Assicurazioni v. Neil ( 1998 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ASSICURAZIONI GENERALI, S.p.A.,
Plaintiff-Appellant,
v. No. 97-2160
KENNETH NEIL,
Defendant-Appellee.
ASSICURAZIONI GENERALI, S.p.A.,
Plaintiff-Appellant,
v. No. 97-2310
KENNETH NEIL,
Defendant-Appellee.
Appeals from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, District Judge.
(CA-96-3521-S)
Argued: September 23, 1998
Decided: November 18, 1998
Before WILKINSON, Chief Judge, and HAMILTON and
MOTZ, Circuit Judges.
_________________________________________________________________
Reversed and remanded by published opinion. Judge Motz wrote the
opinion, in which Chief Judge Wilkinson and Judge Hamilton joined.
_________________________________________________________________
COUNSEL
ARGUED: Edward J. Longosz, II, MILES & STOCKBRIDGE, P.C.,
McLean, Virginia, for Appellant. Gerald William Ueckermann, Jr.,
O'MALLEY, MILES, NYLEN & GILMORE, P.A., Calverton, Mary-
land, for Appellee. ON BRIEF: Naomi G. Beer, MILES & STOCK-
BRIDGE, P.C., McLean, Virginia, for Appellant.
_________________________________________________________________
OPINION
MOTZ, Circuit Judge:
An insurance company filed this diversity declaratory judgment
action to resolve questions under a general liability policy. The com-
pany sought a declaration that it need not provide defense or coverage
to its insured in two personal injury actions brought against the
insured in Florida. The district court awarded summary judgment and
attorneys' fees to the insured. Because, under Maryland law, the poli-
cy's pollution exclusion bars coverage for the injuries alleged in the
underlying tort actions, we reverse.
I.
This controversy arises out of an accident at a Holiday Inn in West
Palm Beach, Florida. A Maryland partnership in which Kenneth Neil
was a general partner owned and operated the Holiday Inn for some
time; in December 1991, the partnership sold its interest in the hotel.
Three months later, in March 1992, several hotel guests suffered car-
bon monoxide poisoning. The injured guests brought personal injury
actions against the new owners and Neil.
Neil's general liability insurance policy, issued by Assicurazioni
Generali, S.p.A. (Generali), an Italian corporation, covered a number
of hotels owned by the partnership, including the West Palm Beach
Holiday Inn. The stated policy period was August 1, 1991 to August
1, 1992.
The policy provides comprehensive general liability insurance for
"bodily injury" caused by an "occurrence." The policy defines "occur-
2
rence" as "an accident, including continuous or repeated exposure to
conditions, which results in bodily injury." It defines bodily injury as
"bodily injury, sickness or disease sustained by any person which
occurs during the policy period."
The policy also provides coverage for injury arising from Com-
pleted Operations Hazards, which is defined to include:
bodily injury . . . arising out of operations . . . but only if the
bodily injury . . . occurs after such operations have been
completed or abandoned and occurs away from premises
owned by or rented to the Named Insured.
In addition, the policy contains an "absolute" pollution exclusion.
This exclusion states:
[T]he insurance provided in this Section of the Policy DOES
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 con-
tamination . . . ; or
c) Payment for the investigation or defense of any loss,
injury or damage . . . related to any of the above.
It is hereby understood that the following meanings apply to
various terms used in the foregoing:
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
3
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,
thermal pollutants and all other irritants or contamina-
tions.
Notwithstanding anything in the foregoing which may be
stated in the foregoing to the contrary, it is hereby under-
stood and agreed that this Pollution Exclusion does not
apply to "Bodily Injury . . . caused by heat, smoke or fumes
arising from a hostile fire."
The policy requires locations covered under the policy to be identi-
fied and kept on file with the insurer. Consistent with this provision,
in January 1992, Neil notified Generali that he no longer owned or
managed the West Palm Beach Holiday Inn and sought a refund of
a portion of the policy to reflect this fact. Generali subsequently
issued a refund and an endorsement providing that coverage for the
West Palm "location" was "deleted" effective January 15, 1992; the
endorsement also stated that "All Other Terms and Conditions
Remain Unchanged."
