MARICOPA COUNTY v. ARIZONA PROPERTY CASUALTY INSURANCE GUARANTY FUND (2000)

MEMORANDUM DECISION

¶ 1 Plaintiff/appellant Maricopa County (Maricopa) appeals from the trial court's entry of partial summary judgment for the defendants/appellees insurance carriers pursuant to Rules 54(b) and 56(b), Ariz. R. Civ. P., 16 A.R.S. This appeal raises issues of interpretation and applicability of the “pollution exclusion” in standard comprehensive general liability (CGL) insurance policies. We conclude that, in ruling on those issues, the trial court erroneously refused to consider extrinsic evidence relating to the drafting history and regulatory approval of the exclusion. Because of unresolved evidentiary issues relating to the admissibility of that evidence, and because the evidence, if admissible, may affect the trial court's ruling, we vacate the summary judgment and remand for further proceedings.

BACKGROUND

¶ 2 According to its opening brief, Maricopa allegedly faces “millions of dollars of potential liability as a result of certain actions brought by the Arizona Department of Environmental Quality (‘ADEQ’) and the United States Environmental Protection Agency (‘EPA’).” Maricopa contends ADEQ and EPA generally have alleged in those enforcement actions that Maricopa is responsible for the investigation and possible cleanup of contamination on or near four sites that it owns or leases. This appeal involves only two of those sites, referred to as the Hassayampa Landfill and the Materials Warehouse site. Maricopa requested the defendant insurance carriers to defend and, if necessary, indemnify it for any damages arising from the government enforcement actions. After the insurers denied coverage and refused to defend or indemnify Maricopa in any of those actions, Maricopa filed this action for declaratory relief and damages.

¶ 3 The defendant carriers moved for partial summary judgment with respect to the Hassayampa Landfill, contending that a standard pollution exclusion in their CGL policies barred coverage. That exclusion, contained in most CGL policies, stated that coverage did not apply to bodily injury or property damage:

Arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste material or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental. 1

The policies at issue here do not define “sudden and accidental.”

¶ 4 The trial court granted the carriers' motion, ruling that the term “sudden” in the exception is not ambiguous and has a “temporal meaning.” The court also ruled that Maricopa had “dispersed” waste materials into the Hassayampa Landfill, knowing “what it was receiving ․ and that it posed a significant risk of pollution.” As to that site, the court further concluded that Maricopa had “dispersed waste materials or pollutants ‘into or upon land,’ ․ the disposal was not accidental[,] ․ [and] the mechanism by which contamination later occurred does not affect coverage.” Finally, based on those conclusions, the court also noted that it “need not consider the applicability of the term ‘sudden.’ “

¶ 5 The trial court initially denied the carriers' separate motion for partial summary judgment with respect to the Materials Warehouse site because of “factual disputes [that] exist.”² The court later reconsidered that ruling, however, and granted the motion based on the court's prior interpretation of the “sudden and accidental” exception. This appeal followed the trial court's entry of a formal judgment for defendants as to the Hassayampa Landfill and Materials Warehouse sites.

DISCUSSION

¶ 6 “On appeal from a summary judgment, we must determine de novo whether there are any genuine issues of material fact and whether the trial court erred in applying the law.” Bothell v. Two Point Acres, Inc., 192 Ariz. 313, ¶ 8, 965 P.2d 47, ¶ 8 (App.1998). Although we must view the facts in the light most favorable to the nonmoving party, id. at ¶ 2, Maricopa does not argue that any material factual dispute exists as to the trial court's rulings that it challenges. Therefore, “we determine whether the trial court correctly applied the substantive law,” Carden v. Golden Eagle Insurance Co., 190 Ariz. 295, 296, 947 P.2d 869, 870 (App.1997), and we will affirm the trial court's ruling if it is correct on any ground. Glaze v. Marcus, 151 Ariz. 538, 540, 729 P.2d 342, 344 (App.1986).

