burden of proof that, as a matter of law, coverage is vitiated by the pollution exclusions in the policies, [as these exclusions] … have been construed to be limited to environmental and industrial pollution …."⁷² Although the court held that it was premature to decide whether GA was under a duty to indemnify its insured, the court held that "due to the fact that [the insured] … was cast in a defensive position as a result of GA's attempt to free itself from the obligations of its policy, [the insured] … is entitled to an award of reasonable costs and attorney's fees incurred in defending [the] … declaratory judgment action."⁷³

The court in Stoney Run,⁷⁴ again in the context of the carrier's duty to defend, held that the absolute pollution exclusion clause would not bar coverage for releases of carbon monoxide from a faulty heating and ventilation system at an apartment complex in New York. The court held that the pollution exclusion was ambiguous as it applied to indoor releases and, therefore, should be read in favor of the insured. The court found the ambiguity in the context of the purpose of the clause. The insured maintained that the clause purported "to exclude coverage only for environmental pollution, not damages due to routine commercial hazards such as a faulty heating and ventilation system."⁷⁵ Based on the terms describing the method of pollution, dispersal, and release, the court held that the insured's position was reasonable, thus making the exclusion ambiguous and justifying a ruling in the insured's favor.

Products—Not Pollutants—Within Meaning of the Absolute Pollution Exclusion

As in the context of the sudden and accidental pollution exclusion, courts have accepted the argument that the absolute pollution exclusion should not apply where the source of the pollution is a product rather than a pollutant, as a layperson would understand the terms. In West American Insurance Co. v. Tufco Flooring East, Inc.,⁷⁶ for example, the insured, a floor resurfacer, sought coverage under its commercial liability policy after the infiltration of vapors or fumes from styrene, which was used by the insured to resurface the floor of a chicken processing facility, caused damage to chickens. The carrier primarily argued that the absolute pollution exclusion barred coverage. The court disagreed.

The court explained that the styrene was a product rather than a pollutant and thus was outside the scope of the pollution exclusion. First, the court stated that:

The Oxford dictionary defines "pollutant" as "a polluting agent or medium." It also defines "pollute" as … "to make physically impure, foul, or filthy; to dirty, stain, taint, befoul …. To contaminate (the environment, atmosphere, etc.) with harmful or objectionable substances." This common understanding of the word "pollute" indicates that it is something creating impurity, something objectionable and unwanted.⁷⁷

[28 ELR 10029]

The court then explained that the flooring material at issue "was wanted. It was not impure. When [the insured] … purchased its … [liability] insurance," it would have understood pollutant in the same way.⁷⁸ Thus, the court held, the styrene, as a useful product, could not be considered a pollutant covered by the pollution exclusion.⁷⁹

Be Careful What You Argue—It May Come Back to Haunt You

The arguments presented by the insured in its pursuit of coverage must be carefully chosen and articulated. If, for example, an insured relies on cases in which the courts have held that the pollution exclusion is inapplicable because of the limiting language "onto land or to the atmosphere," the insured had best ensure that this limiting language is present in the pollution exclusion at issue. In light of the diverse theories against any pollution exclusion's application to indoor releases, reliance upon inapposite authority is not only inappropriate but also unnecessary.

West American Insurance Co. v. Band & Desenberg⁸⁰ demonstrates what can happen when an insured chooses the wrong authority. In West American, the insured owned a building in Sarasota, Florida, that was specifically insured under a standard business owner's policy issued by the plaintiff carrier. The policy contained an absolute pollution exclusion that precluded coverage for all bodily injury and property damage claims "arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants … at or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured."⁸¹

Three employees of one of the tenants in the building claimed that contaminants in the building's air supply "caused them to suffer a series of symptoms collectively referred to as sick building syndrome. The employees alleged that their injuries resulted from a poorly designed air conditioning system that … allowed air-borne contaminants from the attic space into the building's office space."⁸² The carrier argued that the absolute pollution exclusion precluded coverage.

