                IN THE SUPREME COURT OF IOWA
                               No. 135 / 05-1063

                         Filed February 23, 2007

BITUMINOUS CASUALTY CORPORATION,
An Illinois Insurance Company,

      Movant,

vs.

SAND LIVESTOCK SYSTEMS, INC., a
Nebraska Corporation; SAND SYSTEMS, INC.,
a Nebraska Corporation; FURNAS COUNTY
FARMS, a Nebraska General Partnership; and
CORI A. GOSSAGE, Individually and as
Administrator of the Estate of Raymond Charles
Gossage, Jr., and as Next Friend and Mother of
Brian M. Gossage,

      Respondents.
________________________________________________________________________
      Certified questions of law from the United States District Court for

the Northern District of Iowa, Paul A. Zoss, Judge.



      In a certified question, the federal district court asked the supreme

court to determine whether a pollution exclusion provision in an
insurance policy bars coverage for a death caused by the accumulation of

carbon   monoxide     inside    a    washroom.        CERTIFIED      QUESTION

ANSWERED.



      Timothy W. Hamann and Jared Knapp of Clark, Butler, Walsh &

Hamann, Waterloo, for movant.



      Donald    H.   Molstad,       Sioux   City,   and   Patrick   W.   O’Bryan,

Des Moines, for respondent Sand Livestock Systems, Inc.
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      Robert A. Burnett, Jr., Des Moines, for respondent Gossage.



      Laura A. Foggan of Wiley, Rein & Fielding, Washington, D.C., and

David N. May of Bradshaw, Fowler, Proctor & Fairgrave, P.C.,

Des Moines, for amicus curiae Complex Insurance Claims Litigation

Association.
                                     3

STREIT, Justice.

      Is carbon monoxide pollution?       Sand Livestock was sued for

wrongful death after a man died of carbon monoxide poisoning in a hog

confinement facility the company designed and built. Sand Livestock’s

insurer,   Bituminous    Casualty,   sought   a   declaration   that   Sand

Livestock’s insurance did not cover the incident because of a pollution

exclusion provision.    In response to a certified question, we find the

provision unambiguously excludes coverage. We do not decide whether a

reasonable policy holder would expect the exclusion to only pertain to

“traditional environmental pollution.”

      I.    Facts and Prior Proceedings

      Sand Livestock constructed a hog confinement facility in Ida

County, Iowa for Furnas County Farms. During the construction, Sand

Livestock installed a propane power washer in the facility’s washroom.

In 2002, Raymond Gossage, an employee of Furnas County Farms, was

working at the facility. While using the toilet in the washroom, Gossage

was overcome by carbon monoxide fumes. The propane gas heater for

the pressure washer produced the fumes. Furnas was later cited by the
Iowa Occupational Safety and Health Administration for having a

propane device in a room without an outside air supply. According to

the autopsy, Gossage died as a result of asphyxiation due to carbon

monoxide poisoning.

      In 2003, Gossage’s widow filed a wrongful death suit against Sand

Livestock in the Ida County, Iowa district court.         Sand Livestock

requested its insurer, Bituminous Casualty, provide a legal defense and

indemnification pursuant to two insurance policies.       Bituminous had
                                     4

issued Sand Livestock a “Commercial Lines Policy” and a “Commercial

Umbrella Policy” for the time of Gossage’s death.

      The Commercial Lines Policy contained an endorsement entitled

“Total Pollution Exclusion with a Hostile Fire Exception,” which stated:

            This insurance does not apply to:

            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” are defined in the policy as “any solid, liquid, gaseous or

thermal irritant or contaminant, including smoke, vapor, soot, fumes,

acids, alkalis, chemicals and waste.”

      The Commercial Umbrella Policy contained an endorsement

entitled “Pollution Exclusion” which stated:

      It is agreed that this policy does not apply:

      A.    to any liability for “bodily injury,” “property damage” or
            “personal and advertising injury” arising out of the
            actual, alleged or threatened discharge, dispersal,
            release or escape of “pollutants at any time.”

            ....

