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TRAVCO Ins. Co. v. Ward

United States District Court for the Eastern District of Virginia, Norfolk Division

June 3, 2010, Decided; June 3, 2010, Filed

Civ. No. 2:10cv14



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. PP 1, 8-9.) Defendant's residence contains walls that were constructed using sheets of drywall manufactured  [*701]  in China. (Compl. P 10.) On September 23, 2009, Defendant  [**2] reported an insurance claim to Plaintiff seeking coverage for damages allegedly caused by this Chinese drywall. (Compl. P 26.) On January 7, 2010, Plaintiff denied Defendant's claim and filed a declaratory judgment action in this Court. (Compl. P 32; see also Compl. Ex. C.) 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 # 981281474633 1 ("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:

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715 F. Supp. 2d 699 *; 2010 U.S. Dist. LEXIS 54387 **


Subsequent History: Related proceeding at Nationwide Mut. Ins. Co. v. Overlook, LLC, 2010 U.S. Dist. LEXIS 60300 (E.D. Va., June 17, 2010)

Question certified by Travco Ins. Co. v. Ward, 468 Fed. Appx. 195, 2012 U.S. App. LEXIS 4397 (4th Cir. Va., 2012)

Affirmed by Travco Ins. Co. v. Ward, 2013 U.S. App. LEXIS 1066 (4th Cir. Va., Jan. 15, 2013)

Prior History: In re Chinese-Manufactured Drywall Prods. Liab. Litig., 2010 U.S. Dist. LEXIS 41190 (E.D. La., Apr. 27, 2010)


Drywall, coverage, corrosion, latent defect, pollutant, argues, physical loss, ensuing loss, faulty, insured, provide coverage, damages, losses, sulfur, gases, contaminant, ensuing, declaratory judgment, removing, televisions, property damage, garage door, chemicals, replacing, parties, causes, pollution exclusion, claim for damages, dispersal, metallic

Civil Procedure, Declaratory Judgments, Federal Declaratory Judgments, General Overview, Judgments, Summary Judgment, Evidentiary Considerations, Entitlement as Matter of Law, Preliminary Considerations, Federal & State Interrelationships, Insurance Law, Procedure, Evidence & Trial, Burdens of Proof, Claim, Contract & Practice Issues, Policy Interpretation, Exclusions, Ambiguous Terms, Construction Against Insurers, Unambiguous Terms, Ordinary & Usual Meanings, Plain Language, Property Insurance, Exclusions, Faulty Workmanship, Erie Doctrine, Pollution, Ensuing Loss Provisions