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A case which gives a pro-insurer reading of the APE is Assicurazioni Gen. S.p.A. v. Neil, 160 F3d 997 (4th Cir 1998). Neil's partnership, a Maryland entity, owned an operated a Holiday Inn in West Palm Beach, FL. Several hotel guests suffered carbon monoxide poisoning. The CGL policy that coverered the partnership had an absolute pollution exclusion that read a little differently from others we have studied.

It provided that the insurance would not apply to: "(a) The contamination of any environment by pollutants that are introduced at any time, anywhere, in any way; (b) Any bodily injury, personal injury, property damage, costs or other loss or damage arising out of such contamination ..." The policy also included the following definitions:

a. "CONTAMINATION" means any unclean or unsafe or damaging or injurious or unhealthful condition arising out of the presence of pollutants, whether permanent or transient in any environment.
b. "ENVIRONMENT" includes any person, any manmade objects or feature ... land, bodies of water ... air and any other feature of the earth or its atmosphere, whether or not altered, developed or cultivated, including, but not limited to, any of the above, owned, controlled or occupied by the insured.
c. "POLLUTANTS" means smoke, vapors, soot, fumes, acids, sounds, alkalies, chemicals, liquids, solids, gases, *1000 thermal pollutants and all other irritants or contaminations.

The Decision

Though the lower court granted summary judgment for Neil, the appellate court reversed. Two considerations were important for the court. First was the breadth of the language of the exclusion and definitions. In the words of the court: "The policy language providing for the pollution exclusion is, however, quite expansive. It excludes from coverage "the contamination of any environment by pollutants that are introduced at any time, anywhere, in any way." Moreover, the definition of "contamination" and "pollutants" would include carbon monoxide within its limits.

Not only did the court decide to construe the policy language broadly, but it decided that the broad terms defining environment listed above should be given maximal effect. "This provision clearly applies to accidents that occur within a buidling and that do not result from what is commonly considered industrial environmental pollution. If, contrary to its broad language, the policy intended 'environment to be confined to geological features, this 'exclusion to the exclusion' would be unnecessary."

Finally, the court concluded that the pollution exclusion language was not ambiguous. Then, on the strength of the Berhnardt case, quoted in Koloms, the federal appellate court reversed the trial court's holding.

Reflecting on History/Literal Language

The construal of the APE, which is still a raging issue, gives us a fine window into modes of judicial interpretation and the way that history and the "plain language" approach to interpreting contracts may often be at odds with each other. And, it makes you wonder whether a court will adopt its method based on a prior commitment to being generally pro-insured or pro-insurer in policy disputes. The most recent article discussing the problem speaks of the "disarray" of judicial decisions. It concludes that an "environmental-only' construction of the exclusion is unwarranted and inconsistent with policy language and "myriad other pertinent considerations." Shelley and Mooney, "Toxic Torts and The APE Revisited," 39 Tort Trial & Insurance Practice Journal 55 (2003). Yet, the cases reviewed by the article show that the majority of courts still want to import a historical reading into the exclusion. As continued "non-CERCLA-style" losses are discovered (the latest of these is mold), insurers will be hard-pressed to deny liability if the court continues to use the historical explanation. But, as is often the case, if the insurers lose in court, they will press at the ISO level for specific exclusion language so that various kinds of newly-discovered "internal" harms will be excluded.

In the final analysis, then, the fight goes on. As future attorneys, who will probably be doing a lot of work with insurance policies, you should be aware of the nature of the battle and the money at stake in trying to deal with this exclusion.