The insured argued that the pollution exclusion was inapplicable because the pollutants were discharged inside the building only, not to the environment.⁸³ In support of its argument, the insured relied on cases that interpreted older versions of the pollution exclusion, which were specifically limited to discharges "onto land, into the atmosphere, or in the water."⁸⁴ The court stated that the absolute pollution exclusion at issue does not contain this limiting language and, therefore, the cases were inapposite. On this basis, the court ruled in favor of the carrier.⁸⁵

Conclusion

The universe of potential defendants in indoor air quality cases includes owners, tenants, or lessors of buildings; architects, remodelers, maintenance companies, contractors, and subcontractors performing work inside or immediately surrounding a building; and manufacturers and installers of building materials and ventilation systems. Indoor air pollution may be the result of the general condition of the building or of an isolated release or releases. The associated bodily injury claims may range from minor eye irritation to neurological difficulties to death. Whatever the cause and whatever the damage, the reality of indoor air pollution cannot be overlooked, nor should the possibility of insurance coverage for indoor air pollution claims.

A party subject to an indoor air pollution claim should recognize the claim as both legitimate—having legal and medical merit if factually substantiated—and potentially significant. Consequently, an insured should notify its insurance carrier immediately on learning of the possibility of such a claim. This coverage may include, depending on the policy, both a right to a defense and a right to indemnification, both of which may prove invaluable.

If the carrier declines coverage and litigation results, the focus of the litigation will almost inevitably be on the application of the pollution exclusion. While pollution exclusion clauses come in a variety of forms—the specific language of which may be critical—there are two general categories: the sudden and accidental pollution exclusion and the absolute pollution exclusion. Although this distinction proved critical in the context of bodily injury or property damage claims resulting from releases to the natural environment, the distinction may have little relevance in the context of indoor air pollution. The carrier is unlikely to highlight this phenomenon, but the insured should recognize and take advantage of this trend.

Although the courts have reached their conclusions through differing analyses, a large majority have ruled in favor of the insured, generally finding that the pollution exclusion, at its very core, was designed to exclude coverage for environmental pollution—as the term is understood by a layperson—and not for releases inside and isolated to an enclosed building or structure.

The courts applying the sudden and accidental pollution exclusion have reached their conclusion based on three primary arguments. First, some courts have focused on the limiting language "onto the land, the atmosphere or any water course or body of water," which, while not necessarily unique to this category of pollution exclusions, is typically limited to the sudden and accidental pollution exclusion. A majority of courts have ruled that this language either mandates a finding that the parties intended the exclusion to cover only true environmental pollution, or at least creates an ambiguity that, under the doctrine of contra proferentum, should be interpreted in favor of the insured. Second, the courts have focused on the terms describing the method of the pollution, finding that these terms likewise describe the natural, as opposed to the indoor, [28 ELR 10030] environment. This latter argument is particularly noteworthy because these same terms are typically found in the later absolute pollution exclusion as well. Finally, some courts have concluded that to the extent the source of the pollution is a product rather than a pollutant, the pollution exclusion may not be applicable.

Courts interpreting the later absolute pollution exclusion have generally held in the insured's favor based on the method argument, as described above, or by finding an inherent ambiguity in the exclusion as it applied to indoor releases. To a lesser extent, courts have also relied on arguments based on the product versus pollutant distinction.

Based on existing case law, a party subject to or potentially subject to a third-party suit for injuries stemming from indoor air pollution should consider pursuing any and all insurance possibilities. There are, however, two caveats to this general recommendation. First, the insured should keep in mind that a dispute over the interpretation of an insurance contract is, at its very essence, a dispute over a contract. Consequently, the insured should carefully examine the specific language of the applicable policies, which may, in and of itself, be outcome-determinative. Second, the insured should recognize that a majority of the existing cases have been decided in the context of the carrier's duty to defend its insured. It is well accepted that this duty is far broader than the carrier's duty to indemnify. The posture of the decisions does not necessarily lessen their value to the insured, but the insured should be prepared to respond to the carrier's argument that while it may have a duty to defend, it has no duty to indemnify.

1. See generally Dryden Oil Co. of New England v. Travelers Indem. Co., 91 F.3d 278, 26 ELR 21623 (1st Cir. 1996) (holding that contamination from releases of oil to the environment is excluded by the absolute pollution exclusion); Constitution State Ins. Co. v. Iso-Tex Inc., 61 F.3d 405 (5th Cir. 1995) (holding that the absolute pollution exclusion excluded coverage for nuclear waste pollution).

