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Reliance Ins. Co. v. VE Corp.

United States District Court for the Eastern District of Pennsylvania

February 10, 2000, Decided ; February 10, 2000, Filed

CIVIL ACTION No. 95-538

Opinion

FINDINGS OF FACT AND CONCLUSIONS OF LAW

PETER B. SCUDERI

UNITED STATES MAGISTRATE JUDGE

February 10, 2000

Reliance Insurance Company ("Reliance" or "Plaintiff" or "Insurer") initiated this declaratory judgment action in January, 1995, requesting that this court determine [*2]  whether the comprehensive general liability ("CGL") renewal policy issued by Reliance to Vaporator manufacturer, VE Corporation ("VE" or "Defendant" or "insured"), covers a products liability claim for carbon monoxide poisoning asserted against VE by Mark and Marcia Moessner. A bench trial was held on December 7, 1999. In accordance with the following findings of fact and conclusions of law, the Court will enter judgment in favor of the Defendant and against the Plaintiff. Because we find the Total Pollution Exclusion ("T.P.E.") contained in the renewal policy to be contrary to the reasonable expectations of the insured, that provision is unenforceable under Pennsylvania law.

BACKGROUND

1. Reliance is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, which is engaged in the insurance industry.

2. Golodetz Corporation ("Golodetz"), a Delaware Corporation with its principal place of business located in New York City, was the parent company of VE.

3. VE was a corporation organized and existing under the laws of Delaware with its principal place of business in Arlington, Texas, at all times relevant to this action. VE was in the [*3]  business of manufacturing a direct fire steam generator known as the Vaporator, which was used to cure and strengthen concrete. (Defendant's Proposed Findings of Fact No. 3; Plaintiff's Proposed Findings of Fact No. 3). 2

4. MLW Services, Inc. ("MLW") is a New York insurance brokerage firm who won the bid put out by Golodetz for a comprehensive insurance program for Golodetz and its subsidiaries. MLW, in turn, sought quotes from Reliance for the Golodetz accounts. MLW has approximately seventy five employees and is organized into several departments, including [*4]  National Accounts; Commercial Lines; Personal Lines; and Claims.

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2000 U.S. Dist. LEXIS 1819 *

RELIANCE INSURANCE COMPANY v. VE CORPORATION 1

Disposition:  [*1]  Plaintiff's claim for declaratory judgment denied. Judgment entered in favor of Defendant and against Plaintiff.

CORE TERMS

coverage, renewal policy, insured, original policy, product liability, carbon monoxide, reasonable expectation, subsidiaries, pollution exclusion, manufactured, products, Renewal, premium, endorsement, notice, reduction, pollutants, emission, changes, bodily injury, sophisticated, insurance coverage, insurance policy, unilaterally, negotiate, bodily injury claim, conclusions of law, property damage, expectations, declaratory

Civil Procedure, Diversity Jurisdiction, Amount in Controversy, Determination, General Overview, Preliminary Considerations, Venue, Multiparty Litigation, Insurance Law, Policy Interpretation, Reasonable Expectations, Motor Vehicle Insurance, Cancellation & Renewal, Claim, Contract & Practice Issues, Noncommercial Insureds, Evidence, Burdens of Proof, Preponderance of Evidence, Estoppel & Waiver, Burdens of Proof, Equitable Estoppel, Liability & Performance Standards, Notice to Insurers