Is My Drywall Chinese? - HB Litigation Conferences

sought to ensure that its chosen language was consistent with references to “hazardous
substances” 23 and federal environmental statutes. Furthermore, the language of the APE focuses
on the “actual . . . or threatened discharge, dispersal, release, or escape of pollutants . . .,” both of
which echo themes from the Superfund statute. 24
Consideration of this evidence shows that the interpretation of the APE put forth by
insurance companies is not – as it must be for an insurer to meet its burden of proof 25 – the only
reasonable one. Policy language is considered ambiguous if “it is susceptible of more than one
reasonable interpretation.” 26 Policyholders reasonably have expected that coverage for ordinary
liabilities like products liability and premises risks would not be precluded by a “pollution
exclusion.” Accordingly, because the insurance contract was drafted exclusively by the insurers,
the ambiguous provisions should be construed to accord with the objectively reasonable
expectations of the policyholder. 27
23 1982 NAIC Proc. 596, at *685.
24 See, e.g., 42 U.S.C. § 9607(a)(4)(A) (emphasis added); see also Porterfield v. Audubon
Indem. Co., 856 So. 2d 789 (Ala. 2002).
25 E.g., State Farm Lloyd’s v. Goss, 109 F. Supp. 2d 574 (E.D. Tex. 2000); York Ins. Co. v.
Williams Seafood of Albany, Inc., 544 S.E.2d 156 (Ga. 2001). See also 19 Couch on Insurance
2d §§ 79.417, 79.484 (rev. ed. 1983 & Supp. 2009).
26 Chase v. State Farm Fire & Cas. Co., 780 A.2d 1123, 1127-28 (D.C. 2001) (internal
quotation marks and citation omitted). An ambiguity in an insurance contract can be either
patent – one apparent from the face of the provision – or latent –where, although the contract
may be clear on its face, “anyone knowing the background would know that it didn’t mean what
it seems to mean.” Stone Container Corp. v. Hartford Steam Boiler Inspection & Ins. Co., 165
F.3d 1157, 1162 (7th Cir. 1999). The APE and TPE arguably contain both patent and latent
ambiguities.
27
Keene Corp. v. Insurance Co. of N. Am., 667 F.2d 1034, 1041-42 (D.C. Cir. 1981); Travelers
Indem. Co. of Ill. v. United Food & Commercial Workers Int’l Union, 770 A.2d 978, 986 (D.C.
2001). Insurance companies typically attempt to reverse the burden of proof by suggesting that
the policyholder must prove the provision ambiguous. To the contrary, it is the insurance
(Cont’d . . .)
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