2. Because the interpretation of an insurance policy is in reality an action for the interpretation of a contract, state rather than federal common law will apply. Further, because the forum state's choice of law rules control, counsel should carefully consider where the action should be brought or transferred before initiating litigation.

3. See generally Claussen v. Aetna Cas. & Sur. Co., 380 S.E.2d 686 (Ga. 1989); Just v. Land Reclamation, Ltd., 456 N.W.2d 570, 20 ELR 21407 (Wis. 1990); U.S. Fidelity & Guar. Co. v. Morrison Grain Co., 999 F.2d 489 (10th Cir. 1993) (applying Kansas law); Anaconda Minerals Co. v. Stoller Chem. Co., 990 F.2d 1175 (10th Cir. 1993) (applying Utah law).

4. See generally Barmet of Indiana, Inc. v. Security Ins. Group, 425 N.E.2d 201 (Ind. Ct. Appl. 1981); U.S. Fidelity & Guar. Co. v. Star Fire Coals, Inc., 856 F.2d 31 (6th Cir. 1988) (applying Kentucky law); Upjohn Co. v. New Hampshire Ins. Co. 476 N.W.2d 392 (Mich. 1991); Bureau of Engraving, Inc. v. Federal Ins. Co., 5 F.3d 1175 (8th Cir. 1993) (applying Minnesota law).

5. See Cynthia Weiss Antonucci & Alan Roberts, Acute Building Sickness, An Overview, A.B.A. TORT & INS. PRACTICE SEC. 1 (1996).

6. Id. There is a disagreement in the medical community as to whether multiple chemical sensitivity really exists. The concept of chemical sensitivity is that an individual is unusually sensitive to a substance and consequently has an adverse reaction from exposure to the substance at levels that would not affect the average individual.

7. See generally Andrew Kopon Jr. & Joseph C. Gergits, Indoor Environment and Regulatory Developments and Emerging Standards of Care, 62 DEF. COUNSEL J. 47 (Jan. 1995); see also Mackey v. TKCC, Inc., 894 P.2d 120 (Or. Ct. App. 1995) (discussing sick building syndrome as caused by indoor air pollution).

8. See Antonucci & Roberts, supra note 5, at 1.

9. No. 90-CA10594 (D.C. filed Oct. 12, 1990).

10. A daughter of the sick building syndrome cases falls within the sphere of negligence. These cases involve, for example, building-related illnesses created by a specific, defined event such as the misapplication of a pesticide.

11. See Antonucci & Roberts, supra note 5, at 3.

12. Id.

13. Id. at 4.

14. BARRY R. OSTRAGER & THOMAS R. NEWMAN, HANDBOOK ON INSURANCE COVERAGE DISPUTES § 10.02(e) (1995) (emphasis added).

15. Id.

16. This is certainly a twist from the wealth of earlier litigation, which was frequently decided on the "sudden and accidental" language alone. See generally Claussen v. Aetna Cas. & Sur. Co., 380 S.E.2d 686 (Ga. 1989); Anaconda Minerals Co. v. Stoller Chem. Co., 990 F.2d 1175 (10th Cir. 1993) (applying Utah law).

17. See generally Chemical Leaman Tank Lines, Inc. v. Aetna Cas. & Sur. Co., 817 F. Supp. 1136, 24 ELR 20410 (D.N.J. 1993); CPC Int'l, Inc. v. Northbrook Excess & Surplus Ins. Co., 962 F.2d 77 (1st Cir.), as amended on denial of reh'g (1992).

18. OSTRAGER & NEWMAN, supra note 14.

19. Id.

20. Id. (emphasis added).

21. The ambiguity in the "sudden and accidental" language was the basis on which virtually every court deciding in favor of the insured had relied.

22. National Union Fire Ins. Co. v. Baker & McKenzie, 997 F.2d 305 (7th Cir. 1993); Werner Indus., Inc. v. First State Ins. Co., 548 A.2d 188 (N.J. 1988); Pennbarr Corp. v. Insurance Co. of N. Am., 976 F.2d 145 (3d Cir. 1992).

23. See generally OSTRAGER & NEWMAN, supra note 14, § 5.02.

24. 517 N.W.2d 888 (Minn. 1994).

