     Case: 15-20213      Document: 00513320436         Page: 1    Date Filed: 12/23/2015




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT


                                      No. 15-20213                       United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
EVANSTON INSURANCE COMPANY,                                             December 23, 2015
                                                                           Lyle W. Cayce
              Plaintiff - Appellee                                              Clerk

v.

LAPOLLA INDUSTRIES, INCORPORATED,

              Defendant - Appellant




                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:13-CV-3157


Before DAVIS, BARKSDALE, and DENNIS, Circuit Judges.
PER CURIAM:*
       Defendant-Appellant        Lapolla     Industries,    Incorporated         (“Lapolla”)
appeals from the district court’s grant of summary judgment in favor of
Plaintiff-Appellee Evanston Insurance Company (“Evanston”), declaring that
Evanston owes no duty to defend Lapolla in a lawsuit brought against Lapolla




       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                       No. 15-20213
and other defendants in Connecticut. On de novo review, applying the same
Rule 56 standards as the district court, 1 we affirm for the reasons set out below.
      In its memorandum opinion and order entered on February 23, 2015, the
district court summarized the background, which is not in dispute, as follows:
               Lapolla Industries, a citizen of Texas and Delaware,
               manufactures spray polyurethane foam (“SPF”)
               insulation. Evanston Insurance Company, a citizen of
               Illinois, issued Lapolla three insurance policies, two
               commercial general liability (“CGL”) policies and one
               excess liability policy. The policies required Evanston
               to defend Lapolla against underlying suits seeking
               damages for bodily injury or property damage caused
               by Lapolla’s products. The policies also obligated
               Evanston to indemnify Lapolla for these damages. The
               policies excluded coverage for damages for bodily
               injury or property damage that “would not have
               occurred in whole or in part but for the actual, alleged
               or threatened discharge, dispersal, seepage,
               migration, release or escape of pollutants at any time.”
               The policies defined “pollutants” as “any solid, liquid,
               gaseous or thermal irritant or contaminant, including
               smoke, vapor, soot, fumes, acids, alkalis, chemicals,
               electromagnetic fields and waste.”

               This lawsuit stems from underlying litigation arising
               from Lapolla insulation installed during a home
               renovation. In April 2010, during a covered period, the
               plaintiffs’ renovation contractors installed Lapolla-
               manufactured SPF insulation in the part of a home
               owned by Michael and Kimberly Commaroto that was
               being renovated. The Commarotos and their house
               guest, Gretchen Schlegel, were not living in the part of
               the home undergoing renovations. They complained
               that shortly after the insulation was installed in a
               renovated room, they smelled odors and suffered
               respiratory distress, causing them to leave the home.
               Attempts to return triggered the same respiratory


      1   Berquist v. Washington Mut. Bank, 500 F.3d 344, 348 (5th Cir. 2007).
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                                       No. 15-20213
              distress symptoms. The plaintiffs moved                       out
              permanently, leaving their personal property.

              In April 2012, the plaintiffs sued the general
              contractor and various subcontractors for negligence
              and breach of contract. Michael A. Commaroto,
              Kimberly S. Commaroto and Gretchen Schlegel v.
              Pasquale Guzzo, AKA Pasqualino Guzzo d/b/a PDB
              Home Improvement, Perfect Wall, LLC and Jozsef
              Finta, No. FST–CV12–6013645S, Judicial Dist.
              Stamford, Ct. In July 2012, the contractors filed an
              apportionment complaint and a third-party complaint
              against Lapolla. In the plaintiffs’ second amended
              complaint, filed in April 2013, they also asserted a
              products-liability claim against Lapolla, alleging that
              it manufactured, sold, and marketed its SPF
              insulation in a defective and unreasonably dangerous
              manner.

              In 2013, Evanston filed this diversity-jurisdiction suit
              in Texas federal court. Evanston sought a declaratory
              judgment that it has no duty to defend or indemnify
              Lapolla because of the policies’ pollution exclusions.
              After Evanston amended its complaint, Lapolla
              answered and counterclaimed for a declaratory
              judgment that Evanston was obligated to defend and
              indemnify. In April and May 2014, Evanston and
              Lapolla cross-moved for summary judgment. 2

       Both parties agree that this dispute falls under Texas law, under which
a court must interpret the insurance contract using the ordinary rules for
contract interpretation. 3 The insured has the initial burden of proving
coverage. 4 If so, the insurer then bears the burden of proving that a policy


       2 Evanston Ins. Co. v. Lapolla Indus., Inc., 93 F. Supp. 3d 606, 609-10 (S.D. Tex. 2015)
(footnote and record citations omitted).
       3 Id. at 611-12 (citing, among other cases, Sharp v. State Farm Fire & Cas. Ins. Co.,

115 F.3d 1258, 1260 (5th Cir. 1997); Fiess v. State Farm Lloyds, 202 S.W.3d 744, 748 (Tex.
2006); and Lamar Homes, Inc. v. Mid–Continent Cas. Co., 242 S.W.3d 1, 8 (Tex. 2007)).
       4 Id. at 612 (citing Nat’l Union Fire Ins. Co. of Pittsburgh, Penn. v. Puget Plastics