¶ 7 Interpretation of an insurance contract generally involves a matter of law which we review de novo. University Mechanical Contractors of Arizona, Inc. v. Puritan Ins. Co., 150 Ariz. 299, 301, 723 P.2d 648, 650 (1986); National Bank of Arizona v. St. Paul Fire & Marine Ins. Co., 193 Ariz. 581, ¶ 12, 975 P.2d 711, ¶ 12 (App.1999). But when the policy language in question, “illuminated by the surrounding circumstances, indicates that either of the interpretations offered [is] reasonable,” and when “extrinsic evidence establishe[s] controversy over what occurred and what inferences to draw from the events, the matter [is] properly submitted to the [trier of fact].” Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 159, 854 P.2d 1134, 1145 (1993).

I. Interpretative Materials Relating to Pollution Exclusion

¶ 8 Defendants contend, and the trial court ruled, that the term “sudden” in the pollution exclusion is unambiguous and has a “temporal meaning.” Therefore, defendants argue, the exclusion precludes coverage unless the “discharge, dispersal, release or escape” not only is “unexpected and unintended” but also occurs abruptly or instantaneously, not gradually over time. In contrast, Maricopa contends the phrase “sudden and accidental” only means “unexpected and unintended.” To support that interpretation, Maricopa sought to introduce various insurance industry documents from the Insurance Rating Board (IRB), a nationwide organization of insurance companies, and the ISO³ relating to the drafting, marketing, and regulatory approval of the pollution exclusion (hereinafter the “interpretative materials”).

¶ 9 Maricopa's proffered evidence generally showed that in 1970, the IRB had drafted and had urged states to adopt the pollution exclusion. On behalf of its “member and subscriber companies,” the IRB sent letters to various state insurance regulators to encourage them to approve the exclusion in standard CGL policies. In such a letter to Arizona's Director of Insurance in May 1970, the IRB expressed a “need for prompt introduction of these exclusions in recognition of the potential and grave exposures reflected in the exclusions not previously envisioned,” and explained the pollution exclusion as follows:

Coverage for pollution or contamination is not provided in most cases under present policies because the damages can be said to be expected or intended and thus are excluded by the definition of occurrence. The above exclusion clarifies this situation so as to avoid any question of intent. Coverage is continued for pollution or contamination caused injuries when the pollution or contamination results from an accident except that no coverage will be provided under certain operations for injuries arising out of discharge or escape of oil into any body of water.

¶ 10 The defendants filed a motion to strike Maricopa's proffered materials. Relying on ACL Technologies, Inc. v. Northbrook Property and Casualty Insurance Co., 22 Cal.Rptr.2d 206 (Cal.Ct.App.1993), the trial court granted the motion and, therefore, refused to consider the materials. Maricopa later moved for reconsideration of that ruling, contending that Ohio Casualty Insurance Co. v. Henderson, 189 Ariz. 184, 939 P.2d 1337 (1997), compelled the trial court to consider the interpretive materials. The trial court denied that motion without explanation.

¶ 11 In ACL Technologies, the California court refused to consider drafting materials primarily because “the drafting history argument is inconsistent with the rules of insurance contract interpretation” articulated in earlier California decisions and because, “[g]iven the rule that unambiguous language should control, use of drafting history indicates that the court involved has already decided that the language is ambiguous.” 22 Cal.Rptr.2d at 217. According to the court, the insureds were attempting to define “sudden and accidental” as “gradual as long as unintended and unexpected,” a definition that contradicted the clear meaning of “sudden.” Id. The court, therefore, refused to consider parol evidence to support the insured's contrary interpretation. Finally, the court noted the absence of any evidence that the insured had been aware of or relied on the “ ‘industry interpretations” of the pollution exclusion. Id. at 218. See also Smith v. Hughes Aircraft Co., 783 F.Supp. 1222, 1229 (D.Ariz.1991), aff'd in pertinent part, 22 F.3d 1432 (9th Cir.1993) (“The drafting history has little or no relevance because [the insured] has failed to tie it to the parties' intent,” and “there is no evidence that either [party] relied on the exclusion's birthright when inserting it into the CGL policy.”).