After Neil sought, and Generali denied, defense and coverage in
the Florida suits, Generali brought this declaratory judgment action,
seeking to establish that its policy provided no coverage to Neil. The
district court granted summary judgment to Neil. The court held that
(1) the deletion of the West Palm Beach location did not deprive Neil
of coverage under the general liability provision, (2) in addition to the
general liability coverage, Neil was entitled to coverage under the
completed operations hazard provision, and (3) the pollution exclu-
sion did not bar coverage.
Because determination of the applicability of the pollution exclu-
sion dictates the holding of this case, we focus on that issue, assuming
without deciding that the policy would otherwise provide coverage.
We note as a preliminary matter that the parties agree that Maryland
4
law applies in this diversity action involving an insurance contract
issued in Maryland. See Continental Cablevision of New England,
Inc. v. United Broadcasting Co., 873 F.2d 717, 720 (4th Cir. 1989);
Traylor v. Grafton, 332 A.2d 651 (Md. 1975).
II.
Neil contends that the Generali policy's pollution exclusion elimi-
nates coverage only for injuries resulting from environmental pollu-
tion and therefore does not bar coverage for injuries arising from
carbon monoxide poisoning inside a hotel, as alleged in the Florida
cases.
The policy language providing for the pollution exclusion is, how-
ever, quite expansive. It excludes from coverage"[t]he contamination
of any environment by pollutants that are introduced at any time, any-
where, in any way." (Emphasis added). Moreover, the policy defines
"contamination" as "any" injurious condition "arising out of the pres-
ence of pollutants, whether permanent or transient in any environ-
ment." (Emphasis added). The definition of "pollutants" includes
"smoke, vapors, soot, fumes, acids, sounds, alkalies, chemicals, liq-
uids, solids, gases, thermal pollutants and all other irritants or contam-
inations." Thus, carbon monoxide -- whether considered a "fume,"
"vapor," or "gas" -- plainly falls within this policy definition of "pol-
lutant."
The policy also defines "environment" broadly to include "any per-
son, manmade objects or feature" and "any other feature of the earth
or its atmosphere, whether or not altered, developed or cultivated."
The policy goes on to explain that the pollution exclusion does not bar
coverage for any bodily injury "caused by heat, smoke or fumes aris-
ing from a hostile fire." This provision clearly applies to accidents
that occur within a building and that do not result from what is com-
monly 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.
Neil does not suggest that this broad policy language is either
ambiguous or generally inapplicable to injuries resulting from carbon
5
monoxide poisoning. His sole argument, as to the policy language, is
that the pollution exclusion only applies to property "owned or con-
trolled" by him. He relies on the definition of environment in the pol-
icy:
"Environment" includes any person, any manmade objects
or feature, animals, crops or vegetation, person, any land,
bodies of water . . . air and any other feature of the earth or
its atmosphere, whether or not altered, developed or culti-
vated, including, but not limited to, any of the above, owned,
controlled or occupied by the insured.
(Emphasis added). At the time of the carbon monoxide poisoning Neil
had sold the hotel, and thus he no longer "owned or controlled" it. He
contends that the pollution exclusion, therefore, does not apply here.
This is an exceedingly odd claim for Neil to assert. He asks us to
hold that general liability and completed operations hazards coverage
for the hotel extended after he sold it, but the pollution exclusion
ended at that very time. His interpretation would provide Neil with
more insurance coverage for less money. It would mean that after he
sold the hotel and received premium refunds, he obtained coverage
that had been barred by a pollution exclusion when he owned the
hotel and paid the full premiums. Surely no reasonable insured or
insurer would enter into a contract that provided limited coverage for
full premium payments and far greater coverage for partial premium
payments.
