Harleysville Ins. Group v. Omaha Gas

• Decision Date: 18 September 2009
• Docket Number: No. S-07-1235.,S-07-1235.
• Citation: 278 Neb. 547,772 N.W.2d 88
• Parties: HARLEYSVILLE INSURANCE GROUP, appellee, v. OMAHA GAS APPLIANCE CO., doing business as Rybin Plumbing and Heating, appellee, and Victoria M. Beck, Personal Representative of the Estate of Nancy Sachs and Special Administrator of the Estate of Richard Sachs, intervenor-appellant.
• Court: Nebraska Supreme Court

772 N.W.2d 88

278 Neb. 547

HARLEYSVILLE INSURANCE GROUP, appellee, v. OMAHA GAS APPLIANCE CO., doing business as Rybin Plumbing and Heating, appellee, and Victoria M. Beck, Personal Representative of the Estate of Nancy Sachs and Special Administrator of the Estate of Richard Sachs, intervenor-appellant.

No. S-07-1235.

Supreme Court of Nebraska.

September 18, 2009.

Matthew D. Hammes and Ralph A. Froehlich, of Locher, Pavelka, Dostal, Braddy & Hammes, L.L.C., Omaha, for intervenor-appellant.

Dan H. Ketcham, Omaha and Meredith J. Kuehler, of Engles, Ketcham, Olson & Keith, P.C., for appellee Harleysville Insurance Group.

HEAVICAN, C.J., WRIGHT, CONNOLLY, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

McCORMACK, J.

I. NATURE OF CASE

Nancy Sachs and Richard Sachs were allegedly killed by carbon monoxide poisoning after Omaha Gas Appliance Co., doing business as Rybin Plumbing and Heating (Rybin), failed to properly repair and maintain a gas boiler in their home. Victoria M. Beck is the personal representative of the estate of Nancy Sachs and special administrator of the estate of Richard Sachs, and in those capacities, she brought a negligence action against Rybin. Rybin's insurer, Harleysville Insurance Group (Harleysville), brought this declaratory judgment action against Rybin alleging that pollution exclusions preclude coverage for the alleged occurrence. Beck intervened in the declaratory judgment action and now appeals the summary judgment entered in favor of Harleysville.

Beck alleges that the district court erred in failing to appreciate the differences in the Harleysville policies between "liability" caused by a pollutant and "injury" caused by a pollutant. In response, Harleysville argues that Beck has no standing to appeal in the declaratory judgment action because Rybin chose not to appeal. We hold that Beck had standing to appeal, but affirm the order of summary judgment in favor of Harleysville.

II. FACTS

Rybin is in the business of plumbing, heating, and air conditioning. The Sachses' home was heated by radiators connected to a gas boiler system, and Rybin repaired the system after a fire occurred in the Sachses' home. Rybin conducted subsequent service checks on the boiler and eventually replaced it in 2001. Thereafter, the Sachses both died. Beck alleged that the Sachses' deaths were caused by the original boiler's leaking carbon monoxide into the home and that Rybin had failed to conduct reasonable inspections of and repairs to the boiler.

At the time of the alleged negligent acts, Rybin had general liability and umbrella policies with Harleysville. The liability policy provided that Harleysville would indemnify Rybin for sums Rybin became obligated to pay as damages because of "`bodily injury'" "to which this insurance applies." The general liability policy contained a pollution exclusion endorsement with "Limited Coverage for Pollution From a Hostile Fire." The endorsement was in effect at all relevant time periods and stated: "This insurance does not apply to ... `[b]odily injury' or `property damage' which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time." "`Pollutants'" were defined as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste."

The umbrella policy stated that Harleysville would pay on behalf of Rybin the "`ultimate net loss' in excess of the `applicable underlying limit' which the insured becomes legally obligated to pay as damages because of ... `[b]odily injury' ... covered by this policy." A limited pollution exclusion in the umbrella policy provided that "[t]his insurance does not apply to ... [a]ny liability caused by pollutants excluded by `underlying insurance.'" This provision stated further that the listed exceptions to the pollution exclusion outlined in the umbrella policy were overridden by any broader exclusion in the underlying policy. "`Underlying insurance'" was defined so as to include the liability policy, any replacement or renewal policies, and any other insurance available to the insured.