25. Id.

26. Id.

27. Id. at 892.

28. Id.

29. Id. at 893.

30. Id.

31. Id.; see also Gould, Inc. v. Continental Cas. Co., No. 3529 (Ct. C.P., Phila. 1986, June term) (holding, without explaining its ruling, that the pollution exclusion is "designed to apply to occurrences outside the workplace," and thus would be inapposite where the claimant's overexposure to lead and other harmful metals was arguably the result of daily exposure while performing manufacturing operations at the plant).

32. In dicta, the court made one possible exception to its holding, suggestingthat an issue may arise if the contaminated air within the controlled environment escapes to the surrounding natural environment. Because the issue was not specifically before the court, however, the court did not decide the question. 517 N.W.2d at 893; see also Gamble Farm, Inc. v. Selective Ins. Co., 656 A.2d 142 (Pa. Sup. Ct. 1995) (holding that the language "into the atmosphere" required a release to the outdoor, natural environment).

33. 517 N.W.2d at 892-93. The Board of Regents case is important not only for its eloquent language and analysis of why the sudden and accidental pollution exclusion should not exclude coverage for indoor releases, but also as a reminder that the language in the excess policies should be examined independent from the language in the underlying primary policies. Oftentimes, the insured (and sometimes the carrier) will assume that an excess policy simply follows form with the underlying coverages, providing coverage where the primary policy provides coverage. This is not always true. The excess policies at issue in Board of Regents did not mirror the underlying primary policies. The excess policies stated that the policy shall not apply "to liability for contamination or pollution of land, water, air or real or personal property or any injuries or damages resulting therefrom caused by an occurrence." Id. at 839. The court noted that this general exclusion did not contain "language descriptive of the natural environment only." Id. Therefore, the court held, the exclusion in the excess policies did exclude coverage for the release of asbestos fibers within a building. Id.

34. 667 F. Supp. 1563 (S.D. Ga. 1986), aff'd, 826 F.2d 1024 (11th Cir. 1987).

35. Id. at 1579 n.21.

36. Id.

37. While there are a myriad of issues that arise in the context of coverage litigation, one issue that often goes hand-in-hand with the indoor emissions cases in the context of employee exposure is the application of the workers' compensation bar to coverage. For example, the court in Synalloy ultimately held that the carrier was not obliged to defend its insured on the basis that the bodily injury claims were, in essence, workers' compensation claims as opposed to tort claims. Id. at 1583.

38. 609 N.E.2d 506 (N.Y. 1993).

39. Id. at 512-13.

40. Id. at 512-13 (emphasis added).

41. Id.

42. One caveat to this decision, however, is the fact that it dealt with the carrier's duty to defend and not its duty to indemnify.

43. 660 N.E.2d 746 (Ohio C.P. 1993). But see Continental Cas. Co. v. Rapid Am. Corp., 609 N.E.2d 506, 512 (N.Y. 1993) (holding that asbestos could "certainly be an irritant, contaminant or pollutant").

44. The Owens-Corning court also explained that "the release of asbestos fibers from building materials inside or surrounding buildings" may not constitute "an emission into the 'atmosphere' within the context of the exclusion." 660 N.E.2d at 746. Acknowledging that only a few courts have discussed the term "atmosphere" in the asbestos bodily injury context, and those who have typically "rejected a common dictionary definition [that] could arguably include any surrounding in favor of a narrower construction excluding building interiors," the court stated that "the resolution of this case is not to be found in the kind of lexical tomography" inherent in a citation to Webster's Dictionary. Id. at 753. Quoting the Supreme Court of Illinois, the court stated that, "in addition to a building's interior confines, the building's immediate surroundings are also beyond the scope of the exclusion." Id. (quoting U.S. Fidelity & Guar. Co. v. Wilkin Insulation Co., 578 N.E.2d 926, 933 (Ill. 1991)). Ultimately, the court ruled that the term "atmosphere" is limited to outdoor releases to the natural environment.

45. Because this case deals with excess rather than primary policies, the duty to defend versus the duty to indemnify distinction was not at issue. As a general rule, excess policies only obligate the carrier to indemnify, not to defend. Nonetheless, this case may ultimately inure to the benefit of the insured, because regardless of the reason, it does deal with the carrier's duty to indemnify. Consequently, it may prove a useful basis on which to argue the triggering of this secondary duty.

