Travco Ins. Co. v. Larry Ward
| Decision Date | 03 June 2010 |
| Docket Number | Civ. No. 2:10cv14. |
| Citation | 715 F.Supp.2d 699 |
| Parties | TRAVCO INSURANCE COMPANY, Plaintiff, v. Larry WARD, Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
OPINION TEXT STARTS HERE
Wystan Michael Ackerman, Robinson & Cole LLP, Hartford, CT, for Plaintiff.
Jeffrey Arnold Breit, Breit Drescher & Imprevento PC, Norfolk, VA, for Defendant.
ORDER & OPINION ON MOTION FOR SUMMARY JUDGMENT
This matter comes before the Court on a Motion for Summary Judgment, filed by Plaintiff TRAVCO Insurance Company (“Plaintiff”) on March 18, 2010. This case involves a dispute over an insurance policy. Defendant Larry Ward (“Defendant”) owns a residence that is insured under a homeowners insurance policy issued by Plaintiff. (Compl. ¶¶ 1, 8-9.) Defendant's residence contains walls that were constructed using sheets of drywall manufactured in China. (Compl. ¶ 10.) On September 23, 2009, Defendant reported an insurance claim to Plaintiff seeking coverage for damages allegedly caused by this Chinese drywall. (Compl. ¶ 26.) On January 7, 2010, Plaintiff denied Defendant's claim and filed a declaratory judgment action in this Court. Plaintiff seeks a declaration that it is not liable for the damage caused by the Chinese drywall. (Compl. ¶ 15.)
The home insurance policy in question, homeowner's policy # 9812814746331 (“the Policy”), provides coverage for “direct physical loss to property described in Coverages A and B.” (Compl. Ex. A at 8.). 1 Coverage A consists of the “dwelling on the ‘residence premises,’ ” and Coverage B consists of other structures on the premises. ( Id. at 2-3.) This coverage is subject to a number of exclusions, including exclusions for latent defects, faulty materials, corrosion, and pollution. ( Id. at 8-12.) The Policy contains an ensuing loss provision, however, which restores coverage for ensuing losses not otherwise excluded by the Policy. The Policy also provides coverage for personal property in Coverage C, but this coverage is limited to “direct physical loss” caused by an enumerated list of causes. ( Id. at 9-10.)
Based on a review of applicable Virginia law, 2 the Court finds that the Ward Residence and its components suffered a “direct physical loss” within the meaning of the Policy. The Court also finds, however, that four separate exclusions apply to the damage claimed. Specifically, the claimed losses are excluded by the Policy's latent defect, faulty materials, corrosion, and pollutant exclusions. Moreover, none of the losses now claimed by Defendant qualify for coverage under the Policy's ensuing loss provisions. The Court will not categorically rule out, however, the possibility that other as-yet-unclaimed losses might be subject to coverage under the Policy's ensuing loss provisions. Accordingly, Plaintiff's Motion for Summary Judgment is GRANTED IN PART, DENIED IN PART. The Court hereby enters a declaratory judgment providing as follows:
1. The Policy does not provide coverage for the cost of removing and/or replacing the Drywall in the Ward Residence;
2. The Policy does not provide coverage for the damage claimed by Mr. Ward to the air conditioning equipment at the Ward Residence, which resulted from corrosion;
I. FACTUAL AND PROCEDURAL BACKGROUND 1. The Policy
Defendant owns a residence located at 214 80th St. in Virginia Beach (“the Ward Residence”). (Compl. ¶ 8; Ans. ¶ 8.) Defendant purchased this residence on May 1, 2007. ( Id.) On May 7, 2007, Defendant took out a homeowner's insurance policy, Policy No. 981281476331, issued by Plaintiff. (Comp. ¶ 9; Ans. ¶ 9.) The Policy initially covered the Ward Residence from May 7, 2007 to May 7, 2008; Defendant renewed the policy twice for coverage from May 7, 2008 to May 7, 2010. ( Id.)
The Policy is divided into two Sections. Section I provides property coverage, and Section II provides liability coverage. (Compl. Ex. A.) Section I is further subdivided into four separate Coverage sections. Coverage A provides coverage for the dwelling, Coverage B provides coverage for other structures, Coverage C provides coverage for personal property, and Coverage D provides coverage for loss of use.
The core of the Policy is in Section I-Perils Insured Against, which provides as follows:
(Compl. Ex. A at 8-9.) The Policy does not define “direct physical loss.” However, it does define “Property Damage” as “physical injury to, destruction of, or loss of use of tangible property.” ( Id. at 2.)
Section I-Exclusions sets forth twelve different categories of exclusions. In relevant part, it provides as follows:
( Id. at 10-12.)
Coverage C provides for coverage against “direct physical loss to the property described in Coverage C caused by any of the following perils, unless the loss is excluded in Section I-Exclusions.” ( Id. at 9-10.) The Policy then lists seventeen specific perils such as fire and theft. None of these perils is relevant to the present case. ( Id.)
Coverage D provides for the payment of additional living expenses. Specifically, it provides that “[i]f a loss covered under Section I makes that part of the ‘residence premises' where you reside not fit to live in, we cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living.” ( Id. at 4.)
