Michigan: Apartment Fire Smoke Not Pollutant In CGL Policy

aptfire

MICHICAN, May 31 –  The Michigan Supreme Court refused to address or overturn a lower court’s determination that smoke from an apartment complex fire doesn’t constitute a pollutant within the meaning of a pollution exclusion in a commercial general liability policy.  The effect of the ruling leaves a judgment against XL Insurance in place.

Plaintiffs Charlie and Mary Hobson sued apartment owners as well as XL after sustaining injuries in an apartment fire. The Hobsons claimed that XL wrongfully denied insurance coverage to the apartment entities.  XL had sought a ruling that smoke related injuries, including smoke inhalation arising out of an apartment fire,  constituted excluded pollution related losses within the meaning of the landlord’s CGL policy.   The Hobson’s responded that smoke related losses were a component of the fire,  clearly contemplated by the CGL coverage, and were not within the pollution exclusion.   The trial court denied the insurer’s motion for summary disposition and a three-judge panel of an intermediate appeals court affirmed.

The state supreme per Justice Brian Zahra court declined to hear the matter:

“[W]hile this case presents an interesting question of contract interpretation, because the record is undeveloped with regard to what constitutes a discharge, dispersal, seepage, migration, release, or escape [of pollutants] under the endorsement, I agree with my colleagues that leave should be denied.”

Charlie B. Hobson et al. v. Indian Harbor Insurance Co. et al.(Mich 2016, case number 151447).  A link to the prior Court of Appeals opinion can be found here.

 

Property Value Admissible By Allstate To Prove Arson Fraud

arson

SPRINGFIELD, Feb. 29 –  A federal judge in Missouri has denied an insured couple’s attempt to exclude expert evidence Allstate Insurance  intends to submit  in a declaratory judgment action in which it seeks to have its denial of a homeowners insurance coverage claim upheld.

In Allstate Indemnity Company v. Joseph Dixon, et al., No. 14-cv-03489-MDH. W.D. Mo.; 2016 U.S. Dist. LEXIS 24678, U.S. District Judge Douglas Harpool denied a motion to strike Allstate’s expert disclosures filed by Allstate insureds Joseph Dixon and his wife, ruling that the value of the couple’s home could be probative of the couples’  financial motive to commit arson fraud. The Court found that Allstate’s proposed testimony from a county assessor as to the value of the insured couple’s home would not prejudice the homeowners, although it reserved final judgment about the precise nature of the allowed testimony until later in the case.

Allstate  denied coverage for the April 2014 fire, claiming that the Dixons falsified material facts with regard to the claimed loss. A cause and origin and claims investigation by Allstate revealed that the fire was intentionally set.  The Dixons contended in their motion to strike expert disclosures that the value of their home was not in dispute, and that expert testimony concerning the value of the property would be confusing to the jury as well as irrelevant, cumulative and prejudicial.

In denying the motion, Judge Harpool cited to an Eighth Circuit U.S. Court of Appeals’ ruling which discussed proper evidence of motive in arson fraud cases,  Gen. Cas. Ins. Companies v. Holst Radiator Co. (88 F.3d 670, 672 [8th Cir. 1996]).

Allstate v. Dixon (W.D. Mo. 2016)