SILOAM SPRINGS HOTEL, LLC v. CENTURY SURETY COMPANY, 391 P.3d 111

Century Surety issued a commercial general liability policy to Siloam Springs Hotel covering Nov 13, 2012–Nov 13, 2013, with an "Indoor Air Exclusion" barring coverage for bodily injury, property damage, or personal/advertising injury "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."
On Jan 17, 2013 hotel guests allegedly suffered carbon monoxide poisoning from a leak in the indoor pool heater; Century denied coverage invoking the Indoor Air Exclusion.
Siloam sued for a declaration of coverage; the federal district court granted summary judgment for Century, holding the exclusion unambiguous and applicable.
The Tenth Circuit remanded based on a defective removal pleading (LLC citizenship); it suggested the district court consider certifying state-law coverage/public-policy issues to the appropriate state supreme court.
The Western District certified one question to the Oklahoma Supreme Court: whether Oklahoma public policy prohibits enforcement of the Indoor Air Exclusion. The Oklahoma Supreme Court answered: no.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Oklahoma public policy prohibits enforcement of the Indoor Air Exclusion	The exclusion (as applied to a sudden CO leak) would deny victims compensation in circumstances where a reasonable person would expect liability coverage; public policy should invalidate such exclusions at least as applied to sudden accidental events	Parties are free to contract for limits on coverage; no Oklahoma statute or clear judicial precedent articulates a public policy forbidding such an exclusion	Held: No — Oklahoma public policy does not prohibit enforcement of the exclusion; absent an express statutory or constitutional mandate, freedom to contract governs
Whether public-policy analysis requires first resolving the exclusion’s ambiguity/coverage (as to CO leaks)	The meaning and ambiguity of the exclusion is inseparable from any public-policy analysis; as-applied issues matter	The certified question is limited to public policy; courts may decide that discrete question without resolving as-applied coverage	Held by majority: The Court answered the certified public-policy question as posed (no prohibition) and declined to resolve coverage/ambiguity; concurring opinion argued the Court should reformulate and resolve coverage first

Ball v. Wilshire Ins. Co., 221 P.3d 717 (Okla. 2009) (invalidated an auto-policy exclusion that conflicted with Oklahoma's compulsory liability insurance public policy)
Shepard v. Farmers Ins. Co., Inc., 678 P.2d 250 (Okla. 1983) (principles: insurance policies governed by statute; parties free to limit insurer liability absent statutory prohibition)
Burk v. K‑Mart Corp., 770 P.2d 24 (Okla. 1989) (recognizes narrow public-policy exceptions that limit freedom to contract, here in employment-at-will context)
Haworth v. Jantzen, 172 P.3d 193 (Okla. 2006) (insurance exclusions ambiguous when reasonably susceptible to multiple interpretations; ambiguities construed for insured)