¶ 12 Maricopa contends the trial court's reliance on ACL Technologies was “patent error” because the California court's reasoning directly conflicts with well-established principles in Arizona. Maricopa asserts, and we agree, that the rules for interpreting insurance contracts in Arizona differ considerably from those that the court in ACL Technologies utilized. First, our supreme court clearly has rejected “the often repeated and usually over-simplified construct that ambiguity must exist before parol evidence is admissible” and has particularly “criticized the ambiguity prerequisite in the context of non-negotiated [insurance] agreements.” Taylor, 175 Ariz. at 154, 854 P.2d at 1140; see also State Farm Mut. Auto. Ins. Co. v. Wilson, 162 Ariz. 251, 257, 782 P.2d 727, 733 (1989); Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 140 Ariz. 383, 389, 682 P.2d 388, 394 (1984). And, in Arizona, “[t]he determination that an ambiguity must be construed against the insurer comes. at the end of our inquiry, not at the beginning.” Wilson, 162 Ariz. at 258, 782 P .2d at 734.

¶ 13 The court in ACL Technologies required “a showing of ambiguity before extrinsic evidence may be admitted to shed light on that ambiguity,” 22 Cal.Rptr.2d at 217, and the district court in Smith framed the “threshold question ․ [as] whether the disputed-policy terms are ambiguous,” 783 F.Supp. at 1225. In Arizona, however, “there is no need to make a preliminary finding of ambiguity before the judge considers extrinsic evidence.” Taylor, 175 Ariz. at 152, 854 P.2d at 1138.

¶ 14 Second, instead of conditioning interpretation of insurance policies on a preliminary finding of ambiguity, our supreme court has adopted a “common sense” approach under which several factors are analyzed. Wilson, 162 Ariz. at 257, 782 P.2d at 733. As the court recently stated: “We believe the proper methodology is to determine the meaning of the clause—where it is susceptible to different constructions—by examining the purpose of the exclusion in question, the public policy considerations involved and the transaction as a whole.” Ohio Cas., 189 Ariz. at 186, 939 P.2d at 1339. See also Wilson, 162 Ariz. at 257, 258, 782 P .2d at 733, 734 (“[T]he rule in Arizona is that we construe a clause subject to different interpretations by examining the language of the clause, public policy considerations, and the purpose of the transaction as a whole,” “including the reasonable expectations of the insured.”); Arizona Property & Cas. Ins. Guar. Fund v. Helme, 153 Ariz. 129, 135, 735 P.2d 451, 457 (1987).⁴

¶ 15 Although Taylor, unlike this case, did not involve interpretation of an insurance policy, it offers guidance in determining whether the trial court should have considered Maricopa's proffered interpretive materials for purposes of determining whether the pollution exclusion is reasonably “ ‘susceptible to different constructions.” Ohio Gas., 189 Ariz. at 186, 939 P.2d at 1339, quoting Transamerica Ins. Group v. Meere, 143 Ariz. 351, 355, 694 P.2d 181, 185 (1984). Taylor contemplates a two-step process for interpreting contracts generally and evaluating parol evidence. First, the court preliminarily should consider evidence “that is alleged to determine the extent of integration, illuminate the meaning of the contract language, or demonstrate the parties' intent.” Taylor, 175 Ariz. at 153, 854 P.2d at 1139. Second, in “ ‘finalizing’ the court's understanding of the contract[,] ․ the parol evidence rule applies and precludes admission of the extrinsic evidence that would vary or contradict the meaning of the written words.” Id.

¶ 16 Thus, in determining whether contractual language is reasonably susceptible to the interpretation asserted by the proponent of the extrinsic evidence, the trial court should, at least preliminarily, consider the proffered evidence unless it clearly “does not aid in interpretation but, instead, varies or contradicts the written words.” Id. Applying the foregoing principles to this case, we conclude that the trial court erred in refusing to consider the proffered interpretive materials relating to the pollution exclusion. Those materials arguably “illuminate the meaning of the contract language” and allegedly demonstrate defendants' intent when the pollution exclusion was proposed and approved. Id. The trial court's conclusion that “the term ‘sudden and accidental’ is not ambiguous” neither justified its refusal to consider nor necessarily mandated its exclusion of the extrinsic evidence. See Wilson, 162 Ariz. at 257, 782 P.2d at 733 (“[N]either language nor apparent ambiguity alone is dispositive” in construing insurance policies.).

