Missouri court limits the reach of the pollution exclusion.

Author:Gorman, Kelly

American National Property & Casualty Co. v. Wyatt, 400 S.W.3d 417 (Mo. App. W.D. 2013)

  1. Introduction

    Insurance policies typically outline the types of liability that an insurance provider will cover and those that the insurer will not. One type of liability that has been highly litigated in recent decades has been liability for pollution related injuries or losses. (1) Today, the provisions that contemplate this type of liability are called "pollution exclusion clauses." (2)

    Pollution exclusion language, at its most basic level, sets out to limit an insurer's liability for traditional environmental damage. (3) Since its conception, however, insurers have argued that the exclusionary language extends to preclude liability for non-traditional environmental pollution damage. (4) Unfortunately, courts have not ruled on this issue with uniformity. (5) In fact, one court has posited that "[r]arely has any issue spawned as many, and as variant in rationales and results, court decisions as has the pollution-exclusion clause." (6) Nevertheless, before American National Property & Casualty Co. v. Wyatt, no court in Missouri had directly addressed whether pollution-exclusion language extended non-liability to "pollutants" that are not traditional environmental pollutants. (7) In Wyatt, consequently, the Missouri Court of Appeals for the Western District faced the novel issue of interpreting an insurance policy's pollution exclusion to determine whether it encompassed non-traditional pollutants. (8)

    This Note explains the conflicting viewpoints presented in Wyatt and how the court reached its conclusion that the pollution exclusion clause does not encompass non-traditional pollutants. Part 11 of this Note describes the facts of Wyatt and the particular position of each party. In Part III, this Note examines the history behind pollution exclusion language and the various forces that shaped its evolution. Part IV then considers how other jurisdictions have dealt with pollution exclusion clauses and what legal theories or principles shaped their decisions. Finally, Part V argues that the Court of Appeals' rejection of a more broad "pollution exclusion" better comports with the history behind pollution exclusion language and the reasonable expectation of policyholders.


    In 2010, Joyce Bentley drove her granddaughter, Megan Wyatt, and her granddaughter's friend, Robin Ferguson, to her apartment for an overnight visit. (9) Upon arrival, Megan Wyatt and Robin Ferguson exited the car in the driveway and entered Bentley's apartment. (10) Bentley then parked her car in the garage attached to her apartment." Bentley, however, failed to turn off the car's engine before shutting her garage door and entering the apartment. (12) Later that day, police received a call from a neighbor about a suspicious odor. (13) When the police arrived, they found Bentley's vehicle with the engine still running in the garage and the garage door closed. (14) The police then entered Bentley's apartment where they found Bentley and Robin Ferguson unconscious and Megan Wyatt dead from carbon monoxide inhalation. (15) Bentley later died at the hospital. (16)

    Megan's father, Randall Wyatt (Wyatt), as a result of the incident, filed a wrongful death claim against Bentley and her insurance provider, American National Property & Casualty Company (ANPAC). (17) Robin Ferguson, by and through her father and next friend, also filed a negligence claim against Bentley and ANPAC. (18) ANPAC, in response to the suits, filed a declaratory judgment in the Circuit Court of Jackson County. (19) ANPAC argued that its liability policy did not cover the claims asserted against Bentley. In particular, ANPAC asserted that the pollution exclusion clause contained in Bentley's policy precluded coverage for the incident. (21) The parties then filed cross motions for summary judgment. " Circuit Court Judge James Kanatzar granted ANPAC's motion and denied the plaintiffs' motion, concluding that the pollution exclusion clause found in Bentley's policy precluded coverage. (23) The circuit court reasoned that "[a]n average layperson knows that automobile exhaust fumes have a toxic, potentially fatal effect, especially when inhaled by a person in a confined space and therefore would understand that automobile fumes which contain carbon monoxide are 'pollutants."' (24) Wyatt and Robin Ferguson (collectively, "the plaintiffs") appealed. (25)