Nevertheless, Neil maintains that the policy language quoted above
makes the pollution exclusion inapplicable to any"environment" not
"owned, controlled, or occupied by the insured." But the language
Neil relies upon certainly does not compel such a nonsensical inter-
pretation. Rather, its more natural reading is to clarify that the pollu-
tion exclusion includes, but is not limited to , an environment that is
"owned, controlled or occupied by the insured." This more natural
reading not only accords with common sense and normal commercial
practice, but also is the only construction consistent with the obvious
purpose of the absolute pollution exclusion: to exclude from coverage
injuries arising from "contamination" of "any environment" by "pollu-
tants," which are "introduced at any time, anywhere, in any way."
6
Perhaps for these reasons, Neil chiefly relies on an alternative argu-
ment to which we now turn.
III.
Neil's principal contention, which the district court found persua-
sive, is that regardless of the policy language, a Maryland court would
limit the applicability of any pollution exclusion to instances of envi-
ronmental pollution.
As we noted at the outset, Maryland law governs this case. Hence,
if a federal court determines that Maryland's highest court would hold
that the pollution exclusion only applies to industrial environmental
pollution and thus does not bar coverage in this case, we must so
hold. Faithful application of Maryland law would require this result
even if, as here, the policy's plain language and ordinary meaning
indicate a different result. Accordingly, we examine Maryland law on
this subject.
A.
Generally, Maryland law does not compel a court to ignore an
insurance policy's plain language and ordinary meaning. Quite the
contrary, Maryland's highest court has repeatedly noted that "[i]n the
interpretation of the meaning of an insurance contract," it "accord[s]
a word its usual, ordinary and accepted meaning unless there is evi-
dence that the parties intended to employ it in a special or technical
sense." Cheney v. Bell Nat'l Life, 556 A.2d 1135, 1138 (Md. 1989);
see also Chantel Associates v. Mt. Vernon, 656 A.2d 779, 784-85
(Md. 1995). These general principles would seem to require that a
Maryland court defer to the policy's plain meaning, and so in this
case find the pollution exclusion applicable.
In fact, the only Maryland appellate case interpreting a pollution
exclusion in a similar context has held that the exclusion bars cover-
age for injuries resulting from carbon monoxide poisoning. See
Bernhardt v. Hartford Fire Ins. Co., 648 A.2d 1047 (Md. Ct. Spec.
App. 1994), cert. granted and volunt. withdrawn , 337 Md. 641(1995). In Bernhardt, the Maryland Court of Special Appeals detailed
7
the changes made by the insurance industry over time in pollution
exclusion clauses. Id. at 1049-50. It recognized that some courts have
interpreted this drafting history as demonstrating that the industry
may have originally intended to limit the exclusion's applicability to
industrial environmental pollution. Id. at 1050. Nevertheless, after
careful application of the interpretative principles set forth above to
the specific language of the insurance policy before it, the intermedi-
ate appellate court ruled that the policy's pollution exclusion clearly
barred coverage for injuries resulting from carbon monoxide poison-
ing that had occurred inside a house. Id. at 1052.
The Bernhardt court acknowledged that "the title of the endorse-
ment -- `pollution exclusion' -- is, standing alone, ambiguous" but
noted that the language of the policy provision was"quite specific."
Id. at 1051. Quoting that language, the court explained that carbon
monoxide "was a `gaseous . . . irritant or contaminant' and constituted
`fumes' and `chemicals' within the clear language of the definition of
`pollutant.'" Id. The court pointed out that "nowhere" in the exclusion
before it did "the word `industry' or `industrial' appear" nor did the
policy draw any distinction "between intentional and non-intentional
discharge of pollutants" or "suggest that only chronic commission . . .
is excluded from coverage." Id. at 1051-52. For these reasons, the
Bernhardt court held that whatever the insurance industry's original
intent with regard to such clauses, the pollution exclusion in the pol-
icy it was construing unambiguously barred coverage for injuries
resulting from the carbon monoxide poisoning.
