The Clendenin decision is significant in part because it disagrees with a prior Fourth Circuit decision, National Electrical Manufacturers Association (NEMA) v. Gulf Underwriters Insurance Company, 162 F.3d 821 (4th Cir. 1998). The NEMA case found that a pollution exclusion applied to the bodily injury claimed in the welding-rod litigation. The Maryland high court disagreed. (The Fourth Circuit is a bit of a recidivist in this regard, inaccurately predicating that state law would rule for insurance companies only to have the state later expressly go the other way. Compare Mraz v. Canadian Universal Insurance Company, 804 F.2d 1325 (4th Cir. 1986) (holding that Maryland law mandated a “manifestation” trigger of coverage) with Harford County v. Harford Mutual Insurance Co., 610 A.2d 286 (Md. 1992) and compare Maryland Casualty Co. v. Armco Co., Inc., 822 F.2d 1348, 1352-54 (4th Cir. 1987) (predicting that Maryland would refuse to recognize CERCLA response costs as “damages” under CGL policies) with Bausch & Lomb, Inc. v. Utica Mut. Ins. Co., 625 A.2d 1021, 1032-33 (Md. 1993).)

The Maryland court recognized that the substance at issue had a useful purpose and only allegedly was harmful where a person was exposed to undue levels. As the court ruled: “Therefore, reading this definitional provision as a whole, we conclude that to qualify as a pollutant under the contractual definition the substance must be understood to be an irritant or contaminant.” (Slip op. at 13) The court distinguished prior authority (where the insured had conceded that carbon monoxide was a contaminant) on the basis that the manganese might or might not be considered a pollutant depending on the circumstances. (Id. at 14) This should strongly counsel to policyholders that they need (in good faith) to dispute in the liability case, and certainly in the coverage case, that the substance to which the plaintiff was exposed is malum in se.

The court further embraced the standard creation-story of the absolute pollution exclusion to confirm that its linguistic, contextual construction allowing for coverage was not inconsistent with the policy intent. (Slip op. 18-20; slip op at 21 (“We conclude also that the current construction of the total pollution exclusion clause drafted by Insurer was not intended to bar coverage where Insureds ' alleged liability may be caused by non-environmental, localized workplace fumes.”).

And the court confirmed that this type of product-liability risk – though it takes the form of contamination of exposed persons – is reasonably thought to be comprehended by the product-liability insurance provided by CGL policies. As the Maryland high court explained: “Welding fumes emitted during the normal course of business appear to be the type of harm intended to be included under coverage for routine commercial hazards.” (Slip op. at 19). Indeed, the court expressed its overall rationale more broadly and powerfully: “The specific language used in the total pollution exclusion clause, when read in its entirety, supports the conclusion that noxious workplace fumes were not intended to be excluded.” (Slip op. at 20)

Well aware of the continuing litigation over application of the absolute pollution exclusion to workplace- and product-exposure claims, the court recognized: “We expect that, our decision notwithstanding, interpretation of the scope of pollution exclusion clauses likely will continue to be ardently litigated throughout state and federal courts.” (Slip op at 21).