Fumes in boat wheelhouse satisfies release into “atmosphere” requirement   

The Eighth Circuit, applying Minnesota law, affirmed the district court’s ruling and held that the pollution exclusion found in a marine general liability policy excluded coverage for carbon monoxide poisoning caused by an engine malfunction on a boat.

Christopher Klick was seriously injured after suffering carbon monoxide poisoning while aboard a friend’s fishing boat.  As a result of a broken exhaust pipe, the engine expelled carbon monoxide into the engine compartment rather than through the exhaust pipe.  When the boaters opened the hatch of the engine compartment to check on the engine, carbon monoxide flowed up into the wheelhouse of the boat. Klick lost consciousness and fell into the engine compartment.  Klick sued the boat dealer for his injuries.

The boat dealer was insured under a marine general liability insurance policy from Travelers Property Casualty Company of America (“Travelers”).   Under the policy, Travelers was required to pay for liabilities resulting from bodily injury; however, the policy  included a pollution exclusion barring coverage for “[a]ny liability … arising out of the actual … seepage, discharge, dispersal, disposal or dumping, release, migration, emission, spillage, escape, or leakage of ‘pollutants’ into [the] …  atmosphere.” Travelers filed suit seeking a declaration that the policy did not cover Klick’s injuries.  The district court granted summary judgment in favor of Travelers.

On appeal, the parties argued whether Klick’s injuries arose out of the release, dispersal, or migration of carbon monoxide into the “atmosphere.”  Klick contended that the engine compartment did not contain an “atmosphere” and that his injuries arose out of the engine’s initial “release” of carbon monoxide into the engine compartment – not the subsequent movement of gas from the engine compartment to the wheelhouse. The court found that, even if the engine compartment did not contain an “atmosphere,” the “pollution exclusion [was] not limited to liability arising out of an initial ‘release’ of a pollutant or a ‘dispersal’ or ‘migration’ of the pollutant from an original source.” Under Minnesota law, “arising out of” means “causally connected with and not proximately caused by.”  The court found that the release of the carbon monoxide into the wheelhouse was casually connected to Klicks injuries: “[A]n injury can arise out of multiple causes with varying degrees of proximity to the injury.”  Klick argued that the wheelhouse did not contain an “atmosphere” but, under Minnesota law, “‘atmosphere,’ as used in a pollution exclusion, meant ‘ambient air.’”  The court concluded that the wheelhouse where Klick was exposed to the pollutant was not a controlled environment because the back of the wheelhouse was wide open with air readily flowing to and from the surrounding environment, thus constituting “atmosphere.” The court concluded that the pollution exclusion applied and, therefore, there was no coverage under the Travelers policy for Klick’s injuries. Travelers Prop. Cas. Co. of Am. v. Klick, No. 16-4000 (8th Cir. Aug. 14, 2017).