    On appeal, the plaintiffs argued that the language in the pollution exclusion clause was ambiguous and should have been construed against ANPAC. (26) The plaintiffs further argued that a reasonable homeowner purchasing the policy would not believe the policy excluded from its coverage damages caused by exposure to carbon monoxide within the home. (27) The plaintiffs reasoned that reasonable policyholders would instead construe the exclusion as being applicable in regards to traditional environmental pollutants only. (28)

    The Missouri Court of Appeals for the Western District ultimately reversed the circuit court and entered judgment in favor of the plaintiffs. (29) In its unanimous opinion, the court acknowledged that the only issue on appeal was "whether, as a matter of law, ANPAC established that coverage was excluded under the language of the insurance contract." (30) The court then quoted the governing principles of insurance policy interpretation under Missouri law and the actual policy at issue in the case. (31) The court, in recounting the history of the pollution-exclusion clause, observed that "[w]hile barely touched upon in Missouri case law, '[t]he scope of [the pollution exclusion clause] has been described as one of the most hotly litigated insurance coverage questions to arise over the past three decades.'" (32)

    The court then analyzed the language in ANPAC's policy and found that the provisions within the policy would appear on their face to provide broad liability coverage. (33) The court went on to state that the language in the pollution exclusion clause did not unambiguously include non-traditional pollutants in its exclusion. (34) The court reasoned that such an expansive reading of "pollution" and "pollutant" (one that would include non-traditional pollutants) was not consistent with what an ordinary person would consider a pollutant. (35) Ultimately, the court held that a pollution-exclusion clause cannot be read in isolation but must, instead, be construed in the context of the entire policy and in light of a reasonable person's expectations. (36)

  3. Legal Background

    General liability policies, which protect the insured against most claims of bodily injury or property damage, are most often offered in comprehensive general liability (CGL) policies. (37) These CGL policies, though issued by different insurance companies, are all derivatives of the same standard-form CGL policy. (38) For the past few decades, the Insurance Services Office (ISO) has been, practically speaking, the exclusive promulgator of the standard CGL policy for the nation. (39) Because of this, courts have been prone to take persuasive authority and apply it when interpreting provisions of CGL policies. (40)

    This section will examine the history behind pollution exclusion language and the various forces that shaped its evolution. Particular emphasis will be placed on the changes in the CGL policy that led to the pollution exclusion clause in use today. This section will then consider the language of today's pollution exclusion clause and how courts, confronted with the clause, have interpreted it.

    1. History Behind the Pollution Exclusion Clause

      1. Accident-Based Coverage

        Before 1966, the standard CGL policy covered only property damage and personal injuries "caused by accident." (41) Although "accident" was not defined, insurance companies understood it to include an implicit requirement of suddenness. (42) This suddenness requirement was expected to bar coverage for "less clear-cut gradual injury or damage which may emerge over an uncertain period of time and in an uncertain area." (43) Specifically contemplated by this suddenness requirement were pollution-related injuries. (44)

        Courts, however, frequently construed "accident" more broadly, often reading the policy as encompassing any "unexpected, unforeseen and undesigned

        happening or consequence from either a known or unknown cause." (45) Some courts even explicitly rejected the implicit suddenness requirement. (46) For example, one Kentucky court stated that an "accident" as defined by a CGL policy "need not be a blow but may be a process ... It is not required to be sudden ... Where the accident is a process, how long is then not significant whether it takes three hours, three weeks or months." (47) This more liberal judicial interpretation of "accident" and the lack of an enforced "suddenness" requirement allowed pollution-related injuries to easily fall within the confines of a CGL policy. (48)

      2. Occurrence-Based Coverage

        In 1966, the insurance industry, in an effort to narrow the scope of the standard CGL policy, changed the language so that it covered only injuries caused by "occurrences." (49) The policy specified that an "occurrence" was an "accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured." (50)" This language was meant to counter the prevailing judicial interpretations of "accident" which had no requirement of "suddenness" and. thus, encompassed even the most gradual environmental pollution claims. (51) Insurers believed that this language would effectively deny coverage to commercial clients who knowingly polluted the environment. (52) In other words, insurers assumed that this language would bar claims originally sought to be barred by the implicit "suddenness" requirement. (53)

        Yet courts continued to interpret the...

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