Because the Bernhardt analysis is equally applicable here -- in
fact, the pollution exclusion before us, on its face, even more clearly
covers injuries resulting from carbon monoxide poisoning --
Bernhardt would seem to require us to hold that the pollution exclu-
sion bars coverage. If the Bernhardt holding were contained in a state
statute or a decision of the state's highest court, the Maryland Court
of Appeals, we would, absent extraordinary circumstances, be
required to follow it. See Norman Bernhardt v. Polygraphic Co. of
Am., 350 U.S. 198, 204-05 (1956). It is axiomatic that in determining
state law a federal court must look first and foremost to the law of the
state's highest court, giving appropriate effect to all its implications.
A state's highest court need not have previously decided a case with
identical facts for state law to be clear. It is enough that a fair reading
8
of a decision by a state's highest court directs one to a particular con-
clusion. Only when this inquiry proves unenlightening, as we find it
does in this case, should a federal court seek guidance from an inter-
mediate state court.
When seeking such guidance we defer to a decision of the state's
intermediate appellate court to a lesser degree than we do to a deci-
sion of the state's highest court. Nevertheless, we do defer. Indeed,
the Supreme Court has specifically directed:
[w]here an intermediate appellate state court rests its consid-
ered judgment upon the rule of law which it announces, that
is a datum for ascertaining state law which is not to be disre-
garded by a federal court unless it is convinced by other per-
suasive data that the highest court of the state would decide
otherwise.
West v. A T & T, 311 U.S. 233, 237 (1940); accord, Hicks v. Feiock,
485 U.S. 624, 630 n.3 (1988); see also Stoner v. New York Life Ins.
Co., 311 U.S. 464, 467 (1940) ("[F]ederal courts, under the doctrine
of Erie . . . must follow the decisions of intermediate state courts in
the absence of convincing evidence that the highest court of the state
would decide differently.").
Thus, a federal court must "present" persuasive data when it
chooses to ignore a decision of a state intermediate appellate court
that is directly on point. United States v. Little, 52 F.3d 495, 498 (4th
Cir. 1995). What a federal court, sitting in diversity, cannot do is sim-
ply substitute its judgment for that of the state court. Id.B.
The experienced district judge undoubtedly understood the above
principles. However, we believe he miscalculated the persuasiveness
of the data upon which he relied in concluding that the Maryland
Court of Appeals would decline to follow Bernhardt. This may be
because we have never articulated what constitutes"persuasive data,"
permitting a federal court to disregard an intermediate appellate
court's holding on a question of state law. We take this opportunity
to set forth some guidelines.
9
Generally, only if the decision of a state's intermediate court can-
not be reconciled with state statutes, or decisions of the state's highest
court, or both, may a federal court sitting in diversity refuse to follow
it. When an intermediate state court decision is at odds with an exist-
ing statutory scheme or one amended after issuance of the intermedi-
ate court's decision, a federal court may justifiably surmise that the
statute presents persuasive data that the state's highest court would
not follow the intermediate court's decision. See, e.g., J&R Ice Cream
Corp. v. California Smoothie Licensing Corp., 31 F.3d 1259, 1271-73
(3d Cir. 1994); Ground Air Transfer, Inc. v. Westates Airlines, 899
F.2d 1269, 1275 (1st Cir. 1990) (alternative holding). Similarly, the
holdings of a state's highest court that undermine the rationale of an
intermediate appellate court decision may constitute such persuasive
data, see Dimedowich v. Bell & Howell, 803 F.2d 1473, 1482-83 (9th
Cir. 1986); this is so even if a state supreme court holding antedates
the inferior court's opinion. See Humphrey v. C. G. Jung Educ. Ctr.,
624 F.2d 637, 643 (5th Cir. 1980) (alternative holding). However, a
federal court must closely scrutinize the assertedly conflicting statu-
tory schemes or supreme court decisions to satisfy itself that they
truly do undermine an intermediate appellate court decision directly
on point. See, e.g., Gates Rubber Co. v. USM Corp., 508 F.2d 603,
606-615 (7th Cir. 1975).
A federal court can depart from an intermediate court's fully rea-
soned holding as to state law only if "convinced" that the state's high-
est court would not follow that holding. West , 311 U.S. at 237; cf.
