United States District Court, D. Oregon
C. Lauersdorf MALONEY LAUERSDORF REINER, PC Attorney for
Christopher B. Rounds ROUNDS LAW OFFICE PC Attorney for
OPINION & ORDER
A. HERNÁNDEZ United States District Judge
Colony Insurance Company ("Colony Insurance") and
Defendants Victory Construction LLC, dba Premier Pools and
Spas of Oregon; and Vitaly Shavlovskiy (collectively
"Victory Construction") bring cross-motions for
summary judgment on the issue of whether Colony Insurance has
a duty to defend and indemnify Victory Construction in two
state court personal injury lawsuits. The parties submitted
briefs and the Court held oral argument on March 8, 2017.
outcome of this case hinges upon whether carbon monoxide is a
"pollutant" as defined in the parties'
Commercial General Liability Insurance Policy
("Policy"), such that the Policy's
"Hazardous Materials Exclusion" (hereinafter,
"pollution exclusion") serves to exclude coverage
for claims arising from alleged carbon monoxide poisoning.
The Court concludes that the plain meaning of
"pollutant, " as defined in the Policy, includes
carbon monoxide. Thus, the Policy unambiguously excludes
coverage for harm caused by carbon monoxide.
the state court lawsuits are based on alleged carbon monoxide
poisoning, Colony Insurance does not have a duty to defend
and indemnify Victory Construction. The Court grants Colony
Insurance's motion for summary judgment and denies
Victory Construction's motion for summary judgment.
State Court Actions
lawsuits were filed in Clackamas County Circuit Court against
Victory Construction. See Compl. Exs. A, B; ECF 1-1,
1-2. The lawsuits stem from the same incident. Id.
The state court plaintiffs allege negligence in the
installation and ventilation of a natural gas swimming pool
heater and negligence in failing to warn of the risks of
carbon monoxide poisoning associated with operating the
heater in an insufficiently ventilated area. Id. The
state court plaintiffs allege that, as a result of Victory
Construction's negligence, excessive carbon monoxide
filled the home and caused the plaintiffs to be sick.
Id. The state court complaints allege damages
resulting from the release of carbon monoxide from the
Insurance issued the Policy to Victory Construction.
Defs.' Mot. Summ. J. Ex. B, ECF 15. The Policy includes a
pollution exclusion clause which modifies the Policy.
Id. at 12. The pollution exclusion provides that the
Policy does not apply to:
(1) "Bodily injury, " "property damage, "
or "personal and advertising injury" which would
not have occurred in whole or part but for the actual,
alleged or threatened discharge, dispersal, seepage,
migration, release or escape of "hazardous
materials" at any time.
Id. at 12. The pollution exclusion further defines
"hazardous materials" as: "'pollutants,
' lead, asbestos, silica and materials containing
them." Id. The Policy defines
"pollutants" as: "any solid, liquid, gaseous
or thermal irritant or contaminant, including smoke, vapor,
soot, fumes, acids, alkalis, chemicals and waste."
Id. at 27. Thus, the Policy excludes coverage for
injury or damage caused by "irritants" or
judgment is appropriate if there is no genuine dispute as to
any material fact and the moving party is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving
party bears the initial responsibility of informing the court
of the basis of its motion, and identifying those portions
of'"the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, ' which it believes demonstrate the
absence of a genuine issue of material fact."
Celotex Corp. v. Catrett 477 U.S. 317, 323 (1986)
(quoting Fed.R.Civ.P. 56(c)).
the moving party meets its initial burden of demonstrating
the absence of a genuine issue of material fact, the burden
then shifts to the nonmoving party to present "specific
facts" showing a "genuine issue for trial."
Fed. Trade Comm'n v. Stefanchik, 559 F.3d 924,
927-28 (9th Cir. 2009) (internal quotation marks omitted).
The nonmoving party must go beyond the pleadings and
designate facts showing an issue for trial. Bias v.
Moynihan, 508 F.3d 1212, 1218 (9th Cir. 2007) (citing
Celotex, 477 U.S. at 324).
substantive law governing a claim determines whether a fact
is material. Suever v. Connell 579 F.3d 1047, 1056
(9th Cir. 2009). The court draws inferences from the facts in
the light most favorable to the nonmoving party. Earl v.
