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Insurance Law

Don’t Buy a Pig in a Poke – Carbon Monoxide Is a Pollutant

Commercial General Liability (CGL) insurance provides extensive coverage to those insured by the CGL. However, it does not cover every possible event or injury. In Church Mutual Insurance Company v. Clay Center Christian Church, Defendant, Cheryl S. Green; Cheryl S. Green as Personal Representative of the Estate of John R. Green, No. 13-1613 (03/25/2014, USCA, Eighth Circuit) [enhanced version available to subscribers], the Eighth Circuit dealt with death and injury caused by carbon monoxide poisoning.

Cheryl Green and the Estate of John Green (the Greens) appeal from the district court’s grant of summary judgment in favor of Church Mutual Insurance Company (Church Mutual). The district court concluded that coverage for the injuries the Greens suffered because of their exposure to carbon monoxide was precluded by pollution exclusions contained in the relevant policies.


John Green was the pastor of Clay Center Christian Church (the Church). He and his wife, Cheryl, resided at the Church’s parsonage. On November 19, 2009, the parsonage’s heating system malfunctioned and released carbon monoxide throughout the residence. John died as a result of his exposure to the carbon monoxide. Cheryl suffered bodily injuries.

The Church had two policies issued by Church Mutual that are relevant to this appeal: a multi-peril policy and an umbrella policy. The multi-peril policy contained a pollution exclusion that excluded coverage for “‘Bodily injury’ or ‘property damage’ arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants…” The umbrella policy included identical language.

“Pollutants” are defined under both policies as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes materials to be recycled, reconditioned, or reclaimed.”

Church Mutual was notified of John’s death and Cheryl’s injuries on November 20, 2009. That same day, Church Mutual retained attorney Jerald Rauterkus. Church Mutual contended that Rauterkus’s role was limited to conducting a cause-and-origin investigation of the carbon monoxide leak and assisting the Church in matters of communication during the course of the investigation.

The parsonage’s heating system was inspected and tested on three separate occasions from November 2009 to April 2010. The results of the inspections were inconclusive. Although it was evident that the carbon monoxide had been emitted from the parsonage’s heating system, the exact source and cause of the carbon monoxide leak were not clear.

In March 2011, the parties resumed communicating when Rauterkus received requests for additional information from attorney Peter Wegman, who had been hired by the Greens to assist in their representation. After exchanging correspondence, Wegman sent Rauterkus a demand letter on August 19, 2011, seeking policy limits for John’s death and Cheryl’s bodily injuries. In response, Church Mutual filed a declaratory judgment action on September 7, 2011, seeking a determination that the policies’ pollution exclusions precluded any duty on its part to defend or indemnify the Church with respect to the Greens’ claims. Church Mutual also sent the Church a reservation of rights letter denying coverage on the basis of those exclusions.


In February 2012, the Church and the Greens entered into a consent agreement in which the Greens agreed not to “pursue or collect on any of [the Church's] assets or assets of any members of the Church, except for any rights to indemnity under any insurance policies[.]” In exchange, the Church assigned to the Greens all rights it had under its insurance policies. By so doing the Greens limited their right to recover damages to damages from the Church’s insurance company, Church Mutual.


As the declaratory judgment action progressed in the district court, the Greens disclosed their intent to have a chemist testify as an expert witness regarding whether carbon monoxide is an “irritant” or “contaminant.” Church Mutual moved in limine to exclude the chemist’s testimony and then later moved for summary judgment. The district court granted both motions, having concluded that the pollution exclusions were unambiguous, that carbon monoxide was a “pollutant” as defined by the policies, and that the Greens’ claims thus were not covered under the plain terms of the policies. Additionally, the district court rejected the Greens’ contention that Church Mutual was estopped from denying coverage because of its delay in reserving its rights.


The interpretation of an insurance policy is a question of law. Under Nebraska law, a court interpreting a contract, such as an insurance policy, must first determine, as a matter of law, whether the contract is ambiguous. The Greens argue that the terms “irritant” and “contaminant,” as used in the policies’ definition of “pollutants,” are ambiguous.

The Eighth Circuit recognized that the broad nature of the pollution exclusion may cause a commercial client to question the value of portions of its commercial general liability policy, but, as an appellate court reviewing terms of an insurance contract, it could not say that the language of the pollution exclusion is ambiguous in any way. In fact, it found that the language in the Church Mutual pollution exclusion is clear and susceptible of only one possible interpretation.

Because carbon monoxide is a gas that can render air “unfit for use” if introduced at high levels, it constitutes a “pollutant” as defined by the policies. As a result the Eighth Circuit also held that the Nebraska Supreme Court would conclude that carbon monoxide is a pollutant.

In contesting whether carbon monoxide constitutes a “pollutant,” the Greens assert that the district court erred in granting Church Mutual’s motion in limine to exclude the testimony of their expert witness regarding whether carbon monoxide is an “irritant” or “contaminant.” The Eighth Circuit disagreed because the interpretation of an insurance policy is a question of law for the court, not a question of fact, and, therefore, expert testimony has no bearing on the court’s interpretation.


Carbon monoxide, in high levels, is a deadly gas and clearly fits within the definition of pollutant. Since the pollution exclusion is clear and unambiguous there is no potential for coverage under the CGL. This should have been obvious to the plaintiffs’ counsel as it was to Church Mutual, the church, and both the trial and appellate court.

If the heating system at the parsonage was defective there was a good probability that the Clay Center Christian Church would be held liable for the death of pastor Green and the injuries suffered by Mrs. Green. The Greens gave up their right to damages from the church in exchange to collect on the church’s slim rights to recover from the insurer although the church probably had assets that could have been used to satisfy a judgment.

The Clay Center Christian Church had a brilliant lawyer that eliminated the exposure faced by his client by getting the Greens to accept a “pig in a poke” in exchange for a sure win and a defendant with assets to satisfy a judgment.

    By Barry Zalma, Attorney and Consultant

Reprinted with Permission from Zalma on Insurance, (c) 2014, Barry Zalma.

Barry Zalma, Esq., CFE, is a California attorney who limits his practice to consultation regarding insurance coverage, insurance claims handling, insurance bad faith and fraud and acting as a mediator or arbitrator on insurance disputes. Mr. Zalma serves as a consultant and expert almost equally for insurers and policyholders. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. He recently published the e-books, "Zalma on Rescission in California - 2013"; "Random Thoughts on Insurance" containing posts from this blog; "Zalma on Insurance;" "Murder and Insurance Don't Mix;" “Heads I Win, Tails You Lose — 2011,” “Zalma on Diminution in Value Damages,” “Arson for Profit” and “Zalma on California Claims Regulations,” and others that are available at Zalma Books.

Mr. Zalma can be contacted at Barry Zalma or, and you can access his free "Zalma on Insurance Fraud" newsletter at Zalma’s Insurance Fraud Letter.

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