¶ 17 Contrary to the arguments of defendants and amicus curiae, we further conclude that the “sudden and accidental” exception to the pollution exclusion is “reasonably susceptible” to different interpretations. See Taylor, 175 Ariz. at 158–59, 854 P.2d at 1144–45 (“Whether contract language is reasonably susceptible to more than one interpretation so that extrinsic evidence is admissible is a question of law for the court.”). Similarly, we cannot say as a matter of law that Maricopa's proffered evidence “var[ies] or contradict[s] the meaning of the written words” such that the evidence should be excluded on that basis alone. Id. at 153, 854 P.2d at 1139.

¶ 18 In reaching these legal conclusions, we do not write on a blank slate. Rather, at least twenty-five state courts and multiple federal courts already have addressed and interpreted the “sudden and accidental” exception to the standard pollution exclusion. Most, if not all, of what can be said already has been said by those courts. Substantial authority supports both insurance carriers⁵ and policyholders⁶ on the issues relating to the exception. In general, courts holding in favor of insurers have focused on the plain wording of the policy language, found it unambiguous, ascribed a temporal meaning to the word “sudden” and, therefore, applied the pollution exclusion to preclude coverage in situations such as this that involve gradual dispersal or discharge of contaminants into the environment. In contrast, courts holding in favor of policyholders generally have considered extrinsic materials, such as evidence of drafting history and dictionary definitions of “sudden,” examined prior judicial constructions of “sudden and accidental” in other insurance contexts, concluded that the phrase is ambiguous, resolved that ambiguity against the insurer, and accordingly found coverage for gradual contamination as long as the pollution was unexpected and unintended.

¶ 19 In Taylor, our supreme court noted that it had discarded the former doctrine that “if one court found a contract ambiguous and another found it clear, it must be ambiguous.” Taylor, 175 Ariz. at 155 n. 3, 854 P.2d at 1141 n. 3, disapproving Federal Ins. Co. v. P.A.T. Homes, Inc., 113 Ariz. 136, 138–39, 547 P.2d 1050, 1052–53 (1976). In view of the abundant authority and wide divergence of respectable opinions on the meaning of “sudden and accidental” in cases such as this, however, we have little trouble concluding that the clause is reasonably susceptible to differing interpretations. Moreover, Maricopa's proffered interpretive materials, assuming their admissibility, support that conclusion. So, too, do the various dictionary definitions of “sudden.” See Claussen v. Aetna Cas. & Sur. Co., 380 S.E.2d 686, 688 (Ga.1989) (“The primary dictionary definition of the word is ‘happening without previous notice or with very brief notice; coming or occurring unexpectedly; not foreseen or prepared for.’ Webster's Third New International Dictionary, at 2284 (1986). See also Funk and Wagnalls Standard Dictionary at 808 (1980); Black's Law Dictionary, at 1284 (1979).”).

¶ 20 As they did in the trial court, defendants contend the proffered interpretive materials “are irrelevant because they do not relate to the parties' intent” and contain no “party's statements.” Evidence is relevant if it has “any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Ariz. R. Evid. 401, 17A A.R.S.; see also Hawkins v. Allstate Ins. Co., 152 Ariz. 490, 499, 733 P .2d 1073, 1082 (1987) (“[R]elevance requires only a modicum of rationally probative force.”). In our view, the proffered interpretive materials meet that standard.

¶ 21 In cases involving negotiated agreements, the trial court initially should “eliminate the [extrinsic] evidence that has no probative value in determining the parties' intent.” Taylor, 175 Ariz. at 153, 854 P.2d at 1139. But in cases such as this that involve standardized, non-negotiated insurance policies, attempting to divine the parties' “intent” often is futile. As our supreme court has recognized, “treating [such] contracts as if they were traditional ‘agreements,’ reached by bargaining between the parties,” leads to “[a]rtificial results.” Darner, 140 Ariz. at 389, 682 P.2d at 394. See also Zuckerman v. Transamerica Ins. Co., 133 Ariz. 139, 144, 650 P.2d 441, 446 (1982). Therefore, “the parol evidence rule has not been strictly applied to enforce an illusory ‘bargain’ set forth in a standardized contract when that ‘bargain’ was never really made and would, if applied, defeat the true agreement which was supposedly contained in the policy.” Darner, 140 Ariz. at 390–91, 682 P.2d at 395–96.