Corp., 532 F.3d 398, 401 (5th Cir. 2008)).
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exclusion bars coverage. 5 If the insurer is successful, then the burden shifts
back to the insured to prove that the claim at issue falls under an exception to
the exclusion. 6 Central to this dispute is the eight-corners rule, which “provides
that when an insured is sued by a third party, the liability insurer is to
determine its duty to defend solely from [the] terms of the policy and the
pleadings of the third-party claimant.” 7 In this case, therefore, we look to the
four corners of the applicable policies and the four corners of the Commaroto
complaint. Lapolla is entitled to coverage if it can demonstrate any covered,
non-excluded claim asserted in the Commaroto complaint. It cannot.
       As noted above, the policies at issue include total pollution exclusion that
excludes coverage for:
              f. Pollution

              (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.

                                              ....

              Pollutants mean any solid, liquid, gaseous or thermal
              irritant or contaminant, including smoke, vapor, soot,
              fumes, acids, alkalis, chemicals, electromagnetic fields
              and waste. Waste includes materials to be recycled,
              reconditioned or reclaimed. 8

As the district court explained, Texas courts have held that such exclusions are
not ambiguous. 9 “The key is whether the plaintiffs’ operative pleading


       5 Id. (citing Puget Plastics Corp., 532 F.3d at 404).
       6 Id. (citing Century Sur. Co. v. Hardscape Constr. Specialties, Inc., 578 F.3d 262, 265
(5th Cir. 2009)).
       7 Id. (quoting GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305,

307 (Tex. 2006)).
       8 Evanston, 93 F. Supp.3d at 614 (quoting policies).
       9 Id. (citing Noble Energy, Inc. v. Bituminous Cas. Co., 529 F.3d 642, 646 (5th Cir.

2008); Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., 907 S.W.2d 517, 521 (Tex.
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allegations fall within the pollution exclusion’s plain terms—that is, whether
the allegations about what ‘caused the [plaintiffs’] injuries arose out of [the
actual, alleged, or threatened] discharge, dispersal, release or escape of
pollutants.’” 10
       Turning to the Commaroto complaint, the district court quoted
extensively from what it determined to be the relevant facts: those set out in
the general “Summary of Facts” section and those in the single products
liability count against Lapolla. Although Lapolla argued below and on appeal
that the district court should have restricted its inquiry to only the count
against Lapolla and the five paragraphs from the “Summary of Facts”
specifically incorporated by reference into that count, our de novo review
convinces us that there is no material difference between the sets of facts. 11
Because there is no material difference between the two sets of facts, this
argument is irrelevant.
       The district court summarized the operative facts as follows:
              The plaintiffs’ operative pleading alleges that vapors
              from the SPF insulation caused their bodily injuries
              and property damage. According to the second
              amended complaint, the defendants “failed to seal off
              completely areas in which vapors could be transported
              from the areas under renovation and construction to
              the existing area[] of the house[,] in which the
              Commarotos, their three minor children, and their
              houseguest, Schlegel, were living and sleeping during
              the construction process.” (Docket Entry No. 24, ¶ 30).
              As a result, the plaintiffs allegedly suffered adverse
              health effects, incurred costs in investigating and


1995); and Zaiontz v. Trinity Universal Ins. Co., 87 S.W.3d 565, 571 (Tex.App.-San Antonio
2002, pet. denied)).
       10 Id. (quoting Noble, 529 F.3d at 646; some internal quotation marks omitted).
       11 It is curious that Lapolla seeks to ignore most of the “Summary of Facts” section,

which unquestionably provides context for the entire Commaroto lawsuit, while
simultaneously arguing that it should be allowed to introduce extrinsic evidence.
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               remediating the situation, and suffered property
               losses in the form of personal belongings affected by
               the vapor and their inability to use their newly
               renovated home. (See id., ¶¶ 31 (describing the failure
               to contain “vapors” from the SPF insulation), 38
               (alleging a “strong odor” and “symptoms of respiratory
               distress”), 41 (“respiratory distress”), 45 (“upper
               respiratory injury”), 46 (“exposure to” the residence
               and property within it “at the time” of the SPF
               installation), 48 (loss of possessions “that were present
               in the home at the time of the installation of the SPF
               insulation”), 49 (costs incurred for “alternative living,
               food, property, clothes, [and] medical expenses” and
               “to investigate and remediate the damage causes”),
               158 (“upper respiratory injury”), 159 (“exposure to
               their residence itself and from exposure to the
               personal property that was present ... at the time the
               product was installed”), 162 (“costs to investigate and
               remediate the damages caused by the use of the
               product in the home”). 12

