                                                                         FILED
                                                  United States Court of Appeals
                      UNITED STATES COURT OF APPEALS      Tenth Circuit

                                                                  December 13, 2010
                            FOR THE TENTH CIRCUIT
                                                                 Elisabeth A. Shumaker
                                                                     Clerk of Court
    UNION INSURANCE COMPANY,

                 Plaintiff-Counter-
                 Defendant-Appellee,

    v.                                                  No. 09-3159
                                              (D.C. No. 6:08-CV-01096-MLB)
    KARLA MENDOZA,                                       (D. Kan.)

                 Defendant-Counter-
                 Claimant-Appellant.

    __________

    COMPLEX INSURANCE CLAIMS
    LITIGATION ASSOCIATION,

             Amicus Curiae.



                             ORDER AND JUDGMENT *


Before HARTZ, McKAY, and ANDERSON, Circuit Judges.




*
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
      Karla Mendoza appeals the district court’s grant of summary judgment in

favor of Union Insurance Company (Union), in which it ruled that the accidental

disbursement of anhydrous ammonia was excluded from coverage by Union’s

pollution exclusion clause. We have jurisdiction over this diversity case under

28 U.S.C. § 1291, and we affirm.

                                   BACKGROUND

      A. Denial of Coverage. The facts are uncontroverted. In July 2006,

Ms. Mendoza was injured by a spray of anhydrous ammonia fertilizer released on

farm land in Kansas owned by Irsik G&B Farms, Inc. (Irsik Farms). Union

provided a Farm owners-Ranch owners insurance policy to Irsik Farms from

September 2005 to September 2006. Ms. Mendoza filed a personal injury lawsuit

against Irsik Farms and its employee, Bradley Irsik, alleging that they caused her

bodily injury by exposing her to a mist of anhydrous ammonia fertilizer on

July 14, 2006. Anhydrous ammonia fertilizer places nitrogen into the soil, and is

commonly used as a fertilizer. Relying on a pollution exclusion provision in its

insurance policy, Union denied coverage for the Mendoza lawsuit. Ms. Mendoza

obtained a consent judgment from Irsik Farms for one million dollars, in

exchange for a covenant not to execute upon the judgment against them. Union

filed an action in the United States District Court for the District of Kansas

seeking a declaratory judgment that the liability policy did not cover the




                                          -2-
Mendoza judgment. Irsik Farms was voluntarily dismissed from the declaratory

action.

      B. Underlying Claim. On the day Ms. Mendoza was injured, an Irsik

Farm’s employee was applying anhydrous ammonia fertilizer on an Irsik Farm’s

field next to where Ms. Mendoza was working on road construction. The

employee asked Bradley Irsik for help because the fertilizer was not coming out

evenly. The fertilizer was stored in a tank on the back of a tractor; it was applied

to the soil by flowing through piping from the tank to several holes on shanks on

the tractor’s plow and then into the soil. Bradley Irsik raised the plow out of the

soil to see if the lines were plugged, and looked at the plow to see if vapors were

coming out of the tubes. He then held the hydraulic switch down for about three

seconds, releasing the anhydrous ammonia into the air. At the time, Ms. Mendoza

was loading a road sign on the nearby road when a mist of the anhydrous

ammonia fertilizer engulfed her. She testified that she could not breathe; her

eyes, lungs and throat were burning; and she required medical attention.

      C. Policy Language. Union’s policy of insurance to Irsik Farms includes

coverage for personal injury liability. The personal liability coverage contains an

exclusion, however, for personal injury caused by a pollutant. In an endorsement

entitled “Farmer’s Comprehensive Personal Liability Insurance,” the liability

coverage states:




                                         -3-
       If a claim is made or a suit is brought against any insured for
       damages because of bodily injury or property damage caused by an
       “occurrence” to which this coverage applies, we will:

                    a.  pay up to our limit of liability for the damages for which
                    the
                        “Insured” is legally liable; and

                    b.   provide a defense at our expense by counsel of our choice.
                         We may make any investigation and settle any claim or
suit
                         that we decide is appropriate. Our obligation to defend
any
                         claim or suit ends when the amount we pay for damages
                         resulting from the “occurrence” equals our limit of
liability.

Aplt. App., Vol. I, at 68.

       The “Exclusions” clause in the Personal Liability endorsement states in

relevant part:

       Personal Liability and . . . Medical Payments to Others do not apply
       to bodily injury or property damage:

       ****
       j.  (1)      arising out of the actual, alleged or threatened discharge,
                    dispersal, seepage, migration, release or escape of
                    pollutants:

                    (a) at or from any premises, site or location which is or
                        was at any time owned or occupied by, or rented or
                        loaned to you, or any “Insured”.

       ****
                    (d) at or from any premises, site or location on which
                        you, or any “Insured” or any contractors or
                        subcontractors working directly or indirectly on
                        your’s or any “Insured’s” behalf are performing
                        operations:

                                         -4-
                         (i)   If the pollutants are brought on or to the
                               premises, site or location in connection with
                               such operations by you, or any “Insured”. . . .