United States v. Ramos, 39 F.3d 219, 221-22 (9th Cir. 1994) (an inter-
mediate court's totally unexplained holding may merit less defer-
ence). Accordingly, a federal court cannot refuse to follow an
intermediate appellate court's decision simply because it believes the
intermediate court's decision was wrong, bad policy, or contrary to
the majority rule in other jurisdictions. West , 311 U.S. at 237 (federal
courts have a duty to apply state law "rather than to prescribe a differ-
ent rule, however superior [the different rule] may appear from the
viewpoint of `general law' and however much the state rule may have
departed from prior decision of the federal courts"); Malone v. Bank-
head Enters., 125 F.3d 535, 540 (7th Cir. 1997) ("The mere fact that
more courts have interpreted other states' savings statutes differently
does not persuade us that the Illinois appellate courts improperly
interpreted Illinois' statute."). With these precepts in mind, we exam-
10
ine the data that the district court relied on in refusing to follow
Bernhardt.
C.
The district court based its ruling on two factors. First, the court
noted that the Maryland Court of Appeals had granted certiorari in
Bernhardt (which was withdrawn upon settlement),"indicat[ing] that
at least a number of the judges of that Court though[t] the matter
ought to be taken up." Second, the district court determined that the
Maryland Court of Appeals' decision in Sullins v. Allstate Ins. Co.,
667 A.2d 617 (Md. 1995), led to the inescapable conclusion that the
high court "would reverse Bernhardt if that decision were to reach it
for review."
As to the first factor, although a grant of certiorari surely does indi-
cate that some of the judges on the high court wish to hear a case, it
does not, in itself, constitute a decision on the merits. Indeed, more
frequently than not, a grant of certiorari in Maryland does not even
result in reversal by the high court. During the 1997 fiscal year the
Maryland Court of Appeals reversed, dismissed, or remanded 36 of
the civil cases it heard. Administrative Office of the Courts, Annual
Report of the Maryland Judiciary 1996-1997 Table CA-7 (1997). By
comparison, the court affirmed 40 cases. Id. Given these statistics and
the principles set forth above governing federal courts in diversity
cases, the Maryland Court of Appeals' decision to grant certiorari in
a case cannot constitute persuasive data that the high court would
choose not to follow the decision of the intermediate appellate court
in that case. Cf. Haugen v. Total Petroleum, Inc., 971 F.2d 124, 126
n.2 (8th Cir. 1992) (Minnesota Supreme Court's denial of review of
Minnesota Court of Appeals decision does not "give the court of
appeals decision any more or less precedential weight"); Guguere v.
United States Steel Corp., 262 F.2d 189, 192 (7th Cir. 1959) (Illinois
Supreme Court's grant of appeal to Illinois Appellate Court case does
not diminish precedential weight of the intermediate court's holding).
Thus, the district court's reliance on the certiorari grant was mis-
placed.
Sullins, upon which the district court principally relied, however,
presents a more complicated question. In Sullins , the Maryland Court
11
of Appeals held, a year after Bernhardt, that a pollution exclusion
clause did not bar coverage for injuries resulting from exposure to
lead paint chips. 667 A.2d 617. The district court concluded that
Sullins "essentially held that the standard pollution exclusion applies
to what, in common sense, it ought to apply, viz., to pollution of the
physical environment that is the contamination of the air and water
that surround us all, not contamination of indoor living space."
To the extent the district court relied on "common sense" or what
"ought to" be the law, it erred. These do not constitute persuasive data
permitting a federal court to ignore the holding of an intermediate
state court. See West, 311 U.S. at 237; Malone, 125 F.3d at 540. For
this same reason, Neil's citation to assertedly well reasoned cases
construing the law of other states to find pollution exclusions inappli-
cable to carbon monoxide poisoning or other indoor contaminations,
does not assist him. Such cases do exist. See, e.g., Western Alliance
Ins. Co. v. Gill, 686 N.E.2d. 997 (Mass. 1997); Stoney Run Co. v.
