                   United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                ___________

                                No. 02-3280
                                ___________

National Union Fire Insurance        *
Company of Pittsburgh,               *
                                     *
        Plaintiff-Appellant,         *
                                     *   Appeal from the United States
      v.                             *   District Court for the
                                     *   Northern District of Iowa.
Terra Industries, Inc.; Terra        *
Nitrogen, (UK) Limited,              *
                                     *
        Defendants-Appellees.        *
____________________                 *
                                     *
Terra Industries, Inc.; Terra        *
Nitrogen, (UK) Limited,              *
                                     *
        Counter Claimants-Appellees, *
                                     *
      v.                             *
                                     *
National Union Fire Insurance        *
Company of Pittsburgh,               *
                                     *
        Counter Defendant-Appellant. *

                                ___________

                          Submitted: June 12, 2003
                              Filed: October 17, 2003 - Corrected 10/23/03
                               ___________
Before RILEY and HEANEY, Circuit Judges, and ERICKSEN,1 District Judge.
                            ___________

RILEY, Circuit Judge.

       National Union Fire Insurance Company of Pittsburgh (National Union)
brought an action against Terra Industries, Inc. and Terra Nitrogen, (UK) Limited
(collectively Terra) in federal district court2 seeking a declaratory judgment defining
National Union’s obligations to defend and indemnify Terra under a commercial
umbrella insurance policy (policy). National Union appeals the entry of summary
judgment in favor of Terra. We affirm.

I.    BACKGROUND
      A.    Factual Summary
      National Union issued Terra a policy for the period July 1, 1997, to July 1,
2000. The policy provided:

      We will pay on behalf of the Insured those sums in excess of the
      Retained Limit that the Insured becomes legally obligated to pay by
      reason of liability imposed by law or assumed by the Insured under an
      Insured Contract because of Bodily Injury, Property Damage, Personal
      Injury or Advertising Injury that takes place during the Policy Period
      and is caused by an Occurrence happening anywhere in the world.

      The policy defined “property damage” as:




      1
      The Honorable Joan N. Ericksen, United States District Judge for the District
of Minnesota, sitting by designation.
      2
       The Honorable Mark W. Bennett, Chief Judge of the United States District
Court for the Northern District of Iowa.
                                          2
      1.     Physical injury to tangible property, including all resulting loss of
             use of that property. All such loss of use shall be deemed to
             occur at the time of the physical injury that caused it; or

      2.     Loss of use of tangible property that is not physically injured. All
             such loss shall be deemed to occur at the time of the Occurrence
             that caused it.

       The policy defined an “occurrence” with respect to property damage as “an
accident, including continuous or repeated exposure to conditions, which results in
Bodily Injury or Property Damage neither expected nor intended from the standpoint
of the Insured.” The policy further provided that National Union has the “right and
duty” to provide Terra with a defense against any claim or suit for damages against
Terra that is covered by the policy. In consideration for the policy, Terra paid
National Union a premium in excess of $3.2 million.

        Terra operates a chemical plant in Severnside, Bristol, England, and produces
fertilizer by reforming natural gas. Carbon dioxide is a byproduct of fertilizer
production. Terra sold the carbon dioxide to Messer UK Limited (Messer), Hydrogas
Limited, and BOC (collectively resellers). The resellers sold the carbon dioxide to
beverage manufacturers. The beverage manufacturers then incorporated the carbon
dioxide into carbonated beverages during their bottling and canning processes. The
beverage manufacturers sold their products to wholesale and retail customers.

       In May 1998, Terra was notified that benzene was discovered in a test
sampling of a carbonated beverage. Terra investigated and discovered a leak in a C-
114 Feed Preheater exchanger at the Severnside plant. The leak allowed natural gas
containing benzene, a genotoxic carcinogen, to bypass the reforming process and to
permeate the carbon dioxide. Before discovering the benzene leak, Terra had sold
substantial quantities of carbon dioxide containing low levels of benzene to resellers
who resold the carbon dioxide containing benzene to beverage manufacturers, who


                                           3
incorporated the carbon dioxide into their carbonated beverages and sold the now
contaminated beverages to wholesale and retail customers. Following notification of
the benzene leak, scientific testing, and two days of extensive media attention, the
beverage manufacturers initiated a trade recall to retrieve product from large
wholesalers and large supermarket chains. Because the low benzene levels posed a
negligible health risk to consumers, the beverage manufacturers decided against
initiating a consumer recall, fearing such a recall would cause widespread panic.

