In its recent decision in Midwest Family Mut. Ins. Co. v. Wolters, 2013 Minn. LEXIS 304 (Minn. May 31, 2013), the Minnesota Supreme Court had occasion to consider whether an absolute pollution exclusion applies to bodily injury resulting from an indoor release of carbon monoxide.
Wolters was a general contractor that had been hired to build a home with an in-floor radiant heating system. It was later determined that Wolters purchased and installed the wrong type of boiler for the project. Further, the boiler itself was negligently installed. As a result, and because the home’s carbon monoxide detectors also were negligently installed, the homeowners suffered injury as a result of severe carbon monoxide poisoning. The homeowners later filed suit against Wolters.
Midwest Family Mutual insured Wolters under a general liability policy. Midwest provided Wolters with defense in the underlying suit, but subsequently brought a coverage action seeking a declaration of non-coverage based on its policy’s pollution exclusion, which states in pertinent part:
9. We do not pay for bodily injury or property damage:
a. arising wholly or partially out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants: . . .
4) at or from any premises where you or any contractor or subcontractor, directly or indirectly under your control, are working or have completed work:
a) if the pollutant is on the premises in connection with such work, unless the bodily injury or property damages arise from the heat, smoke or fumes of a fire which becomes uncontrollable or breaks out from where it was intended to be; or
b) if the work in any way involves testing, monitoring, clean-up, containing, treating or removal of pollutants.
The Midwest policy defined “pollutants” as:
- any solid, liquid, gaseous, thermal, electrical emission (visible or invisible) or sound emission pollutant, irritant or contaminant; or
- waste, including materials to be recycled, reclaimed or reconditioned as well as disposed of.
Midwest moved for summary judgment on the basis of its exclusion, and the trial court held that it would be inappropriate as a matter of law to rule the exclusion was applicable since Wolters did not cause “environmental pollution.” On appeal, however, the Minnesota Court of Appeals observed that Minnesota courts have employed a “non-technical, plain-meaning approach” to the interpretation and application pollution exclusion. As such, and concluding that carbon monoxide is a pollutant, the court reversed the lower court’s ruling.
On appeal to the Minnesota Supreme Court, Wolters urged the court follow the “majority rule” of courts across the country, limiting application of the exclusion to traditional environmental pollution. Specifically, the insured argued that the definition of “pollutants” is ambiguous as applied to matters of indoor air pollution. The Minnesota Supreme Court rejected this assertion, concluding that under the “non-technical, plain meaning” approach to interpreting the exclusion, as required by its prior decision in Board of Regents of the University of Minn. v. Royal Ins. Co. of America, 517 N.W.2d 888 (Minn. 1994), an indoor release of carbon monoxide qualifies as a pollutant. As the court explained:
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. It is enough for purposes of the present dispute to conclude that carbon monoxide is a pollutant under the terms of the absolute pollution exclusion; there are serious concerns associated with the breadth of the exclusion that we leave for another day, and we do not attempt to define the complete scope of the term "pollutant" in the absolute pollution exclusion. Instead, we only conclude that, based on our holding in Board of Regents, carbon monoxide qualifies as a pollutant in this case.
The court further held that the fact that the release was indoors as opposed to outdoors did not require a different outcome since the exclusion did not contain language limiting its application to traditional environmental pollution. In so concluding, the court rejected the insured’s argument that the “reasonable expectations” doctrine required a different result since the exclusion was plainly and conspicuously labeled as such. Such a broad application of the exclusion, noted the court, would prevent inconsistency in determining what constitutes a pollutant and under what circumstances.