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National Elec. Mfrs. Ass'n v. Gulf Underwriters Ins. Co.

Citation: 29 ELR 20433
No. 97-2319, 162 F.3d 821/(4th Cir., 12/29/1998)

The court holds that an excess insurer did not have a duty to defend a trade association against negligence claims arising from standards the association set for its members' use of manganese in welding rods. A group of welders had sued the association claiming that the standards had exposed them to dangerous levels of manganese fumes, and the association now seeks a declaratory judgment for insurance coverage and defense costs. The court first holds that a pollution exclusion clause in the association's insurance policy unambiguously and explicitly excludes coverage by the excess insurer. The pollution exclusion clause relieves the excess insurer of its duty to defend where claims arise from the creation of an injurious condition involving any pollutant. The exclusion defines pollutant to include any solid, gaseous, or thermal irritant or contaminant, including fumes. The welders' claims arise from the creation of injury resulting from the exposure to manganese fumes. In addition, the fact that the welders brought their claims as negligence claims does not remove their claims from the pollution exclusion clause. In analyzing the applicability of the exclusion, all that matters is whether the injurious condition about which the welders complain arose from the dissemination of a pollutant. Furthermore, because the pollution exclusion clause unambiguously covers the welders' claims, the court refuses to apply the reasonable expectation test to limit the breadth of the pollution exclusion to environmental pollution. The language of the pollution exclusion clause is unambiguous and is clearly not limited to atmospheric or environmental pollution. The court next holds that the association failed to satisfy the conditions precedent to the excess insurer's coverage. The association failed to demonstrate that it exhausted its primary or other excess insurance before seeking coverage from the excess insurer.

Counsel for Plaintiff
Lorelie S. Masters
Anderson, Kill & Olick
2000 Pennsylvania Ave. NW, Ste. 7500, Washington DC 20006
(202) 728-3100

Counsel for Defendant
Don W. Fowler
Lord, Bissell & Brook
Harris Bank Bldg.
115 S. La Salle St., Ste. 2600, Chicago II 60603
(312) 443-0700

Before Widener and Luttig, JJ.