      B.     Procedural Summary
      After the trade recall, several beverage manufacturers sued Messer and Terra
in England’s Commercial Court, claiming breach of contract and breach of warranty
for supplying carbon dioxide unsuitable for use in consumer beverages. The
beverage manufacturers also brought tort claims in the same lawsuits directly against
Terra. Messer filed third-party breach of contract and breach of warranty claims
against Terra. Terra, in turn, promptly notified National Union.

       At the time this appeal was filed, the High Court of Justice, Queen’s Bench
Division, Commercial Court, in London, England, had entered two judgments3
against Messer and Terra, obligating Terra to indemnify the resellers for their liability
to the beverage manufacturers. National Union, on behalf of Terra, satisfied the first
judgment in the Britvic case, but refused to satisfy the second judgment in the
Bicardi-Martini case, contending Terra sustained only economic loss, with no
corresponding physical injury to property. Terra and Messer appealed the judgments,
and the Supreme Court of Judicature Court of Appeal dismissed the appeals.

      3
       Britvic Soft Drinks Ltd. and Bass Brewers Ltd. v. Messer UK Ltd. and Terra
Nitrogen (UK) Ltd., (1999 Folio No. 841) [2002] 1 Lloyd’s Rep. 20, 2001 WL
513121 (QBD) (Comm. Ct.) (May 9, 2001) (Britvic); Bicardi-Martini Ltd. v. Thomas
Hardy Packaging Ltd. v. Messer UK Ltd. and Terra Nitrogen (UK) Ltd., (1999 Folio
No. 1198) [2002] 1 Lloyd’s Rep. 62, 2001 WL 1040274 (QBD) (Comm. Ct.) (July
12, 2001) (Bicardi-Martini).
                                           4
       Thereafter, National Union brought this declaratory judgment action in federal
district court. Both National Union and Terra filed motions for summary judgment.
The district court concluded the benzene contamination of Terra’s carbon dioxide,
which was later sold and incorporated into carbonated consumer beverages,
constituted an “occurrence” under the policy. The district court further concluded the
occurrence resulted in “property damage” when the integrated products were rendered
unsuitable for human consumption, necessitating recall and destruction. The district
court denied National Union’s motion for summary judgment and granted Terra’s
motion for summary judgment. The district court ordered National Union to
indemnify Terra for the judgment in the Bicardi-Martini case, to pay for Terra’s
defense of all benzene contamination claims, and to indemnify Terra against any
judgment or settlement resulting from the benzene contamination.

       C.      Issues on Appeal
       On appeal, National Union argues the district court erred in holding National
Union’s duty to indemnify Terra was not determined in Bicardi-Martini, which
awarded damages only for intangible economic loss. National Union further contends
there was no property damage and, alternatively, no property damage was caused by
an occurrence. Conversely, Terra argues its right to coverage under the policy is not
controlled by the English Commercial Court’s ruling that no “direct physical damage
to property” occurred, because the policy at issue does not require “direct” injury.
Terra further claims the English Commercial Court was never presented with the
question of whether Terra’s liability to third parties arose from “property damage,”
as defined by the policy and construed under American coverage law. Finally, Terra
contends the benzene contaminated carbon dioxide altered the carbonated beverages
of third parties, contaminating the consumer products and rendering them unsaleable,
and thereby triggering an occurrence of property damage under the policy.




                                          5
II.   DISCUSSION
      A.     Standard of Review
      We review de novo a district court’s rulings on issues of law, including the
application of collateral estoppel, In re Scarborough, 171 F.3d 638, 641 (8th Cir.
1999), and the interpretation of insurance policy contractual provisions, United Fire
& Cas. Co. v. Fid. Title Ins. Co., 258 F.3d 714, 718 (8th Cir. 2001).

       B.     Collateral Estoppel
       Under Iowa law, collateral estoppel applies if (1) the issues in the current and
prior actions are identical, (2) the issue was raised and actually litigated in the prior
action, (3) the issue was material and relevant to the disposition of the prior action,
and (4) the determination was necessary and essential to the prior judgment. See,
Dolan v. State Farm Fire & Cas. Co., 573 N.W.2d 254, 256 (Iowa 1998) (issue
preclusion). We agree with the district court that the English Commercial Court’s
interpretation of contractual liability clauses relied on a definition of “property
damage” distinct and independent from the definition contained in National Union’s
policy. The issues are clearly not identical. Therefore, the district court properly
determined collateral estoppel does not apply.

