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Court of Appeal, Second District, Division 4, California.


No. B107856.

Decided: March 31, 1998

McGarry & Laufenberg and William Leamon Cummings, El Segundo, for Plaintiff and Appellant. Zelle & Larson, Desiree D. Brutocao and Bryan M. Barber, Los Angeles, for Defendant and Respondent.

This is an appeal from grant of summary judgment in favor of respondent, Wassau Underwriters Insurance Company, and against appellant, Panda Management Company.   The trial court concluded that a claim against appellant resulting from discharge of sewage was not covered by reason of the “Total Pollution Exclusion Endorsement” (pollution endorsement) contained within a Commercial General Liability (CGL) policy issued by respondent to appellant.   We affirm.


On April 1, 1995, appellant was issued two policies of insurance by respondent:  (1) a CGL policy, number 4826 00 000042;  and (2) a Business Property Policy, number 2066 00 056578.

On August 23, 1995, a pressurized drain pipe at a shopping center located at 865 Market Street, San Francisco, California, burst, causing damage to the business premises of Visionary Games & Books (Visionary), a tenant of the shopping center at that location.   Visionary made a claim against appellant which asserted that the disposal of cooking oil at a restaurant owned by appellant in the same shopping center had caused the incident.

Appellant tendered the claim to respondent on September 5, 1995.   Respondent denied the claim on October 24, 1995, based upon the pollution endorsement to its CGL policy.

On December 1, 1995, appellant filed this action against respondent, seeking declaratory relief holding that coverage existed under the CGL policy and requesting damages for breach of the duty to defend it against the Visionary claim.

On February 13, 1996, Bassam E. Khoury and others filed an action against appellant for the property damage asserted in the Visionary claim (the Visionary action).   The complaint alleged that Visionary was a retail toy store located at the San Francisco Shopping Centre at which appellant operated a restaurant known as the “Panda Express” and that the restaurant disposed “of sizable quantities of waste grease and used vegetable cooking oils by allowing, permitting, directing, authorizing and/or failing to prevent said grease and vegetable oils from being poured into the internal plumbing and sewer system of the Centre and, ultimately, into the San Francisco municipal sewer system, through various sink and floor drains and sewer inlets.”   It was further alleged that this disposal violated various City of San Francisco ordinances as well as California Health and Safety Code section 117555 and resulted in rupture of a sewer pipe which inundated the space occupied by Visionary, causing damage to its merchandise and premises.

On March 28, 1996, appellant filed a motion for summary judgment, or in the alternative for summary adjudication, seeking a declaration that respondent owed it a duty to defend the Visionary action.   The motion was opposed by respondent on the basis that no coverage existed because of the pollution exclusion.   The court agreed and denied the motion with the following notation:  “Language of Total Pollution Exclusion Endorsement is clear and unambiguous.   Liability is excluded.   No duty to defend.”

Relying upon this prior determination, on July 29, 1996, respondent filed its own motion for summary judgment.   Appellant filed opposition and raised three arguments which are reprised here on appeal.   First, it relied upon a “Sewer Backup Extension of Coverage Endorsement” contained within the Business Property policy and argued that this extension of coverage under that policy created an ambiguity within the CGL policy.1  Second, it urged that the pollution exclusion applied only to contamination of the environment and not damage to discrete property resulting from discharge of effluence.   Third, it contended that respondent had not carried its burden to disprove that under all potential theories coverage was not afforded, concluding that a duty to defend existed pursuant to (Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 661-662, 42 Cal.Rptr.2d 324, 913 P.2d 878).

On September 13, 1996, the court granted summary judgment.   Judgment was entered on November 8, 1996, and notice of appeal was filed on December 5, 1996.


“In interpreting insurance contracts, terms used therein are interpreted in their ‘ordinary and popular sense,’ unless used by the parties in a technical sense or a special meaning is given them.   If a meaning a layperson ascribes to contract language is not ambiguous, courts will apply that meaning.  [Citations.]   We are well aware of the statement in a number of cases that any ambiguity will be resolved in favor of coverage.   That approach was significantly modified in Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264-1265, 10 Cal.Rptr.2d 538, 833 P.2d 545, and AIU Ins. Co. v. Superior Court [ (1990) ] 51 Cal.3d [807] at page 822, 274 Cal.Rptr. 820, 799 P.2d 1253.   The present approach recognizes that ‘[w]hile insurance contracts have special features, they are still contracts to which ordinary rules of contractual interpretation apply.  [Citation.]’  (Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545.)   Moreover, the ‘ “principle of construction comes into play only if it is first determined that an ambiguity exists, which is also a question of law.”  [Citation.]’  ․ [¶] A term is ambiguous if it is susceptible of two or more interpretations.  [Citation.]   However, coverage terms cannot be analyzed in a vacuum.  [Citation.]   The Policy must be construed in its entirety, with each clause interpreted in relation to the others contained therein.  [Citations.]”  (Transamerica Ins. Co. v. Superior Court (1994) 29 Cal.App.4th 1705, 1714-1715, 35 Cal.Rptr.2d 259.)

