The federal district court certified questions to the Hawaii Supreme Court regarding coverage for underlying allegations of greenhouse gas emissions. Aloha Petroleum, Ltd. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 2023 U.S. Dist. LEXIS 156211 (D. Haw. Sept. 5, 2023).
Aloha was sued in two lawsuits, one filed by the County of Maui and the second filed by the City and County of Honolulu. The underlying lawsutis alleged that Aloha disregarded known risks of harm to the counties when selling its fuel products that would inevitably combust and produce greenhouse gasses, particularly carbon dioxide, thereby changing the climate and causing harm to the counties.
Aloha tendered the suits to AIG. Coverage was denied based on AIG’s determination there was no “occurrence” and the pollution exclusion barred coverage. Aloha sued AIG in federal district court seeking a declaratory judgment on AIG’s obligations under the policy.
The parties filed cross-motions for summary judgment. The court found two issues for which it sought guidance from the Hawaii Supreme Court. First, the parties’ dispute hinged on whether recklessness could amount to an “accident” as the term has been defined by the Hawaii Supreme Court. If so, were greenhouse gas emissions the release or escape of “pollutants.”
The court noted that in the Hawaii Supreme Court’s decision Tri-S Corp. v. Western World Ins. Co., 110 Hawaii 473, 135 P.3d 82 (2006), the court held that an exclusion in an occurrence policy did not exclude coverage for recklessness. The Supreme Court considred whether a “wilful and wanton’ misconduct claim was excepted from coverage by a clause exlcuding “expected or intended” injuries. “Wilful and wanton” misconduct comprised recklessness, so the court focused on the recklessness mental state. The court found that the exclusion might not apply to the wilful and wanton claim because the possibility existed that the insured could be found liable for recklessness, which did not involve intent or expectation. Thus, the wilful and wanton act could be an occurrence.
On the other hand, some cases from the Hawaii Supreme Court defined an “accident” to require injuries that were neither the “expected nor reasonably foreseeable result of the insured’s own intentional acts or omissions.” E.g., AIG v. Estate of Caraang, 74 Haw. 620, 636, 851 P.2d 321, 329 (1993). Therefore, a conflict existed between Tri-S implyng that an “accident” could be the result of recklessness and Carrang saying that an “accident cannot be “reasonably foreseeable” from the insured’s perspective, a standard almost synonymous with the subjective foreseeability required by recklessness.
If the Hawaii Supreme Court found that recklessness could be an “accident”, the federal district court then asked whether greenhouse gases were “pollutants,” defined in the AIG policies to mean “any gasseous . . . irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” On the one hand, the Hawaii Air Pollution Control statutes defined “air pollutant” to include greenhouse gases. Further, it was reasonable to assume that greenhouse gases were “gaseous” “chemicals” that were known to cause harm to persons and property through climate change.
On the other hand, it was also reasonable that greenhouse gases, such as carbon dioxide, were emitted around people daily, but were relatively harmless to immediate health, particularly in limited amounts.
Therefore, the following questions were certified to the Hawaii Supreme Court:
1) For an insurance policy defining a covered “occurrence” in part as an “accident,” can an “accident’ include recklessness?
2) For an occurrence insurance policy excluding coverage of “pollution” damages, are greenhouse gasses “pollutants,” i.e., “gaseous” “irritants or contaminants, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste”?