August 25, 2009
Written By Attorneys: Robert T. Horst and Mark H. Rosenberg
This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.
The United States District Court for the Southern District of Florida has recently reaffirmed that a standard pollution exclusion in a commercial general liability policy excludes coverage for liability claims based upon an alleged exposure to viral contaminants and/or microbes. In First Specialty Ins. Corp. v. GRS Management Associates, Inc., No. 08-81356-CIV, 2009 WL 2524613 (S.D. Fla. Aug. 17, 2009), the Court examined whether two insurers had the duty to provide coverage on CGL policies for a lawsuit alleging injury from exposure "to the dangerous, hazardous, and unsafe sanitary conditions" of a swimming pool. Although the underlying complaint apparently failed to specify why the swimming pool was allegedly unsafe, record evidence established that the lawsuit concerned the purported contraction of a viral infection from ingesting swimming pool water contaminated by the virus.
In examining whether these insurers had a duty to provide defense and/or indemnification for the underlying lawsuit, the Court examined the insurance policies at issue, which consisted of two primary commercial general liability policies and an excess liability policy. All of these policies contained standard pollution exclusion clauses, and defined the term "pollutant" to include contaminants. The Court observed that in a number of previous decisions, Florida courts have interpreted similar pollution exclusions to encompass contaminants and microbes. As the record evidence established that "the substance in the swimming pool was a viral contaminant and a harmful microbe," the Court held that the pollution exclusions applied, and that the insurers therefore had no duty to defend and/or indemnify the policyholders with regard to the underlying lawsuit. Accordingly, the Court granted the insurers' motions for summary judgment with regard to these issues.
The matter is of relevance to the pending "Chinese drywall" cases that have recently been filed across the United States, which are generally based upon the theory that such drywall emits unpleasant and potentially hazardous vapors. Even when policyholders faced with such lawsuits have retained liability insurance policies containing standard pollution exclusions, policyholders may have an argument for coverage under these policies in states that have limited the application of such exclusions to so-called "traditional" pollution, such as chemicals emitted from factories. However, as reflected by cases such as GRS Management, Florida courts have not adopted this restrictive approach to interpreting pollution exclusions, making it unlikely that such courts will interpret standard CGL policies to provide coverage for Chinese drywall litigation.
While Florida is by no means the sole venue for Chinese drywall lawsuits, a significant number of Chinese drywall cases have been brought in Florida and involve Florida defendants. The continued willingness of Florida courts to interpret and enforce pollution exclusions in a manner consistent with their plain language should therefore help limit the potential exposure of liability insurers arising from this growing wave of litigation.
