Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 906 F.3d 926

In Jan. 2013 several hotel guests allegedly suffered carbon-monoxide poisoning from an indoor pool heater; the hotel sought coverage under a liability policy and Century Surety denied coverage relying on an exclusion for injuries “arising out of, caused by, or alleging to be contributed to in any way by any toxic, hazardous, noxious, irritating, pathogenic or allergen qualities or characteristics of indoor air regardless of cause.”
The hotel sued; the district court granted summary judgment for the insurer, holding the indoor-air exclusion unambiguous and barring coverage for carbon-monoxide injuries.
On appeal this Court remanded (Siloam I) because the record did not establish complete diversity; the district court later found diversity existed and certified a public-policy question to the Oklahoma Supreme Court.
The Oklahoma Supreme Court (majority) answered the certified question by holding that enforcement of the exclusion is not prohibited by Oklahoma public policy but declined to resolve the exclusion’s proper interpretation; Justice Kauger separately concluded the exclusion is ambiguous and would construe it for the insured.
This Court, applying Oklahoma law and considering Nevada Supreme Court precedent (Casino West), predicted the Oklahoma Supreme Court would find the exclusion ambiguous and construe it in favor of the insured, reversing the district court and remanding for damages.

Issue	Plaintiff's Argument (Hotel)	Defendant's Argument (Insurer)	Held
Whether federal diversity jurisdiction existed	Diversity present; appeal proper	Removal defective originally; jurisdiction uncertain	District court’s finding of complete diversity is valid; appellate merits reached on remand
Whether the hotel’s appeal was timely / whether this Court should review merits after remand	Timely notice after district court’s final order on remand; merits review appropriate	Appeal untimely; prior remand forecloses merits review	Appeal timely; this Court may review merits de novo now that jurisdiction resolved
Whether the indoor-air exclusion is ambiguous under Oklahoma law	Exclusion reasonable read as limited to inherent/continuous air qualities (not one-time leaks)	Exclusion unambiguous and covers any air-borne hazard “regardless of cause”	Exclusion is ambiguous; ambiguous terms construed for insured; exclusion does not bar coverage for sudden, isolated carbon-monoxide release
Whether Oklahoma public policy prohibits enforcing the exclusion	(Implicit) enforcement would be against policy if exclusion read broadly	Enforcement permitted; public policy does not void exclusion	Oklahoma Supreme Court majority held public policy does not prohibit enforcement; this Court did not certify question and resolved coverage via ambiguity rule

Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233 (10th Cir. 2015) (remanding to develop jurisdictional record)
Century Sur. Co. v. Casino West, Inc., 329 P.3d 614 (Nev. 2014) (holding the indoor-air exclusion ambiguous and construing it for insureds)
Siloam Springs Hotel v. Century Sur. Co., 392 P.3d 262 (Okla. 2017) (Oklahoma Supreme Court: public policy does not bar enforcing the exclusion; majority declined to resolve interpretation)
Pitco Prod. Co. v. Chaparral Energy, Inc., 63 P.3d 541 (Okla. 2003) (standard for contractual ambiguity under Oklahoma law)
Wood v. Eli Lilly & Co., 38 F.3d 510 (10th Cir. 1994) (federal courts in diversity apply forum-state law and standards)
Hardin v. First Cash Fin. Servs., Inc., 465 F.3d 470 (10th Cir. 2006) (predicting state-law decisions when highest court has not ruled)