Kaiser v. Allstate Indemnity Co., 307 Neb. 562

Kaiser owned an Omaha rental house insured by Allstate and leased it to tenants from April 2012 to May 2013.
After tenants vacated, testing and contractor reports documented methamphetamine vapor and residue throughout the house and recommended decontamination; Kaiser paid remediation costs and submitted a claim to Allstate.
Allstate denied coverage, citing policy exclusions for vapors/ toxic chemicals, contamination/pollutants, smoke from manufacturing controlled substances, vandalism, and tenant acts.
The district court found methamphetamine vapor and residue caused the loss and that those causes fell within the policy exclusions; it also held the “sudden and accidental” exceptions did not apply because the loss occurred over months.
Kaiser appealed the summary-judgment dismissal of his breach-of-contract and bad-faith claims; the Nebraska Supreme Court affirmed the district court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether loss from tenants’ methamphetamine production/use is excluded under policy paragraphs 12 and 13(e)/(f) (toxics/contamination)	Kaiser argued terms were ambiguous and loss should be covered (e.g., vandalism/malicious mischief)	Allstate argued loss was caused by methamphetamine vapor and residue, which are excluded as toxic chemicals/contaminants/pollutants	Held: Excluded — terms unambiguous; meth vapor/residue fall within paragraphs 12 and 13(e)/(f)
Whether exceptions for "sudden and accidental" fire/smoke (paras. 18, 19(d)) apply (predominant cause rule)	Kaiser claimed the injury was predominantly from sudden causes (fire/smoke/vandalism exception)	Allstate argued exceptions require "sudden and accidental" loss; loss here occurred over months and is not sudden	Held: Exceptions do not apply — insured failed to prove loss was "sudden and accidental"; loss occurred over time
Whether summary judgment was improper because of factual dispute whether damage resulted from production vs. use	Kaiser contended there remained a genuine factual dispute about production v. use	Allstate maintained the dispositive causes were methamphetamine vapor/residue, excluded under policy regardless of production v. use	Held: Summary judgment proper — whether by production or use is immaterial because the excluded causes (vapor/residue) are undisputed

Dutton-Lainson Co. v. Continental Ins. Co., 271 Neb. 810, 716 N.W.2d 87 (2006) (construed "sudden and accidental" conjunctively; pollution occurring over long period is not "sudden")
Poulton v. State Farm Fire & Cas. Cos., 267 Neb. 569, 675 N.W.2d 665 (2004) (distinction between specific-perils and all-perils policies and related burden rules)
Gage County v. Employers Mut. Cas. Co., 304 Neb. 926, 937 N.W.2d 863 (2020) (burden shifts to insurer to prove applicability of policy exclusions once insured shows covered property was damaged)
Henn v. American Family Mut. Ins. Co., 295 Neb. 859, 894 N.W.2d 179 (2017) (principles of insurance-policy interpretation)