¶ 22 The trial court did not expressly rule on defendants' relevancy objection. And, in view of its refusal to even consider the interpretive materials, the trial court apparently did not review them and, therefore, did not evaluate their probative value. Those materials reflect that the IRB drafted and sought regulatory approval of the pollution exclusion in 1970. Because the IRB allegedly represented numerous insurance carriers, including defendants,⁷ evidence of its interpretation of and representations relating to the exclusion arguably may be imputed to defendants and, at a minimum, is probative of their intent.

¶ 23 That Maricopa was unaware of and did not rely on the interpretive materials when it purchased defendants' policies does not render the materials irrelevant or unworthy of consideration. See Darner, 140 Ariz. at 391, 682 P.2d at 396, quoting and adopting Restatement (Second) of Contracts § 211(2) (1981) (should interpret standardized agreements “wherever reasonable as treating alike all those similarly situated, without regard to their knowledge or understanding of the standard terms of the writing”). As Professor Corbin states:

The practical interpretation of the contract by one party, evidenced by his words or acts, can be used against him on behalf of the other party, even though that other party had no knowledge of those words or acts when they occurred and did not concur in them. In the litigation that has ensued, one who is maintaining the same interpretation that is evidenced by the other party's earlier words, and acts, can introduce them to support his contention.

3 Arthur L. Corbin, Corbin on Contracts § 558, at 256 (1960). Arizona has adopted the Corbin view. See Taylor, 175 Ariz. at 153, 854 P.2d at 1139; Darner, 140 Ariz. at 393, 682 P.2d at 398; Johnson v. Cavan, 152 Ariz. 452, 454, 733 P.2d 649, 651 (App.1986). Thus, at least in the context of standardized, form insurance policies such as those involved in this case, we reject defendants' assertion that evidence of a party's unilateral, uncommunicated understanding of contractual terms is automatically inadmissible. Accordingly, we find the Ninth Circuit's conclusion in Smith that the interpretive materials are “irrelevant because [the insured] has not shown that it relied on [them] or that the [drafting] history played any part in the policy negotiations,” incompatible with Darner and the Restatement. 22 F.3d at 1437.

¶ 24 As they did in the trial court, defendants also contend the interpretive materials are “unauthenticated,” “lack foundation,” and constitute “inadmissible hearsay.” Although Maricopa responded to those objections in the trial court, it has not done so on appeal. Only facts that “would be admissible in evidence” may be used or considered in summary judgment proceedings. Ariz. R. Civ. P. 56(e); see Florez v. Sargeant, 185 Ariz. 521, 526–27, 917 P.2d 250, 255–56 (1996).

¶ 25 In accordance with Arizona caselaw, defendants moved to strike Maricopa's proffered interpretive materials on evidentiary and other grounds. See Johnson v. Svidergol, 157 Ariz. 333, 335, 757 P.2d 609, 611 (App.1988) (inadmissible or otherwise deficient materials submitted in support of, or in opposition to, motion for summary judgment should be challenged through motion to strike or objection is waived). The trial court struck Maricopa's proffered materials but did not expressly rule on any of defendants' evidentiary objections. In addition, defendants filed various documents to refute Maricopa's construction of the interpretive materials it had submitted, in the event the trial court were to consider such extrinsic evidence. The trial court did not consider any of those documents, and Maricopa contends that many of defendants' proffered materials “apparently were exhibits to a deposition taken in another unidentified lawsuit” and that, in any event, those materials provide little support for defendants' position.

¶ 26 According to Maricopa, the “uncontroverted” interpretive materials demonstrate that the exception to the pollution exclusion “was added by the insurance industry merely to clarify existing coverage; to exclude coverage for intentional pollution, but not unexpected and unintended gradual contamination.” Maricopa further contends the trial court certainly would have reached a different conclusion had it considered the “uncontradicted extrinsic evidence,” and, therefore, urges this court to direct entry of summary judgment for it.

¶ 27 In contrast, defendants contend that if the trial court erred in not considering the extrinsic evidence, as we have concluded here, “the proper remedy is remand to the trial court for consideration of all the relevant documents, in light of the rules of evidence, and both the insurers' and insureds' perspectives.” According to defendants, “the complete record of drafting history indicates that sudden has a temporal connotation .” Finally, relying largely on materials not found in the record but apparently quoted in an insurance industry publication, the amicus curiae asserts that, “taken as a whole, the drafting and regulatory history of the pollution exclusion at issue here bears out that the intent ․ was always to bar coverage for long-term, gradual pollution claims.”

