In Clendenin Brothers, Inc. v. United States Fire Ins. Co., 2006 WL 27432 (Md. Jan. 6, 2006), a Maryland appeals court found that an insurer was not relieved of its duty to defend against a claim for injuries arising from manganese welding fumes by invoking the pollution exclusion.
Plaintiffs in underlying lawsuits claimed that Clendenin Brothers' welding products produced harmful fumes containing manganese, which caused bodily injury and neurological damage. U.S. Fire sought a declaratory judgment stating that it had no duty to defend or indemnify, based on the total pollution exclusions in the general liability and umbrella policies it issued to Clendenin Brothers.
The policies' pollutions exclusions stated: "This Insurance does not apply to:…f. (1) 'Bodily Injury' or 'property damage' which would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape or pollutants at any time." The policies defined "pollutants" as "any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste."
The court was presented with an issue of first impression in Maryland : does a total pollution exclusion relieve the insurer from its duty to defend or indemnify if "the alleged harm was caused by localized, workplace manganese welding fumes"?
The court found a reasonably prudent person could interpret the exclusion to both include and exclude the fumes.
On the one hand, the court reasoned, a prudent person could find that manganese welding fumes fall under the policies' definition of "pollutant," which includes "fumes." However, the court also said that a prudent person could conclude the opposite. By the policies' definition, the substance must be an irritant or contaminant. But, some prudent persons, the court opined, might not consider manganese to be a contaminant or irritant. The element has positive applications and is used in a welder's normal course of business.
The court also turned to the development of the pollution exclusion to show that excluding localized manganese welding fumes was not the intended purpose of the exclusion. Citing its decision in another case where it examined the exclusion's history, the court stated that "the insurance industry intended the pollution exclusion to apply only to environmental pollution."
The court further said that "noxious workplace fumes were not intended to be excluded…the terms 'discharge,' 'dispersal,' 'release,' 'escape,' 'contaminant,' and 'pollutants' are terms of art in environmental law and are used by Maryland courts to refer to environmental exposures." The pollution exclusion was found to be ambiguous regarding manganese welding fumes.