Thus, in the district court’s reading, all of the allegations in the Commaroto
complaint fell under the pollution exclusion, and Evanston is therefore entitled
to entry of a final judgment declaring that it has no duty to defend Lapolla in
the Commaroto suit. We agree. A plain reading of the complaint shows that all
of the plaintiffs’ injuries, both personal injury and property damage, were
alleged to have been caused by “pollution” as defined by the policies.
      We also agree with the district court’s assessment of Lapolla’s
arguments, which Lapolla continues to assert on appeal:
               Lapolla points to the plaintiffs’ allegations about the
               “presence of the product in their home” and argues
               that these allegations do not trigger the pollution
               exclusion. Lapolla contends that the second amended
               complaint “makes a clear distinction between alleged
               injuries and damages resulting from SPF installed in


      12   Evanston, 93 F. Supp.3d at 618.
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                their home versus those allegedly caused by ‘vapors’
                allegedly released from the SPF after it was installed.”
                The distinction is between the harm caused by the
                mere presence of the SPF in the part of the home
                undergoing renovations, as opposed to the harm
                caused by the release of vapors to the parts of the home
                where the plaintiffs were living, including the guest
                room adjacent to the room in the renovation area
                where the insulation was sprayed.

                Lapolla distinguishes between damage from exposure
                to vapors resulting from the installation process used
                by the defendants,[] and one plaintiff’s “expos[ure] for
                hours to the newly—applied SPF insulation.” The
                second allegation, Lapolla contends, suggests harm
                from physical contact or the mere presence of the SPF
                in the part of the home undergoing renovation, rather
                than harm from the release of vapors from that part of
                the home to the rest of the residence where the
                plaintiffs were living and their personal possessions
                were located. The allegations undermine this
                distinction. The allegations include that “[b]efore
                beginning the application of the SPF insulation, the
                defendants failed to seal off completely areas in which
                vapors could be transported from the areas under
                renovation and construction to the existing areas of
                the house in which the Commarotos, their three minor
                children, and their houseguest, Schlegel, were living
                and sleeping during the construction process.” The
                factual allegations about the Lapolla SPF insulation
                make clear that it was present only in the part of the
                house undergoing renovation, and that the bodily
                harm to the Commarotos and their guest, and the
                damage to their personal property, occurred when
                vapors migrated to the rooms where the Commarotos
                lived and their guest was staying. 13

As the district court properly explained, not only is Lapolla’s reading factually
unsupported by the complaint, but case law supports the conclusion that the


      13   Id. at 618-19 (citations to record omitted).
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alleged damages arose from “the release and migration of [the insulation’s]
vapors” rather than from “the presence of the insulation itself.” 14 Based on a
plain reading of the Commaroto complaint, we must conclude that all of the
alleged injuries arose from “pollution,” as defined by the policies, and are thus
excluded.
       On appeal, Lapolla has attempted to refine its position, arguing: “To be
sure, the Commarotos could still argue that although the ‘unsafe and
dangerous’ SPF may not pose a health risk, like asbestos, left undisturbed, it
may still negatively affect the value of their home.” But that argument misses
the point of the eight-corners rule: we must examine the complaint as it exists
now, not as it might exist under different circumstances. As currently pleaded,
every claim in the Commaroto complaint falls under the pollution exclusion,
and none falls under an exception to that exclusion.
       Finally, Lapolla argues that we should apply an exception to the eight-
corners rule that would allow us to look beyond the factual allegations in the
complaint to extrinsic evidence—specifically, deposition testimony by two of
the plaintiffs stating that they physically touched and examined the spray
foam insulation. Lapolla concedes that the district court applied the correct
standard for this exception under Star-Tex Resources, L.L.C. v. Granite State
Insurance Co., 553 F. App’x 366 (5th Cir. 2014), i.e., that the court may only
look beyond the eight corners of the complaint and policy to extrinsic evidence
“when it is initially impossible to discern whether coverage is potentially
implicated and when the extrinsic evidence goes solely to a fundamental issue
of coverage which does not overlap with the merits of or engage the truth or
falsity of any facts alleged in the underlying case.” 15 Lapolla argues that


       14 Id. at 619-20 (discussing Hamm v. Allstate Ins., Co., 286 F. Supp. 2d 790 (N.D. Tex.
2003); and Nautilus Ins. Co. v. Country Oaks Apts. Ltd., 566 F.3d 452, 457 (5th Cir. 2009)).
       15 553 F. App’x at 371.

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extrinsic evidence is allowed because, in its view, it is impossible to tell from
the Commaroto complaint whether the plaintiffs’ personal injuries were caused
by physical contact with the insulation or vapors. As set out above, we conclude
otherwise. The Commaroto complaint entirely concerns damages from vapors
and says nothing to suggest damages from physical contact with the spray
foam insulation. Because it is not “impossible to discern whether coverage is
potentially implicated,” Lapolla cannot satisfy the first part of the test.
Accordingly, the district court properly excluded the extrinsic evidence.
      Following de novo review of the summary judgment record, we reach the
same conclusion reached by the district court in its excellent and thorough
opinion. We conclude, essentially for the reasons set out in that opinion as
supplemented above, that Evanston is entitled to a judgment declaring that
Evanston owes no duty to defend Lapolla in the Commaroto suit.
      AFFIRMED.




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