¶ 28 In view of these disparate positions and the various unresolved questions relating to the interpretive materials, we believe the trial court should preliminarily evaluate and ride on issues relating to those materials, including any evidentiary objections. Because of the complex nature of the issues in this case, however, we deem it advisable to furnish some guidance to the trial court for its task on remand. As noted above, the court first should address and resolve any evidentiary issues relating to the parties' proffered interpretive materials. Next, because the “sudden and accidental” exception to the pollution exclusion is reasonably susceptible to different interpretations, proper construction of the exception requires an examination of not only its language, but also “the purpose of the exclusion in question, the public policy considerations involved and the transaction as a whole,” Ohio Casualty, 189 Ariz. at 186, 939 P.2d at 1339, “including the reasonable expectations of the insured.” Wilson, 162 Ariz. at 258, 782 P.2d at 734. We also note that, “[a]lthough the insurer has the burden of proving that a policy exclusion is applicable, the insured carries the burden of proving that his claim falls within an exception to that exclusionary clause .” Hudnell v. Allstate Ins. Co., 190 Ariz. 52, 54, 945 P.2d 363, 365 (App.1997) (citations omitted).

¶ 29 As best we can tell, the trial court did not undertake any Wilson/Ohio Casualty analysis, which to some extent entails a fact-intensive inquiry into such matters as “the purpose of the exclusion in question” and “the transaction as a whole.” Ohio Cas., 189 Ariz. at 186, 939 P.2d at 1339. Evaluation of the “purpose of the exclusion in question,” id., will hinge in part on what extrinsic evidence is ultimately found to be admissible. Moreover, the record before us contains little, if any, evidence relating to public policy issues or Maricopa's “reasonable expectations” with respect to its CGL policies in general or the pollution exclusion in particular.

¶ 30 Because of the substantial, unresolved evidentiary issues relating to both sides' interpretive materials and given the nature of the multi-factor analysis that Wilson and Ohio Casualty call for, we believe the trial court should evaluate those issues and factors in the first instance. Cf. Nolde v. Frankie, 192 Ariz. 276, 121, 964 P.2d 477, 121 (1998) (remanding to trial court for further evaluation of defendants' statute of limitations defense because court apparently had not measured plaintiffs' allegations of estoppel against appropriate standard). In the absence of that analysis and considering the deficiencies in this record, we cannot affirm the summary judgment for defendants based solely on their interpretation of “sudden” in the pollution exclusion.

II. Other Issues

¶ 31 Although defendants urge us to affirm the summary judgment on other grounds, we are disinclined to do so based on this record. As to the Hassayampa Landfill, defendants contend, and the trial court found, that Maricopa intentionally “dispersed” hazardous materials by placing them in the landfill, expecting them to eventually contaminate the groundwater. Because Maricopa's “disposal was not accidental,” the trial court ruled, coverage was barred regardless of the proper interpretation of “sudden.”

¶ 32 Maricopa argues that there are genuine issues of material fact that preclude summary judgment on those alternative bases. We agree. The trial court noted that it had “been presented with very few facts showing what the materials put in the Hassayampa landfill were, how they were contained and what actually happened to them after they were deposited.” Moreover, Maricopa presented competent evidence that it did not expect or intend that there would be groundwater contamination at the landfill and that it took various precautionary measures to avoid damage to the environment there. In addition, Maricopa presented expert opinion evidence that the contamination at the landfill probably was caused by a third party's drilling of a monitoring well, which punctured an underlying basalt layer. In light of that evidence, reasonable minds could differ as to Maricopa's intent and expectation, and as to the cause of contamination, with respect to the Hassayampa Landfill.

