                                                                  NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ___________

                                      No. 09-4037
                                      ___________

                               HUSSEY COPPER, LTD.,
                                                Appellant

                                            v.

                       ARROWOOD INDEMNITY COMPANY,
                        f/k/a ROYAL INSURANCE COMPANY


                                      ___________

                    On Appeal from the United States District Court
                        for the Western District of Pennsylvania
                       (D.C. Nos. 07-cv-00758 & 07-cv-01286)
                     District Judge: Honorable Joy Flowers Conti
                                     ___________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                   on July 16, 2010

                  Before: FUENTES and VANASKIE, Circuit Judges,
                            and DITTER,* District Judge.

                            (Opinion Filed: August 23, 2010)




                              OPINION OF THE COURT




      *
       Honorable J. William Ditter, United States District Judge for the Eastern District
of Pennsylvania, sitting by designation.
FUENTES, Circuit Judge:

       Hussey Copper, Ltd. (“Hussey”) appeals the District Court’s order granting

summary judgment to Arrowood Indemnity Company (“Arrowood”).1 We have

jurisdiction under 28 U.S.C. § 1291 and will affirm.2

                                             I.

       Because we write primarily for the parties, we discuss the facts only to the extent

necessary for resolution of the issues raised on appeal. Hussey sued Arrowood seeking

defense and indemnity pursuant to its commercial general liability policy for a lawsuit

brought against it by the Kane County Public Building Commission (the “Building

Commission”). The Building Commission complaint alleged that lead-coated copper

roofing panels, produced by Hussey and installed at the Kane County Judicial Center in

Kane County, Illinois, had eroded, resulting in the contamination of a retention pond

adjacent to the site. The Illinois Environmental Protection Agency (the “Illinois EPA”),

upon being informed of the contamination, ordered the Building Commission to

remediate the lead and copper pollution in and around the pond. Upon completion of the

remediation project, the Building Commission sued Hussey in Illinois state court seeking

recovery of its costs and expenses. Hussey sought indemnity from Arrowood.


       1
        At the time many of the events underlying this lawsuit transpired, Arrowood was
known as Royal Insurance Company. For simplicity, we refer to Appellee as Arrowood
throughout this opinion.
       2
         We exercise plenary review over the District Court’s entry of summary
judgment. See Business Edge Group, Inc. v. Champion Mortg. Co., Inc., 519 F.3d 150,
153 n.5 (3d Cir. 2008).

                                            -2-
       At issue is a broad exclusion in Hussey’s insurance policy that limits coverage for

pollution-related damages. Section f.(2) of the exclusion bars coverage for:

       Any loss, cost or expense arising out of any:

              (a)    Request, demand or order that any insured or others test for,
                     monitor, clean up, remove, contain, treat, detoxify or
                     neutralize, or in any way respond to, or assess the effects of
                     pollutants; or

              (b)    Claim or suit by or on behalf of a governmental authority for
                     damages because of testing for, monitoring, cleaning up,
                     removing, containing, treating, detoxifying or neutralizing, or
                     in any way responding to, or assessing the effects of
                     pollutants.

(App. at 103.) Arrowood declined to indemnify Hussey, claiming that under section

f.(2)(a) of this provision, Hussey’s liability to the Building Commission was outside the

scope of the policy. Hussey ultimately settled with the Building Commission and filed

suit against Arrowood, alleging that Arrowood violated the insurance contract when it

failed to indemnify Hussey.

       The parties filed cross-motions for summary judgment. The District Court ruled in

Arrowood’s favor, finding that the Building Commission suit fell unambiguously within

the scope of the pollution exclusion clause. However, the Court permitted Hussey to

conduct discovery as to whether judgment should be entered in its favor under the

doctrine of regulatory estoppel based upon statements the Insurance Services Office made

to Pennsylvania insurance regulators when seeking approval for its insurance policies.

The District Court ultimately entered judgment in Arrowood’s favor, finding that



                                            -3-
Arrowood was not estopped from asserting that the pollution exclusion clause applied to

the Building Commission’s claims. Hussey thereafter filed this timely appeal.

                                             II.

       Hussey raises two issues on appeal—it contends (1) that the pollution exclusion

provision invoked by Arrowood and enforced by the District Court does not

unambiguously exclude coverage for the Building Commission’s lawsuit, and (2) that the

District Court erred in concluding that the doctrine of regulatory estoppel did not bar

Arrowood from relying upon the pollution exclusion to deny coverage. For all of the

reasons persuasively stated in the Magistrate Judge’s reports and recommendations and

the District Court’s opinion, as well as for the reasons set forth below, we disagree with

Hussey and will affirm the entry of summary judgment in Arrowood’s favor.

