Ohio Sec. Ins. Co. v. B&B Heat & Air, Inc.

642 F.Supp.3d 1282

OHIO SECURITY INSURANCE COMPANYand The Ohio Casualty Insurance Company, Plaintiffs, v. B&B HEAT & AIR, INC. and Ann Kinser, Defendants.

Case No. 21-CV-009-CVE-SH

United States District Court, N.D. Oklahoma

Signed November 23, 2022

Margo Elizabeth Shipley, Robert P. Fitz-Patrick, William Walker O'Connor, Hall Estill Hardwick Gable Golden & Nelson, Tulsa, OK, for Plaintiffs.

Katherine Ann Taylor Loy, Marcus Glen Mullins, Durbin Larimore & Bialick, Oklahoma City, OK, for Defendant B&B Heat & Air, Inc. Daniel E. Smolen, David Matthew Bross, Smolen and Roytman, Tulsa, OK, for Defendant Ann Kinser.

OPINION AND ORDER

CLAIRE V. EAGAN, UNITED STATES DISTRICT JUDGE

Now before the Court is plaintiffs' motion for summary judgment (Dkt. # 30). Plaintiffs Ohio Security Insurance Company (Ohio Security) and The Ohio Casualty Insurance Company (Ohio Casualty) filed this case seeking a declaratory judgment that they have no duty to defend or indemnify defendant B & B Heat & Air, Inc. (B & B) against claims filed by Ann Kinser in state court concerning the allegedly negligent installation of a heating, ventilation, and air conditioning (HVAC) system. The parties dispute whether an exclusion in the insurance policy concerning the dispersal of "pollutants" applies to Kinser's claims. Plaintiffs argue that the policy language is clear and unambiguous that any bodily injury caused by the dispersal of pollutants is excluded from coverage under the policy. B & B argues that the policy language is ambiguous as applied to the facts of this case, because B & B did not use or apply any "pollutants" during its work and B & B had a reasonable expectation that it would be covered for the completed installation of an HVAC system.

I.

B & B is an HVAC contractor operating in Oklahoma, and B & B purchased a general commercial liability (GCL) policy from Ohio Security that was in effect from June 16, 2017, to June 16, 2018. Dkt. # 2-1, at 26. B & B also purchased a commercial umbrella policy from Ohio Casualty covering the same time period. Dkt. 2-2, at 8. The GCL policy had a coverage limit of $1 million per occurrence, with a general aggregate limit of $2 million. Dkt. # 2-1, at 40. Ohio Security agreed to "pay those sums that the insured becomes legally obligated to pay because of 'bodily injury' or 'property damage' to which this insurance applies." Id. at 48. This includes a duty to defend B & B against any "suit" seeking such damages, but Ohio Security has no obligation to defend B & B against claims for which the insurance does not apply. Id. "Bodily injury" is defined as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time." Id. at 61. B & B purchased "completed operations" coverage as part of the policy with a $2 million aggregate policy limit. Id. at 27, 40-44. Completed operations coverage applies to claims for bodily injury or property damage "occurring away from premises you own or rent and arising out of 'your product' or 'your work . . . .' " Id. at 63. This coverage applies only to completed products or work that are no longer in the possession or control of B & B. Id. "Your work" is defined as "work or operations performed by you or on your behalf [and] [m]aterials, parts or equipment furnished in connection with such work or operations." Id. at 64. The GCL policy specifically references the "products completed" coverage in at least two exclusions, and the policy does not contain any express or implied representation that exclusions in the policy are not applicable to "products completed" coverage. Dkt. # 2-1, at 52 (stating that paragraph six of the "Damage to Property" exclusion does not apply to products-completed operation hazard and the "Damage to Your Work" exclusion precludes coverage for property damage to " 'your work' arising out of it and any part of it and included in the 'products-completed operations hazard' ").

