The Estate of Wheeler v. Garrison Prop. & Cas. Ins. Co.
| Decision Date | 25 May 2022 |
| Docket Number | 4:20-cv-00041-SLG |
| Parties | The ESTATE OF JOSIAH WHEELER, pursuant to the assignment of rights of insureds Deborah Overly and Terry Summers, and KEITH WHEELER and RHETTA WHEELER, individually and as representatives of the Estate of Josiah Wheeler, Plaintiffs, v. GARRISON PROPERTY AND CASUALTY INSURANCE COMPANY, a subsidiary of USAA Insurance Company, Defendant. |
| Court | U.S. District Court — District of Alaska |
ORDER ON CROSS-MOTIONS FOR DECLARATORY JUDGMENT
This matter comes before the Court on Plaintiffs' Cross Motion for Declaratory Relief on Coverage at Docket 26 and Defendant's Cross Motion for Declaratory Judgment at Docket 32. Because the Federal Rules of Civil Procedure do not provide for “motions for declaratory judgment, ” the Court construes the parties' motions to be motions for summary judgment.[1] For the reasons discussed herein, the Court will deny Plaintiffs' motion and grant Defendant's motion.
The underlying facts are not generally in dispute, and are as follows: Plaintiffs Keith and Rhetta Wheeler have filed this suit both individually and on behalf of the estate of their son, Josiah Wheeler. Josiah was a 17-year-old boy who died on or about January 4, 2019, while using the bathtub at a cabin in Tok, Alaska. An autopsy revealed that Josiah died from acute carbon monoxide poisoning. The deputy fire marshal who investigated Josiah's death determined that the cabin's water heater was the source of the fatal carbon monoxide. During his investigation, the deputy fire marshal discovered that the water heater had been installed in the same small bathroom as the bathtub, and that its flue connection was not connected to any ducting or other venting system. This contravened the water heater's instruction manual, which cautioned not to install it in small, poorly ventilated rooms such as bathrooms and bedrooms, and specified that it should be connected to a venting system to safely exhaust carbon monoxide and other flue gases.[2]
Josiah had been renting the cabin from its owners, Deborah Overly and Terry Summers. Overly and Summers submitted a homeowners' insurance claim to Defendant Garrison Property and Casualty Insurance Company (“Garrison”), through whom they had a homeowners' general liability policy covering the cabin.[3]Relevant here, the policy contained a pollution exclusion clause, which provided that the policy's personal liability coverage did not apply to any bodily injury “[a]rising out of the . . . discharge dispersal, release, escape, seepage or migration of ‘pollutants' however caused and whenever occurring.”[4] The policy defined “pollutants” to be “any solid, liquid gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”[5]Deeming carbon monoxide to be a “pollutant” for the purposes of the policy, Garrison denied coverage.[6]
In August 2020, Overly and Summers signed a “Confession of Judgment” admitting that their negligence caused Josiah's death and confessing judgment to the Wheelers in the total amount of $1, 680, 000 in damages: $1, 400, 000 for Josiah's wrongful death, plus $140, 000 to each parent for loss of consortium.[7] In a separate document, Overly and Summers also assigned to Plaintiffs their rights to pursue coverage claims against Garrison.[8]
On December 4, 2020, Plaintiffs initiated this suit against Garrison. They seek a declaratory judgment that Josiah's death was covered under the policy and an award of “appropriate damages.”[9] Plaintiffs filed proof of service of the complaint and summons on February 3, 2021.[10] Garrison did not initially appear, and the Clerk of Court entered a default.[11] Plaintiffs then moved for a default judgment, [12] which the Court granted on May 4, 2021.[13] On September 28, 2021, Garrison appeared and moved to set aside the default judgment.[14] The Court granted Garrison's motion and set aside the default judgment on February 1, 2022.[15]
In their opposition to Garrison's motion to set aside the default judgment, Plaintiffs also included a “cross motion for declaratory order” seeking a ruling that Overly and Summers's policy covered Wheeler's death.[16] Garrison opposed Plaintiffs' motion and filed its own “cross motion for declaratory judgment.”[17] The motions have been fully briefed. At Plaintiffs' request, the Court heard oral argument on February 1, 2022.[18]
A. Summary Judgment
