Builders Mut. Ins. Co. v. Parallel Design & Dev. Llc
| Decision Date | 13 May 2011 |
| Docket Number | Civil Action No. 4:10cv68. |
| Citation | 785 F.Supp.2d 535 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | BUILDERS MUTUAL INSURANCE COMPANY, Plaintiff,v.PARALLEL DESIGN & DEVELOPMENT LLC, and Ricky L. Edmonds, Defendants. |
OPINION TEXT STARTS HERE
Danny M. Howell, Esq., Andrew Biondi, Esq., Courtney S. Schorr, Esq., Jeffrey H. Geiger, Esq., Michael T. Marr, Esq., Mikhael D. Charnoff, Esq., for Plaintiff.Richard G. Collins, Jr., for Defendant Parallel Design & Development LLC.Richard J. Serpe, Esq., Frederick S. Longer, Esq., Jeffrey A. Breit, Esq., John W. Drescher, Esq., Michael F. Imprevento, Esq., for Defendant Ricky L. Edmonds.
On December 17, 2009, Plaintiff, Builders Mutual Insurance Company (“Builders Mutual”), filed a Complaint in the Richmond Division of this Court, seeking a declaratory judgment on three separate issues. In Count I, Builders Mutual seeks a declaration that it has no obligation under the applicable insurance contracts to defend or indemnify Parallel Design and Development LLC (“Parallel”), with respect to a lawsuit filed in state court against Parallel by Defendant Ricky L. Edmonds (“Edmonds”), because such coverage is excluded by the insurance contract's Total Pollution Exclusion. In Count II, Builders Mutual seeks a specific declaration that it has no obligation to defend or indemnify Parallel for any medical monitoring sought by Edmonds in his underlying state lawsuit because such coverage is also excluded by the insurance contract's Total Pollution Exclusion. In Count III, Builders Mutual seeks a declaration that the “Your Work” exclusion in the applicable insurance policy also excludes coverage for the claims alleged in the Edmonds state lawsuit. The case was transferred to this Division on June 1, 2010 and Builders Mutual filed the motion for summary judgment currently pending before the Court. After considering the Complaint, the briefs submitted by the parties, and the arguments made by counsel at the hearing on this motion, for the reasons set forth below, the Court DENIES IN PART Builders Mutual's motion for summary judgment and therefore concludes that Builders Mutual does have a duty to defend Parallel in Edmonds' underlying state court action. However, the Court HOLDS IN ABEYANCE Builders Mutual's motion on the issue of indemnity until the underlying action is resolved.
Edmonds owns a home located on Holly Street in Richmond, Virginia. Compl. Ex. 2, at ¶ 1. This home was built by both The Overlook, L.L.C., which is not a party to this action, and Parallel. Id. Allegedly, when constructing this home, Parallel used “defective drywall” imported from China. Id. On September 3, 2009, Edmonds filed suit in the Circuit Court for the City of Norfolk against Parallel and other defendants not relevant to this action. In that suit, Edmonds claims that the defective drywall used in his home “is inherently defective because it emits various sulfide gases and/or other toxic chemicals through ‘off-gassing’ that create noxious odors, and cause damage and corrosion ... to the structural, mechanical and plumbing systems of the Plaintiff's home....” Id. at ¶ 11. Further, according to Edmonds' complaint, the “compounds emitted by the drywall at issue are also capable of, among other things, harming the health of individuals subjected to prolonged exposure.” Id. at ¶ 12. The “chemical compounds cause and have caused dangerous health consequences including, among other things, allergic reactions, respiratory afflictions, sinus and bronchial problems requiring medical attention, including headaches suffered by the Plaintiff.” Id. Additionally, as to health consequences, the complaint alleges that “some of the compounds being emitted from Defendants' defective drywall are very hazardous, some latently affecting the central nervous system and basic oxygenation on a cellular level.” Id. at ¶ 58. Premised on these underlying allegations, Edmonds asserts twelve counts against Parallel in his state court action.