       The parties agree that Pennsylvania law applies to Hussey’s claim against

Arrowood. We recently described the relevant considerations for interpreting an

insurance policy under Pennsylvania law as follows:

       Our inquiry is straightforward. We look first to the terms of the policy
       which are a manifestation of the intent of the parties. When the language of
       the policy is clear and unambiguous, we must give effect to that language.
       However, when a provision in the policy is ambiguous, the policy is to be
       construed in favor of the insured. Next, we compare the terms of the policy
       to the allegations in the underlying claim. It is well established that an
       insurer’s duties under an insurance policy are triggered by the language of
       the complaint against the insured.

Nationwide Mut. Ins. Co. v. CPB Intern., Inc., 562 F.3d 591, 595 (3d Cir. 2009)

(quotation marks and citations omitted). Where “the language of a policy is clear and



                                            -4-
unambiguous, we must apply its plain and ordinary meaning, and not struggle to create

ambiguity solely for the purpose of finding coverage where none exists.” Techalloy Co.,

Inc. v. Reliance Ins. Co., 487 A.2d 820, 826 (Pa. Super. Ct. 1984) (citation omitted).

“Contractual language is ambiguous if ‘it is reasonably susceptible of different

constructions and capable of being understood in more than one sense.’” Gardner v. State

Farm Fire and Cas. Co., 544 F.3d 553, 558 (3d Cir. 2008) (quoting Hutchison v. Sunbeam

Coal Corp., 519 A.2d 385, 390 (Pa. 1986)).

       We agree with Arrowood that the Building Commission’s suit against Hussey falls

squarely within the unambiguous language of the insurance contract’s pollution exclusion

provision, which is not reasonably susceptible to multiple interpretations. Section f.(2)(a)

of the pollution exclusion clause is sweeping—it excludes from coverage “[a]ny loss, cost

or expense arising out of any . . . [r]equest, demand or order that any insured or others . . .

in any way respond to, or assess the effects of pollutants.”3 (App. at 103 (emphasis

added).) We conclude that Hussey’s liability to the Commission is without question a

cost of Hussey’s that arises out of the Illinois EPA’s order compelling the Building

Commission to test for and clean up the effects of pollutants.4 “Cost,” Black’s Law

Dictionary makes plain, is synonymous with “expenditure,” which is defined as “[a] sum

paid out.” Black’s Law Dictionary 397, 658 (9th ed. 2009). As a result of the Building


       3
        Courts within and outside of Pennsylvania have interpreted this pollution
exclusion provision broadly. See Coal Heat, Inc. v. U.S. Fidelity and Guaranty Co., No.
99-CV-5647, 2000 WL 1689713, at *6-7 (E.D. Pa. Nov. 2, 2000) (citing cases).
       4
           Hussey does not challenge the designation of lead and copper as pollutants.

                                              -5-
Commission’s lawsuit against Hussey, Hussey incurred such an expenditure in the form

of its liability to the Building Commission. Such an expenditure manifestly “aris[es] out

of” the Illinois EPA’s “order that any insured or others”—the “other[]” here being the

Building Commission—respond to the pollution caused by the erosion of Hussey’s

roofing panels.5 (App. at 103.) The “plain and ordinary meaning” of the broad pollution

exclusion clause unambiguously encompasses Hussey’s liability to the Building

Commission. Techalloy, 487 A.2d at 826.

       Hussey advances several arguments in its effort to show that the language of the

pollution exclusion is ambiguous, but we do not find its arguments persuasive. Hussey’s

strongest argument is its suggestion that adopting the above-described construction of

section f.(2)(a)’s plain language would render section f.(2)(b) surplusage. See In re

Cendant Corp. Securities Litigation, 454 F.3d 235, 247 (3d Cir. 2006) (“A contract is to

be considered as a whole, and, if possible, all its provisions should be given effect . . . .”)

(citation omitted). According to Hussey, if section f.(2)(a) were interpreted to include

liability for a claim brought by an entity ordered by the government to remediate

pollution, “then a claim or suit by a governmental authority seeking damages for the

cleanup of pollutants likewise would be excluded under section (2)(a). If that were the

case, where would be no need for section (2)(b).” (Appellant’s Br. at 28.)




       5
         We have explained, in applying Pennsylvania law, that the words “arising out
of” are “normally given broad construction.” Battaglia v. McKendry, 233 F.3d 720, 727
(3d Cir. 2000).

