Steven A. Meyerowitz | Law.com | March 21, 2017
A federal district court in Oregon has ruled that carbon monoxide was a “pollutant” as defined in a commercial general liability (“CGL”) insurance policy such that the policy’s pollution exclusion served to exclude coverage for claims arising from alleged carbon monoxide poisoning.
The Case
Lawsuits filed in an Oregon state court against Victory Construction LLC, dba Premier Pools and Spas of Oregon, and Vitaly Shavlovskiy (together, “Victory Construction”) alleged negligence in the installation and ventilation of a natural gas swimming pool heater and negligence in failing to warn of the risks of carbon monoxide poisoning associated with operating the heater in an insufficiently ventilated area.
The state court lawsuits alleged that, as a result of Victory Construction’s negligence, excessive carbon monoxide filled the home and caused the plaintiffs to be sick. The complaints sought damages resulting from the release of carbon monoxide from the heater.
Victory Construction sought defense and indemnity from Colony Insurance Company, which had issued a CGL policy to Victory Construction.
Colony Insurance contended that the policy’s pollution exclusion precluded coverage for the claims against Victory Construction arising from the alleged carbon monoxide poisoning, and went to court seeking a determination to that effect.
The Colony Insurance Policy
The Colony Insurance policy’s pollution exclusion provided that the policy did not apply to:
(1) “Bodily injury,” “property damage,” or “personal and advertising injury” which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “hazardous materials” at any time.
It defined:
hazardous materials
as:
“pollutants,” lead, asbestos, silica and materials containing them
It defined:
pollutants
as:
any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste
The District Court’s Decision
The district court, applying Oregon law, granted Colony Insurance’s motion, finding that the “only plausible interpretation” of the policy’s terms resulted in the conclusion that carbon monoxide was “a pollutant.”
Accordingly, the district court held, the pollution exclusion applied to damages caused by carbon monoxide.
In its decision, the district court explained that the pollution exclusion excluded coverage for injury or damage caused by “irritants” or “contaminants” – terms, the district court noted, that the policy did not define.
It then ruled that, based on a “plain meaning analysis,” carbon monoxide was either an “irritant” or “contaminant” and, thus, was a “pollutant” under the policy.
Therefore, the district court concluded, Colony Insurance did not have a duty to defend or indemnify Victory Construction.
The case is Colony Ins. Co. v. Victory Construction LLC, No. 3:16–cv–00457–HZ (D. Ore. March 9, 2017). Attorneys involved include: Andrew C. Lauersdorf, MALONEY LAUERSDORF REINER, PC, 1111 E. Burnside St., Ste. 300, Portland, OR 97214, Attorney for Plaintiff. Christopher B. Rounds, ROUNDS LAW OFFICE PC, 1409 Franklin St., No. 217, Vancouver, WA 98660, Attorney for Defendants.
FC&S Legal Comment
Many other courts also have concluded that carbon monoxide was a “pollutant” for purposes of an insurance policy’s pollution exclusion. See, Claudia G. Catalano, 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) (electronic version updated weekly) (collecting cases). See also, e.g., Church Mut. Ins. Co. v. Clay Ctr. Christian Church, 746 F.3d 375 (8th Cir. 2014) (predicting that the Nebraska Supreme Court would conclude that carbon monoxide was a pollutant because it was a gas that could render air “unfit for use” if introduced at high levels); Century Sur. Co. v. Casino W., Inc., 677 F.3d 903 (9th Cir. 2012) (noting that some courts have found the pollution exclusion “clear and unambiguous when applied to carbon monoxide poisoning”); Nautilus Ins. Co. v. Country Oaks Apartments Ltd., 566 F.3d 452 (5th Cir. 2009) (holding that “[i]t could not be clearer” that carbon monoxide is a pollutant under the exclusion and rejecting the argument that “a substance must generally or usually act as an irritant or contaminant to constitute a ‘pollutant’”); Longaberger Co. v. U.S. Fid. & Guar. Co., 201 F.3d 441 (6th Cir. 1999) (unpublished decision) (affirming district court holding that carbon monoxide is a pollutant); Shaw v. Liberty Mut. Fire Ins. Co., No. 6:15–CV–686–ORL–TBS (M.D. Fla. Feb. 12, 2016), reconsideration denied, No. 6:15–CV–686–ORL–TBS (M.D. Fla. Apr. 25, 2016) (“while carbon monoxide is a naturally occurring gas that is present in the air we breathe, it is also an irritant, contaminant, and toxic at the level of concentration experienced by the [plaintiffs.] Therefore, carbon monoxide clearly and unambiguously fits within the definition of a ‘pollutant’ under the Policy.”); Midwest Family Mut. Ins. Co. v. Wolters, 831 N.W.2d 628 (Minn. 2013) (“While there may be substances that are difficult to establish as ‘pollutants’ for purposes of the absolute pollution exclusion, carbon monoxide is not one of them.”).
Other courts, it also should be noted, have reached the opposite conclusion. See, e.g., Apana v. TIG Ins. Co., 574 F.3d 679 (9th Cir. 2009) (collecting cases).