Insurance coverage for lead examined.
Landlords and building owners are increasingly facing claims arising from lead exposure. Each day the newspapers are filled with headlines such as "Boy Poisoned By Lead Paint To Get Up To $1.5 million." Who will pay these huge sums?
Landlords and building owners are finding they can call upon insurance policies issued years ago to pay for these lead exposure claims.
A variety of insurance policies provide landlords and owners with protection against lead exposure claims including comprehensive general liability insurance policies, umbrella and excess liability policies. These policies were intended to provide coverage for bodily injury and property damage claims landlords and owners face in lead cases.
Often these claims stem from activities which took place many years ago. Landlords and owners should make sure to provide notice to all insurance companies that sold them policies lead liabilities. Since 1. may be able to look to old policies to provide coverage for lead cases, they should perform a diligent search for insurance policies and make sure that no policies are discarded in the course of document destriction.
The Pollution Exclusion
While it may seem obvious to most that lead is not a "pollutant, " insurance companies attempt to avoid their contractual obligations by arguing that the "pollution exclusion" bars coverage for lead elms. Numerous courts nationwide have rejected this argument.
Most recently, a state court in New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of held: There is nothing in the [pollution] exclusion clause exclusion clause n → cláusula de exclusión
exclusion clause n → clause f d'exclusion
exclusion clause exclude n from which it can be inferred that the provision was drafted with a view toward limiting liability for lead paint related injury. The definition of pollutant in the policy makes no reference to lead, paint, or lead based paint. " Generali-U.S. Branch v. Caribe Realty Corp., No. 25499/91 (S. Ct., April 26, 1994).
In March, another New York trial court held that the owner of a building sued by a demolition worker exposed to lead-based fumes fumes
odorous gases and other volatile materials; inhalation of irritating fumes causes coughing and, if sufficiently severe, irreversible pulmonary edema. could call upon his insurance company. In Schumman v. State of New York, No. 84605 (Ct. Cl. March 30, 1994), the court held that the pollution exclusion clause did not bar claims arising from lead exposure: "Here the failure to provide claimant with an appropriate protective device gives rise to exposure - covered by the policy and not excluded by the pollution exclusion clause. Similarly, in Continental Casualty Co. v. Rapid- American Corp., the New York Appellate Division In several jurisdictions, the Appellate Division is the name of a court, or division of a court, that hears appeals from lower courts.
Thus, the Appellate Division found that a mere "tangential tan·gen·tial also tan·gen·tal
1. Of, relating to, or moving along or in the direction of a tangent.
2. Merely touching or slightly connected.
3. impact on any |environment'" is not sufficient to trigger the pollution exclusion. The New York Court of Appeals, affirming the Appellate Division's decision, emphasized that the exclusion is intended to: "exclude coverage for envirommental pollution. The terms used in the exclusion to describe the method of pollution - such as "discharge' and "dispersal" - are terms of art in environmental law used with reference to damage or injury caused by disposal or containment of hazardous waste Hazardous waste
Any solid, liquid, or gaseous waste materials that, if improperly managed or disposed of, may pose substantial hazards to human health and the environment. Every industrial country in the world has had problems with managing hazardous wastes. ."
Similarly, in Gould, Inc. v. Continental Casualty Co., No. 3529 (Pa. Ct. C.P. July 26, 1991), the court held that the so-called sudden and accidental pollution exclusion did not bar coverage for a claim involving workplace exposure to lead fumes and dust because the pollution exclusion applied only to occurrences outside the workplace.
In A-1 Sandblasting Sandblasting or bead blasting is a generic term for the process of smoothing, shaping and cleaning a hard surface by forcing solid particles across that surface at high speeds; the effect is similar to that of using sandpaper, but provides a more even finish & Steancleaning Co. v. Baiden, 53 Or. App. 890, 632 P.2d 1377 (1981), passing vehicles were damaged by the overspray Overspray refers to the application of any form of paint, varnish, stain or other non-water soluble airborne particulate material onto an unintended location. This concept is most commonly encountered in graffiti, auto detailing, and when commercial paint jobs drift onto unintended of paint used while the policyholder was spray-painting a bridge. The exclusion excluded liability for: "Damage to property arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants... "
The insurance company denied coverage for the policybolder's liability for the damage to the cars on the ground that paint is either a liquid, or alternatively, because of its chemical composition, an acid or alkali, and thus was excluded by the above-cited policy language. The lower court disagreed, finding that paint "in common understanding" is not thought to be an irritant ir·ri·tant
Causing irritation, especially physical irritation.
