11th Circuit Leaves it to Alabama to Decide if Pollution Exclusion Applies to Carbon Monoxide Deaths

By Jim Sams | September 8, 2021

National Trust Insurance Co. contends that a pollution exclusion in a policy it sold to an Alabama furnace-repair company excludes coverage for a wrongful death claim caused by carbon monoxide poisoning.

The Indiana-domiciled carrier won’t be able to test that argument in federal court any time soon.

A panel of the 11th Circuit of Court of Appeals affirmed a decision by the Northern Alabama U.S. District Court not to hear a lawsuit filed by National Trust that seeks a declaratory judgment that its pollution exclusion applies to carbon dioxide emissions. The court said that no Alabama state court has ruled on whether carbon monoxide is a pollutant under an insurance policy exclusion, so a ruling by a federal judge could create friction between state and federal courts.

In a concurring opinion, Circuit Judge Andrew L. Brasher said some states have ruled that carbon monoxide is a pollutant subject to a policy exclusion, but others have not.

“For its part, the Supreme Court of Alabama has described this morass of conflicting caselaw as, ‘not just a split of authority, but an absolute fragmentation of authority . . . with cases reaching the same conclusion as to a particular issue . . . on the basis of differing, and sometimes inconsistent, rationales.”

Steven Hoge filed a wrongful death suit against Southern Heating and Cooling Inc. and other defendants in Dekalb County Circuit Court after his parents died from carbon monoxide poisoning in January 2018. His lawsuit alleges that a technician for the company who was called out for a service call failed to inform Billy Carl and Mary Ellen Hoge that the burner in their gas furnace was misaligned, causing fatal levels of carbon monoxide to accumulate in their home.

Southern Heating had purchased a commercial liability policy from National Trust with a $1 million limit. The insurer filed a lawsuit in federal court seeking a declaratory judgment that no coverage is owed under that policy because of the pollution exclusion.

Attorney Christopher S. Randolph Jr., with the Hare/Wynn law firm in Birmingham, represents Hoge. He said he knows of no Alabama appellate court decision that has addressed the question of whether carbon monoxide is a “pollutant” under an insurance policy exclusion, but he believes that state courts will find that the exclusion does not apply.

It is the province of state courts to resolve questions of state law. Randolph said any ruling by the district court about whether an pollution exclusion applies in this case would be just a “guess.”

Randolph said National Trust has been defending Southern Heating in the state law case under a reservation of rights.

The 11th Circuit panel said in its opinion that the district could would also have to decide whether a “hostile fire exception” to the pollution exclusion in the policy applies. A hostile fire is a fire set intentionally that expands outside its intended boundaries.

The district court ruled that the two lawsuits are “parallel,” meaning they require resolution of substantially the same facts. Attorneys for National Trust argued that in light of that finding, the district court abused its discretion by refusing to hear its case.

The 11th Circuit, however, declined to adopt a “bright line rule” that the existence of parallel proceedings require federal trail courts to accept a declaratory judgment case in all circumstances.

“In sum, a district court may exercise its discretion and decline to adjudicate a claim under the Declaratory Judgment Act even in the absence of parallel proceedings,” the opinion says.

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