Although Builders Mutual is not a party to the underlying state lawsuit, it has interests intertwined in the action because it has previously issued, to the Court's knowledge, at least three insurance contracts to Parallel. As a result, Builders Mutual is providing Parallel with a defense in state court against Edmonds' claims, subject to a reservation of rights. These insurance policies provide Parallel with coverage for the periods of June 2006 to June 2007, June 2007 to June 2008, and June 2008 to June 2009. Although there are three potentially applicable insurance policies, Builders Mutual has submitted evidence stating that “[b]ecause the Certificate of Occupancy for Edmonds' property ... was issued on July 25, 2006,” the policy spanning from June 2006 to June 2007 (“Applicable Policy”) “is the applicable policy with regard to the Edmonds' claim.” Warbington Aff., at ¶ 3. Edmonds agrees that the June 2006 to June 2007 policy is controlling.
According to the Applicable Policy, Builders Mutual “will pay those sums that the insured [Parallel] becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” Compl. Ex. 1, at p. 38 of 67. The insurance applies only if the “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory.” Id. However, the Applicable Policy also includes several relevant exclusions. In particular, Builders Mutual argues that the “Total Pollution Exclusion” and the “Your Work” exclusions are applicable here and bar coverage for the Edmonds claims.
According to the Applicable Policy's Total Pollution Exclusion, the “insurance does not apply to:”
(1) “Bodily injury” or “property damage” which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “ pollutants ” at any time.
(2) Any loss, cost or expense arising out of any:
(a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of “ pollutants ”....Id. at p. 37 of 67 (emphasis added). This Total Pollution Exclusion is found in an endorsement included in the Applicable Policy.
Insurance policies like the Applicable Policy are generally composed of a collection of basic form contracts, which are then supplemented with additional endorsements that either add terms to or modify terms in those basic form contracts. One such form contract included in the Applicable Policy is the Commercial General Liability coverage form. This Commercial General Liability coverage form contained a Pollution Exclusion, referred to as “Exclusion (f),” which included a definition of the word “pollutants.” However, the separate Total Pollution Exclusion endorsement modified portions of this Commercial General Liability policy, specifically, Exclusion (f). Of critical importance, the parties do not dispute that the Total Pollution Exclusion endorsement replaced Exclusion (f) in its entirety. While Exclusion (f) defined the term “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste,” id. at p. 39 of 67, the Total Pollution Exclusion, does not contain a definition of “pollutants.” As a result, the term “pollutants” in the Total Pollution Exclusion is left undefined in the Applicable Policy.1
The Policy also includes an exclusion entitled “Damage to Work Performed by Subcontractors on Your Behalf.” Id. at p. 14 of 67. This exclusion, which replaces exclusion “1” in the basic Commercial General Liability policy, states that the “insurance does not apply to ... ‘property damage’ to ‘your work’ arising out of it or any part of it and included in the products-completed operations hazard.” Id. While there are several different components to this exclusion that involve complex definitions, the most significant aspect of the “Your Work” exclusion for purposes of this Opinion and Order is that it only has a bearing on coverage for “property damage.” Since that aspect of the exclusion proves dispositive in the Court's “Your Work” analysis, the Court need not delve into further detail with respect to this exclusion.
Builders Mutual's Complaint seeks a declaratory judgment on several issues. In Count I, the Complaint seeks a declaratory judgment stating that Builders Mutual has no obligation to defend or indemnify Parallel, with respect to the Edmonds suit, because Edmonds' claims are excluded under the Total Pollution Exclusion. Compl. ¶¶ 28–31. In Count II, Builders Mutual seeks a declaration that the portion of the Total Pollution Exclusion excluding coverage for any loss arising out of any “[r]equest, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of ‘pollutants' ” relieves Builders Mutual of any obligation to defend or indemnify Parallel with respect to Edmonds' requests for “monitoring.” Id. at ¶¶ 32–36. Lastly, in Count III, Builders Mutual seeks a declaration that the “Your Work” exclusion also excludes from coverage any claim made in Edmonds' underlying Complaint. Id. at ¶¶ 37–40.
After the Complaint was filed, the case was transferred to this Division of the Court. Docket No. 27. Subsequently Builders Mutual filed the motion for summary judgment addressed in this Opinion and Order. Docket No. 54. Builders Mutual argues that the Total Pollution Exclusion unambiguously excludes coverage for the claims in Edmonds' underlying lawsuit, despite the fact that the term ...
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