¶ 33 Thus, defendants were not entitled to summary judgment on the alternative grounds that they urge. In addition, based on this record, we cannot conclude as a matter of law that Maricopa's mere placement of waste materials into a landfill, without more, constituted the type of intentional “dispersal” of contaminants that would, in and of itself, preclude coverage. See Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 617 (Colo.1999) (“[T]he phrase ‘discharge, dispersal, release or escape’ in the pollution exclusion does not apply to an initial placement of waste in a containment area such as a licensed landfill,” but rather, “the relevant polluting event for purposes of the pollution exclusion clause is the release of pollutants from a containment area and not the initial placement of waste in that containment area”); see also Queen City Farms, Inc. v. Central Nat'l Ins. Co., 882 P.2d 703, 719 (Wash.1994). If that were true, defendants' CGL policies would provide no coverage for landfill owners/operators for so-called secondary contamination resulting from the dispersal or escape of landfill contents into the environment, even if such dispersal were abrupt, unexpected, and unintended. We find such a construction of the pollution exclusion untenable.

¶ 34 As for the Materials Warehouse site, defendants urge us to affirm summary judgment, claiming there is no evidence of any “occurrence” or “property damage” at that site during the applicable policy periods. Finding disputed factual issues, the trial court initially denied those aspects of defendants' motion for partial summary judgment, but ultimately granted the motion based solely on the court's interpretation of “sudden.” In view of the Planet policies' definition of “property damage” and evidence that damage from groundwater contamination continued during those policy periods, we cannot say as a matter of law that defendants were entitled to summary judgment on the other grounds that they urge, and that the trial court rejected, as to the Materials Warehouse site.

¶ 35 Finally, we decline Maricopa's invitation to direct the trial court to enter partial summary judgment in its favor on the ground that it innocently purchased the Materials Warehouse site after its predecessor in interest had actively polluted the site and had completed all acts that ultimately led to groundwater contamination. According to Maricopa, the pollution exclusion “should not be applied to a situation such as the Materials Warehouse site where Maricopa is an innocent owner and did nothing to contaminate the property.”

¶ 36 In accordance with most courts that have addressed this issue, we reject Maricopa's argument. See, e.g., Park–Ohio Indus., Inc. v. The Home Indern. Co., 975 F.2d 1215 (6th Cir.1992); Northern Ins. Co. v. Aardvark Assoc., Inc., 942 F.2d 189 (3d Cir.1991); Quaker State Minit–Lube, Inc. v. Fireman's Fund Ins. Co., 868 F.Supp. 1278 (D.Utah 1994), aff'd, 52 F.3d 1522 (10th Cir.1995); Larsen Oil Co. v. Federated Serv. Ins. Co., 859 F.Supp. 434 (D.Or.1994); Powers Chemco, Inc. v. Federal Ins. Co., 533 N.Y.S.2d 1010 (App.Div.1988), aff'd, 548 N.E.2d 1301 (N.Y.1989); Queen City Farms, 882 P.2d at 725. Nothing in the language of the policies limits the pollution exclusion's applicability to “active polluters.” Rather, the exclusion negates coverage for a type of damage, not a type of conduct. Thus, Maricopa is not entitled to summary judgment on this basis as to the Materials Warehouse site.

DISPOSITION

¶ 37 We vacate the trial court's partial summary judgment for defendants. For the reasons stated above, we remand for further proceedings consistent with this decision.

FOOTNOTES

1.  For purposes of clarity and convenience, we will refer to this entire provision as “the pollution exclusion,” and to the last phrase of this provision (following the semicolon) as “the exception.”

2.  The trial court excepted from its ruling “Planet Policy No. KR6706048 [because it] ․ contains a blanket exclusion for pollution” that apparently has no exception for “sudden and accidental” pollution events.

3.  The ISO refers to the Insurance Services Office, the IRB's successor, which was formed after the IRB dissolved and “inherited” its records.

4.  Although any significant difference between the concepts of ambiguity and reasonable susceptibility to differing interpretations is debatable and difficult to discern, see Smith, 783 F.Supp. at 1225 n. 2 (describing Wilson as a “schizophrenic approach”), Arizona is now committed to the latter.

