Midwest Family Mut. Ins. Co. v. Wolters

Decision Date22 August 2011
Docket NumberA11-181
PartiesMidwest Family Mutual Insurance Company, Appellant, v. Michael D. Wolters, et al., Respondents, Charles E. Bartz, et al., Respondents, Jerry D. Larson, Defendant.
CourtMinnesota Court of Appeals

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2010).

Reversed and remanded

Shumaker, Judge

Beltrami County District Court

File No. 04-CV-10-1537

Steven E. Tomsche, Matthew R. Smith, Tomsche, Sonnesyn & Tomsche, P.A., Minneapolis, Minnesota (for appellant)

Robert A. Woodke, Bruce L. Meyer, Brouse, Woodke & Meyer P.L.L.P., Bemidji, Minnesota (for respondent Michael D. Wolters)

Anthony J. Nemo, Meshbesher & Spence, Ltd., Minneapolis, Minnesota (for respondents Charles E. Bartz and Catherine M. Brewster)

Considered and decided by Larkin, Presiding Judge; Shumaker, Judge; and Wright, Judge.



In this insurance-coverage dispute, appellant argues that the district court erred by concluding that (1) the pollution exclusion was limited to environmental pollutants; (2) damages arose from a hostile fire; and (3) the policy did not exclude coverage for damages associated with the improper installation of a carbon-monoxide detector. Because we conclude that the pollution exclusion encompasses the emission of carbon monoxide from a boiler in a home; that the fire in the boiler was not hostile; and that damages from the improper installation of a carbon-monoxide detector are excluded from coverage, we reverse and remand.


The facts are undisputed. On December 28, 2007, respondents Charles Bartz and Catherine Brewster went to sleep in Bartz's newly constructed residence. Brewster woke up at about 5:30 the next morning disoriented and nauseous. She could not wake Bartz and called 911. Both Bartz and Brewster were taken to a hospital and treated for carbon-monoxide poisoning. An investigation revealed that the boiler caused the high levels of carbon monoxide and that the carbon-monoxide detector was not connected to a power source.

In January 2007, Bartz had hired respondent Michael Wolters to construct the residence, which was designed to have radiant heating in the floor. Wolters subcontracted the plumbing and electrical work, and he purchased the materials for the heating system from a local supplier for the plumber to install. Wolters testified at his deposition that hetold the supplier that he needed a boiler designed to use liquid-propane fuel. But he was sold a boiler that was compatible only with natural gas and was clearly marked "for natural gas only." The plumber installed the boiler and Wolters connected it to a liquid-propane fuel line designed to connect to a propane tank. Wolters never tested the boiler because Bartz had not yet purchased the propane tank by the time Wolters's work was completed in October 2007.

Wolters also instructed the electrician to install the carbon-monoxide detector. Wolters testified that he tested the fire and carbon-monoxide detectors before completing the job and that they were working at that time. But the engineering firm hired to investigate the incident reported that the carbon-monoxide detector was not connected to the electric wires in the ceiling that were supposed to supply power and that the back-up battery was installed backwards.

Bartz and Brewster sued Wolters for negligence and breach of express and implied warranties. Wolters was insured under an artisan-contractor commercial general liability (CGL) policy from appellant Midwest Family Mutual Insurance Company from April 2007 until April 2008, and he tendered his defense. Midwest appointed defense counsel for Wolters and also commenced a declaratory-judgment action, claiming that it has no duty to defend or indemnify Wolters under the policy. Midwest moved for summary judgment in the declaratory-judgment action, which the district court denied. The district court then entered summary judgment in favor of respondents at Midwest's request to allow for appeal.


When reviewing an appeal from summary judgment, we determine whether any genuine issues of material fact exist and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). Because the facts are undisputed here, we must decide only whether either party is entitled to judgment as a matter of law. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).

"The interpretation of an insurance policy, including the question of whether a legal duty to defend or indemnify arises, is one of law which this court reviews de novo." Auto-Owners Ins. Co. v. Todd, 547 N.W.2d 696, 698 (Minn. 1996). "While the insured bears the initial burden of demonstrating coverage, the insurer carries the burden of establishing the applicability of exclusions." Travelers Indem. Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888, 894 (Minn. 2006). Exclusions "are construed narrowly and strictly against the insurer, and, like coverage, in accordance with the expectations of the insured." Id. (citation omitted). "[O]nce the insurer shows the application of an exclusion clause, the burden of proof shifts back to the insured because the exception to the exclusion 'restores' coverage for which the insured bears the burden of proof." SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 314 (Minn. 1995), rev'd on other grounds by Bahr v. Boise Cascade Corp., 766 N.W.2d 910 (Minn. 2009).

