«HEADWATERS RESOURCES, INC., Plaintiff - Appellant, v. No. 13-4035 ILLINOIS UNION INSURANCE COMPANY and ACE AMERICAN INSURANCE COMPANY, Defendants - ...»
insurance: would that individual interpret the unambiguous language of the exclusions to bar coverage for occurrences involving innocuous substances like water? See Reg’l Bank of Colo., N.A. v. St. Paul Fire and Marine Ins. Co., 35 F.3d 494, 497 (10th Cir. 1994). We think not, and that fact alone is likely enough to distinguish those hypotheticals from the comprehensive pollution that the underlying plaintiffs allege in the complaints here, which the pollution exclusions unambiguously cover. To the same end, we are unconvinced that the substances in these hypotheticals would even qualify as “irritant[s] or contaminant[s]” or “substance[s]... [that have]... the effect of making the environment impure, harmful, or dangerous” under the plain language of the applicable policies. 11 In any event, those closer cases are not before us today, and we need not determine how the pollution exclusions here might apply to different allegations.
Headwaters’ assertions of overarching ambiguity are not grounded in Utah law, and they ultimately do not bear on our clear-cut task under the eight corners rule. We thus turn back to the specifics of the pollution exclusion to consider whether they apply to bar coverage for the allegations from the Chesapeake litigation.
11 Headwaters also contends the terms “irritant” and “contaminant” are independently ambiguous. We disagree. These terms have plain and unambiguous meanings, see Church Mut. Ins. Co v. Clay Ctr. Christian Church, 746 F.3d 375, 380–81 (8th Cir. 2014), even if those meanings are expansive.
Pursuant to the definitions in the 2003 and 2006 policies, the “toxic substances” contained within the fly ash mixture clearly constitute pollutants.
Since the fly ash, including its component parts and associated binding agents, is a “pollutant” under these policies, coverage is excluded as long as one of the subparts applies. As the district court held, the “pollutants that allegedly resulted in the Fentress and Sears plaintiffs’ bodily injury and property damage were ‘processed as waste[,]’” triggering subpart c of the pollution exclusion.
Headwaters Res., Inc., 913 F. Supp. 2d at 1217 (subpart c applies to “the pollutants that allegedly resulted in the Fentress and Sears plaintiffs’ bodily injury and property damage”). Fly ash, regardless of its possible utility, is a coal combustion waste product according to the complaints. This is the case even when it is mixed with other substances. For this reason, when Headwaters and its co-defendants released the fly ash mixture, a pollutant, into the environment at the Fentress site, the pollution exclusion from the 2003 and 2006 policies forestalled coverage in the event of a lawsuit. Significantly, subpart c only requires that the pollutants were processed as waste “at any time”; thus, it was irrelevant whether the fly ash was still waste when it was dispersed at the Fentress site.
Because of the broad definitions of “pollution” and “pollutants” in the remaining policies, it is clear that the allegations in the complaint properly invoke the pollution exclusions. For example, the complaints allege that the “coal ash [and binding agent] discharged... contains toxic substances” and that “airborne and waterborne releases at the Fentress Site have caused  hidden carcinogens, poisons and hazardous substances inherent in coal ash [and binding agent] to spread from the facility to the surrounding communities in periodic waves driven by wind and water.” See App. Vol. IV at 791, 824; App. Vol. VII at 1509, 1561.
No ambiguity exists in the extent to which the exclusions apply because they bar coverage for the introduction into the environment of “any substance [that] has, or is alleged to have, the effect of making the environment impure, harmful, or dangerous.” App. Vol. II at 344, 403, 464; App. Vol. III at 598, 697. In the alternative, the fact that the fly ash is considered “waste” under the definition of “pollutants” would also occasion the application of this exclusion.
Instead of relying on the plain language of the applicable exclusions in these policies, the district court sought to avoid the possibility that the broad pollution exclusions could “exclud[e] coverage for bodily injury or property damage not caused by a ‘pollutant acting as a pollutant.’” Headwaters Res., Inc., 913 F. Supp. 2d at 1220 (citing IPE, 2007 WL 4561460). In doing so, the district
“traditional environmental pollution.” Id. But the district court came to its conclusion without ever determining that the policies were ambiguous. While we agree that plaintiffs complain of “traditional environmental pollution” as that term is generally defined in other jurisdictions, see generally Apana v. TIG Ins. Co., 574 F.3d 679, 682–83 (9th Cir. 2009) (collecting cases), we need not consider other scenarios given that the alleged facts in the complaint are resolved by unambiguous language. What is inescapable in this case is that the facts alleged exemplify the type of pollution that the pollution exclusions unambiguously describe and eliminate from the scope of coverage under the policies.
