United States District Court, District of Alaska (2022)
In Estate of Wheeler v. Garrison Property & Casualty Insurance Co., 604 F. Supp. 3d 844 (D.
Alaska 2022), the court held that pollution exclusion clauses of homeowner insurance policies are
subject to literal interpretation. (Id. at 850–51). In 2019, while at a vacation rental property, a
couple’s son died from acute carbon monoxide poisoning caused by a water heater with inadequate
ventilation. (Id. at 846). In a “Confession of Judgment,” the rental property owners assigned rights
to the parents to pursue insurance coverage claims against the insurance company for their son’s
death. (Id.). The insurance company denied coverage, citing a pollution exclusion clause in the
property owners’ insurance policy, which prevented liability coverage should injury arise out of
the discharge or escape of pollutants. (Id.). Under the policy, pollutants included any solid, liquid,
or gas that could cause harm. (Id.). Under Alaska law, courts interpret insurance contracts
according to the “reasonable expectations” of a layperson, with any ambiguity being resolved in
favor of the insured. (Id. at 848–49). However, a coverage restriction will be recognized if the
plain language of the policy indicates so. (Id. at 848). The parents pointed to other state courts that
determined pollution exclusion clauses to be ambiguous when applied to carbon monoxide, while
the insurance company argued that the plain language clearly included carbon monoxide leaks.
(Id. at 848–49). Looking to Alaska precedent in similar contaminant–leak cases, the district court
held that Alaska law directs pollution exclusion clauses to be read literally, and that the clause in
this policy unambiguously included carbon monoxide. (Id. at 850–51). Further, the court held that
an objectively reasonable person would expect the clause to include carbon monoxide. (Id. at 851).
Since the plain language of the pollution exclusion clause unambiguously included carbon
monoxide, and a layperson could not reasonably expect otherwise, the court held that the parents’
interpretation was unreasonable. (Id. at 852). Accordingly, the district court held that pollution
exclusion clauses will be read literally, avoiding ambiguities that would lead to favorable
conclusions for the insured. (Id. at 850–51).