Federal Rule of Civil Procedure 56(a) directs a court to “grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” In reviewing crossmotions for summary judgment, a court “review[s] each separately, giving the nonmovant for each motion the benefit of all reasonable inferences.”[19] B. Alaska Insurance Contract Interpretation
Under Alaska law, [20] courts construe insurance contracts according to the principle of “reasonable expectations.”[21] This principle requires courts to construe insurance contracts “so as to provide that coverage which a layperson would have reasonably expected from a lay interpretation of the policy terms.”[22] An insured's expectation of coverage must be “objectively reasonable.”[23] To determine what an insured party's reasonable expectations were, Alaska law directs a court to “look[] to (1) the language of the disputed provisions in the policy, (2) other provisions in the policy, (3) extrinsic evidence, and (4) case law interpreting similar provisions.”[24]“[B]ecause of inequities in bargaining power, [Alaska law] construe[s] coverage broadly and exclusions narrowly, in favor of insureds.”[25] Alaska law will, however, recognize a coverage restriction “if . . . plain language limits the coverage of [the] policy.”[26]
Alaska law provides that if an insurance policy provision is ambiguous, a court “must accept the interpretation that most favors the insured.”[27] However, [28]
As the Court construes their motions, [29] the parties have cross-moved for summary judgment on the dispositive question of whether the pollution exclusion clause in Overly and Summers' insurance policy excludes coverage for a death caused by carbon monoxide in the cabin. There are no genuine disputes of material fact regarding the circumstances of Josiah's death or the applicable policy language.[30] The parties agree that the resolution of their dispute turns on the interpretation of the policy, [31] which is a question of law for the Court.[32]
Plaintiffs' position is that the policy's exclusion clause does not exclude coverage for Josiah's death. They assert that the exclusion clause, “by its own terms, describes pollution as the unintentional escape of pollutants into the environment from containers that were meant to keep the pollutants sequestered.”[33] Reasoning that a water heater is not a “container . . . meant to keep [a] pollutant[] sequestered, ” they assert that the water heater's discharge of carbon monoxide was not “pollution” as defined in the policy.[34] Plaintiffs also assert that the policy must be read to contain implied “building heating” and “hostile fire” exceptions to the clause to avoid an overly broad interpretation that would “consume the entire . . . policy.”[35] Lastly, observing that no Alaska court has ever considered whether pollution exclusion clauses cover carbon monoxide, Plaintiffs point to decisions from Nevada and other jurisdictions holding the application of such clauses to carbon monoxide to be ambiguous.[36] They urge the Court to conclude similarly and, following Alaska law, to resolve the ambiguity in their favor.[37]
Garrison disagrees that the pollution exclusion clause is inapplicable, although it agrees that whether pollution exclusion clauses cover carbon monoxide is a matter of first impression under Alaska law. Garrison maintains, citing a recent North Dakota Law Review article, that “[a] majority of courts” hold pollution exclusion clauses “to bar coverage for personal injuries resulting from carbon monoxide exposure.”[38] Garrison maintains that the clause's application to carbon monoxide is not ambiguous. Garrison further asserts that the clause's language, the policy's other provisions, and relevant extrinsic evidence all indicate that an insured in Plaintiffs' position could not have reasonably expected the clause to include coverage for bodily injury caused by carbon monoxide.[39]
C. Whether the Policy's Pollution Exclusion Clause's Application to Carbon Monoxide is Ambiguous
Pollution exclusion clauses have been “repeatedly litigated” across the United States, and most states' interpretations of them “fall into ‘one of two broad camps.'”[40] [41] The Ninth Circuit has interpreted these clauses by considering whether the state in question has an established position on pollution exclusion clauses and, if not, considering whether there is an indication as to which “camp” the state would likely fall into.[42]
The Alaska Supreme Court has only once had occasion to interpret a pollution exclusion...
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