(CN) – An insurance dispute involving a motel where four guests died of carbon monoxide poisoning will head to the Nevada Supreme Court after the 9th Circuit certified two questions Friday.
Four guests of the Casino West Motel in Yerington, Nev., died in 2006 after carbon monoxide fumes from a pool heater seeped into their room, which had blocked airways.
When relatives of the deceased sued, the motel’s insurance carrier, Century Surety Co., denied coverage, citing the policy’s pollution and indoor-air-quality exclusions. The former lets the insurer off the hook for accidental injuries or deaths “caused by smoke, fumes, vapor or soot from equipment used to heat that building,” while the latter does the same in cases involving “toxic, hazardous, noxious, irritating, pathogenic or allergen qualities or characteristics of indoor air regardless of cause.”
Century asked a federal judge in Reno to rule that it had no duty to indemnify Casino West in any wrongful-death suits arising from incident. Casino West shot back with a bad-faith action. The court eventually ruled for the motel, finding the insurer’s exclusions ambiguous.
Though the court also initially barred Century from heading to the 9th Circuit, it eventually green-lit a jointly requested interim appeal.
In a brief order Friday, the San Francisco-based appellate panel declined to rule on either issue until the Nevada Supreme Court assesses the policy exclusions.
The 9th Circuit certified two questions to the state’s high court, staying all proceedings in the meantime.
While pollution exclusions have been widely litigated in the circuit courts, with conflicting results, Nevada – a state with a large hotel industry – has not “expressly decided the scope of the pollution exclusion,” the three-judge panel said.
“Casino West contends that the fact that so many courts have reached different opinions conclusively establishes the exclusion as ambiguous,” the order states. “However, Casino West has not cited any Nevada cases so holding, and we have not found any on our own. Given the magnitude of the hotel industry in Nevada, we believe the question of the ambiguity of this standard insurance exclusion is one of exceptional importance to Nevada insurers and insureds.”
The first question of law asks: “Does the pollution exclusion in Century’s insurance policy exclude coverage of claims arising from carbon monoxide exposure?”
The second question asks: “Does the indoor air quality exclusion in Century’s insurance policy exclude coverage of claims arising from carbon monoxide exposure?”
“These questions are determinative in this case,” the order states. “If both exclusions are ambiguous, as the district court found, then Casino West’s claims would be covered by Century. However, if one or both of the exclusions is unambiguous, then the opposite result would occur and Century would have no duty to defend or indemnify Casino West with regard to the wrongful death suits.”