Devcon Intl. Corp. v. Reliance Ins. Co. et. al. (United States Court Of Appeal, Third Circuit, June 8, 2010)
This environmental coverage dispute arises from an alleged nuisance caused by the policyholder, Virgin Islands Cement, wherein large quantities of dust from an airport construction project allegedly contaminated plaintiffs’ drinking water and caused breathing disorders and other unspecified physical, emotional, and psychological damage. The residents also claimed that emissions from construction vehicles were causing similar health problems.
The policyholder tendered to Reliance, who agreed to defend under a reservations of rights. Thereafter, the policyholder commenced the instant declaratory judgment action seeking a ruling on the insurer’s obligation to defend and indemnify under the policy which the lower court held in the insurer’s favor.
On appeal the policyholder argued that the scope of the pollution exclusion was ambiguous, claiming that the purpose of the exclusion was to preclude coverage for catastrophic environmental pollution akin to the dumping of hazardous waste and thus it was not applicable to the present construction-related claims. Alternatively, the policyholder argued that it reasonably believed that the insurance policy would provide coverage for construction-related harms such as those caused by dust and engine fumes, and urged coverage under the doctrine of reasonable expectations.
The Court of Appeals held that under its precedent in Reliance Ins. Co. v. Moessner, 121 F3d 895 (3d Cir. 1997), it rejected the "environmental catastrophes" argument, rather concluding that the exclusion "admits no ambiguity" as it clearly states that the exclusion applies to the escape of pollutants "at any time" and contains no language limiting its scope to strictly environmental claims. Moreover, the court affirmed the lower court holding in favor of the insurer based on the pollution exclusion, which expressly excludes coverage for injuries that result from the release of any "solid … irritant or contaminant." The court noted that plaintiff in the underlying action alleged that particulate dust generated at the airport caused a variety of personal and property injuries. Those injuries were directly caused by the dust which the exclusion places outside the policy’s coverage. Consequently, the court concluded that the exclusion was not ambiguous and that the policy provided no insurance coverage where bodily injury or property damage resulted form airborne solids and fumes, such as the dust and engine exhaust complained of in the underlying action.
For a copy of the decision, click here
Paul Steck and Jonathan Kuller
https://www.goldbergsegalla.com/attorneys/Steck.html
https://www.goldbergsegalla.com/attorneys/Kuller.html
Case published courtesy of Lexis