      C.    to any obligation of the “insured” to indemnify or
            contribute to any party because of “bodily injury,”
            “property damage” or “personal and advertising injury”
            arising out of the actual, alleged or threatened
            discharge, dispersal, release or escape of “pollutants.”

      D.    to any obligation to defend any “suit” or “claim” against
            any “insured” alleging “bodily injury,” “property
            damage” or “personal and advertising injury” and
            seeking damages for “bodily injury,” “property damage”
            or “personal and advertising injury” arising out of the
            actual, alleged or threatened discharge, dispersal,
            release or escape of “pollutants.”

            ....
                                       5
            “Pollutants” means any solid, liquid, gaseous, or
            thermal irritants or contaminant, including smoke,
            vapor, soot, fumes, acids, alkalis, chemicals and
            waste. . . .

      In 2004, Bituminous filed a complaint in federal court seeking a

declaration it has no duty to pay damages to Mrs. Gossage or to defend

or indemnify Sand Livestock for the death of Gossage because of the

pollution exclusions contained in both policies. A year later, Bituminous

filed a motion for summary judgment. Bituminous claimed the pollution

exclusions in the policies preclude coverage. Sand Livestock and Mrs.

Gossage argued the exclusions do not apply to the particular facts of this

case and Bituminous is obligated to defend Sand Livestock and cover any

losses that may arise if Sand Livestock is found to be liable.

      In its ruling, the federal court noted that because we have not

interpreted a pollution exclusion in an insurance policy in this particular

context, it must “predict” how we would do so. The federal court stated

“courts   throughout    the   United   States   have   interpreted   pollution

exclusions such as those contained in the policies at issue, and have

reached a dizzying array of results.”           See Claudia G. Catalano,

Annotation, What Constitutes “Pollutant,” “Contaminant,” “Irritant,” or
“Waste” within Meaning of Absolute or Total Pollution Exclusion in Liability

Insurance Policy, 98 A.L.R.5th 193 (2002). After reviewing other courts’

approaches to this issue, the federal court concluded “both parties’

positions are supported by case law from other jurisdictions, and there is

no Iowa case either directly on point or sufficiently definitive to allow this

court to predict how the Iowa Supreme Court would decide the issue

presented here.”      Consequently, the federal court certified to us the

following question:
                                     6
       Do the total pollution exclusions in the policies issued by
       Bituminous to Sand Livestock relieve Bituminous from any
       obligation to defend or indemnify Sand Livestock, or to pay
       damages to Mrs. Gossage, for claims arising out of the death
       of Raymond Gossage?

       II.   Merits

       The issue before us is whether the pollution exclusions found in

Sand Livestock’s insurance policies exclude coverage for a death caused

by the release of carbon monoxide fumes inside a hog confinement

facility.

       Mrs. Gossage and Sand Livestock urge us to find the policies in

question provide coverage for Gossage’s death. Mrs. Gossage argues the

pollution exclusions are ambiguous because it is unclear whether their

scope extends beyond “traditional environmental pollution.”             Mrs.

Gossage reminds us an ambiguous provision is construed in favor of the

insured. Under slightly different reasoning, Sand Livestock argues the

doctrine of reasonable expectations applies.     Sand Livestock argues a

reasonable policyholder would expect the pollution exclusions to prevent

coverage for “traditional hog confinement problems associated with

pollution wastes and smells, and not wrongful death claims based on an

alleged negligent design of a hog confinement facility which allowed

carbon monoxide to accumulate.”          Bituminous argues the pollution

exclusions clearly and succinctly prevent coverage for carbon monoxide

poisoning and Bituminous urges us to hold it has no duty to defend or

indemnify Sand Livestock.

       A.    Whether the Pollution Exclusions are Ambiguous

       We begin with our rules of contract interpretation peculiar to

insurance policies.

       The cardinal principle in the construction and interpretation
       of insurance policies is that the intent of the parties at the
                                     7
      time the policy was sold must control. Except in cases of
      ambiguity, the intent of the parties is determined by the
      language of the policy. “An ambiguity exists if, after the
      application of pertinent rules of interpretation to the policy, a
      genuine uncertainty results as to which one of two or more
      meanings is the proper one.” Because of the adhesive nature
      of insurance policies, their provisions are construed in the
      light most favorable to the insured.           Exclusions from
      coverage are construed strictly against the insurer.