Prudential-LMI Ins. Co., 47 F.3d 34 (2d Cir. 1995) (New York law);
Regional Bank of Colorado v. St. Paul Fire & Marine Ins. Co., 35
F.3d 494 (10th Cir. 1994) (Colorado law); Thompson v. Temple, 580
So.2d 1133 (La. App. 1991). They may even state the"better view."
But see State Farm Fire & Casualty v. Deni Assoc. , 678 So.2d 397(Fla. App. 1996); League of Minn. Cities Ins. Trust v. City of Coon
Rapids, 446 N.W.2d 419 (Minn. Ct. App. 1989); see also New Castle
County v. Hartford Accident and Indem. Co., 933 F.2d 1162, 1195
nn.60, 61 (3d Cir. 1991) (listing cases and concluding "about half of
the cases hold[] that the clause bars coverage, and . . . the other half
hold[] that it does not"). But they do not provide a basis for ignoring
the Court of Special Appeals' statement as to Maryland law.
Although neither "common sense" nor the law of other states
assists Neil, if Sullins does hold that pollution exclusions can only
apply to environmental pollution, then the district court was correct.
In that case, Sullins would provide persuasive data that the Court of
Appeals would, if given the opportunity, overrule Bernhardt. The
question is: does Sullins hold this?
The "bottom line" of Bernhardt and Sullins obviously differs --
Bernhardt held the pollution exclusion applicable, resulting in a
denial of coverage for the insured, while Sullins held the exclusion
12
inapplicable, resulting in a finding of coverage for the insured -- but
just as clearly, Sullins did not expressly overrule the Bernhardt hold-
ing. Indeed, Sullins principally relied on Bernhardt in recounting the
history of the pollution exclusion, citing Bernhardt no less than four
times. See Sullins, 667 A.2d at 622. This is noteworthy because the
Maryland Court of Appeals does not indiscriminately or frequently
cite opinions from the Court of Special Appeals; for example,
although Sullins relied on multiple cases both in Maryland and
throughout the country, it referred to only two other cases from the
Court of Special Appeals, and cited each a single time. It seems
unlikely that Sullins would have so heavily relied on Bernhardt, with-
out any qualification, if it disapproved of Bernhardt. However,
because Sullins depended on Bernhardt only for historical purposes,
this alone does not indicate approval of the holding in Bernhardt. To
determine the vitality of Bernhardt, we must examine Sullins' ratio-
nale.
Like Bernhardt, Sullins relied heavily on general principles of
Maryland law governing interpretation of insurance policies, and,
again like Bernhardt, Sullins carefully examined the language of the
insurance policy before it in applying these principles. In Sullins, the
pollution exclusion clause provided in its entirety:
We do not cover bodily injury or property damage which
results in any manner from the discharge, dispersal, release,
or escape of:
a) vapors, fumes, acids, toxic chemicals, toxic liquids or
toxic gasses;
b) waste materials or other irritants, contaminants or pollu-
tants.
667 A.2d at 618 (quoting policy language).
Sullins first recognized that when interpreting insurance policies,
words are to be "given their customary, ordinary and accepted mean-
ing, unless there is an indication that the parties intended to use the
words in a technical sense" and that "[a] term which is clear in one
13
context may be ambiguous in another." 667 A.2d at 619. Applying
these principles, the Sullins court found the terms "contaminants" and
"pollutants" ambiguous in the context of the case before it, i.e., in
determining whether lead paint chips constitute a contaminant or pol-
lutant as defined by the policy. Id. at 620. For this reason, the Court
of Appeals in Sullins determined that "the policy must be construed
against [the insurance company] as the drafter of the policy" and thus
the pollution exclusion would not bar coverage. Id.
This analysis, of course, does not compel the conclusion that the
Court of Appeals would not follow Bernhardt. The intermediate court
there found that carbon monoxide was clearly a "`gaseous . . . irritant
or contaminant' and constituted `fumes' and `chemicals' within the
clear language of the definition of `pollutant'." Bernhardt, 648 A.2d
at 1051. Thus, the exclusion in Bernhardt did not present any ambigu-
ity to be construed against the insurer. Accordingly, if the Sullins
opinion stopped after its analysis of the policy language, notwith-
standing its ultimate holding, nothing in Sullins would suggest disap-
proval of or disinclination to follow the intermediate court's decision
in Bernhardt in a case, like the present one, with unambiguous policy
language.
