Firemen's Ins. Co. v. Kline & Son Cement Repair

• Decision Date: 13 February 2007
• Docket Number: No. CIV. 3:06CV425.,CIV. 3:06CV425.
• Citation: 474 F.Supp.2d 779
• Court: U.S. District Court — Eastern District of Virginia
• Parties: FIREMEN'S INSURANCE COMPANY OF WASHINGTON, D.C., Plaintiff, v. KLINE & SON CEMENT REPAIR, INC. et al., Defendants.

474 F.Supp.2d 779

FIREMEN'S INSURANCE COMPANY OF WASHINGTON, D.C., Plaintiff, v. KLINE & SON CEMENT REPAIR, INC. et al., Defendants.

No. CIV. 3:06CV425.

United States District Court, E.D. Virginia, Richmond Division.

February 13, 2007.

COPYRIGHT MATERIAL OMITTED

James Wingate Barkley, Elisabeth M. Ayyildiz, Morin & Barkley, Charlottesville, VA, for Plaintiff.

Chad Matthew Rinard, Law Offices of Robert J. Barlow PLC, Fredericksburg, VA, John M. Claytor, Harman Claytor Corrigan & Willman, Elizabeth E. Stanulis Skilling, Richmond, VA, for Defendants.

Patricia Lewis, Richmond, VA, pro se.

MEMORANDUM OPINION

DOHNAL, United States Magistrate Judge.

This matter is a declaratory judgment action that is before the Court by consent of the parties pursuant to 28 U.S.C. § 636(c)(1) on cross-motions for total or partial summary judgment (docket entry nos. 13, 15, and 18).¹ See 28 U.S.C. § 2201 et seq. Jurisdiction is invoked pursuant to 28 U.S.C. § 1332(a). Co-Defendant R.J. Smith General Contracting, Inc. ("R.J.Smith") contracted with Defendant Kline & Son Cement Repair, Inc. ("Kline") to apply an epoxy sealant to a concrete floor as part of a renovation project of a warehouse. Co-Defendant Patricia Lewis ("Lewis") has asserted a personal injury claim against both R.J. Smith and Kline alleging that she developed respiratory problems as a result of inhaling fumes from the sealant applied by Kline. (Compl. ¶ 8.) The insurer of R.J. Smith and Kline, Firemen's Insurance Company of Washington, D.C. ("Firemen's"), asks this Court to declare that it has no duty to defend or indemnify the Defendants in Lewis' personal injury claim pursuant to a Total Pollution Exclusion clause provided for in the Policy. (Compl. ¶¶ 18-25; Firemen's Br. Supp. Mot. Summ. J. ("Firemen's Br.") at 4-7.) R.J. Smith and Kline counter that Lewis' claim is covered by the Policy because the Total Pollution Exclusion clause is ambiguous as applied to the facts of this case, and therefore must be construed against Firemen's in favor of coverage. (Kline's Br. Supp. Mot. Summ. J. ("Kline's Br.") at 4-10 (docket entry no. 14); R.J. Smith's Mem. Supp. Mot. Part. Summ. J. ("R.J. Smith's Mem.") at 5-9 (docket entry no. 16.)) The matter has been extensively briefed and the Court has entertained oral argument. The case is therefore "ripe" for resolution. For the reasons set forth herein, Firemen's motion is GRANTED and the Defendants' motions are DENIED.

Undisputed Facts and Material Inferences

In January of 2005, R.J. Smith entered into a contract with the Virginia Department of Alcoholic Beverage Control ("ABC") to provide general contracting services in connection with the renovation of an ABC warehouse in Richmond, Virginia. (Stipulation of Uncontested Facts ("Facts") ¶ 2) (docket entry no. 17.) In February of that same year, Kline entered into a subcontract with R.J. Smith under which Kline agreed to perform work related to restoration of a concrete floor at the ABC warehouse. (Facts ¶ 4 & Ex. 2.) Kline is in the business of laying concrete floors and, relevant to the current proceeding, applying protective sealants on top of the concrete. (Kline's Br. at 2.) As such, Kline contracted to apply and did apply an epoxy and eurathane² protective sealant to the concrete floor at the warehouse on April 8 or 9, 2005. (Facts ¶ 5.)

