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Commercial General
Liability |
Pollutants |
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Pollution Exclusion |
Underlying Insurance |
Nancy and Richard Sachs
hired Omaha Gas Appliance Company (doing business as Rybin Plumbing and
Heating) (Rybin) to repair and eventually replace the boiler system in their home.
After the system was replaced, both Nancy and Richard Sachs died of carbon
monoxide poisoning. Victoria Beck, as personal representative of the estate of
Nancy Sachs and special administrator of the estate of Richard Sachs, filed a
legal action against Rybin. At the time of the accident, Rybin had general
liability and umbrella policies with Harleysville Insurance Group
(Harleysville). Harleysville filed a declaratory judgment action stating that
the pollution exclusion in each policy excluded coverage. The lower court found
that Harleysville was not obligated to defend or indemnify Rybin because carbon
monoxide was a “pollutant” excluded from coverage. Beck appealed.
On appeal, Beck acknowledged
that the general liability policy's language excluded coverage for carbon
monoxide poisoning. Instead, she focused on the umbrella policy's language. It
provided that Harleysville would pay 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 [the] policy.”
The policy had a limited pollution exclusion which provided: “This insurance
does not apply to . . . [a]ny liability caused by pollutants excluded by
‘underlying insurance.’”
Beck's position was that the
umbrella policy extended coverage to pollution occurrences excluded by the
general liability policy because the limited pollution exclusion applied only
to strict liability pollution claims (claims stemming from the pollutants
themselves without any human causal element). The Supreme Court of Nebraska
disagreed. Evaluating the language of both policies, and focusing on their
interrelationship with one another, the court found that there was “no basis
for Beck’s conclusion that the phrase “[a]ny liability caused by pollutants
excluded by ‘underlying insurance’ could be construed as providing coverage.”
The court concluded that the umbrella policy excluded coverage for liability
caused by the release of pollutants, whether “human culpability” was involved
or not. It affirmed the lower court's judgment in favor of Harleysville.
Supreme Court of Nebraska.
Harleysville Insurance Group v. Omaha Gas Appliance Company. No. S-07-1235.
September 18, 2009. 772 Northwestern Reporter 2d 88