Recently, the San Antonio appellate court weighed in on application of a total pollution exclusion to workplace accidents. In Zaiontz v. Trinity Universal Ins. Co., 2002 WL 753815 (Tex. App. -- San Antonio, April 30, 2002), the appellate court affirmed, on different grounds, a trial court decision in favor of the insurers for claims arising out of an employee's exposure to Bio Zapp's "Smoke and Fire Odor Eliminator." Zaiontz was an employee of Bio Zapp and was injured in the course and scope of his employment while spraying Bio Zapp Smoke and Fire Odor Eliminator in the interior of a smoke-damaged airplane.
Bio Zapp was a non-subscriber to workers' compensation insurance; therefore, both Bio Zapp and its president and majority shareholder, Michael Gershonsen, were sued for Zaiontz' injuries. A jury awarded Zaiontz in excess of $1 million against Gershonsen and Bio Zapp. In the resulting post-judgment litigation against Bio Zapp's insurers, Trinity and the umbrella carrier, Texas Pacific Indemnity Company, the court reviewed the application of the employee exclusion and the status of Gershonsen as an insured under the policies. For purposes of this note, however, we focus on the court's rulings with regard to application of the umbrella carrier's total pollution exclusion.
Texas Pacific argued that Zaiontz' injuries were excluded by the total pollution exclusion because his injury, and any consequent liability to Bio Zapp or Gershonsen, arose from the actual dispersal of a pollutant, i.e., the Smoke and Fire Odor Eliminator.
The court began its analysis with a review of National Union Fire Ins. Co. v. CBI Industries, 907 S.W.2d 517 (Tex. 1995), which held that a similar absolute pollution exclusion contained no latent or patent ambiguities when applied to a workplace accident. Zaiontz argued that his injuries did not arise from the "discharge, dispersal, seepage, migration, release or escape" of the Smoke and Fire Odor Eliminator because the substance did not leave the location of its placement, the interior of the smoke-damaged airplane.
In a thorough analysis, the court rejected Zaiontz' argument, and reviewed the plain, ordinary and generally accepted meaning of the words "discharge, dispersal, seepage, migration, release or escape." The court held that to "discharge" a pollutant means to emit it, to "disperse" a pollutant means to break it up and scatter it about, and to "release" a pollutant means to set it free from confinement. According to the court, any of those verbs is the functional equivalent of “spray.” Since Zaiontz was injured when he sprayed the Smoke and Fire Odor Eliminator into the interior of the plane, he was injured by the "discharge, dispersal or release" of the Smoke and Fire Odor Eliminator within the meaning of the exclusion.
Zaiontz next argued that the pollution exclusion does not apply unless the substance moved from the area in which it does not pollute into an area in which it does pollute, citing Clarendon American Ins. Co. v. Bay, 10 F. Supp. 2d 736 (S.D. Tex. 1998). In Bay, the court held that the pollution exclusion did not apply to plaintiffs’ claims arising out of the contact between their skin and the wet cement if the contact occurred while the cement and its ingredients were in the cement's intended container because in that case the resulting injuries did not stem from "discharge, dispersal, seepage, migration or release" of pollutants. Reiterating its conclusion that Zaiontz' injuries stemmed from spraying, and, therefore, the discharge, dispersal and release of a substance, the court went on to hold that under the definition of pollutant, fumes from the Smoke and Fire Odor Eliminator were a pollutant. Significantly, the court cited with approval cases holding that even ordinary substances may be found to be pollutants if they have an irritating effect on the plaintiff.
In sum, the San Antonio Court of Appeals followed the reasoning of the supreme court in National Union v. CBI Industries and rejected Zaiontz' invitation to adopt a "common sense" approach to the pollution exclusion. The opinion by the San Antonio appellate court is well-reasoned and balanced and commends itself to anyone seeking interpretation of the pollution exclusion under Texas law, especially in the context of a workplace injury.