Smoke Inhalation From Fire Not Subject to Application of Pollution Exclusion

Hobson v. Indian Harbor Ins. Co., et. al. (Mich. Ct. App., March 10, 2015)

This coverage action involve a dispute in which the plaintiffs sought to recover under their landlord’s commercial general liability (CGL) insurance policy for alleged injuries that occurred following a fire in the apartment complex where the plaintiffs resided. The policy contained a standard pollution exclusion precluding coverage for the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of “pollutants” at any time. Smoke is included in the list of defined “pollutants.” The insurer defendants argued that the alleged injuries suffered by the plaintiffs included “smoke inhalation injuries” and coverage was therefore barred by the pollution exclusion. The plaintiffs countered that the exclusion did not apply because the policy contemplated pollution as a substance that was confined and then released, “something distinctively apart and different from a fire.” The court affirmed its earlier decision holding that the insurer’s attempt to separate smoke from the fire that burned at the complex was a failed effort to extend the scope of the exclusion beyond the scope of its original intent and beyond the plain meaning of the language contained in the exclusion. Indeed, it was “impossible” to separate some from the fire and thus the insurers could not show that the injuries resulted from a “discharge, dispersal, seepage, migration, release, or escape” of a pollutant. The court further noted that in this case, the plaintiffs’ injuries arose from the negligence on the part of the insured that resulted in a fire. The plaintiffs did not allege injuries that were caused in whole or in part by the discharge, dispersal, release, seepage, migration, or escape of a pollutant, so the defendant’s contention that the pollutant was the basis for plaintiff’s claim was inaccurate: “Plaintiffs were allegedly injured when the fire and smoke engulfed them. It did not pollute them.” Accordingly, the appellate court held the trial court did not err in denying the insurer’s motion.