                                              -6-
       Hussey’s argument fails, however, because the plain language of sections f.(2)(a)

and f.(2)(b) indicates that the two provisions exclude coverage for pollution-related losses

in different circumstances. Section f.(2)(a), its terms make clear, applies when the

insured or others are compelled by a “[r]equest, demand or order” (such as the Illinois

EPA’s order in this case) to respond to or assess the effects of pollutants. (App. at 103.)

By contrast, section f.(2)(b) applies when the “governmental authority” itself remediates

the pollution and then files a “[c]laim or suit” against the responsible party or parties to

recover the costs of remediation. (Id.) That the pollution exclusion provision would

contain one clause addressing private remediation of pollution and a separate clause

addressing remediation by governmental authorities is not surprising. The

Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”)

itself addresses these two categories of costs in distinct subsections, one of which makes

potentially responsible polluters liable for “all costs of removal or remedial action

incurred by the United States Government or a State or an Indian tribe not inconsistent

with the national contingency plan,” and the other of which makes potentially responsible

polluters liable for “any other necessary costs of response incurred by any other person

consistent with the national contingency plan.” 42 U.S.C. §§ 9607(a)(4)(A)-(B).

Arrowood’s pollution exclusion provision simply tracks CERCLA in separating out these

two categories of liability. In sum, our reading of the pollution exclusion clause’s

unambiguous terms gives effect to both provisions and creates no surplusage, contrary to

Hussey’s unavailing argument to the contrary.

                                              -7-
       We are likewise unpersuaded by Hussey’s suggestion that industry custom and

usage demonstrates that the insurance industry does not regard section f.(2)(a) as applying

to products-based claims like Hussey’s. It is true that, even in the absence of contractual

ambiguity, “[i]n construing policy language, courts should consider any special usage

‘[w]here terms are used in a contract which are known and understood by a particular

class of persons in a certain special or peculiar sense.’” USX Corp. v. Liberty Mut. Ins.

Co., 444 F.3d 192, 198 (3d Cir. 2006) (quoting Sunbeam Corp. v. Liberty Mut. Ins. Co.,

781 A.2d 1189, 1193 (Pa. 2001)) (emphasis added). But Hussey identifies no “terms” in

the instant contract that are subject to special or peculiar meaning. Id. Instead, Hussey

simply argues that the entire pollution exclusion provision has an industry-specific

meaning. Without providing evidence that a particular term within the policy has an

idiosyncratic, industry-specific meaning, Hussey is in effect arguing that the entire

contract does not mean what it says. Needless to say, we reject such an unpersuasive

contention.

       Finally, we are unconvinced by Hussey’s argument that Arrowood should be

estopped from invoking the pollution exclusion as a result of representations made by

agents of the insurance industry to Pennsylvania insurance regulators about the exclusion.

The gist of Hussey’s argument is that an organization called the Insurance Services Office

(“ISO”), on behalf of insurance companies like Arrowood, made representations to state

insurance regulators in order to obtain regulatory approval for the pollution exclusion

clause. In these statements, Hussey contends, ISO indicated that the clause did not apply

                                             -8-
to product-based claims, but now, according to Hussey, Arrowood is trying to benefit by

arguing that the exception applies to Hussey’s product-based claim, contrary to

Pennsylvania’s regulatory estoppel doctrine.

       We disagree. Hussey is correct that under Pennsylvania’s doctrine of regulatory

estoppel, an industry that makes representations to a regulatory agency to win agency

approval “will not be heard to assert the opposite position when claims are made by

[litigants such as] insured policyholders.” Sunbeam, 781 A.2d at 1192-93. Here, the

District Court properly rejected Hussey’s equitable estoppel argument. First, Hussey’s

evidence of industry representations to Pennsylvania insurance regulators pertains to a

different pollution exclusion provision in a different contract than the one at issue in this

case; the statements simply are not relevant to any claim for estoppel relating to the

contractual language under consideration here. Moreover, even if the ISO representations

were relevant to any claim for estoppel concerning this contract (which they are not), we

agree with Arrowood that the statements, when read in context, show that the ISO

consistently represented to regulators that the pollution exclusion would apply to clean-up

costs like those the Building Commission incurred. In other words, ISO’s statements

were not so contrary to Arrowood’s position that Arrowood should be estopped from

invoking the pollution exclusion here.6




       6
        We have reviewed the remainder of Hussey’s arguments and find that they are
without merit.

                                             -9-
                                    III.

For the foregoing reasons, we will affirm the judgment of the District Court.




                                    -10-