Harleysville's complaint for declaratory judgment alleged that due to the pollution exclusion in the general liability policy and the total pollution exclusion endorsement on that policy, Harleysville had "no duty to defend or indemnify or provide any coverage whatsoever to Rybin in connection with any claim ... arising out of the alleged carbon monoxide exposure." The complaint did not specifically refer to the umbrella policy, but it was attached as an exhibit.

Beck filed a motion asking for permission to intervene in the declaratory judgment action and to be named as a party defendant. The court granted leave to intervene. Thereafter, the court granted Harleysville's motion for summary judgment, concluding that Harleysville did not have a duty to defend or indemnify Rybin in its pending litigation with Beck because carbon monoxide was a "pollutant" excluded from coverage. Because Beck had not been notified of the summary judgment proceedings, however, the court later vacated that order. Harleysville again moved for summary judgment, and Beck filed a cross-motion for summary judgment. In support of her motion for summary judgment, Beck argued that the pollution exclusion in the umbrella policy was distinct from the general liability policy and did not bar coverage for the Sachses' injuries. Beck also asserted that Harleysville was estopped from asserting any exclusion under the umbrella policy because it did not specifically address that policy in its complaint for declaratory judgment.

The court denied Beck's motion for summary judgment and again granted summary judgment in favor of Harleysville. The court explained that the language of the umbrella policy excluding coverage for "liability caused by pollutants" did not indicate that the pollutant must be the sole cause of the insured's liability or that the application of the exclusion depended on the underlying negligence of the insured. The court also found no authority for the assertion that an insurer must plead specific policy exclusions in a declaratory judgment action.

Beck moved to alter or amend the summary judgment order. Harleysville resisted, arguing, among other things, that because Rybin did not challenge the summary judgment order, Beck, as merely an intervenor, was unable to make any challenge. The court rejected this argument and found that Beck, as an intervenor, was to be accorded the rights which, under like circumstances, belong to any other unsuccessful suitor.¹ But the court found that the motion otherwise lacked merit. Beck appeals.

III. ASSIGNMENTS OF ERROR

Beck assigns that (1) the district court erred in determining as a matter of law that the umbrella policy does not provide coverage for Rybin's negligent acts or omissions resulting in the Sachses' deaths and (2) Harleysville has waived its right to assert an exclusion under the umbrella policy by failing to plead any exclusion under the umbrella policy.

IV. STANDARD OF REVIEW

The interpretation of an insurance policy is a question of law, in connection with which an appellate court has an obligation to reach its own conclusions independently of the determination made by the trial court.²

Standing is a jurisdictional component of a party's case because only a party who has standing may invoke the jurisdiction of a court; determination of a jurisdictional issue which does not involve a factual dispute is a matter of law which requires an appellate court to reach an independent conclusion.³

V. ANALYSIS

1. STANDING

We first address Harleysville's jurisdictional arguments relating to Beck's standing before our court. Harleysville asserts that Beck does not have standing to appeal because the nonintervening party, Rybin, chose not to appeal. Alternatively, Harleysville asserts that Beck cannot present any arguments about the interpretation of the policies that were not also made by Rybin. Harleysville apparently hopes to bind Beck by res judicata to a judgment limiting her future ability to recover against Harleysville and, at the same time, preclude her access to the appellate courts to challenge that judgment. This we will not do. As the trial court noted, an intervenor against whom a judgment has been rendered must be accorded the rights which, under like circumstances, belong to any other unsuccessful suitor.⁴

Harleysville's reliance on State ex rel. Nelson v. Butler⁵ is misplaced. In Butler, we said: "An interven[o]r who is not an indispensable party cannot change the position of the original parties, or change the nature and form of the action or the issues presented therein."⁶ This proposition, however, does not touch on the right to appeal an unfavorable judgment. The proposition refers to the scope of the action before the trial court and the fact that "it is fundamental that an intervenor takes the action as he finds it and cannot secure relief that is foreign or extraneous to the action."⁷

In other words, "[a]n interven[o]r cannot widen the scope of the issues ...[,] broaden the scope or function of [the] proceedings ... [,] or raise questions which might be the subject of litigation but which are extraneous to the controlling question to be decided in the case."⁸ Thus, in Butler, we held that the intervenors' challenge to the constitutionality of a legislative resolution improperly broadened the scope of a mandamus action in which the original parties relied upon the resolution's validity.⁹ And in Arnold v. Arnold,¹⁰ we held that the district court was correct in refusing to consider, in a dissolution action, a series of law actions between the intervening parents of the husband and the divorcing spouses based on various promissory notes and debts alleged to be due to the parents.

In this case, Beck did not seek...