LeMars Mut. Ins. Co. v. Joffer, 574 N.W.2d 303, 307 (Iowa 1998) (citations

omitted).

      “[W]hen an insurer has affirmatively expressed coverage through

broad promises, it assumes a duty to define any limitations or

exclusionary clauses in clear and explicit terms.” Grinnell Mut. Reins. Co.

v. Jungling, 654 N.W.2d 530, 536 (Iowa 2002) (citing Amco Ins. Co. v.

Haht, 490 N.W.2d 843, 845 (Iowa 1992)). Words that are not defined in

the policy are given “their ordinary meaning, one that a reasonable

person would understand them to mean.”           Id. (citing A.Y. McDonald

Indus. v. Ins. Co. of N. Am., 475 N.W.2d 607, 619 (Iowa 1991)). This is

because we interpret insurance policies from the standpoint of an

ordinary person, not a specialist or expert. Id. (citing Haht, 490 N.W.2d

at 845).

      Where the meaning of terms in an insurance policy is
      susceptible to two interpretations, the one favoring the
      insured is adopted. However, the mere fact that parties
      disagree on the meaning of terms does not establish
      ambiguity. The test is an objective one: Is the language fairly
      susceptible to two interpretations?

N. Star Mut. Ins. Co. v. Holty, 402 N.W.2d 452, 454 (Iowa 1987) (citations

omitted).

      Bituminous argues the pollution exclusions unambiguously apply

to the facts of this case. It claims carbon monoxide is a “pollutant” as

defined by the policy and Gossage’s death was clearly due to “dispersal,”
                                            8

“release,” or “escape” of this “pollutant.”                 The exclusions define

“pollutant” as “any solid, liquid, gaseous or thermal irritant or

contaminant, including smoke, vapor, soot, fumes, acids, alkalis,

chemicals and waste.” According to Bituminous, “[t]here is nothing in

this   broad     definition    which    would         exclude   carbon    monoxide.”

Bituminous characterizes carbon monoxide as a gaseous irritant or

contaminant.       Carbon monoxide is defined in the dictionary as “a

colorless odorless very toxic gas.”             Webster’s Third New International

Dictionary 336 (unabr. ed. rev. 2002).

       We agree with Bituminous that carbon monoxide falls within the

extremely broad language of the policies’ definition of “pollutants.” It is

difficult   to   say   the     exclusions       are   “fairly   susceptible   to   two

interpretations,” which is required for us to find the exclusions

ambiguous.

       Mrs. Gossage argues the exclusion is ambiguous because it is

unclear whether the exclusion extends beyond “traditional environmental

pollution.” She claims her position is supported by the original purpose

of pollution exclusions.         One commentator explained “the available
evidence most strongly suggests that the absolute pollution exclusion

was designed to serve the twin purposes of eliminating coverage for

gradual environmental degradation and government-mandated cleanup

such as Superfund response cost reimbursement.” Jeffrey W. Stempel,

Reason and Pollution:         Correctly Construing the “Absolute” Exclusion in

Context and in Accord with Its Purpose and Party Expectations, 34 Torts &

Ins. L.J. 1, 32 (Fall 1998); see Am. States Ins. Co. v. Koloms, 687 N.E.2d

72, 81 (Ill. 1997) (“Our review of the history of the pollution exclusion

amply demonstrates that the predominate motivation in drafting an
                                     9

exclusion for pollution-related injuries was the avoidance of the

‘enormous expense and exposure resulting from the “explosion” of

environmental litigation.’ ”); Bernhardt v. Hartford Fire Ins. Co., 648 A.2d

1047, 1049–50 (Md. Ct. App. 1995) (detailing the evolution of pollution

exclusions).   But the plain language of the exclusions at issue here

makes no distinction between “traditional environmental pollution” and

injuries arising from normal business operations. See Cincinnati Ins. Co.

v. Becker Warehouse, Inc., 635 N.W.2d 112, 120 (Neb. 2001).

