Absolute Pollution Exclusion Applies Indoors

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In Midwest Family Mutual Insurance Co. v. Wolters, et al., — N.W.2d –, 2013 WL 2363239 (Minn. May 31, 2013), the Minnesota Supreme Court joined the minority view in holding that the absolute pollution exclusion applies to pollution that may occur indoors.

What Happened: the insured, a general contractor, was hired to build a home, including the installation of a gas boiler and carbon monoxide detectors.  The homeowners suffered serious injuries as a result of carbon monoxide poisoning and sued for negligence, claiming an incorrect boiler was installed and the detectors malfunctioned.  The contractor’s general liability policy contained an absolute pollution exclusion precluding coverage for bodily injury arising out of the release of pollutants.

What the Court Said:  applying a plain-meaning approach to the interpretation of the policy, the court held that carbon monoxide is both a pollutant and irritant.  And, because the exclusion avoids the use of language descriptive of the natural environment (e.g., “atmosphere”), the exclusion applies to a release that occurs indoors.  The court thus rejected the majority rule that the exclusion is limited to hazards traditionally associated with environmental pollution.

For What It’s Worth:  while the authorities remain split on the issue, Wolters demonstrates that the absolute pollution exclusion can be reasonably construed to apply to non-environmental claims.  Here, the court’s analysis was guided by the revision to the “qualified” pollution exclusion (deleting the reference to pollution of the “atmosphere”).  The Court’s “plain-meaning” approach is noteworthy in prevailing over other rules of construction that exclusions are narrowly interpreted and ambiguities construed against the insurer.  For followers of Judge Posner (fans, detractors and those in the middle), the dissent cited his recent Seventh Circuit opinion in Scottsdale Indemnity, noting the exclusion was never intended to apply to non-environmental accidents in which pollutants have caused “everyday activities” to have gone “slightly, but not surprisingly, awry.”