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Pollution exclusion shields Travelers in carbon monoxide poisoning

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 A Travelers Cos. Inc. unit is not obligated to provide coverage in an incident in which carbon monoxide that flowed from a recreational fishing boat’s engine killed two men and injured a third, because of its policy’s pollution exclusion, says a federal appeals court, in affirming a lower court ruling.

Christopher A. Klick and two friends, Lonnie Norbert and Jeffrey Wheeler, were aboard Mr. Norberg’s 25-foot fishing boat on Lake of the Woods in northern Minnesota in a boat that had been sold to Mr. Norberg a few weeks earlier by Baudette, Minnesota-based Rainy River Marine Inc. and a financial institution, according to Monday’s ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Travelers Property Casualty Co. of America v. Christopher A. Klick; Rainy River Marina Inc.

Mr. Norberg was at the boat’s helm, which was near the front of the boat in the wheelhouse, as the boat returned to shore, according to the ruling. The boat’s engine was housed in an enclosed compartment beneath the wheelhouse.

Mr. Norbert and Mr. Klick noticed the engine was not operating properly. Mr. Klick took the helm and Mr. Norberg opened the hatch of the engine compartment to check the engine.

Unbeknownst to either, an exhaust pipe had broken off at the spot where it connected with the engine, and as a result, the engine had been expelling carbon monoxide gas into the engine compartment rather than through the exhaust pipe and out behind the boat.

As result, when Mr. Norberg opened the engine compartment hatch from within the wheelhouse, carbon monoxide flowed up into the wheelhouse. Mr. Klick quickly lost consciousness and fell into the engine compartment. He awoke there several hours later severely burned and brain damaged from the carbon monoxide, although he survived; the gas killed Mr. Norberg and Mr. Wheeler.

Mr. Klick sued Rainy River and the financial institution, Grafton, North Dakota-based Choice Financial Group, in state court seeking damges for his injuries from the accident.

Rainy River held a marine general lability insurance policy from Hartford, Connecticut-based Travelers unit Travelers Property Casualty Co. of America at the time of the accident that required the insurer to pay damages resulting from bodily injury.

The policy included a pollution exclusion for injuries “arising out of” the “seepage, discharge, dispersal, disposal or dumping, release, migration, emission, spillage, escape or leakage” of pollutants into the “atmosphere.”

Travelers then sued Mr. Klick, Rainy River and Choice Financial in U.S. District Court in Minneapolis, seeking a declaration the policy did not cover Mr. Klick’s injuries because of the pollution exclusion.

The District Court granted Travelers summary judgment, which a three-judge appeals court panel unanimously upheld.

Mr. Klick argued the exclusion did not apply because his injuries did not arise out of the release, dispersal or migration of carbon monoxide into the “atmosphere,” in that the engine compartment did not contain “atmosphere,” said the ruling.

“Assuming for the sake of analysis that Klick is correct that the engine compartment did not contain ‘atmosphere,’ Klick’s injuries did not arise only out of the release of carbon monoxide into the engine compartment,” said the ruling.

“The movement of the carbon monoxide from the engine compartment into the wheelhouse was also a ‘release,’ ‘dispersal,’ or ‘migration’ of a pollutant,” the ruling said.

“The pollution exclusion is not limited to liability arising out of an initial ‘release’ of pollutant or a ‘dispersal’ or ‘migration’ of the pollutant from an original source,” the ruling said, in holding the pollution exclusion applies and Travelers is entitled to a declaratory judgment in its favor.