The Pollution Exclusion Can Bar Coverage for Alleged Carbon Monoxide Poisoning Claims

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In Foremost Ins. Co. v. Rodriguez, a Pennsylvania federal district denied a motion to dismiss a declaratory judgment lawsuit filed by a liability insurer that sought to disclaim coverage for an underlying lawsuit alleging carbon monoxide exposure.[1] 

In the underlying state court lawsuit, tenants sued their landlords, alleging that the landlords refused to repair a heating system, which resulted, ultimately, in carbon monoxide poisoning. After the tenants’ hospitalization, the local gas company deemed the heater on the property unsafe, and instructed the landlords to replace the heater.   

The landlords’ policy excluded coverage for bodily injury arising out of the discharge, dispersal, release, escape of, or the ingestion, inhalation or absorption of pollutants. The policy contained a typical definition of pollutants, which included any gaseous irritant or contaminant, including smoke, vapor and fumes. Irritants and contaminants released by fire on the insured premises were not considered a pollutant under the policy.  

In the coverage case, the Foremost court applied Pennsylvania law, and compared the “four corners” of the underlying complaint against the policy. The underlying complaint alleged injury from exposure to carbon monoxide, and carbon monoxide poisoning. In the coverage action, the tenants and the landlords tried to redefine those underlying allegations, arguing that the tenants’ claims were based, at least in part, upon exposure to natural gas (or the buildup of natural gas), and not from a byproduct of ignition. But, the court rejected those arguments, and interpreted coverage in the context of the allegations actually stated in the underlying complaint, which did not mention natural gas at all. The court declined to consider coverage based upon possible amendments to the tenants’ allegations of liability.    

In applying the pollution exclusion, the Foremost court was not swayed by the fact that carbon monoxide was not expressly included in the policy’s definition of pollutant. The court found that the language of the pollution exclusion was clear and unambiguous, and in accord with other decisions applying the exclusion. The court determined that based upon the pending allegations of liability, the pollution exclusion served as a proper basis for the liability insurer to seek declaratory relief that it had no duty to defend or to indemnify the landlords.

This case demonstrates that correctly applying the standards that govern the proper interpretation of a liability insurer’s coverage obligations is important, and likely outcome determinative. In this case, the Foremost court applied established Pennsylvania law governing how courts evaluate the duty to defend, enabling the liability insurer in this case to overcome motions to dismiss filed in coverage litigation based upon the application of the pollution exclusion.  

[1] Foremost Ins. Co. v. Rodriguez, Civil Action No. 19-360, 2019 WL 3037161 (E.D. Pa. July 11, 2019).