INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Liberal interpretation of pollution exclusion
Seventeen-year-old Josiah Wheeler rented a cabin in Tok, Alaska, that was owned by Deborah Overly and Terry Summers. Wheeler was found dead in the cabin’s bathtub, and an autopsy revealed that he had died of acute carbon monoxide poisoning.
A deputy fire marshal discovered that a propane water heater in the bathroom had an exhaust flue that was not connected to any external venting, causing high levels of carbon monoxide to accumulate when the bathroom door was shut.
The cabin was covered under a homeowners policy issued by Garrison Property and Casualty Insurance Company (Garrison); the policy included a pollution exclusion clause.
Wheeler’s estate and his parents sought an out-of-court settlement with the homeowners, who notified Garrison of the claims. Garrison denied coverage, citing the pollution exclusion clause, and refused to defend the homeowners. The homeowners confessed liability and assigned their right to proceed against Garrison to Wheeler’s estate.
The estate then filed suit against Garrison in federal district court, seeking damages and a declaratory ruling that the policy provided coverage. The district court granted summary judgment to Garrison, concluding that the pollution exclusion unambiguously barred coverage for carbon monoxide poisoning. The estate appealed.
Instead of ruling on the merits, the United States Court of Appeals for the Ninth Circuit sought clarification from the supreme court on how the pollution exclusion should be interpreted under Alaska law.
Specifically, the court certified the following question: “Does a total pollution exclusion in a homeowners insurance policy exclude coverage of claims arising from carbon monoxide exposure?”
The court also indicated: “We do not intend the form of this question to limit the Alaska Supreme Court’s consideration of the issues relevant to this matter. If the Alaska Supreme Court decides to consider the certified question, it may reword the question in its discretion.”
The Alaska Supreme Court accepted the certified question and ordered full briefing. The court said: “Where an insurance company by plain language limits the coverage of its policy, we recognize that restriction … but the reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored, even though painstaking study of the policy provisions would have negated those expectations.”
Estate of Josiah Wheeler v. Garrison Property and Casualty Insurance Company—Supreme Court of the State of Alaska—No. S-18849—February 28, 2025.