Firemen's issued a commercial general liability insurance policy (the "Policy") to Kline for the period September 10, 2004, to September 10, 2005, in which Kline was a named insured and R.J. Smith qualified as an additional insured.³ (Facts ¶ 1.) On August 1, 2005, Lewis (an employee at the warehouse), asserted a personal injury claim against both Kline and R.J. Smith alleging that she developed respiratory problems on April 11, 2005, as a result of inhaling fumes from the epoxy applied by Kline. (Facts ¶¶ 5, 7-8.) More specifically, Lewis alleged that she inhaled the fumes from the epoxy/eurathane while she was in her office located on a separate floor above the warehouse. (Firemen's Br. at 3, ¶ 10.) Although Lewis has not yet filed a formal action, her personal injury claim — as manifested in both her sworn deposition testimony and her related demand for settlement — is the basis for the present insurance coverage dispute.

R.J. Smith has sought indemnity from Kline for Lewis' claim pursuant to the Subcontract executed between Kline and R.J. Smith. (Compl. ¶ 9; R.J. Smith's Answer ¶ 8.) In turn, both Kline (as the named insured) and R.J. Smith (as the additional insured) seek a defense and indemnification from Firemen's under the Policy for the claims made by Lewis. (Compl. ¶¶ 11-12; R.J. Smith's Answer ¶¶ 11 9-10.)

The Policy requires Firemen's to indemnify those sums the insureds become legally obligated to pay due to "bodily injury" resulting from an "occurrence" (i.e., an accident) that took place during the policy period. (Facts, Ex. 1 (the "Policy"), at FIC000049.)⁴ The parties concede that Lewis' claim alleges "bodily injury" caused by an "occurrence" within the meaning of the Policy. (Facts ¶ 9.) Thus, Firemen's must provide coverage to the insureds for Lewis' claim unless her claim is otherwise excluded from coverage.

The Policy excludes a number of "occurrences" from coverage, including damages resulting from pollution. Central to the resolution of this case is the Total Pollution Exclusion clause ("Pollution Exclusion") contained in the Policy which provides, in pertinent part:

TOTAL POLLUTION EXCLUSION ...

This insurance does not apply to:

. . . . .

f. Pollution

(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.

(The Policy at FIC000059.) In pertinent part, the Policy defines "pollutants" as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste." Id. at FIC000056.

Standard of Review

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In considering whether to grant a motion for summary judgment, the court must assess the evidence offered by both parties and "determine whether there is a genuine issue for trial" after viewing the evidence in the light most favorable to the nonmoving party and resolving all factual disputes in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Since this Court is faced with cross-motions for summary judgment, the Court must review each motion separately on its own merits. Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir.2003) (citation omitted). When considering each motion, the Court must "resolve all factual disputes and any competing, rational inferences in the light most favorable" to the party opposing that motion. Id. (citation omitted).

To defeat a summary judgment motion, the non-moving party may not rest upon mere allegations or denials, but must "set forth specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In essence, the Court must decide if the evidence when viewed in the light most favorable to the non-moving party "presents a sufficient disagreement to require submission to the [factfinder] or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505. Resolution of the instant matter is "especially appropriate ... because the construction of insurance contracts is a legal question well suited for resolution by the court." W. Am. Ins. Co. v. Johns Bros., Inc., 435 F.Supp.2d 511, 513-14 (E.D.Va.2006) (citation omitted).

Analysis

1. The Facts of This Case Present a Justiciable "Case or Controversy"

Article III of the United States Constitution limits the exercise of judicial power to "cases" and "controversies." U.S. CONST, art. III, § 2, cl. 1. In accordance with this constitutional mandate, the Federal Declaratory Judgment Act provides that, "[i]n a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other, legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The Court raised the issue of justiciability sua sponte when it first learned during, oral argument that Lewis has not yet formally filed a personal injury suit against the alleged tortfeasors, Kline and R.J. Smith. Without a lawsuit being filed, the Court questioned whether Firemen's Complaint set forth a "case of actual controversy" sufficient to support the action seeking declaratory relief. The issue is of particular significance in light of the fact that, under Virginia law, there is constant reference to an insurer's duty to defend only when an underlying "complaint alleges facts and circumstances, some of which would, if proved, fall within the risk covered by the policy." Va. Elec. & Power Co. v. Northbrook Prop. & Cas. Ins. Co., 252 Va. 265, 475 S.E.2d 264, 265 (1996) (emphasis added) (quoting Lerner v. Safeco, 219 Va. 101, 245 S.E.2d 249, 251 (1978)). Indeed, "such a provision [to defend] places no obligation on the insurer to defend an action against an insured when, under the allegations of the complaint, it would not be liable under its contract for any recovery therein had." Lerner, 245 S.E.2d at 251 (citation omitted and emphasis added). As Lewis has not filed an underlying lawsuit, the initial question before the Court is whether an actual controversy exists such...