46. 660 N.E.2d at 747.

47. Id. at 749 (citations omitted).

48. Id. (quoting Alexander v. Buckeye Pipe Line Co., 374 N.E.2d 146, 150 (Ohio 1978)).

49. Id.

50. Id.

51. Id. (dismissing as inapposite Hydro Sys., Inc. v. Continental Ins. Co., 717 F. Supp. 700 (C.D. Cal. 1989), aff'd, 429 F.2d 472, 21 ELR 20702 (9th Cir. 1991); and Guilford Indus., Inc. v. Liberty Mut. Ins. Co., 688 F. Supp. 792 (D. Me. 1988), aff'd, 879 F.2d 853 (1st Cir. 1989)).

52. Hydro Sys., 717 F. Supp. at 751 (relying on Technicon Elecs. Corp. v. American Home Assurance Co., 542 N.E.2d 1048, 1050, 20 ELR 20380, 203801 (N.Y. 1989) (holding that for the pollution exclusion to apply, the complaint "must allege a discharge, dispersal, release, or escape of a toxic or hazardous waste [that] has actually resulted in pollution")).

53. Id.; see also Continental Cas. Co. v. Rapid American Corp., 581 N.Y.S.2d 669 (N.Y. Ct. App. 1992), aff'd on other grounds, 609 N.E.2d 506, 672 (N.Y. 1993) (holding that the release of asbestos is not "environmental pollution of land, water course, or the atmosphere, but simply bodily injury sustained by the ultimate user of a product"). But see Madison Constr. Co. v. Harleysville Mut. Ins. Co., 678 A.2d 802, 806 (Pa. Super. 1996) (holding that a sealant, although a commonly used membrane-forming construction material and product of commerce, is still a pollutant in light of it resulting xylene fumes. "While the floor-covering material … itself was a necessary instrument of [the insured's] … work, the vapors, however unavoidable, were not. They were an unwanted irritating waste product of the floor covering, and thus could be construed to fit within the policy's definition of pollution."), appeal granted, 690 A.2d 711 (Pa. 1997) (granted on duty to defend issue).

54. Owens-Corning, 660 N.E.2d at 751. But see U.S. Fidelity & Guar. Co. v. Wilkin Insulation Co., 578 N.E.2d 926 (Ill. 1991) (holding without discussion that asbestos is a pollutant within the meaning of a liability policy).

55. 660 N.E.2d at 751; see also West Am. Ins. Co. v. Tufco Flooring E., Inc., 409 S.E.2d 692 (N.C. Ct. App. 1991) (reaching the same conclusion in interpreting the absolute pollution exclusion).

56. See generally Mark J. Manta, The Absolute Pollution Exclusion: The Inside Story, 10 MEALEY'S INS. REP. 3 (1995).

57. This limiting language is present in a few, although not a majority, of absolute pollution exclusions. See supra notes 18-21 and accompanying text. Consequently, the impact of this limiting language should not automatically be ignored simply because an absolute pollution exclusion is at issue.

58. Manta, supra note 56, at 21.

59. No. 95 Civ. 3200 (MBM), 1996 WL 603964 (S.D.N.Y. Oct. 22, 1996).

60. There is at least one New York case that is inconsistent with other authority interpreting New York law. This case is Oates v. State, 597 N.Y.S.2d 550 (N.Y. Ct. Cl. 1993), and it evidences a split of authority within the lower courts in New York. The court in Oates held that the in utero exposure of plaintiff, whose mother was employed by the insured as a custodian, to lead paint was excluded from coverage by the application of the absolute pollution exclusion. In reaching its conclusion, the court focused on the nature of the absolute pollution exclusion and the lack of ambiguities inherent in it as opposed to the sudden and accidental pollution exclusion. (The court also ruled that the employee exclusion was applicable.)

Interestingly, however, this case has basically been ignored on both the state and federal level, and thus may not be indicative of New York law on the issue. In fact, the New York Appellate Court for the Second Division recently confirmed the application of Continental Casualty Co. v. Rapid American Corp., 581 N.Y.2d 669 (N.Y. Ct. App. 1992), aff'd on other grounds, 609 N.E.2d 506, holding that "the pollution exclusion is limited to environmental and industrial pollution." Georgia Ins. Co. v. Naimberg Realty Assocs., 650 N.Y.S.2d 246, 247 (N.Y. App. Div. 1996).