Nielsen Media Research. Inc.. 658 F.3d 1108, 1112 (9th
factual context makes the nonmoving party's claim as to
the existence of a material issue of fact implausible, that
party must come forward with more persuasive evidence to
support his claim than would otherwise be necessary.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986).
parties disagree about whether the pollution exclusion
relieves Colony Insurance from its duty to defend and
indemnify Victory Construction in the underlying state court
lawsuits.The only plausible interpretation of the
Policy's terms results in the conclusion that carbon
monoxide is a pollutant. Thus, the pollution exclusion
applies to damages caused by carbon monoxide and, therefore,
Colony Insurance has no duty to defend or indemnify Victory
law governs this Court's construction of the Policy and,
thus, Colony Insurance's duty to defend and indemnify.
Larson Constr. Co. v. Or. Auto. Ins. Co., 450 F.2d
1193, 1195 (9th Cir. 1971); Allstate Ins. Co. v.
Morgan, 123 F.Supp.3d 1266, 1272 (D. Or. 2015). The
insured bears the burden of proving coverage while the
insurer has the burden of proving exclusion from coverage.
Id. (citing ZRZ Realty Co. v. Beneficial Fire
& Cas. Ins. Co.. 349 Or. 117, 127, 241 P.3d 710
(2010)). If the insurer can establish that the insured is
precluded from coverage, it has neither the duty to defend
nor the duty to indemnify the insured. Id.
an insurer has a duty to defend presents a question of law,
which is determined by comparing the terms of the insurance
policy with the allegations of the complaint against the
insured." Drake v. Mut. of Enumclaw Ins. Co.,
167 Or.App. 475, 478, 1 P.3d 1065, 1068 (2000).
Even if the complaint alleges some conduct outside the
coverage of the policy, the insurer may still have a duty to
defend if certain allegations of the complaint, without
amendment, could impose liability for conduct covered by the
policy. Any ambiguity in the complaint with respect to
whether the allegations could be covered is resolved in favor
of the insured.
Ledford v. Gutoski, 319 Or. 397, 400, 877 P.2d 80,
82 (1994) (citation omitted). Conversely, "[i]f the
complaint does not contain allegations of covered conduct...,
then the insurer has no duty to defend." Abrams v.
Gen. Star Indem. Co., 335 Or. 392, 400, 67 P.3d 931, 935
(2003); see also Siltronic Corp. v. Employers Ins. Co. of
Wausau, No. 3:11-CV-1493-ST, 2015 WL 181785, at *4 (D.
Or. Jan. 14, 2015). The Court must construe exclusion clauses
narrowly. Am. Econ. Ins. Co. v. Hughes, 121 Or.App.
183, 186, 854 P.2d 500, 501 (1993).
Oregon Supreme Court has explained that "the primary and
governing rule of the construction of insurance contracts is
to ascertain the intention of the parties." Hoffman
Constr. Co. of Alaska v. Fred S. James & Co. of Or.,
313 Or. 464, 469, 836 P.2d 703, 706 (1992). Courts must
determine the intention of the parties based on the terms and
conditions of the insurance policy. Id. (citing Or.
Rev. Stat. § (O.R.S.) 742.016). Courts begin with the
wording of the policy, "applying any definitions that
are supplied by the policy itself and otherwise presuming
that words have their plain, ordinary meanings."
Tualatin Valley Hous. Partners v. Truck Ins. Exch.,
208 Or.App. 155, 159-60, 144 P.3d 991, 993 (2006) (citing
Hoffman, 313 Or. at 469-70, 836 P.2d at 703).
"If, from that vantage point, [the Court] find[s] only
one plausible interpretation of the disputed terms, [the
Court's] analysis goes no further." Id.
other hand, if the disputed terms are susceptible to more
than one plausible interpretation, then the Court examines
the terms in the broader context of the policy as a whole.
Id. If the Court's consideration of the
policy's broader context fails to resolve the ...