The umbrella policy issued by Ohio Casualty applies when B & B becomes "legally obligated to pay by reason of liability imposed by law or assumed by the 'Insured' under an 'insured contract' because of 'bodily injury' . . . that takes place during the Policy Period and is caused by an 'occurrence' " for amounts in excess of the "retained limit." Dkt. # 2-2, at 12. In this case, the umbrella policy becomes applicable if B & B becomes liable for amounts in excess of the policy limits of the GCL policy.

The GCL policy contains numerous exclusions to coverage, including a pollution exclusion for bodily injury or property damage "arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of 'pollutants.' " Id. at 50. The GCL policy defines "pollutants" as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed." Id. at 63. The pollution exclusion included in the GCL policy is modified by a total pollution exclusion that states as follows:

This insurance does not apply to:

(1) "Bodily injury" or "property damage" which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants" at any time . . . .

Id. at 71. The GCL policy also contains an exclusion for "silica or silica-related dust," and the GCL policy does not apply to claims for " 'bodily injury' arising, in whole or in part, out of the actual, alleged, threatened or suspected inhalation of, or ingestion of, 'silica' or 'silica-related dust.' " Id. at 76. "Silica" is defined as "silicon dioxide (occurring in crystalline, amorphous and impure forms), silica particles, silica dust or silica compounds," and " '[s]ilica-related dust' means a mixture or combination of silica and other dust or particles." Id. at 76.

In April 2018, B & B installed a new HVAC system in the attic of Ann Kinser's home in Grove, Oklahoma. Dkt. # 2-3, at 3. Kinser alleges that B & B failed to ensure that the new HVAC system was properly sealed in at least two locations and, due to B & B's negligent installation, the "HVAC system would pull small, poisonous, fibrous pieces of fiberglass installation from the attic and distribute it throughout [Kinser's] home." Id. Kinser alleges that B & B unsuccessfully attempted to repair the faulty installation of the HVAC system, and she claims that she inhaled particles of fiberglass anytime she was inside her home. Id. Kinser claims that she suffered from serious health problems and was forced to move out of her home. Id. Kinser retained counsel and B & B received notice of a potential lawsuit by Kinser, and B & B contacted Ohio Security upon learning of the potential litigation. Dkt. # 30-2, at 2. Ohio Security declined to retain counsel to represent B & B, because Ohio Security had no duty to defend B & B until Kinser actually commenced litigation. Id. at 7. Ohio Security also advised B & B that it likely had no duty to indemnify B & B against any claims brought by Kinser, because the pollution and silica dust exclusions appeared to be applicable based on Kinser's allegations. Id. at 8. Kinser subsequently filed a lawsuit against B & B in Delaware County District Court alleging a negligence claim and she sought damages in excess of $75,000. B & B again contacted Ohio Security and requested that Ohio Security defend B & B against Kinser's negligence claim. Ohio Security sent a letter (Dkt. # 30-3) denying B & B's request for defense and indemnification against Kinser's negligence claim, inter alia, based on the total pollution and silica dust exclusions in the GCL policy. Dkt. # 30, at 10.

Ohio Security and Ohio Casualty filed this case seeking a declaratory judgment that they have no obligation to defend or indemnify B & B against Kinser's negligence claim. Plaintiffs allege that "many" exclusions in the policies apply to Kinser's claim, but plaintiffs' complaint focuses on the applicability of the pollution exclusion in the GCL policy. Dkt. # 2, at 4. Plaintiffs filed a motion for judgment on the pleadings (Dkt. # 30), and B & B asked the Court to convert the motion into a motion for summary judgment. Dkt. # 53. The Court granted B & B's request to convert the motion for judgment on the pleadings into a motion for summary judgment, and the parties filed supplemental briefing with evidence outside of the pleadings.

II.

Summary judgment pursuant to Fed. R. Civ. P. 56 is appropriate where there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Kendall v. Watkins, 998 F.2d 848, 850 (10th Cir. 1993). The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 317, 106 S.Ct. 2548. "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed 'to secure the just, speedy and inexpensive determination of every action.' " Id. at 327, 106 S.Ct. 2548.

"When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts . . . . Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.' " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538...