But Sullins does not stop with analysis of the policy language.
Rather, the Sullins court went on to state that the "history of the pollu-
tion exclusion supports this conclusion." Id. at 622. The court then
recounted that history, which it found demonstrated an intention by
the insurance industry "to exclude only environmental pollution dam-
age from coverage." Id. Undoubtedly, it is these observations that led
the district court to hold that Maryland's high court would "reverse
the decision in Bernhardt."
On close examination, however, the Sullins' statements and review
of the insurance pollution's drafting history provide no persuasive
data that Maryland's high court would limit the applicability of all
pollution exclusions to injuries resulting from environmental pollu-
tion. The Sullins court, although initially somewhat unclear on the
point, ultimately explained the precise "conclusion" that it found sup-
ported by the insurance industry's intent to confine the pollution
exclusion to environmental pollution. That "conclusion" is not a gen-
eral one, i.e., pollution exclusions apply only to injuries resulting
14
from environmental pollution and not to contamination of indoor liv-
ing space. Rather, Sullins found the intent of the insurance industry,
as demonstrated by the history of the pollution exclusion, to support
a very specific "conclusion," i.e. that the language of the pollution
exclusion in the case before it was ambiguous:
It appears from the foregoing discussion [of the drafting his-
tory of the pollution exclusion] that the insurance industry
intended the pollution exclusion to apply only to environ-
mental pollution. That supports our conclusion that a rea-
sonably prudent layperson may interpret the terms
"pollution" and "contamination" in the circumstances of the
case now before us, as not encompassing lead paint. . . .
Id. at 623 (emphasis added). This "conclusion" does not undermine
Bernhardt's holding that when a court examines language in a pollu-
tion exclusion that unambiguously applies to a cause of alleged inju-
ries, the exclusion bars coverage of those injuries, regardless of what
the drafting history may suggest about the original intent of such
exclusions.
Although Sullins does reason, as Neil contends, that the insurance
industry originally intended pollution exclusions to be limited to envi-
ronmental pollution, the Sullins court's holding rests upon the
ambiguity in the exclusion language before it and its resolution of that
ambiguity against the insurer. In contrast, the language of the pollu-
tion exclusion in Bernhardt and in the case at hand unambiguously
applies to injuries resulting from carbon monoxide poisoning.
We note that Bernhardt itself questioned whether the broad, but
clear, pollution exclusion before it was "beyond that which might be
required to meet the industry's legitimate aims," but decided that it
was "not the function of courts to rewrite the contracts of parties, even
when the enforcement of the contract as written may result in a hard-
ship." Bernhardt, 648 A.2d at 1052. This conclusion is dictated by a
long series of Maryland Court of Appeals' cases. See, e.g., State v.
Glazer, 594 A.2d 138, 146 (Md. 1991); Canaras v. Lift Truck Ser-
vices, Inc., 322 A.2d 866, 873 (Md. 1974); Compania de Alstal S.A.
v. Boston Metals, Co., 107 A.2d 357, 372 (Md. 1954). Given this
principle and that Sullins expressly follows the same contract inter-
15
pretation analysis as Bernhardt, it seems unlikely that the Maryland
Court of Appeals would rewrite an unambiguous pollution exclusion
either.
For these reasons, we believe Sullins does not provide persuasive
data that the Maryland Court of Appeals would refuse to follow
Bernhardt. Since Neil offers no other persuasive data that Bernhardt
does not accurately state Maryland law, we must follow it and hold
that the pollution exclusion bars coverage for the injuries allegedly
caused by carbon monoxide poisoning.
IV.
We reverse the district court's grant of summary judgment to Neil,
vacate its awards of attorneys' fees to Neil for services rendered this
action and as in the underlying Florida tort suits, and remand the case
so that the district court can enter an order granting summary judg-
ment to Generali.
REVERSED AND REMANDED
16