Notwithstanding its analysis regarding whether the complaints allege “traditional environmental pollution,” the district court’s initial conclusion that “[t]hese allegations place the [Chesapeake litigation] squarely within the exclusions for damages arising out of pollution found in the Remaining Policies,” Headwaters Res., Inc., 913 F. Supp. 2d at 1219, is the correct one. After finding no ambiguity in the remaining policies, the district court’s work was done.
* * * In sum, the dispositive feature in this case—the feature Headwaters cannot rebut—is that the language of the pollution exclusions remains unmistakeably plain both on its face and as applied to these facts. And because that clear language applies to the causes of action alleged in the complaints, ACE was not
Accordingly, we agree with the district court that ACE was not liable to reimburse Headwaters for expenses incurred in connection with defending against the Fentress Complaint and the Sears Complaint.
Headwaters also argues that ACE violated its duty of good faith. Under Utah law, the “obligation of good faith performance contemplates, at the very least, that the insurer will diligently investigate the facts to enable it to determine whether a claim is valid, will fairly evaluate the claim, and will thereafter act promptly and reasonably in rejecting or settling the claim.” Beck v. Farmers Ins.
Exch., 701 P.2d 795, 801 (Utah 1985). Where an insurance contract indicates that the scope of coverage is defined by the allegations in the underlying complaint, then the insurer’s only obligation is to compare the complaint to the policy to determine whether the occurrence is covered. Equine Assisted Growth, 266 P.3d at 736. So, to meet its obligation of good faith, ACE in this case only needed to compare the allegations in the complaints to the policies and timely communicate to the insured its coverage decision. ACE fulfilled its obligation.
Finally, Headwaters contends the district court should have granted its Rule 59 motion to revisit summary judgment. It argues the court grounded its ruling
court specifically dropped claims alleging that the leached materials had contaminated plaintiffs’ ground water because the complaints lacked the factual specificity to establish the requisite causal link between the leaching and the injury under Virginia law. See App. Vol. XIV at 3546–53. Headwaters speculates, therefore, that the district court would have reached a different decision had it not considered the leachate claims in concluding the pollution exclusions applied.
We review a denial of a Rule 59 motion for abuse of discretion. Knight v.
Mooring Capital Fund, LLC, 749 F.3d 1180, 1191 (10th Cir. 2014). “[A] trial court’s decision will not be disturbed unless the appellate court has a definite and firm conviction that the lower court made a clear error of judgment or exceeded the bounds of permissible choice in the circumstances.” Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997).
There was no abuse of discretion here. Headwaters claims the district court’s “refusal to consider any claims other than those relating to the ‘deleted’ leachate claims meets the criteria” for a Rule 59 motion. See Aplt. Br. at 59.
This argument suffers from both a procedural flaw and a substantive flaw.
Procedurally, a Rule 59(e) motion “is not appropriate to revisit issues already addressed or advance arguments that could have been raised in prior briefing.” Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000).
that the leachate claims had been dropped from the Virginia state court litigation, but did not do so. We cannot fault the district court for concluding the argument was untimely and refusing to consider it in the context of Rule 59.
And from a substantive perspective, the district court specifically ruled that the new evidence or arguments from the state court litigation “would not change the outcome on the parties’ summary judgment motions anyway - the court sees no distinction among pollution of the air, surface water, and ground water.” See Docket Text Order, Headwaters Res., Inc. v. Ill. Union Ins., No.
2:09-cv-01079-DN (D. Utah), ECF #120 (filed Feb. 14, 2013). The district court’s point is clear: the widespread pollution alleged through the Chesapeake litigation was not contingent on the groundwater claims alone. See supra Part II.A.3. Accordingly, the pollution exclusions would be triggered even if the district court specifically excluded the leachate claims from the complaints.
Finally, it is worth reiterating that the district court considered the underlying complaints and the policies—the only documents necessary to rule on ACE’s liability—in making its decision. Thus, no supplemental evidence or information, as a matter of law, could have influenced the district court’s decision.
For the foregoing reasons, we AFFIRM the district court’s disposition below.