A source of irritation.
n 1. an agent that causes an irritation or stimulation.
2. , contaminant contaminant /con·tam·i·nant/ (kon-tam´in-int) something that causes contamination.
something that causes contamination. or a pollutant. The Oregon Supreme Court The Oregon Supreme Court (OSC) is the highest state court in the U.S. state of Oregon. The only court that may reverse or modify a decision of the Oregon Supreme Court is the Supreme Court of the United States. affirmed, stating that a reading of the above list of substances, "is not so clear as to cause a reasonable person in W& position of the insured to believe that paint was one of the substances referred to in the exclusion... "
The Absolute Pollution Exclusion
In 1986, the insurance industry revised the Comprehensive General Liability policy to include a new pollution exclusion that has been nicknamed the "absolute pollution exclusion."
The only highest state court which has ruled on the issue rejected application of the so-called absolute pollution exclusion to bar coverage for lead claims. In Atlantic Mutual Insurance Co. v. McFadden, 413 Mass. 90, 595 N.E.2d 762 (1992), the Supreme Court of Massachusetts held that in-place lead paint is not a "pollutant" under the pollution exclusion. Indeed, the McFadden lower court had ruled that, "there is no language in the policy which even suggests that lead in paint, putty, or plaster is a |pollutant' within the meaning of the provision." The Massachusetts Supreme Court similarly rejected the insurance company's argument. The court concluded: "There simply is no language in the exclusion provision from which to infer that the provision was drafted with a view toward limiting liability for lead paint-related injury. The definition of "pollutant" in the policy does not indicate that leaded materials fall within its scope."
In Mount Vernon Fire Insurance Co. v. Valencia, No. 92 CV 1253 (E.D.N.Y. July 29, 1993), the judge awarded sanctions and attorney's fees to the policy-holder on the ground that the insurance company had asserted an insupportable claim that an absolute pollution exclusion barred coverage for claims arising from lead poisoning lead poisoning or plumbism (plŭm`bĭz'əm), intoxication of the system by organic compounds containing lead. . The judge state that "had [Mount Vernon's] counsel made the required inquiry into the law surrounding the pollution exclusion, he could not have come to the conclusion, consistent with minimal standards of professional competence, that the pollution exclusion would operate to exclude coverage of the [defendant in the underlying claim]."
Similarly, other courts have refused to read the term "pollutant" overbroadly. In West Am. Ins. Co. v. Tufco Flooring E., Inc., 104 N.C. App. 312, 409 S.E.2d 692 (1991), vapors were released by the material (styrene sty·rene
A colorless oily liquid from which polystyrenes, plastics, and synthetic rubber are produced. Also called vinylbenzene. monomer monomer (mŏn`əmər): see polymer.
Molecule of any of a class of mostly organic compounds that can react with other molecules of the same or other compounds to form very large molecules (polymers). resin) with which the policyholder resurfaced the floor of a Perdue Perdue may refer to:
The North Carolina Court of Appeals The North Carolina Court of Appeals is the only intermediate appellate court in the state of North Carolina. It is composed of fifteen members who sit in rotating groups of three. Judges serve eight-year terms and are elected in statewide non-partisan elections. affirmed the trial court's summary judgment ruling that there was coverage and that the exclusion was inapplicable in·ap·pli·ca·ble
Not applicable: rules inapplicable to day students.
in·ap , finding, among other things, that the flooring material containing styrene monomer resin is not a "pollutant" under the so-called absolute pollution exclusion. The court stated: "The common understanding of the word |pollute' indicates that it is something creating impurity im·pu·ri·ty
n. pl. im·pu·ri·ties
1. The quality or condition of being impure, especially:
a. Contamination or pollution.
b. Lack of consistency or homogeneity; adulteration.
c. , something objectionable and unwanted. The flooring material (styrene monomer resin) brought upon the premises by [the policyholder] was wanted. It was not impure im·pure
adj. im·pur·er, im·pur·est
1. Not pure or clean; contaminated.
2. Not purified by religious rite; unclean.
3. Immoral or sinful: impure thoughts. . When [the policyholder] purchased its CGL See Carrier Grade Linux. insurance, it understood |pollutant' in the same way that the Oxford English Dictionary Oxford English Dictionary
(OED) great multi-volume historical dictionary of English. [Br. Hist.: Caught in the Web of Words]
See : Lexicography defines |pollutant,' as an unwanted impurity, not as the raw materials which [the policyholder] purchased to do its job.
