Court Opinion

ID: 9838514
Source: CourtListenerOpinion
Date Created: 2023-09-06 17:01:39.336199+00
Date Added: 2024-06-11T18:02:38.793753
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

THE ESTATE OF JOSIAH                        No. 22-35484
WHEELER, pursuant to the
assignment of rights of insured           D.C. No. 4:20-cv-
Deborah Overly and Terry Summers;           00041-SLG
KEITH WHEELER; RHETTA
WHEELER, individually and as
representatives of the Estate of Josiah       ORDER
Wheeler,                                    CERTIFYING
                                            QUESTION TO
               Plaintiffs-Appellants,       THE ALASKA
                                             SUPREME
 v.                                           COURT

GARRISON PROPERTY AND
CASUALTY INSURANCE
COMPANY, a subsidiary of USAA
Insurance Company,

               Defendant-Appellee.

                  Filed September 6, 2023

 Before: Mary H. Murguia, Chief Judge, and Richard A.
    Paez and Jacqueline H. Nguyen, Circuit Judges.

                            Order
2     ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.

                          SUMMARY *

              Certification Order / Alaska Law

   The panel certified the following question to the Alaska
Supreme Court:
    Does a total pollution exclusion in a homeowners’
insurance policy exclude coverage of claims arising from
carbon monoxide exposure?

                           COUNSEL

Kenneth L. Covell (argued), Law Offices of Kenneth L.
Covell, Fairbanks, Alaska, for Plaintiffs-Appellants.
Cheryl L. Graves (argued), Farley & Graves PC, Anchorage,
Alaska, for Defendant-Appellee.

                             ORDER

    The Estate of Josiah Wheeler and Josiah’s parents, Keith
and Rhetta Wheeler, (collectively, “the Wheelers”) appeal
the district court’s grant of summary judgment in favor of
Garrison Property and Casualty Insurance Company
(“Garrison”). Because this case involves an issue of first
impression under Alaska law, we respectfully ask the Alaska

*
 This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
     ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.   3

Supreme Court to exercise its discretion to decide the
certified question set forth in Part III of this order.
                             I.
    The facts underlying this case are undisputed. In
October 2018, seventeen-year-old Josiah Wheeler moved
into a cabin owned by Deborah Overly and Terry Summers
in Tok, Alaska. Josiah was found dead in the cabin’s bathtub
in January 2019. An autopsy showed that he died from acute
carbon monoxide poisoning. After an investigation, the
deputy fire marshal determined that the cabin’s water heater
had emitted the carbon monoxide. Summers had installed
the water heater in the same small bathroom as the bathtub
without connecting its flue to a venting system, in
contravention of the heater’s instruction manual.
    At the time of Josiah’s death, the cabin was covered by
a homeowners’ insurance policy that Garrison issued to
Overly and Summers. The policy contained the following
pollution exclusion:
             SECTION II – EXCLUSIONS
    1. Coverage E – Personal Liability and Coverage F –
Medical Payments to Others do not apply to “bodily injury”
or “property damage”:
                            ...
     k. Arising out of the actual, alleged, or threatened
     discharge, dispersal, release, escape, seepage or
     migration of “pollutants” however caused and
     whenever occurring. This includes any loss, cost or
     expense arising out of any:
       (1) Request, demand or order that any “insured” or
       others test for, monitor, clean up, remove, contain,
4    ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.

       treat, detoxify, or assess the effects of “pollutants”;
       or
       (2) Claim or suit by or on behalf of a governmental
       authority for damages because of testing for,
       monitoring, cleaning up, removing, containing,
       treating, detoxifying or neutralizing, or in any way
       responding to, or assessing the effects of
       “pollutants”.

   The policy defines “pollutants” as “any solid, liquid,
gaseous or thermal irritant or contaminant, including smoke,
vapor, soot, fumes, acids, alkalis, chemicals and waste.”
    The Wheelers brought wrongful death and survivorship
claims against Overly and Summers. Overly and Summers
submitted an insurance claim to Garrison. In April 2019,
Garrison denied liability coverage on the basis that carbon
monoxide was a “pollutant” that fell under the policy’s
pollution exclusion.
    In August 2020, Overly and Summers signed a
confession of judgment in which they admitted liability for
Josiah’s death. They also assigned to the Wheelers their
rights to pursue coverage claims against Garrison.
   In December 2020, the Wheelers filed a declaratory
judgment action against Garrison seeking a declaration of
coverage and an award of damages. The parties filed cross
motions for declaratory judgment, which the district court
construed as motions for summary judgment. See Est. of
Wheeler v. Garrison Prop. & Cas. Ins. Co., 604 F. Supp. 3d
844, 845 & n.1 (D. Alaska 2022). The district court,
concluding that the Wheelers’ case fell within the pollution
exclusion, denied their motion and granted summary
judgment for Garrison. Id. at 853. The Wheelers appealed.
      ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.   5

