(Article from Insurance Law Alert, September 2023)
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Holding
The Ninth Circuit asked the Alaska Supreme Court to decide whether a pollution exclusion bars coverage for claims arising out of carbon monoxide poisoning, a matter of first impression under Alaska law. Estate of Wheeler v. Garrison Prop. & Cas. Ins. Co., 2023 U.S. App. LEXIS 23648 (9th Cir. Sept. 6, 2023).
Background
The coverage dispute arose after a young man died from carbon monoxide poisoning while living in the home of the policyholders. When the decedent’s estate sued the homeowners, the homeowners filed an insurance claim. The insurer denied coverage on the basis of a pollution exclusion that applied to bodily injury or property damage “[a]rising out of the actual, alleged, or threatened discharge, dispersal, release, escape, seepage or migration of ‘pollutants’ however caused and whenever occurring.” The policy defined pollutants as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”
The decedent’s estate, as assignees of the homeowners, sued the insurer, seeking a declaration of coverage and an award of damages. An Alaska district court granted the insurer’s summary judgment motion, finding that the suit fell within the scope of the pollution exclusion.
Decision
The Ninth Circuit noted the history of extensive litigation and conflicting decisions across jurisdictions as to the scope of a pollution exclusion—both in general and in the context of carbon monoxide claims. Expressing uncertainty as to how the Alaska Supreme Court would rule on this outcome-determinative issue, the Ninth Circuit certified the following question: “Does a total pollution exclusion in a homeowners’ insurance policy exclude coverage of claims arising from carbon monoxide exposure?”
Comments
Courts that have declined to apply a pollution exclusion to carbon monoxide claims have generally reasoned that such exclusions are intended to apply only to “traditional environmental pollution,” meaning claims of outdoor air, water or ground contamination by industrial polluters, rather than discrete, isolated incidents of injury or damage caused by the release of an indoor pollutant. In contrast, a significant number of courts have concluded that the exclusion bars coverage for such claims, reasoning that carbon monoxide is a pollutant and that the exclusion, by its plain terms, applies unambiguously. Those decisions appear to be the better reasoned ones, as the language of the exclusion itself lacks reference to any “traditional” or outdoor requirement and absent ambiguity, consideration of legislative history or other extrinsic evidence is not warranted.