Carbon Monoxide Is A Pollutant In Iowa, But Not Wisconsin
Recently the courts in two mid-western states had the opportunity to consider whether carbon monoxide constitutes a “pollutant” so as to exclude carbon monoxide based claims under the absolute pollution exclusion. The result is that carbon monoxide is a “pollutant” in Iowa but not in Wisconsin.
The Iowa Case
The Iowa Supreme Court considered the carbon monoxide question in Bituminous Cas. Corp. v. Sand Livestock Systems, Inc., 728 N.W.2d 216 (Iowa 2007). In Sand Livestock, an insured was sued for wrongful death after a man died of carbon monoxide poisoning in a hog confinement facility the company designed and built. During construction, the insured installed a propane power washer in the facility’s washroom. At a later date, an employee of the company that owned the building was using the washroom when he was overcome by carbon monoxide fumes and died. It was later determined that the propane gas heater for the pressure washer had produced the fumes.
Following tender of the underlying suit by the insured, the builder’s insurer filed suit in federal court seeking a declaration that it had no duty to defend or indemnify based on the absolute pollution exclusion. In considering a summary judgment motion by the carrier, the federal court noted that there was no Iowa case either directly on point or sufficiently definitive to allow the court to predict how the Iowa Supreme Court would decide the issue, and consequently certified the question of whether the policy’s total pollution exclusion applied to the Iowa Supreme Court.
The policy at issue included an endorsement entitled “Total Pollution Exclusion with a Hostile Fire Exception.” 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 insured and the decedent’s estate argued the exclusion did not apply to the particular facts of this case. Further, the decedent’s estate argued that the pollution exclusion was ambiguous because it was unclear whether its scope extended beyond “traditional environmental pollution.” In contrast, the insurer argued the pollution exclusion clearly and succinctly prevented coverage for carbon monoxide poisoning.
The Iowa Supreme Court agreed with the insurer that the broad definition of “pollutant” would include carbon monoxide. Citing to the dictionary definition of carbon monoxide, the court noted that it is defined as “a colorless odorless very toxic gas.” Webster's Third New International Dictionary 336 (unabr. ed. rev. 2002). Based on the broad definition of pollutant, the court found that it would be difficult to say the exclusion was “fairly susceptible to two interpretations,” as required to find the exclusion ambiguous. With respect to the “traditional environmental pollution” argument, the court concluded that the plain language in the exclusion encompassed the injury at issue because carbon monoxide was a gaseous irritant or contaminant, which was released from the propane power washer. Thus, the pollution exclusion applied to bar coverage for the death caused by carbon monoxide poisoning.
The Wisconsin Case
Unlike the Iowa Supreme Court, the Wisconsin Court of Appeals has come to the opposite conclusion on carbon monoxide as a pollutant. In Langone v. American Family Mut. Ins. Co., 731 N.W.2d 334 (Wis. App. 2007), the court considered a claim where a decedent and his brother were tenants in an apartment building when they were overcome by carbon monoxide poisoning from a malfunctioning fireplace and boiler installed by the landlord. In this case the policy issued to the landlord contained an absolute pollution exclusion that defined “pollutants” identically to the definition in Sand Livestock. The trial court judge held that the policy language was ambiguous and thus coverage existed under the policy as a matter of law.
The Wisconsin Appellate Court agreed with the trial court’s finding. The appellate court noted that a review of other jurisdictions indicates that there are three approaches to interpreting the pollution exclusion. Some courts have held that the pollution exclusion clause clearly and unambiguously bars coverage for all liability arising from carbon monoxide emissions. Others have adopted a second approach, finding that the clause is unclear when applied to residential carbon monoxide leaks because the clause may be read to apply only to industrial or environmental pollution. Finally, the third approach, recognized as a “ minority” approach, is based on a belief that the reasonable expectations of the insured should control over the actual contract language, even if it is unambiguous.
Here, the insured cited to the Wisconsin cases that hold that carbon dioxide is not a pollutant, arguing that because carbon monoxide, like carbon dioxide, does not have the harmful effect of an irritant or contaminant unless or until it accumulates to certain levels, it is contextually ambiguous. Therefore, in Langone, the court’s first task was to determine whether the exclusion was susceptible to more than one reasonable interpretation, and thus ambiguous.