                              II.
                              A.
    The pollution exclusion emerged in the 1970s to shield
the insurance industry from “ever-increasing economic
burdens due to environmental claims” under newly enacted
air pollution laws by barring coverage for “government-
mandated cleanup from long-term industrial pollution.” 9
Couch on Insurance § 127:3 (3d ed. 2021). The original
pollution exclusion was a “qualified” exclusion that restored
coverage if pollution was “sudden and accidental.” Claudia
G. Catalano, Annotation, What Constitutes “Pollutant,”
“Contaminant,” “Irritant,” or “Waste” Within Meaning of
Absolute or Total Pollution Exclusion in Liability Insurance
Policy, 98 A.L.R.5th 193 (2002). Later versions of the
exclusion eliminated that caveat, producing the modern
“absolute” or “total” pollution exclusion. Id. The Garrison
homeowners’ insurance policy issued to Overly and
Summers contained a total pollution exclusion.
    Since the inception of the pollution exclusion, its scope
“has been repeatedly litigated, spawning conflicting judicial
decisions throughout the country.” Century Sur. Co. v.
Casino W., Inc., 677 F.3d 903, 908 (9th Cir. 2012) (quoting
Apana v. TIG Ins. Co., 574 F.3d 679, 682 (9th Cir. 2009)).
We have observed that “[m]ost state court decisions fall into
one of two broad camps”: they either find the exclusion’s
terms to be unambiguous and apply it literally, or they limit
the exclusion to traditional environmental pollution due to
ambiguity or the reasonable expectations of the insured. Id.
(internal quotation marks omitted).
    Many states have decisions in both “camps” because
their courts make a fact-specific determination in each case,
tailoring their analysis to the insurance policy and the cause
6        ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.

of the damage. 1 State courts’ approaches and the results in
these cases thus vary according to the facts and over time.
    This principle holds true when applied to carbon
monoxide cases. Some states have decided that carbon
monoxide falls outside the total pollution exclusion after
having previously held that its language was unambiguous
with respect to a different substance. For instance, a Nevada
federal district court applying state law held that an
exclusion was unambiguous as applied to hazardous waste
in a landfill, Mont. Refin. Co. v. Nat’l Union Fire Ins. Co. of
Pittsburgh, Pa., 918 F. Supp. 1395, 1396 (D. Nev. 1996);
years later, in response to our certified question, 2 the
Supreme Court of Nevada nonetheless held that the
exclusion did not bar coverage for deaths from carbon
monoxide inhalation, Century Sur. Co. v. Casino W., Inc.,
329 P.3d 614 (Nev. 2014).
    State courts or federal courts applying the law of
Massachusetts, Illinois, Ohio, Kentucky, Tennessee,
Washington, and the District of Columbia have likewise held
that carbon monoxide is outside the scope of the exclusion

1
  For example, the Alabama Supreme Court held that the exclusion was
ambiguous and inapplicable in a case involving lead, Porterfield v.
Audubon Indem. Co., 856 So. 2d 789 (Ala. 2002), but that it
unambiguously excluded coverage of damage caused by an underground
gasoline leak, Federated Mut. Ins. Co. v. Abston Petroleum, Inc., 967 So.
2d 705 (Ala. 2007). And after Connecticut’s highest court held that
contaminants in the soil and water at an industrial site clearly fell within
the exception, Schilberg Integrated Metals Corp. v. Cont’l Cas. Co., 819
A.2d 773 (Conn. 2003), its lower courts nonetheless held that the
language was ambiguous as applied to asbestos, see, e.g., R.T. Vanderbilt
Co. v. Hartford Accident & Indem. Co., 156 A.3d 539, 629 (Conn. App.
Ct. 2017).
2
    See Century Sur. Co., 677 F.3d at 905.
       ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.             7

but reached the opposite conclusion about different
substances. 3 Minnesota, Iowa, and Georgia have held that
carbon monoxide falls within the pollution exclusion. 4