A few lower court decisions have applied erroneously the so-called absolute pollution exclusion to preclude coverage for lead claims. These cases were settled by the insurance companies on appeal so as to preserve the decisions below. See, Oates v. New York, 597 N.Y.S.2d 550 (Ct. Cl. 1993) absolute pollution exclusion barred coverage for in utero in utero (in u´ter-o) [L.] within the uterus.
In the uterus.
in utero adv. injury allegedly arising from ingestion ingestion /in·ges·tion/ (-chun) the taking of food, drugs, etc., into the body by mouth.
1. The act of taking food and drink into the body by the mouth.
2. of lead pigment in paint); Kaytes v. Imperial Casualty & Indem Go., No. 93-1573 (E.D. Pa. Jan. 7, 1994) (absolute pollution exclusion barred coverage arising from injury caused by lead pigment in paint).
The Lead Exclusion
In view of the potential liability arising from injuries caused by lead, a number of insurance companies have added lead exclusions to their policies. At least 22 commercial liability insurance companies selling property and casualty insurance in New York have filed for and have been granted approval to add a lead liability exclusion to insurance policies they sell in New York. At least another 18 requests for approval are currently pending.
One court has found that such lead exclusions can preclude coverage. In J. A. M. Assocs. of Baltimore v. Western World Ins. Co., 95 Md. App. 695, 622 A.2d 818 (1993), the Maryland appellate court A court having jurisdiction to review decisions of a trial-level or other lower court.
An unsuccessful party in a lawsuit must file an appeal with an appellate court in order to have the decision reviewed. held that a provision contained in a renewed policy excluding "all losses arising out lead paint poisoning" was valid. The policyholder argued that the addition of the lead exclusion in the renewed policy had not been brought to its attention. Ruling in favor of the insurance company, the court sum that the policyholder was under sufficient notice regarding changes in the policy given differences in the deductible, a change in the premium, and the fact that notice was given to an agent.
Other Policy Exclusions
The sistership exclusion is designed to bar coverage for product recalls. Insurance companies attempt to use this exclusion to bar coverage in lead paint cases. In Sherwin Williams v. Certain Underwriters at Lloyd's London, 813 F. Supp. 576, 587 (N.D. Ohio 1993), the court held that the sistership exclusion precluded coverage for abatement costs in the context of lead pigment in paint. Nevertheless, the court held there was still a duty to defend on the basis of earlier policies which potentially were triggered.
Insurance companies also try to use the owned product exclusion to avoid liability for lead paint cases. This exclusion is "based on the theory that liability policies are not intended to provide coverage for faulty workmanship, but rather for damage caused by the product to other property." See Stonewall stone·wall
v. stone·walled, stone·wall·ing, stone·walls
a. Ins. Co. v. Nat'l Gypsum gypsum (jĭp`səm), mineral composed of calcium sulfate (calcium, sulfur, and oxygen) with two molecules of water, CaSO4·2H2O. It is the most common sulfate mineral, occurring in many places in a variety of forms. Co.
Because products containing lead, such as paint containing lead pigment, generally work quite well, the own product/-business risk exception generally would not apply. In NL Industries, Inc. v. Commercial Union Ins. Co., Nos. 90-2124-25 (D.N.J. July 11, 1991), the court held that the business risk exclusion did not apply to injury caused by lead pigment in paint because the product, while inherently dangerous, was not defective.
Liability insurance policies provide coverage for lead cases. Where the bodily injury or property damage has occurred over many years, even though it is not visible, every policy for every policy year provides coverage. The pollution exclusion does not limit coverage for lead cases. Landlords and owners should aggressively seek coverage for their lead liabilities.