Like Sand Livestock, the insurer here asserted that the exclusion unambiguously applied to damage caused by carbon monoxide when the plain meaning and dictionary definitions of policy terms and carbon monoxide are considered. The insurer cited to the broad policy definition of “ pollutant,” which includes “ any ... gaseous or thermal irritant or contaminant, including ... vapor [and] fumes.” In considering this point, the court noted that the Wisconsin Supreme Court has acknowledged that this type of pollution exclusion is intended to have “broad application.”
Again citing to Webster's Third New International Dictionary, the court noted that that the definition of carbon monoxide is “a colorless odorless very toxic gas.” Further, that despite other Wisconsin decisions finding the exclusion unambiguous, policy and dictionary definitions alone will not necessarily render the policy language unambiguous. Instead, the court observed that the Wisconsin Supreme Court has found similar pollution exclusion clauses ambiguous with regard to the facts of one case, but not another, thereby demonstrating that policy and dictionary definitions are not dispositive.
The court agreed with the insured that carbon monoxide emissions resulting from simultaneous operation of both a fireplace and a boiler were not contemplated by the term “pollutant” in the policy. Citing to the carbon dioxide and lead paint cases, the court noted that it must consider the nature of the substance involved. In this case, the court found that most people are exposed to carbon monoxide in small quantities every day. Like carbon dioxide, carbon monoxide is colorless, odorless, and present in the air around us. Citing to the EPA, the court noted that homes without a gas stove have average carbon monoxide levels between .5 and 5 parts per million while areas near a properly adjusted gas stove may have levels as high as 5 to 15 parts per million. Thus, the court concluded that the concentrated level of carbon monoxide in the apartment could be described as a normal condition gone awry. As such, the court was unconvinced by the insurer’s argument that the potentially hazardous character of carbon monoxide unambiguously qualifies it as a pollutant.
The court went on to consider the reasonable expectations test proposed by the insured. In considering this test, the court concluded that the carbon monoxide poisoning in this case was more analogous to the case involving carbon dioxide poisoning (finding the exclusion does not apply). It noted that the insurer was correct in its assertion that most people are aware of the dangers of high levels of or extended exposure to carbon monoxide; however, people are exposed to low levels of carbon monoxide every day. Like the carbon dioxide case, the court found that this was a “sick building” case where an omnipresent substance became concentrated due to a ventilation defect. The court stated that carbon monoxide, like carbon dioxide, becomes harmful when levels are abnormally high or exposure is unusually extended. Because the adverse consequences resulted from the “sick building,” the court held that the extraordinary concentration of carbon monoxide in the rental property would not ordinarily be characterized as a “pollutant.” Further, that the insured could reasonably expect coverage for damages caused by an accumulation of a substance that is routinely present.
Therefore, the Wisconsin court concluded that the pollution exclusion clause does not apply to carbon monoxide poisoning under the facts of the case before it. The court stated that a substance may or may not be a pollutant under the terms of a policy exclusion depending on the context or environment in which the substance is involved; furthermore, that the term “pollution” is ambiguous where the insured could reasonably expect coverage under the facts of the case. As ambiguous coverage clauses are construed broadly in favor of coverage and ambiguous exclusions are construed narrowly against the insurer, the appellate court affirmed the lower court’s coverage finding.
Despite advent of the use of the broad language found in the absolute pollution exclusion, many courts continue to narrow its application to the more “traditional environmental pollution” events. Further, even when faced with a gas defined as “very toxic,” courts may refuse to apply the exclusion. As seen above, the particular jurisdiction will often determine the treatment of a substance as a “pollutant.” Just as Iowa and Wisconsin differ on the treatment of carbon monoxide as a pollutant, so do many other states. The tally now stands at eight states which find that carbon monoxide is not a “pollutant” and five in which it is considered a “pollutant.” Close review of the law of the state involved will dictate the likely outcome for a claim involving the absolute pollution exclusion.