Kaiser v. Allstate Indemnity Co., 949 N.W.2d 787

Kaiser owned an Omaha rental house insured by Allstate; tenants occupied it from April 2012 to May 2013.
After the tenants vacated, testing found methamphetamine vapor and residue throughout the house; Kaiser paid for remediation and sought reimbursement (~$38,361.80) from Allstate.
Allstate’s policy insured direct physical loss but expressly excluded loss "consisting of or caused by" vapors, toxic chemicals, contaminants, pollution, and smoke from manufacturing controlled substances; it contained limited exceptions for "sudden and accidental" fire from vandalism and for sudden smoke from a tenant act.
Allstate denied the claim; Kaiser sued for breach of contract and bad faith.
The district court granted summary judgment for Allstate, finding methamphetamine vapor/residue constituted excluded toxic chemicals/contamination and that the loss was not "sudden and accidental."
The Nebraska Supreme Court affirmed: the exclusions applied, the loss occurred over time (not suddenly), and whether the damage came from use versus production was immaterial.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether loss from methamphetamine in the house is excluded as vapors/contamination	Kaiser argued the exclusion terms are ambiguous and should be construed for coverage	Allstate argued meth vapor and residue are plainly "toxic chemicals/contaminants" excluded by policy	Court: Terms not ambiguous; meth vapor/residue fall within exclusions (coverage denied)
Whether vandalism/tenant-act exceptions ("sudden and accidental" fire or smoke) apply	Kaiser argued the predominant cause was covered under the exceptions	Allstate argued Kaiser must prove loss was both sudden and accidental and he cannot do so	Court: "Sudden and accidental" conjunctive; loss occurred over months, not sudden; exceptions do not apply
Who bears burden to prove coverage/exclusion	Kaiser relied on all-perils characterization to shift initial burden	Allstate maintained it must prove an exclusion applies once coverage presumed	Court: Treated policy as all-perils; Kaiser met initial showing of damage; Allstate bore burden to prove exclusions and did so
Whether a genuine factual dispute (production v. use) precluded summary judgment	Kaiser contended a factual dispute remained whether damage resulted from production or mere use	Allstate said production vs use is immaterial because vapor/residue are excluded either way	Court: Dispute immaterial to legal conclusion; summary judgment for Allstate affirmed

Henn v. American Family Mut. Ins. Co., 295 Neb. 859, 894 N.W.2d 179 (2017) (principles for interpreting insurance policies)
Poulton v. State Farm Fire & Cas. Cos., 267 Neb. 569, 675 N.W.2d 665 (2004) (distinguishing specific-perils and all-perils policies and burden implications)
Dutton-Lainson Co. v. Continental Ins. Co., 271 Neb. 810, 716 N.W.2d 87 (2006) ("sudden and accidental" construed conjunctively; long-term pollution not "sudden")
Gage County v. Employers Mut. Cas. Co., 304 Neb. 926, 937 N.W.2d 863 (2020) (insurer bears burden to prove applicability of exclusions once coverage shown)
Mapes Indus. v. United States F. & G. Co., 252 Neb. 154, 560 N.W.2d 814 (1997) (supporting view that pollution over extended time is not sudden)