Ninth Circuit Certifies Pollution Exclusion Issue to Alaska Supreme Court
The Ninth Circuit certified a question on the interpretation of the pollution exclusion to the Alaska Supreme Court. Estate of Joshua Wheeler v. Garrison Prop. and Cas. Ins. Co., 2023 U.S. App. LEXIS 23648 (9th Circuit Sept. 6, 2023).
Josiah Wheeler moved into a cabin owned by Deborah Overly and Terry Summers in Tok, Alaska. Josiah was found dead in the cabin's bathtub. An autopsy showed that he died from acute carbon monoxide poisoning. The deputy fire marshal determined that the cabin's water heater had emitted the carbon monoxide. Summers had installed the water heater in the same small bathroom as the bathtub without connecting its flue to a venting system, in contravention of he heater's instruction manual.
Overly and Summers had a homeowers' policy issued by Garrison. The policy excluded medical payments for bodily injury arising out of "discharge, dispersal, release, escape, seepage or migration of pollutants." The policy defined "pollutants" as "a solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapour, soot fumes, acids alkalis, chemicals and waste.
The Wheelers brought wrongful death and survivorship claims against Overly and Summers. A claim was submitted to Garrison. Coverage was denied on the basis that carbon monoxide was a "pollutant" that fell under the policy's pollution exclusion. Overly and Summers signed a confession of judgment in which they admitted liability for Josiah's death. They also assigned to the Wheelers their rights to pursue coverage against Garrison.
The Wheelers filed a declaratory judgment action against Garrison seeking a declaration of coverage and an award of damages. The parties filed cross-motions for summary judgment. The district court held that the pollution exclusion applied to deny coverage and granted summary judgment for Garrison.
On appeal, the Ninth Circuit noted that some states decided that carbon monoxide fell outside the total pollution exclusion after having previously held that its language was unambiguous with respect to a different substance.
How the Alaska Supreme Court interpreted the pollution exclusion could determine the outcome of the case. If the exclusion applied only to active industrial polluters or traditional environmental pollution, then there would be coverage in this case. In contrast, if the plain language unambiguously encompassed carbon monoxide exhaust from a residential water heater, coverage might be precluded, unless that result contravened the reasonable expectations of the insured.
The Ninth Circuit was unable to predict how the Alaska Supreme Court would analyse the Wheelers' case without expanding state law. Alaska had not considered the exclusion in the residential context or in any case involving a nonindustrial pollutant that caused no environmental harm.
Therefore, the following question was certified to the Alaska Supreme Court:
Does a total pollution exclusion in a homeowners' insurance policy exclude coverage of claims arising from carbon monoxide exposure?
