South Florida Injury Attorney Blog

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.