       C.     Policy Interpretation
       State law governs the interpretation of insurance policies. Capitol Indem.
Corp. v. Haverfield, 218 F.3d 872, 875 (8th Cir. 2000). The “[c]onstruction of an
insurance policy–the process of determining its legal effect–is a question of law for
the court. Interpretation–the process of determining the meaning of words used–is
also a question of law for the court unless it depends on extrinsic evidence or a choice
among reasonable inferences to be drawn.” Grinnell Mut. Reins. Co. v. Jungling, 654
N.W.2d 530, 536 (Iowa 2002) (quoting A.Y. McDonald Indus. v. Ins. Co. of N. Am.,
475 N.W.2d 607, 618 (Iowa 1991)). The Iowa courts interpret an insurance policy
from the “viewpoint of an ordinary person, not a specialist or expert.” Id.


                                           6
      As the district court recognized, no Iowa case directly addresses whether a
contaminated product sold to third-party manufacturers for incorporation into food
or beverages triggers an “occurrence” resulting in “property damage,” when the
incorporation contaminates the finished food or beverage product and renders it
unsuitable for human consumption.4 We agree with the district court that Kartridge
Pak Co. v. Travelers Indem. Co., 425 N.W.2d 687 (Iowa Ct. App. 1988), does not
control in this instance. Kartridge Pak involved damage to an insured’s own meat
product caused by a defective deboner, id. at 689, as distinguished from this case
which involves damages to third-party consumer beverages caused by incorporation
of benzene contaminated carbon dioxide.

       We have carefully reviewed the policy, briefs, record, and oral arguments, as
well as the applicable case law. Most American courts interpreting the same or
similar policy language under similar factual scenarios have found an “occurrence”
resulting in “property damage.” See Zurich Am. Ins. Co. v. Cutrale Citrus Juices
USA, Inc., No. 5:00-CV-149-OC-10GRJ, 2002 WL 1433728, at *3 (M.D. Fla. Feb.
11, 2002) (holding “the adulteration of Cutrale’s juice, which it sold to Tropicana,
was an ‘occurrence’ . . . [that] resulted in ‘property damage’ which means ‘physical
injury to tangible property’ when, and to the extent that, the adulterated juice was
blended by Tropicana in the regular course of business with Tropicana’s other juice
products.”); Chubb Ins. Co. of N. J. v. Hartford Fire Ins. Co., No. 97CIV.6935 LAP,
1999 WL 760206, at *8 (S.D.N.Y. Sep. 27, 1999) (concluding sales of adulterated
apple juice to beverage manufacturers constituted “occurrences” causing property
damage within meaning of comprehensive general liability policy); Gen. Mills, Inc.
v. Gold Medal Ins. Co., 622 N.W.2d 147, 152 (Minn. Ct. App. 2001) (concluding “all


      4
        The Supreme Court of Iowa has determined “injury to the environment
resulting from contamination by hazardous waste constitutes ‘property damage’
within the meaning of the CGL policies.” A.Y. McDonald Indus., 475 N.W.2d at
624.
                                         7
risk” policy insured food manufacturer who sustained direct physical loss or damage
to its oat products resulting from independent contractor treating oats with FDA
unapproved pesticide); Shade Foods, Inc. v. Innovative Prods. Sales & Mktg., Inc.,
93 Cal. Rptr.2d 364, 376-77 (Cal. Ct. App. 2000) (holding presence of wood splinters
in almonds caused “property damage” within meaning of commercial general liability
policy when contaminated almonds were incorporated into nut clusters and cereal
products). See also Thomas J. Lipton, Inc. v. Liberty Mut. Ins. Co., 314 N.E.2d 37,
39 (N.Y. 1974) (concluding coverage existed under products liability insurance
policies for insured noodle manufacturer’s liability to soup manufacturer who
incorporated contaminated noodles into packaged soups and pasta products). Finding
these cases persuasive, we conclude the incorporation of contaminated carbon dioxide
into consumer beverages constituted an “occurrence” resulting in “property damage”
within the meaning of the policy.

III.  CONCLUSION
      We conclude the district court thoroughly analyzed the issues and reached the
correct conclusions. Accordingly, we affirm the district court’s detailed and well-
reasoned opinion and judgment. See Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v.
Terra Indus. Inc., 216 F. Supp.2d 899 (N.D. Iowa 2002). Heeding the advice of
Robert Browning that “less is more,” we stop here.
                      ______________________________




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