      ****
          (2)

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

      (This exclusion does not apply to property damage caused by
      accidental drift of vapors, fumes, or toxic chemicals as a result of
      spraying operations.)

Id. at 69-71.

      D. District Court Ruling. The district court granted Union’s motion for

summary judgment, ruling Irsik Farm’s accidental disbursement of anhydrous

ammonia was excluded from coverage by the pollution exclusion. It ruled that

the language of the pollution exclusion clause and its definition of a pollutant are

not ambiguous, and that anhydrous ammonia, while useful as a fertilizer in

farming operation, is a pollutant. Aplt. App., Vol. II, at 345, 347. It concluded

that “a pollutant under the insurance policy is any irritating or contaminating

substance, which may be a solid, liquid, gaseous or thermal substance.” Aplt.

App., Vol. II, at 342. Citing to dictionary definitions, it concluded that an

“irritant is a source of irritation, especially physical irritation,” and that




                                           -5-
“[t]o contaminate means to make impure or unclean by contact or mixture.” Id. at

342-43 (internal quotations omitted). Ms. Mendoza now appeals that ruling.

                                     ANALYSIS

      Ms. Mendoza contends that the anhydrous ammonia was being used, as it

commonly is, as a fertilizer, and that under these circumstances, it is not a

pollutant. She contends that the definition of a pollutant in the pollution

exclusion clause is so overly-broad as to be ambiguous because any substance

could conceivably meet the definition of a pollutant under the exclusion. She

notes that the definition of a pollutant does not define the terms irritant or

contaminant and read literally, these terms are virtually boundless, because there

is no substance or chemical in existence that does not irritate or contaminate some

person or property. She contends the terms “irritant” and “contaminant,” do not

have a plain, ordinary meaning. She further argues that, particularly in a farm

owner’s insurance policy, a reasonably prudent insured farmer would not

understand the exclusion clause’s definition of a pollutant to cover a commonly

used farm fertilizer. Thus, she argues that coverage exists because the exclusion

must be interpreted narrowly and in a light most favorable to the insured.

      In response, Union contends that anhydrous ammonia is a pollutant under

the terms of its pollution exclusion clause, and thus is excluded from coverage.

Union presented evidence that anhydrous ammonia has known hazardous effects,

including respiratory tract, skin and eye burns, and contains one or more

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components listed as a hazardous air pollutant under the Clean Air Act. It asserts

that Ms. Mendoza’s injuries of burning in her eyes, throat, lungs and skin further

establish that anhydrous ammonia fertilizer is an irritant. Thus, Union argues the

anhydrous ammonia is clearly an irritant and contaminant and, thus, falls within

the policy’s definition of a pollutant.

      Our duty in a diversity case is to “apply state law in accordance with the

then controlling decision of the highest state court.” Juarez v. United Farm

Tools, Inc., 798 F.2d 1341, 1342 (10th Cir.1986) (internal quotation marks and

alteration omitted). Under Kansas law, an insurer bears the burden of proving

that coverage is excluded. Shelter Mut. Ins. Co. v. Williams ex rel. Williams,

804 P.2d 1374, 1383 (Kan. 1991). When interpreting insurance contracts, and

exclusion clauses in particular, Kansas applies the following rules of

construction:

             Because the insurer prepares its own contracts, it has a duty to
      make the meaning clear. If the insurer intends to restrict or limit
      coverage under the policy, it must use clear and unambiguous
      language; otherwise, the policy will be liberally construed in favor of
      the insured. If an insurance policy’s language is clear and
      unambiguous, it must be taken in its plain, ordinary, and popular
      sense. In such case, there is no need for judicial interpretation or the
      application of rules of liberal construction. The court shall not make
      another contract for the parties and must enforce the contract as
      made.

            However, where the terms of an insurance policy are
      ambiguous or uncertain, conflicting, or susceptible of more than one
      construction, the construction most favorable to the insured must
      prevail.

                                          -7-
             To be ambiguous, a contract must contain provisions or
      language of doubtful or conflicting meaning, as gleaned from a
      natural and reasonable interpretation of its language. Ambiguity in a
      written contract does not appear until the application of pertinent
      rules of interpretation to the face of the instrument leaves it
      genuinely uncertain which one of two or more meanings is the proper
      meaning. Whether a written instrument is ambiguous is a question of
      law to be decided by the courts. Courts should not strain to create an
      ambiguity where, in common sense, there is not one. The test in
      determining whether an insurance contract is ambiguous is not what
      the insurer intends the language to mean, but what a reasonably
      prudent insured would understand the language to mean.

Am. Family Mut. Ins. Co. v. Wilkens, 179 P.3d 1104, 1109-10 (Kan. 2008)

(internal quotation marks and bracketed material omitted).

