540 F.3d 1270 (11th Cir. 2008), 07-13207, James River Ins. Co. v. Ground Down Engineering, Inc.
|Citation:||540 F.3d 1270|
|Party Name:||JAMES RIVER INSURANCE COMPANY, a foreign corporation, Plaintiff-Appellant, v. GROUND DOWN ENGINEERING, INC., a Florida Corporation, Laurel A. Hall, individually, Priority Development, L.P., a foreign limited partnership, Defendants-Appellees.|
|Case Date:||August 20, 2008|
|Court:||United States Courts of Appeals, Court of Appeals for the Eleventh Circuit|
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John R. Hargrove, W. Kent Brown, Carol A. Gart, Paula J. Phillips, Gordon, Hargrove & James, P.A., Fort Lauderdale, FL, Sina Bahadoran, Hinshaw & Culbertson, LLP, Miami, FL, for Plaintiff-Appellant.
Elizabeth Ashley McRae, Carey, O'Malley, Whitaker & Manson, P.A., Brett Wadsworth, Tampa, FL, for Defendants-Appellees.
Appeal from the United States District Court for the Middle District of Florida.
Before EDMONDSON, Chief Judge, and PRYOR and KRAVITCH, Circuit Judges.
KRAVITCH, Circuit Judge:
James River Insurance Company appeals the district court's dismissal of its claim seeking a declaratory judgment that it is not obligated to provide a legal defense to Ground Down Engineering under the insurance policy Ground Down purchased from James River. James River also appeals the denial of its summary judgment motion. James River argues that the “pollution exclusion" in the policy excuses it from the obligation to defend Ground Down and Ground Down's engineer, Laurel Hall, in a suit filed by Priority Development for negligently failing to discover construction debris and fuel tanks during an environmental site assessment. For the following reasons, we conclude that the district court erred in holding that the pollution exclusion does not apply. We, therefore, vacate the district court's dismissal and remand with instructions for the district court to enter an order granting summary judgment to James River.
Priority Development's predecessor in interest hired Ground Down to conduct a “Phase I Site Assessment" of real property it was considering purchasing. According to the report generated by Ground Down's engineer, the purpose of this assessment was to satisfy one of the requirements for Priority to qualify for the “innocent landowner defense" under the Comprehensive Environmental Response, Compensation, and Liability Act (known as CERCLA or Superfund). The assessment report stated that it was also intended to identify “Recognized Environmental Conditions" which referred to “the presence or likely presence of any Hazardous Substances or Petroleum Products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any Hazardous Substances or Petroleum Products."
Ground Down completed its assessment and reported that no recognized environmental conditions had been found. Priority then purchased the property. After Priority began developing the site, it found “a significant amount of construction debris," several 55-gallon drums, and half of an underground storage tank. Priority filed suit against Ground Down and Laurel Hall for breach of contract, negligent misrepresentation, and negligence for failing to properly complete the Phase I Site Assessment. In its complaint, Priority alleged that testing revealed the drums and the underground storage tank previously contained petroleum, and that Priority, therefore, had to remove the drums and the surrounding soil and dispose of them at a special waste facility. Priority also alleged that the construction debris caused an elevation in the level of methane gas on
the property which also required expensive environmental remediation.
Ground Down submitted a claim to its insurance company, James River, requesting provision of a legal defense in the suit with Priority and payment of any resulting damages under its professional liability insurance policy. James River began providing a defense under a reservation of rights but also filed suit in federal court seeking a declaratory judgment that it was not required to provide coverage owing to the “pollution exclusion" contained in the policy.
The policy provides coverage for wrongful acts in Ground Down's performance of or failure to perform professional services. The covered “professional services" are services that Ground Down is qualified to perform in its “capacity as an architect, engineer, landscape architect, land surveyor or planner."
The policy includes a “pollution exclusion" provision excluding from coverage “[a]ll liability and expense arising out of or related to any form of pollution, whether intentional or otherwise." The pollution exclusion states that the policy does not cover “any damages, claim, or suit arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants.’ " This includes
Any loss, cost, expense, fines and/or penalties arising out of any (1) request, demand, order, governmental authority or directive or that any private party or citizen action that any...
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