2. The Insurance Claim
The Ward Residence contains walls that were constructed using sheets of Chinese drywall (“the Chinese Drywall”). (Compl. ¶ 10; Ans. ¶ 10.) Over time, the Chinese Drywall in the Ward Residence has released sulfuric gas into the Residence. ( See generally Hejzlar Dec.) On August 10, 2009, Defendant filed a lawsuit in the Circuit Court for the City of Norfolk against several development and supply companies, alleging that they constructed his home with “inherently defective” drywall. The suit is captioned Ward v. Peak Building Corp. In relevant part, Defendant alleges that the Chinese Drywall in his home “emits various sulfide gasses and/or other toxic chemicals through ‘off-gassing’ that create noxious odors and cause damage and corrosion.” Ward v. Peak Building Corp., No. CL09-5167, Compl. 11 (Va. Cir. Ct. filed Aug. 10, 2009). Defendant further claims that the “compounds emitted by the drywall at issue are also capable of ... harming the health of individuals.” Id. 12. The case is currently part of a multi-district litigation pending in the Eastern District of Louisiana. See In re Chinese-Manufactured Drywall Prods. Liability Litig., MDL No.2047, 626 F.Supp.2d 1346 (J.P.M.L.2009).
While this state court lawsuit was pending, Defendant began to prepare an insurance claim. Defendant retained Dr. Zdenek Hejzlar, an occupational safety and health engineer, to inspect his home. On August 26, 2009, Dr. Hejzlar personally inspected the Ward Residence. (Compl. ¶¶ 13-14; Ans. ¶¶ 13-14.) Additionally, Dr. Hejzlar instructed an investigator to perform a second inspection of the Ward Residence on August 31, 2009. (Compl. ¶ 18; Ans. ¶ 18.) Dr. Hejzlar found, inter alia, that the level of sulfur gas inside the Ward Residence was twenty times higher than ambient levels; that there was “widespread impact to susceptible metal surfaces (e.g. copper, silver, chrome) such as HVAC coils, electrical wiring in outlets, ground wires and other metallic surfaces”; and that the residents of the home should be relocated to assure their safety. (Hejzlar Dec.)
On September 23, 2009, Defendant filed a claim with Plaintiff, seeking coverage for damages related to the Chinese Drywall. (Compl. ¶ 26; Ans. ¶ 26.) On January 7, 2010, Plaintiff sent Defendant a letter denying coverage for his claim. (Compl. Ex. C.) Plaintiff also informed Defendant that it would be filing suit in this court “seeking a declaratory judgment that your policy does not provide coverage for your claim.” ( Id.)
3. Present Suit
On January 7, 2010, Plaintiff filed a declaratory judgment action in this Court...
To continue reading
Request your trial
-
Elegant Massage, LLC v. State Farm Mut. Auto. Ins. Co.
...destruction, if a plaintiff can show a distinct and demonstrable physical alteration to the property. See e.g., TRAVCO Ins. Co. v. Ward , 715 F. Supp. 2d 699, 708 (E.D. Va. 2010), aff'd , 504 F. App'x 251 (4th Cir. 2013) (noting that "physical damage to the property is not necessary, at lea......
-
Huntington Ingalls Indus. v. Ace Am. Ins. Co.
...at 55 (gasoline odor); Farmers Ins. Co. of Or. v. Trutanich, 858 P.2d 1332, 1336 (Or. Ct. App. 1993) (methamphetamine odor); TRAVCO Ins. Co., 715 F.Supp.2d at 707-10 releasing toxic gas). These cases demonstrate that in order for something intangible to cause a direct physical loss, the cau......
-
Cordish Cos. v. Affiliated FM Ins. Co.
...eliminated or destroyed’ the property's functionality or rendered it ‘useless or uninhabitable.’ ") with TRAVCO Ins. Co. v. Ward , 715 F. Supp. 2d 699, 701, 708-09 (E.D. Va. 2010) (finding that a building suffered a "direct physical loss" because it had been rendered uninhabitable by toxic ......
-
In re Chinese Manufactured Drywall Products Liab. Litig..This Document Relates To Cases: 09–6072, 09–7393, 10–688, 10–792, 10–929, 10–930, 10–931, 10–1420, 10–1693, 10–1828.
...of Chinese-manufactured drywall in a home constitutes a physical loss under a homeowners' insurance policy. In Travco Insurance Co. v. Ward, 715 F.Supp.2d 699 (E.D.Va.2010), the Eastern District of Virginia held that the plaintiffs' home suffered a “direct physical loss” due to the Chinese-......
-
Chapter 4
...First Associates, L.L.C. v. Continental Casualty Co., 817 F. Supp.2d 374 (S.D.N.Y. 2011). Fourth Circuit: TRAVCO Insurance Co. v. Ward, 715 F. Supp.2d 699 (E.D. Va. 2010) (ensuing loss not covered). Fifth Circuit: Bishop v. Alfa Mutual Insurance Co., 796 F. Supp.2d 814 (S.D. Miss. 2011). Si......
-
Business Interruption Insurance Claims Arising Out of Coronavirus/covid-19
...See id. at 410 n.5. [14] Id. at 413-14. [15] No. 04-1750, 131 F. App'x 823 (3d Cir. 2005). [16] Id. at 825. [17] Id. at 826-27. [18] 715 F. Supp. 2d 699 (E.D. Va. 2010). [19] Id. at 703. [20] Id. at 708. [21] Id. at 709-10 (alteration in original) (quoting Greenbaum v. Travelers Ins. Co., 7......