5.  See, e.g., SnyderGeneral Corp. v. Continental Ins. Co., 133 F.3d 373 (5th Cir.1998); LaFarge Corp. v. Travelers Indem. Co., 118 F.3d 1511 (11th Cir.1997); Harrow Prods., Inc. v. Liberty Mut. Ins. Co., 64 F.3d 1015 (6th Cir.1995); Federated Mut. Ins. Co. v.. Botkin Grain Co., 64 F.3d 537 (10th Cir.1995); Charter Oil Co. v. American Employers' Ins. Co., 69 F.3d 1160 (D.C.Cir.1995); Cincinnati Ins. Co. v. Flanders Elec. Motor Serv., Inc., 40 F.3d 146 (7th Cir.1994); Smith v. Hughes Aircraft Co., 22 F.3d 1432 (9th Cir.1993); Aetna Cas. & Sur. Co. v. General Dynamics Corp., 968 F.2d 707 (8th Cir.1992); Northern Ins. Co. v. Aardvark Assoc., Inc., 942 F.2d 189 (3d Cir.1991); A. Johnson & Co. v. Aetna Cas. & Sur. Co., 933 F.2d 66 (1st Cir.1991); Ogden Corp. v. Travelers Indem. Co., 924 F.2d 39 (2d Cir.1991); Dimmitt Chevrolet, Inc. v. Southeastern Fidelity Ins. Corp., 636 So.2d 700 (Fla.1993); North Pac. Co. v. Mai, 939 P.2d 570 (Idaho 1997); Iowa Comprehensive Petroleum Underground Storage Tank Fund Bd. v. Farmland Mut. Ins. Co., 568 N.W.2d 815 (Iowa 1997); American Motorists Ins. Co. v. ARTRA Group, Inc., 659 A.2d 1295 (Md.1995); Lumbermens Mut. Cas. Co. v. Belleville Indus., Inc., 555 N.E.2d 568 (Mass.1990); Auto Owners Ins. Co. v. City of Clare, 521 N.W.2d 480 (Mich.1994); Anderson v. Minnesota Ins. Guar. Ass'n, 534 N.W.2d 706 (Minn.1995); Northville Indus. Corp. v. National Union Fire Ins. Co., 679 N.E.2d 1044 (N.Y.1997); Waste Management of Carolinas, Inc. v. Peerless Ins. Co., 340 S.E.2d 374 (N.C.1986); Hybud Equip. Corp. v. Sphere Drake Ins. Co., 597 N.E .2d 1096 (Ohio 1992); Kerr–McGee Corp. v. Admiral Ins. Co., 905 P .2d 760 (Okla.1995); Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127 (Utah 1996); Sinclair Oil Corp. v. Republic Ins. Co., 929 P.2d 535 (Wyo.1996).

6.  See, e.g., Alabama Plating Co. v. United States Fidelity & Guar. Co., 690 So.2d 331 (Ala.1996); Hecla Mining Co. v. New Hampshire Ins. Co., 811 P.2d 1083 (Colo.1991); Claussen v. Aetna Cas. & Sur. Co., 380 S.E.2d 686 (Ga.1989); Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607 N.E.2d 1204 (Ill.1992); American States Ins. Co. v. Kiger, 662 N.E.2d 945 (Ind.1996); Hudson v. Farm Family Mut. Ins. Co., 697 A.2d 501 (N.H.1997); Morton Int'l, Inc. v. General Accident Ins. Co., 629 A.2d 831 (N.J.1993); St. Paul Fire & Marine Ins. Co. v. McCormick & Baxter Creosoting Co., 923 P.2d 1200 (Or.1996); Greenville County v. Insurance Reserve Fund, 443 S.E.2d 552 (S.C.1994); Queen City Farms, Inc. v. Central Nat'l Ins. Co., 882 P.2d 703 (Wash.1994); Joy Techs., Inc. v. Liberty Mut. Ins. Co., 421 S.E.2d 493 (W.Va.1992); Just v. Land Reclamation, Ltd., 456 N.W.2d 570 (Wis.1990).

7.  Although Columbia Casualty Company contends that it was first formed after 1970 and, therefore, cannot be bound by any prior IRB actions or representations, the record indicates that Columbia is part of the CNA group of companies, which had a representative member company with the IRB in 1970. On remand, the trial court should rule on any factual and legal issues relating to the alleged agency relationship between the IRB (or its predecessor and successor entities) and defendants.

PELANDER, Presiding Judge.

CONCURRING: WILLIAM E. DRUKE and JOSEPH W. HOWARD, Judges.