American National Property & Casualty Co. v. Wyatt: Missouri Court Interprets Pollution Exclusion in Favor of Coverage

American National Property & Casualty Co. v. Wyatt: Missouri Court Interprets Pollution Exclusion in Favor of Coverage

The interpretation and application of pollution exclusions still flummox parties and fill docket sheets.  The Missouri Court of Appeals recently addressed such an exclusion in American National Property & Casualty Co. v. Wyatt.  This decision is an important one for policyholders seeking coverage because it continues the line of authority supporting the proposition that, to avoid absurd results, the pollution exclusion must be reasonably interpreted within the confines of certain limiting principles.

This case concerned coverage for underlying litigation stemming from a tragic accident in which one child was killed and another seriously injured from the inhalation of carbon monoxide gas after a car’s engine was left running inside a garage.  The insurer denied coverage on the basis that the pollution exclusion broadly applied, and the trial court agreed.

On appeal, however, the court considered the history of the pollution exclusion and its various forms and interpretations, and the purpose of the exclusion as relating to claims concerning traditional environmental damage.  This commentary relates the key points of that analysis. The court ultimately considered the policyholder’s “reasonable expectations” of coverage, which meant the exclusion would not apply to “every possible irritant or pollutant imaginable.”  This commentary shows how the court’s narrow interpretation of the exclusion was bolstered by the drafters’ use of terms that were regularly used to describe events of environmental pollution.  Thus, the court found that accidentally leaving a car running such that carbon monoxide accumulated indoors, leading to inhalation of a lethal amount of the gas, was not the type of environmental pollution that the pollution exclusion was intended to target.  As such, the pollution exclusion did not bar coverage for the underlying litigation.

    Nicholas M. Insua is a Partner in the Newark, New Jersey office of McCarter & English, LLP. He may be reached by e-mail at ninsua@mccarter.com.

 

    Jennifer Black Strutt is an Associate in the Stamford, Connecticut office of McCarter & English, LLP. She may be reached by e-mail at jstrutt@mccarter.com.

The opinions in this commentary are those of the authors alone and do not represent the views of McCarter & English, LLP or any of its clients.

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