Brian Margolies, Partner, Traub Lieberman Straus & Shrewsberry LLP
The United States District Court for the Southern District of Florida has held on several occasions that the pollution exclusion applies to Chinese drywall claims. See, e.g., CDC Builders, Inc. v. Amerisure Mut. Ins. Co., 2011 U.S. Dist. LEXIS 114509 (S.D. Fla. Aug. 16, 2011); Gen. Fid. Ins. Co. v. Foster, 2011 U.S. Dist. LEXIS 103618 (S.D. Fla. Mar. 24, 2011). In its recent decision Colony Ins. Co. v. Total Contracting & Roofing, Inc., 2011 U.S. Dist. LEXIS 120269 (S.D. Fla. Oct. 18, 2011), the Southern District of Florida added to this line of cases by holding that a hazardous materials exclusion applied to drywall claims. In doing so, the court rejected the insured's argument that application of the exclusion rendered coverage illusory.
The insured, Total Contracting, was sued for having allegedly installed defective drywall in a home that it renovated. Underlying plaintiffs alleged that the drywall emitted sulfides and other noxious gases, resulting in property damage and bodily injury. Total Contracting's insurer, Colony, denied coverage under a series of consecutively renewed general liability policies on the basis of a hazardous materials exclusion, applicable to bodily injury or property damage "which would not have occurred in whole or in part but for the actual or threatened discharge, dispersal, seepage, migration, release or escape of 'hazardous materials' at any time." "Hazardous materials" was defined as "'pollutants', lead, asbestos, silica and materials containing them." Thus, the exclusion tracked the language of a total pollution exclusion, but applied to a broader range of substances.
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