3
 Massachusetts held that the exclusion did not apply to carbon monoxide
but did apply to a home oil spill. Compare W. All. Ins. Co. v. Gill, 686
N.E.2d 997 (Mass. 1997), with McGregor v. Allamerica Ins. Co., 868
N.E.2d 1225 (Mass. 2007). Illinois law does not exclude carbon
monoxide damage but excludes damage from contaminated tap water.
Compare Am. States Ins. Co. v. Koloms, 687 N.E.2d 72 (Ill. 1997), with
Scottsdale Indem. Co. v. Village of Crestwood, 673 F.3d 715 (7th Cir.
2012). Ohio courts have declined to apply the exclusion to carbon
monoxide or to aircraft fuel chemicals but have applied it to government
mandated pollution cleanup costs. Compare Andersen v. Highland
House Co., 757 N.E.2d 329 (Ohio 2001), and Bosserman Aviation
Equip., Inc. v. U.S. Liab. Ins. Co., 915 N.E.2d 687 (Ohio Ct. App. 2009),
with Danis v. Great Am. Ins. Co., 823 N.E.2d 59 (Ohio Ct. App. 2004).
In Kentucky, the exclusion does not apply to carbon monoxide but does
apply to nuclear material. Compare Motorists Mut. Ins. Co. v. RSJ, Inc.,
926 S.W.2d 679 (Ky. Ct. App. 1996), with Sunny Ridge Enters., Inc. v.
Fireman’s Fund Ins. Co., 132 F. Supp. 2d 525 (E.D. Ky. 2001). Courts
applying Tennessee law have held that the exclusion does not apply to
carbon monoxide but does exclude coverage for sulfuric acid and for
human waste in the water supply. Compare In re Idleaire Techs. Corp.,
No. 08-51227(KG), 2009 WL 413117 (Bankr. D. Del. Feb. 18, 2009),
with Sulphuric Acid Trading Co. v. Greenwich Ins. Co., 211 S.W.3d 243
(Tenn. Ct. App. 2006), and CBL & Assocs. Mgmt., Inc. v. Lumbermens
Mut. Cas. Co., No. 1:05-CV-210, 2006 WL 2087625 (E.D. Tenn. July
25, 2006). Washington state courts have not applied the exclusion to
carbon monoxide or to diesel fuel but have excluded coverage for
damage from sealant fumes. Compare Xia v. ProBuilders Specialty Ins.
Co., 400 P.3d 1234 (Wash. 2017), as modified (Aug. 16, 2017), and Kent
Farms, Inc. v. Zurich Ins. Co., 998 P.2d 292 (Wash. 2000), with
Quadrant Corp. v. Am. States Ins. Co., 110 P.3d 733 (Wash. 2005).
Courts applying District of Columbia law have not applied the exclusion
to carbon monoxide but have held that it bars coverage for manganese
fumes. Compare Richardson v. Nationwide Mut. Ins. Co., 826 A.2d 310
(D.C.2003), reh’g en banc granted, opinion vacated, 832 A.2d 752 (D.C.
2003), and vacated pursuant to settlement, 844 A.2d 344 (D.C. 2004),
8      ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.

                                   B.
    The question of how the Alaska Supreme Court
interprets this homeowners’ insurance policy pollution
exclusion as applied to carbon monoxide may determine the
outcome of this case. If the exclusion applies only to active
industrial polluters or traditional environmental pollution,
then there would be coverage in this case. In contrast, if the
plain language unambiguously encompasses carbon
monoxide exhaust from a residential water heater, coverage
might be precluded unless that result contravenes the
reasonable expectations of the insured. See Bering Strait
Sch. Dist. v. RLI Ins. Co., 873 P.2d 1292, 1294–95 (Alaska
1994).
    Existing Alaska law does not permit us to predict how
the Alaska Supreme Court would resolve this issue. The
Alaska Supreme Court has only once addressed the scope of
an insurance policy’s total pollution exclusion in a published
decision. Whittier Props., Inc. v. Alaska Nat’l Ins. Co., 185
P.3d 84 (2008). Whittier concerned an underground storage
tank at a gas station that leaked over 50,000 gallons of
gasoline into the surrounding soil. Id. at 87. Environmental
authorities discovered the damage, investigated, and
assessed penalties as well as cleanup costs. Id. at 87–88.
Neighboring property owners also filed suit for property
damage. Id.

with Nat’l Elec. Mfrs. Ass’n. v. Gulf Underwriters Ins. Co., 162 F.3d 821
(4th Cir. 1998).
4
 See Midwest Family Mut. Ins. Co. v. Wolters, 831 N.W.2d 628 (Minn.
2013); Bituminous Cas. Corp. v. Sand Livestock Sys., Inc., 728 N.W.2d
216 (Iowa 2007); Reed v. Auto-Owners Ins. Co., 667 S.E.2d 90 (Ga.
2008).
      ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.          9