      Different courts interpreting this same definition of a pollutant in liability

exclusion clauses have reached different conclusions as to the term’s meaning and

as to whether the term is ambiguous under Kansas law. Compare Regent Ins. Co.

v. Holmes, 835 F. Supp. 579, 581-82 (D. Kan. 1993) (holding that the definition

of pollutants in this exclusion clause was ambiguous because it did not define the

terms irritant or contaminant), and Westchester Fire Ins. Co. v. City of Pittsburg,

794 F. Supp. 353, 355 (D. Kan. 1992) (holding that this pollution exclusion clause

was so broad and imprecise as to be ambiguous), with Atl. Ave. Assocs. v. Cent.

Solutions, Inc., 24 P.3d 188, 191-92 (Kan. Ct. App. 2001) (holding that an

identical exclusion clause was not ambiguous), and Crescent Oil Co. v. Federated

Mut. Ins. Co., 888 P.2d 869, 871-73 (Kan. Ct. App. 1995) (holding that no

ambiguity arose from the pollution exclusion clause language itself).

                                         -8-
      Based on these conflicting decisions, we requested the Kansas Supreme

Court to exercise its discretion to accept the certified question of whether the

definition of a pollutant in a standard pollution exclusion clause in a liability

insurance contract is ambiguous under Kansas law. We recognized that the

Kansas Court of Appeals had twice held the term to be unambiguous, in Atlantic

Avenue and Crescent Oil, but we noted that those decisions could be interpreted

as being limited to the presented facts. See also Grynberg v. Total, S.A., 538 F.3d

1336, 1354 (10th Cir. 2008) (noting that “we are not bound by decisions of state

intermediate appellate courts when we apply state law in a diversity case.”).

      The Kansas Supreme Court initially accepted certification. It subsequently

dismissed the case, however, stating that, in light of a recent Kansas federal

district court decision, Gerdes v. American Family Mutual Insurance Co., 713 F.

Supp. 2d 1290 (D. Kan. 2010), it would be improper to accept certification

because there is controlling Kansas precedent. The dismissal order stated that

Gerdes “acknowledged the precedential value of Crescent Oil [ ] and Atlantic

Avenue [ ] beyond the facts of those cases,” and thus, these decisions represented

the state’s controlling precedent. Order to Dismiss, Union Ins. Co. v. Mendoza,

No. 104,087 (Kan. Oct. 8, 2010) (unpublished order).

      In Gerdes, the district court held that under Kansas law, as articulated in

Atlantic Avenue and Crescent Oil, the definition of a pollutant in a pollution

exclusion clause as “any solid, liquid, gaseous or thermal irritant or contaminant,

                                          -9-
including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste” is not

so overly broad as to be ambiguous and is not subject to conflicting

interpretations. 713 F. Supp. 2d at 1300-01. In Crescent Oil, gasoline leaked

from an underground storage tank at a gasoline station. The insured’s policy had

a pollution exclusion clause with the same definition of pollutants as in Irsik

Farm’s policy with Union. The Kansas court in Crescent Oil recognized that

“[c]ases in some jurisdictions may have limited the scope of the definition of

pollutant under the exclusion in a number of ways,” but that it was not

constrained to do so. 888 P.2d at 872-73. It declined to hold that the pollution

exclusion applied only to active industrial pollution, as the insured had

contended, and ruled that the policy definition of pollutants did not permit

“multiple conflicting interpretations.” Id. at 873. The Kansas Court of Appeals

in Atlantic Avenue followed Crescent Oil, holding that the exclusion clause was

not so overly broad as to render the entire exclusion ambiguous, 24 P.3d at 191,

and that liquid cement cleaner is a pollutant when it leaks out of a drum, causing

damage. Id. at 191-92.

      Based on Gerdes, and the Kansas Supreme Court’s characterization of

Gerdes in its order of dismissal, we conclude that the district court correctly held

that, under Kansas law, the definition of a pollutant as “any solid, liquid, gaseous

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




                                         -10-
alkalis, chemicals and waste” is not ambiguous, and must, therefore, be enforced

according to its terms.

      By its terms, the pollution exclusion clause here includes “any irritating or

contaminating substance, which may be a solid, liquid, gaseous or thermal

substance.” Aplt. App., Vol. I, at 71. Union presented undisputed evidence that

anhydrous ammonia is an irritant. As noted by the district court, the Material

Safety Data Sheet for the anhydrous ammonia used by Irsik Farms stated that

exposure to the anhydrous ammonia was a major health hazard that could cause

respiratory tract burns, skin burns and eye burns, as well as nausea, vomiting and

nerve damage, and contains one or more components listed as a hazardous air

pollutant under the Clean Air Act. See Aplee. Br., Attach. 1, at 1-2, 7; Aplt.

App., Vol. II, at 345-46 (Memorandum and Order). Accordingly, we conclude the

district court correctly ruled that the release of anhydrous ammonia is a pollutant

under the pollution exclusion clause in Irsik Farm’s liability insurance policy with

Union, and, therefore, that Union is not liable for bodily injuries arising out of

Ms. Mendoza’s exposure to it.

      Accordingly, we AFFIRM the district court’s order granting summary




                                         -11-
judgment in favor of Union.


                                     Entered for the Court



                                     Monroe G. McKay
                                     Circuit Judge




                              -12-