We interpret insurance policies using the general principles of contract law. Thommes v. Milwaukee Ins. Co., 641 N.W.2d 877, 879 (Minn. 2002). "In interpreting insurance contracts, [this court] must ascertain and give effect to the intentions of the parties as reflected in the terms of the insuring contract." Jenoff, Inc. v. N.H. Ins. Co.,558 N.W.2d 260, 262 (Minn. 1997). An insurance policy "must be construed as a whole, and unambiguous language must be given its plain and ordinary meaning." Henning Nelson Constr. Co. v. Fireman's Fund Am. Life Ins. Co., 383 N.W.2d 645, 652 (Minn. 1986). Language in a policy is ambiguous if it is susceptible to two or more reasonable interpretations. Medica, Inc. v. Atl. Mut. Ins. Co., 566 N.W.2d 74, 77 (Minn. 1997).


Wolters's CGL policy provides coverage for costs of "bodily injury" or "property damage" for which the insured becomes liable. But this coverage is subject to several express exclusions, including a pollution exclusion, which states:

9. We do not pay for bodily injury or property damage:
a. arising wholly or partially out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants:
4) at or from any premises where you or any contractor or subcontractor, directly or indirectly under your control, are working or have completed work:
a) if the pollutant is on the premises in connection with such work, unless the bodily injury or property damages arise from the heat, smoke or fumes of a fire which becomes uncontrollable or breaks out from where it was intended to be; or
b) if the work in any way involves testing, monitoring, clean-up, containing, treating or removal of pollutants.

"Pollutant" is defined in the policy to include "any solid, liquid, gaseous, thermal, electrical emission (visible or invisible) or sound emission pollutant, irritant or contaminant." Because the exclusion no longer includes an exception for sudden andaccidental dispersal of pollutants, it is known as an absolute pollution exclusion. 22 Minnesota Practice § 5:9 (2d ed. 2010).

The district court concluded that the absolute pollution exclusion should be limited to traditional environmental pollutants, reasoning that Minnesota courts' past interpretations of the exclusion to include interior contamination from ordinary negligence is against public policy. Although the concerns expressed by respondents and the district court appear valid, precedent compels an interpretation of the pollution exclusion to include interior pollutants, and any policy-based expansion of that exclusion is beyond our authority.

We have taken a "non-technical, plain-meaning approach" to interpreting the pollution exclusion. Auto-Owners Ins. Co. v. Hanson, 588 N.W.2d 777, 779 (Minn. App. 1999) (citing Bd. of Regents of Univ. of Minn. v. Royal Ins. Co. of Am., 517 N.W.2d 888, 891 (Minn. 1994)). Under this approach, carbon monoxide constitutes a pollutant under the policy definition. The definition includes "any . . . gaseous . . . emission . . . pollutant, irritant or contaminant." Carbon monoxide is a highly poisonous gas that was emitted by the improperly functioning boiler. Moreover, the federal government classifies carbon monoxide as a pollutant and regulates its concentration under the Clean Air Act. 40 C.F.R. § 50.08 (2010).

Minnesota courts have concluded that changes to the language of the pollution exclusion have broadened its scope. Royal, 517 N.W.2d at 890, 893-94 (concluding that a policy excluding coverage for damages "arising out of the discharge, dispersal, release or escape of . . . irritants, contaminants or pollutants into or upon land, the atmosphere, orany water course or body of water" did not exclude coverage for damage from release of asbestos fibers inside a building but that a policy excluding coverage for "contamination or pollution of land, water, air, or real or personal property" did); Hanson, 588 N.W.2d at 780 (concluding that "the scope of the exclusion is in its broadest form" in a policy with no reference to the object polluted).

We recognize that Minnesota's interpretation is not shared by a majority of other jurisdictions. 22 Minnesota Practice § 12.21(2d ed. 2010) (stating that a majority of jurisdictions limit exclusion to traditional environmental pollution). But we have rejected "a technical rather than an ordinary reading of the exclusion, ascribing to the reader a knowledge of 'terms of art' in environmental law." Hanson, 588 N.W.2d at 779. And we have concluded that the exclusion...

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