    The gas station owner submitted a claim for coverage
under his commercial general liability insurance policy. The
policy contained a clause excluding property damage arising
out of the “discharge, dispersal, seepage, migration, release
or escape of pollutants.” Id. at 89. The policy defined a
“pollutant” as “any solid, liquid, gaseous or thermal irritant
or contaminant, including smoke, vapor, soot, fumes, acids,
alkalis, chemicals and waste.” Id. at 87, 89–91.
     The Alaska Supreme Court held that the exclusion
provision was unambiguous and covered the gasoline leak
by its plain terms. The Court explained that the policy’s
other provisions and extrinsic evidence also supported a
literal interpretation.
    Garrison argues that Whittier conclusively establishes
that the Alaska Supreme Court would interpret the pollution
exclusion literally in the Wheelers’ case. The district court
recognized that Whittier did not address carbon monoxide
but concluded that the Court’s reasoning suggested a
preference for literal interpretation and represented Alaska’s
choice of a “camp” in the national debate over the scope of
the pollution exclusion. Est. of Wheeler, 604 F. Supp. 3d at
850–51. 5 But see Sauer v. Home Indem. Co., 841 P.2d 176,
181 n.8 (Alaska 1992) (stating that the “new pollution
exclusion language . . . ‘shifts the emphasis to industrial
sites’” (quoting 1 W. Freedman, Richards on the Law of
Insurance § 5:2[d] (6th ed. supp. 1991))).

5
  In Apana, without much explanation, we listed Alaska as a member of
the literal interpretation camp based on Whittier, calling it a
“representative decision.” 574 F.3d at 683 n.3. Whittier, however,
concerned a commercial insurance policy and environmental pollution,
and Apana did not analyze how its holding would impact a case with
different facts.
10    ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.

    Although the Whittier Court cited cases from other
factual contexts, it explicitly tailored its holding to coverage
for a gasoline leak in a commercial general liability policy.
See, e.g., Whittier Props., Inc., 185 P.3d at 94 (affirming the
lower court judgment “[b]ecause the pollution exclusion
unambiguously excludes leaked gasoline from coverage and
the other policy provisions do not restore or otherwise
provide coverage”). We therefore do not read the decision
to suggest that the Alaska Supreme Court would bypass a
fact-specific analysis in future cases involving different
substances.
     Ultimately, we are unable to predict how the Alaska
Supreme Court would analyze the Wheelers’ case without
expanding state law. See Orkin v. Taylor, 487 F.3d 734, 741
(9th Cir. 2007) (explaining that a federal court sitting in
diversity “take[s] state law as it exists without speculating as
to future changes in the law”). Pollution exclusion cases
tend to set the rule for the specific pollutant at issue, and
Alaska has not considered this exclusion in the residential
context or in any case involving a nonindustrial pollutant
that caused no environmental harm. Whittier thus places this
case at a decision point in Alaska law, and the Alaska
Supreme Court is best positioned to decide this question of
first impression.
                              III.
   Pursuant to Rule 407 of the Alaska Rules of Appellate
Procedure, we therefore respectfully certify to the Alaska
Supreme Court the following question:

       Does a total pollution exclusion in a
       homeowners’ insurance policy exclude
      ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.    11

       coverage of claims arising from carbon
       monoxide exposure?

    This question of law “may be determinative of the cause”
pending before us, and there appears to be “no controlling
precedent in the decisions” of the Alaska Supreme Court.
Alaska R. App. P. 407(a). 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.
                              IV.
    Further proceedings in this court are stayed pending the
Alaska Supreme Court’s decision whether to accept review;
and, if that Court accepts review, pending receipt of the
answer to the certified question. This case is withdrawn
from submission and shall be administratively closed until
further order of this court. The parties shall notify this court
whether the Alaska Supreme Court accepts the certified
question in a joint report to be filed within seven days of the
Alaska Supreme Court’s decision. If the Alaska Supreme
Court accepts the certified question, the parties will file a
joint report every three months after the date of acceptance
advising this court of the status of the proceeding. This panel
retains jurisdiction over further proceedings upon receiving
a decision from the Alaska Supreme Court.
    The Clerk of Court is hereby ordered to transmit a copy
of this order to the Alaska Supreme Court under the official
seal of the United States Court of Appeals for the Ninth
Circuit. See Alaska R. App. P. 407(d). Moreover, the Clerk
of Court shall provide “copies of all or any relevant portion
12     ESTATE OF WHEELER V. GARRISON PROP. & CAS. INS. CO.

of the record” to the Alaska Supreme Court upon request.
Id.
     /s/ Mary H. Murguia
     Chief Judge Mary H. Murguia
     U.S. Court of Appeals for the Ninth Circuit