 In ascertaining the plain meaning of a term it is appropriate to turn to definitions within dictionaries unless it is proven that terms are being used in a technical sense.  (AIU Ins. Co. v. Superior Court, supra, 51 Cal.3d at pp. 826-827, 274 Cal.Rptr. 820, 799 P.2d 1253;  Shell Oil Co. v. Winterthur Swiss Ins. Co. (1993) 12 Cal.App.4th 715, 746, 15 Cal.Rptr.2d 815.)

Here, the grant of coverage is contained within item 1 under coverage A of section 1 as follows:  “We will pay those sums the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.   We will have the right and duty to defend any ‘suit’ seeking those damages.”

Item 2, contained within the same section, lists fourteen exclusions of which exclusion f, the standard pollution exclusion, is one of the exclusions listed.   This standard exclusion is modified by the “Total Pollution Exclusion Endorsement” which reads as follows:

“Exclusion f. is replaced by the following:

“f. (1) ‘Bodily injury’ or ‘property damage’ which arises out of or would not have occurred in whole or [in] part but for the actual, alleged or threatened discharge, dispersal, release or escape of pollutants at any time.

“(2) Any loss, cost or expense arising out of any request, demand or order that you or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants.

“Pollutants mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.   Waste includes material to be recycled, reconditioned or reclaimed.

“Subparagraph (1) of this exclusion does not apply to ‘bodily injury’ or ‘property damage’ caused by heat, smoke or fumes from a hostile fire.   As used in this exclusion, a hostile fire means one which becomes uncontrollable or breaks out from where it was intended to be.

“This exclusion applies to all coverage afforded by this policy, including the coverage within the ‘products/completed operations hazard.”  (Italics added.)

Appellant relies upon reference to its separate first party property damage policy to establish an ambiguity in the third party liability policy.   We reject this approach.  “ ‘Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation.  (Civ.Code, § 1636.)   Such intent is to be inferred, if possible, solely from the written provisions of the contract.  (Id. § 1639.)   The “clear and explicit” meaning of these provisions, interpreted in their “ordinary and popular sense,” unless “used by the parties in a technical sense or a special meaning is given to them by usage” (id.   § 1644), controls judicial interpretation.  (Id. § 1638.)’ ”  (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18, 44 Cal.Rptr.2d 370, 900 P.2d 619;  italics added;  see also AIU Ins. Co. v. Superior Court, supra, 51 Cal.3d at p. 822, 274 Cal.Rptr. 820, 799 P.2d 1253 and Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1265, 10 Cal.Rptr.2d 538, 833 P.2d 545.)

 In other words, we will not read words or terms into an insurance policy absent evidence that the parties, either through their actions or expressed intent, changed the meaning of the language of the policy at issue.   Other than the existence of the first party policy, no evidence was presented by appellant that either of the parties expected or intended that language from one policy would be utilized to interpret the other.   Absent such evidence, we will not utilize the other policy to interpret the CGL policy.

 Appellant also argues that case and statutory law support its expectation that damage to another arising from sewage backup would not be treated as pollution.   Again, there is no independent evidence to establish that the parties intended or expected that the cases and statutory law relied upon by appellant would be read into the CGL policy.   Thus, we interpret the policy based solely upon its own language to make a determination whether the policy itself is ambiguous with respect to the coverage issue.   We conclude that it is not.

 As previously noted, included within the definition of the term pollutants is solid or liquid waste.   As pertinent, the term “waste” is defined in Merriam Webster's Collegiate Dictionary (10th ed.1995) as “4 ․ b:  refuse from places of human or animal habitation;  as (1):  GARBAGE, RUBBISH (2):  EXCREMENT ․ (3):  SEWAGE.”  (Id. at p. 1333.)   The term sewage is defined as “refuse liquids or waste matter carried off by sewers.”   (Id. at p. 1073.)   There can be no doubt that the material contained within the drain pipe and which inundated the Visionary premises was waste, clearly and unambiguously defined as a pollutant within the policy.

 The key here is the wording of the exclusion, more particularly the terms “discharge, ․ release or escape of pollutants.”   The word discharge means “to pour forth fluid or other contents.”  (Id. at p. 330.)   The word release means “to let go.”  (Id. at p. 987.)   The term escape means “leakage or outflow esp. of a fluid.”  (Id. at p. 395.)   Each of these terms conveys a meaning significant to the incident which gave rise to the underlying claim.

 The allegations of the underlying action, as characterized within the instant case, effectively claim that appellant's restaurant “discharged” and “released” waste grease and cooking oils into the internal sewer system of the shopping center, resulting in backup of the system and ultimately causing “escape” of the waste into the Visionary premises.   The fact that clogging of the system contributed to the “escape” of the waste is of no moment because the terms of the policy provide for application of the pollution exclusion where the damage “would not have occurred in whole or [in ] part but for the ․ discharge, ․ release or escape of pollutants at any time.”  (Italics added.)


The judgment is affirmed.   Costs are awarded to respondent.


1.   That endorsement provides as follows:  “It is agreed [that] this policy is extended to cover loss caused by or resulting from water which backs up through sewers or drains.”

HASTINGS, Acting Presiding Justice.

BARON and CZULEGER**, JJ., concur.