Lawsuit Over Allegedly Defective Chinese Drywall Not Covered by Commercial General Liability Insurance Policy, Court Rules
A Florida federal court recently ruled on a question of whether an insurance company was obligated to defend or indemnify a construction company in a class action products liability lawsuit. The court granted summary judgment to the plaintiff insurance company in First Specialty Insurance Corp. v. Milton Construction Company in July 2012, finding that a Total Pollution Exclusion endorsement in the company’s commercial general liability policies excluded coverage for a claim regarding allegedly defective drywall.
The defendant, Milton Construction Company, is also a defendant in a class action lawsuit in the Eastern District of Louisiana, Block, et al v. Gebrueder Knauf Verwaltungsgesellschaft, K.G., et al, alleging both personal injuries and property damage resulting from defective Chinese drywall. According to the class action suit, sulfur compounds exited the drywall and injured people in the affected properties, such as eye and throat irritation, nausea, fatigue, breathing difficulties, and neurological damage. The compounds also allegedly damaged metal in the affected properties through “rapid sulfidation,” including air conditioning and refrigerator coils, electronic equipment and appliances, and copper wiring. Milton allegedly installed defective Chinese drywall in units at Miami’s San Lorenzo Condominium building, giving rise to claims in the class action lawsuit.
Milton had two commercial general liability insurance policies, issued by the plaintiff, First Specialty Insurance Corp., during the time period covered by the class action lawsuit. Both policies included coverage for “bodily injury” or “property damage” claims with a “Total Pollution Exclusion Endorsement.” The endorsement excluded coverage for injury or damage claims arising from the discharge of pollutants, defined as any “solid, liquid, gaseous, or thermal irritant or contaminant,” such as smoke, fumes, chemicals, or waste. Milton requested defense and indemnification from First Specialty in the drywall class action suit. First Specialty denied coverage under the pollution endorsement and filed suit in the Southern District of Florida seeking a declaratory judgment affirming its position.
The district court, in considering First Specialty’s motion for summary judgment, identified the question before it as whether or not the sulfur compounds that allegedly exited the Chinese drywall were “pollutants” as defined by the Total Pollution Exclusion Endorsement, and therefore whether the endorsement excluded coverage for the class action lawsuit. The court cited a Florida case, Deni Associates of Florida v. State Farm, 711 So.2d 1135 (Fla. 1998), which found that a pollution exclusion endorsement was not ambiguous and did not limit the exclusion to “environmental or industrial pollution.” Rather, the endorsement excluded coverage for damages caused by all “hazardous materials and/or pollutants.” The court also cited a local federal case, General Fidelity Ins. Co. v. Foster, 808 F.Supp.2d 1315 (S.D. Fla. 2011), which applied a pollution exclusion endorsement to alleged damage from defective Chinese Drywall-related sulfur compounds. It therefore granted First Specialty’s motion for summary judgment, finding that the Louisiana class action alleged the same sort of damages and that the pollution exclusion endorsement in Milton’s insurance policies excluded coverage by the plaintiff.
The products liability attorneys at Cohn & Smith help recover compensation for people in South Florida who have suffered injuries due to dangerous or defective consumer products. Contact us today online, at (954) 431-8100, or at (305) 624-9186 to schedule a free and confidential consultation with one of our lawyers.
More Blog Posts:
Florida Portable Propane Heaters Had Sufficient Safety Warnings, Eleventh Circuit Rules, South Florida Injury Attorney Blog, July 12, 2012
Multi Agency Federal Investigation of Chinese Drywall Defects Is Inconclusive, South Florida Injury Attorney Blog, November 4, 2009
Florida Product Defect Lawsuits Rise as Defective Chinese Drywall Drives Families From New Homes, South Florida Injury Attorney Blog, May 14, 2009