Westport Ins. Corp. v. VN Hotel Group LLC, et. al.
(United States District Court, Middle District, Florida, October 11, 2011)
The issue in this environmental coverage dispute was whether the insurer of a hotel chain was obligated to provide coverage to its insured hotel based on a wrongful death action in which a hotel guest contracted legionnaires disease after using the hotel hot tub. Specifically, the issue was whether the policy’s Pollution Exclusion or Fungi or Bacteria Exclusion applied to bar coverage.
The policy defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.” The insurer argued that Legionella bacteria constitutes contaminants within the pollution exclusion, and therefore, the underlying suit falls within the pollution exclusion.
In holding against the insurer and against the application of the exclusions, the court concluded that while bacteria may be considered a “contaminant,” the Legionella bacteria that caused the injury was not a “pollutant” as defined under the policy as it was not a solid, liquid, gaseous, or thermal substance. As such, it did not fit within the express Pollution Exclusion. Further, the court distinguished this case from the recent Markel Intl. Ins. Co. v. Florida West Covered RV & Boat Storage, LLC (M.D. Fla. Mar 9, 2011) relied upon by the insurer, wherein the court found that asphalt millings – not the bacteria contained within the millings – were the pollutants.
Likewise, the court held that the Fungi or Bacterial exclusion did not apply to the facts as the spa tub did not constitute a “structure” within the meaning of the policy and, even if it did, the exception to the exclusion would bring the claim back within the grant in coverage. Here, the court appears to strain its analysis to find coverage, concluding that the exclusion would be excepted because the bacteria were contained in a “good or product intended for bodily consumption” where “consumption” is defined as “the utilization of economic goods in the satisfactions of wants.” Thus, the court reasoned that the spa possessed economic utility because claimant’s use of the spa constituted consumption that was “bodily” and involved “the utilization in the satisfaction of wants relating to the body.”
For a copy of the decision see Here
Paul C Steck and Joanna M. Roberto