61. LeFrak, 1996 WL 603964 at *2. The complaint did not state the method by which the infant was exposed (i.e., ingestion, inhalation, or a particular event, such as stripping the walls).

62. Id. at *3.

63. Id. (quoting Fitzpatrick v. American Honda Motor Co., 575 N.E.2d 90, 91-92 (N.Y. 1991)).

64. Id. at *4.

65. Id.

66. 47 F.3d 34 (2d Cir. 1995).

67. Id.

68. Id.

69. Id.; see also U.S. Liability Ins. Co. v. Bourbeau, 49 F.3d 786, 789 (1st Cir. 1995) (holding that the discharge of paint chips into soil was covered by the pollution exclusion because it polluted the environment, but that the presence of lead paint in a household would not be so covered); American States Ins. Co. v. Koloms, 666 N.E.2d 699, 701-03 (Ill. Ct. App. 1996) (holding that claims for injuries from carbon monoxide and other noxious fumes and gases emitted from the building's faulty furnace were not vitiated by the absolute pollution exclusion, because such exclusion, as evidenced by the terms such as "discharge" and "dispersal," was only meant to apply to releases to the outside, natural environment).

70. Not all courts have been able to escape the reasoning used in cases interpreting the pollution exclusion in the industrial pollution and outdoor releases context. For example, the Florida Court of Appeals for the Fourth Circuit, on its own motion to grant review en banc, resolved the issue of the pollution exclusion's applicability to indoor releases in two unrelated appeals, State Farm Fire & Cas. Ins. Co. v. Deni Assocs. of Fla., Inc., (State Farm) and Florida Farm Bureau Mut. Ins. Co. v. Fogg (Fogg), 678 So. 2d 397 (Fla. Ct. App. 1996), review granted, 695 So. 2d 699 (Fla. 1997), as if it were dealing with outdoor releases. The court held, without analysis, that the absolute pollution exclusion was not ambiguous, and consequently it was required to rule in favor of the carrier.

What is particularly interesting about this consolidated appeal is that the underlying cases were factually quite distinguishable. In State Farm, the insured, an architectural firm, was moving its office equipment into new offices within the same building when ammonia from a blue print machine accidentally spilled. The fire department removed the carpeting, broke a window to ventilate the interior atmosphere, and ordered the building evacuated until the air was safe to breathe. The fire department declared the building safe for occupancy approximately six hours later.

In Fogg, the insured owned and operated a citrus grove in Palm Beach County. The insured hired an outside contractor to spray an insecticide on the grove from a helicopter. While spraying the grove, the contractor also sprayed two men who were standing on adjacent property.

It is the authors' opinion that these appeals should have been heard separately because, if nothing else, they raise different legal issues.

71. No. 95-10369, 1996 WL 689591 (N.Y. App. Div. Nov. 12, 1996).

72. Id. at *2 (emphasis added) (citations omitted).

73. Id. (emphasis added); see also General Accident Ins. Co. v. Idbar Realty Corp., 646 N.Y.S.2d 138 (N.Y. Ct. App. 1996) (admonishing the carrier for failing to defend under an almost identical factual scenario and holding that the carrier's duty to indemnify issue was premature).

74. 47 F.3d 34 (2d Cir. 1995).

75. Id. at 36.

76. 409 S.E.2d 692 (N.C. Ct. App. 1991).

77. Id. at 698.

78. Id.; accord American States Ins. Co. v. Koloms, 666 N.E.2d 699 (Ill. Ct. App. 1996), aff'd, No. 81289, 1997 WL 643919 (Oct. 17, 1997).

79. The court also relied on the argument that the terms describing the method of the release (i.e., discharge or dispersal) mandated a ruling that the pollution exclusion was inapplicable to indoor releases.

80. 925 F. Supp. 758 (M.D. Fla. 1996); see also Madison Constr. Co. v. Harleysville Mut. Ins. Co., 678 A.2d 802 (Pa. Super. 1996), appeal granted, 690 A.2d 711 (Pa. 1997) (granted on duty to defend issue).

81. 925 F. Supp. at 759.

82. Id. at 760.

83. Id.

84. Id. at 761.

85. Id.