609 F.3d 214 (3rd Cir. 2010), 07-4602, Devcon Intern. Corp. v. Reliance Ins. Co.
|Docket Nº:||07-4602, 08-1996.|
|Citation:||609 F.3d 214|
|Opinion Judge:||JORDAN, Circuit Judge.|
|Party Name:||DEVCON INTERNATIONAL CORPORATION; V.I. Cement & Building Products, Inc. d/b/a Mark 21 Industries, Inc., d/b/a Controlled Concrete Products, Inc., d/b/a Springfield Crusher, Appellants, v. RELIANCE INSURANCE COMPANY; Virgin Islands Insurance Guaranty Association, Appellees.|
|Attorney:||Jack J. Aiello, Gunster, Yoakley & Stewart, West Palm Beach, FL, James L. Hymes, III, Law offices of James L. Hymes, III, St. Thomas, VI, for Appellants. Richard H. Hunter, Hunter, Cole & Bennett, St. Croix, USVI, for Appellees.|
|Judge Panel:||Before SMITH, CHAGARES and JORDAN, Circuit Judges.|
|Case Date:||June 08, 2010|
|Court:||United States Courts of Appeals, Court of Appeals for the Third Circuit|
Submitted Under Third Circuit LAR 34.1(a) May 6, 2010.
[Copyrighted Material Omitted]
Devcon International Corporation (" Devcon" ) appeals an order of the District Court of the Virgin Islands of the United States entering a declaratory judgment in favor of Reliance Insurance Company (" Reliance" ) on Devcon's claim that Reliance is required to defend and indemnify Devcon in a nuisance action brought against it in the Superior Court of the Virgin Islands (" the underlying action" ). For the reasons that follow, we will affirm.
I. Factual Background
This case arises from an alleged nuisance caused by Virgin Islands Cement (" V.I. Cement" ), a subsidiary of Devcon, at the Henry E. Rohlsen Airport (" the airport" ) on the island of St. Croix, Virgin Islands.
A. Facts Alleged In The Underlying Complaint
In September 1999, the Virgin Islands Port Authority (" VIPA" ), which operates the airport, retained V.I. Cement to act as general contractor on a project to extend the airport's sole runway. Construction began the following month and generated large quantities of dust, which drifted over property belonging to the plaintiffs in the underlying action, all of whom live near the airport. The dust allegedly contaminated the plaintiffs' drinking water and cisterns and caused breathing disorders and other unspecified physical, emotional, and psychological damage. The plaintiffs also alleged that emissions from construction vehicles were causing similar problems, and that construction noise from the project deprived them of the quiet enjoyment of their properties.
In the spring of 2000, one of the plaintiffs filed a formal complaint with the Virgin Islands Department of Planning and Natural Resources (" DPNR" ). DPNR investigators conducted an examination of the site and ordered VIPA to undertake immediate dust control measures and to submit a written plan for the relocation of residents during construction. On March 31, 2000, the DPNR issued a supplemental order that required VIPA to provide residents with uncontaminated potable water. On June 7, 2000, it rescinded its prior requirement that VIPA draft a plan for relocating residents, but it imposed additional dust remediation obligations. According
to plaintiffs, neither VIPA nor its general contractor, V.I. Cement, ever fully remediated the dust problem, which continued despite the DPNR orders.
Plaintiffs filed the underlying suit on April 6, 2001, advancing various nuisance-related claims. The plaintiffs amended their complaint several times, the final version of which sets forth claims against V.I. Cement for nuisance, breach of the DPNR orders, trespass, negligence, and negligent and intentional infliction of emotional distress.
B. The Pollution Exclusion And Proceedings In The District Court
V.I. Cement, acting through its parent company, Devcon, tendered defense of the plaintiffs' claims to Reliance, which had issued a commercial general liability policy to Devcon. Reliance initially informed Devcon that " it is questionable whether the insurance policy provides coverage for any of [plaintiffs'] claims" because the policy excluded coverage for injuries resulting from pollution caused by V.I. Cement. (App. at 689.) However, Reliance later agreed to defend Devcon pursuant to a reservation of rights letter under which Reliance asserted " the right to withdraw from the matter at any future date" if Reliance discovered that the plaintiffs' injuries were outside the scope of the insurance policy. ( Id. ) Devcon then commenced the instant declaratory judgment action to ascertain Reliance's obligation to defend and indemnify it under the policy.
The Reliance policy provides coverage for " those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage.... The bodily injury or property damages must be caused by an occurrence." ( Id. at 898.) " Occurrence" is defined as " an accident, including continuous or repeated exposure to substantially the same general harmful conditions." ( Id. at 911.)
The policy also contains numerous exclusions that excise coverage for specific harms caused by the insured. In particular, the policy removes coverage for any " bodily injury and property damage which would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time" (hereinafter " the pollution exclusion" ). ( Id. at 892.) " Pollutants" are defined as " any solid, liquid, gaseous or thermal irritant or contaminant, including, but not limited to, smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste." ( Id. )
The parties filed cross-motions for summary judgment in the District Court. The Court found that the pollution exclusion removed coverage for the plaintiffs' injuries and that Devcon had no reasonable expectation of coverage for such harms because they were beyond the scope of coverage. Accordingly, the Court entered a declaratory judgment in favor of Reliance, finding that it had no duty to defend or indemnify Devcon for the injuries allegedly caused by V.I. Cement. Devcon filed this timely appeal.
On appeal, Devcon argues that the scope of the pollution exclusion is ambiguous and that we must construe it to provide coverage for the harms in the underlying action. Alternatively, Devcon suggests 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 it urges us to
extend coverage under the doctrine of reasonable expectations. We address each of those arguments in turn.2
A. The Pollution Exclusion
To establish insurance coverage, the insured bears the initial burden of showing that the harm described in the plaintiff's complaint potentially falls within the scope of the policy. State Farm Fire & Cas. Co. v. Estate of Mehlman, 589 F.3d 105, 110 (3d Cir.2009). " If the complaint avers facts that might support recovery under the policy, coverage is triggered and the insurer has a duty to defend." Sikirica v....
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