      The Supreme Court of Illinois, which analyzed a nearly identical

exclusion, acknowledged:

      A close examination of this language reveals that the
      exclusion (i) identifies the types of injury-producing
      materials which constitute a pollutant, i.e., smoke, vapor,
      soot, etc., (ii) sets forth the physical or elemental states in
      which the materials may be said to exist, i.e., solid, liquid,
      gaseous or thermal, and (iii) specifies the various means by
      which the materials can be disseminated, i.e., discharge,
      dispersal, release or escape. To that extent, therefore, the
      exclusion is indeed “quite specific,” and those courts wishing
      to focus exclusively on the bare language of the exclusion
      will have no difficulty in concluding that it is also
      unambiguous.

Koloms, 687 N.E.2d at 79. Although the court in Koloms looked beyond
the “bare language of the exclusion” to find ambiguity, we find it

inappropriate and unwise to do so.       An ambiguity exists only if the

language of the exclusion is “susceptible to two interpretations.” Holty,

402 N.W.2d at 454. We may not refer to extrinsic evidence in order to

create ambiguity.    Becker Warehouse, 635 N.W.2d at 120; Quadrant

Corp. v. Am. States Ins. Co., 110 P.3d 733, 742 (Wash. 2005). Instead,

we must enforce unambiguous exclusions as written. Leuchtenmacher v.

Farm Bureau Mut. Ins. Co., 461 N.W.2d 291, 294 (Iowa 1990). The plain

language in the exclusions encompasses the injury at issue here because
                                    10

carbon monoxide is a gaseous irritant or contaminant, which was

released from the propane power washer.        See Assicurazioni Generali,

S.p.A. v. Neil, 160 F.3d 997, 1006 (4th Cir. 1998) (finding pollution

exclusion     unambiguously   barred     coverage   for   carbon    monoxide

poisoning); Essex Ins. Co. v. Tri-Town Corp., 863 F. Supp. 38, 41 (D.

Mass. 1994) (same); Bernhardt, 648 A.2d at 1052 (same).

        B.    Whether a Reasonable Policyholder             Would    Expect
              Coverage Under These Facts
        Sand Livestock argues Bituminous should be required to provide

coverage based on the doctrine of reasonable expectations, which Iowa

recognizes.    Sand Livestock claims an ordinary lay person would not

comprehend the breadth of the pollution exclusions.        An insured may

utilize the doctrine of reasonable expectations to avoid an exclusion that

“ ‘(1) is bizarre or oppressive, (2) eviscerates a term to which the parties

have explicitly agreed, or (3) eliminates the dominant purpose of the

policy.’ ” Iowa Comprehensive Petroleum Underground Storage Tank Fund

Bd. v. Federated Mut. Ins. Co., 596 N.W.2d 546, 551 (Iowa 1999) (quoting

Benavides v. J.C. Penney Life Ins. Co., 539 N.W.2d 352, 356 (Iowa 1995)).

However, in order for the doctrine to apply, the insured must show

“ ‘circumstances attributable to the insurer that fostered coverage

expectations’ or that ‘the policy is such that an ordinary layperson would

misunderstand its coverage.’ ”    Id. (quoting Benavides, 539 N.W.2d at

357).

        Because this case comes to us as a certified question from the

federal district court, this issue is not properly before us.      Iowa Code

section 684A.1 (2003) gives this court the power to answer certified

“questions of law.”    The applicability of the doctrine of reasonable

expectations is a question of fact that is not within the scope of chapter
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684A.      Wright v. Brooke Group Ltd., 652 N.W.2d 159, 170 n.1 (Iowa

2002). Sand Livestock and Mrs. Gossage are free to argue the doctrine of

reasonable expectations to the federal district court.

         III.   Conclusion

         We find the pollution exclusions in Sand Livestock’s insurance

policies bar coverage for Gossage’s death, which was caused by carbon

monoxide poisoning. Accordingly, our answer to the certified question is

“yes.”

         CERTIFIED QUESTION ANSWERED.
