-TEM Dragas Management Corporation v. The Hanover Insurance Company et al, No. 2:2010cv00547 - Document 93 (E.D. Va. 2011)
Court Description: OPINION granting Citizens' and Hanover's Motion, determining that recovery under the 2007-2008 and 2008-2009 Citizens CGL policies and all the Hanover umbrella policies is barred by the absolute pollution exclusion. Signed by District Judge Rebecca Beach Smith and filed on 8/8/2011. (rsim)
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FILED UNITED STATES DISTRICT COURT EASTERN DISTRICT OP VIRGINIA AUG - 8 2011 Norfolk Division clerk. u.s district court no: -'"o k va DRAGAS MANAGEMENT CORPORATION, Plaintiff, CIVIL ACTION NO: V. HANOVER INSURANCE COMPANY, CITIZENS 2:10cv547 and INSURANCE COMPANY OF AMERICA, Defendants. OPINION This case insurers', and comes Citizens Hanover 31. For insurers' reasons court Company Company ("Motion"), the the Insurance Insurance Summary Judgment # before on of America ("Hanover"), follow, the defendant ("Citizens") Motion filed February 1, which the for 2011. Partial See Docket court GRANTS the Motion. I. This Chinese drywall Cromwell 1 The Park court previous No. Opinion at has once at two Salem 2:10cv547, See F. concerns developments ("Cromwell recounted occasions. July 21, 2011) ; No. 2:O9CV185, again the 2d the Park") facts Dragas Supp. in and Corp. 2011 installation Hampton underlying Mgmt. , the v. W.L. The Roads area, Hampshires this case Hanover 2982097 Dragas Mgmt. Corp. v. Builders Mut. F. Supp. 2d , 2011 W.L. 2473263 June of on Ins. (E.D. at two Co. , Va. Ins. Co., (E.D. Va. 13, 2011). Therefore, the court will only briefly summarize those facts that have been set out in depth before and instead will focus on the facts that are particularly important to the instant Motion. Greenbriar ("The built Dragas by contractor, Blaine DMC Corp. provision at both Management executed a and and manufactured in seventy-four a at China. (74) The of and six (6) The the of the homes, at Cromwell Porter- contractor, in and general with all drywall Hampshires Chinese the drywall drywall the for units Porter-Blaine Cromwell drywall were As agreement local of developments ("DMC"). subcontract Some installed housing Corp. installation developments. Hampshires These ("Porter-Blaine"), the procured Hampshires"). was Park installed sixty-eight (68) at was in The Park. A. The Chinese approximately than it drywall three representative caused property metal and components, electronics. experienced air a drywall, with the samples damage For of home. addition, All wiring, parties the was homes HVAC of By rate drywall domestic example, coils. blackening smell. of to rate levels the many agree homeowners the a result, and corroding in piping, Chinese drywall homes (30%) with percent of metal reported source copper percent pitting of greater As wiring, with of objects bad, the of the domestic (1%). copper a sulfur times damaging than one corrosion that by thirty contrast, less (375) houses over elemental drywall. coils, exhibited and of seventy-five including failure Chinese In hundred failure conditioning contained Homes piping, inside the rotten-egg corrosion and damage was reduced sulfur gases, including hydrogen disulfide, carbon disulfide, and carbonyl sulfide.2 DMC early discovered 2009 damage and to the refused, and removing a demand awarded of for the expenses.4 into Virginia is "caused homes where sulfur gases Final that in The remediate drywall. drywall, the parties cost its a found then judgment on with November then on June filed 26, at 2009, the its right Circuit 2010. On fault post-judgment 12, cost, remediation. exercised the structural DMC Porter-Blaine plus own affected of all in Porter-Blaine at Porter-Blaine damages, in the Final property it was convert Court The and interest, to for entirety damage actually Order, the at sulfur agree to certain but do not other the of 7. In gases See were summaries damage See words, to Docket DMC discharged, of how the # 86, does not dispersed, or Trial costs of Exhibits 72 remediating and the 89 are both developments. at the as infra Section III.D. DMC's accurate other the Chinese components agree formed or released. H that of Pretrial Order that installed" released from the drywall. 3 the drywall currently outstanding. were Pretrial concede Chinese remediation the DMC Beach 2 The parties agree the the arbitrator $4,900,000 judgment drywall replace the the Porter-Blaine arbitration against arbitration City the replacing 2010, and and with and the damaged personal property.3 DMC costs, that undertook recovery October 7, the DMC for seeking problem requested homes and components, the drywall 4 Citizens and Hanover defended Porter-Blaine at the arbitration. B. During the relevant commercial excess general liability time period, liability (umbrella) insured legally injury' or obligated 'property See Mem. Supp. Ex. 1-B, Ex. 2008-2009 triggered 1-C by & "an . "occurrence" Ex. to J., 1-D CGL Id. damages which Ex. 1, this an umbrella CGL policy, that the insured of 'bodily 2006-2007, policy in same policy a & only * coverage Id. An continuous or general had 1-A, was the including the Ex. 2007-2008 coverage period." "an accident, applies." Decl., place CGL the because Makimoto takes Citizens that The insurance The substantially The sums (2005-2006, during to as policies). defined as and Porter-Blaine's "those pay damage' . exposure conditions." for %occurrence' . is to Summ. Citizens territory' repeated Mot. carried both was provided by Citizens.5 Porter-Blaine becomes insurance policy. policy number ZBR 7905525, policy (CGL) Porter-Blaine harmful $1,000,000 per occurrence limit and a $2,000,000 aggregate limit.6 Porter-Blaine's was 5 provided by Porter-Blaine the coverage 2008-2009, but umbrella Hanover.7 carried years of each of a policy, The policy number umbrella policy separate 2005-2006, the policies policy with 2006-2007, has the same UHR 7917898, insured Porter- Citizens during 2007-2008, and policy number. 6 The policy did not carry a deductible. 7 Similar to its policies with Citizens, with Hanover were individual policies Porter-Blaine's policies for the policy years Blaine for "the 'ultimate net limit'8 because of 'bodily injury' this insurance applies," the policy MakimotO 2008-2009 as "an period. Decl., loss' or 2-D, Mem. Supp. 2-E, including substantially the & Mot. 2-F liability 'retained to which continuous had a J. , or is repeated conditions, Id. Ex. 2, 2007-2008, "Occurrence" same general harmful policy Summ. (2006-2007, in bodily injury or property damage." excess the 'property damage' Hanover umbrella policies).9 accident, of which is caused by an occurrence during See Ex. in excess & defined exposure to which results The Hanover umbrella $10,000,000 per occurrence limit and a $10,000,000 aggregate limit. Both the exclusions 2007-2008 the from and Hanover 2005-2006, the 8 Citizens and Hanover coverage. 2008-2009 umbrella Importantly Citizens policies, 2006-2007, policies CGL for this policies, contained 2007-2008, contained and an as case, well absolute 2008-2009, certain the as all pollution which all had same policy number. "Retained 'underlying MakimotO limit" is defined insurance.'" Decl., Ex. See 2-D, as Mem. 2-E, & "the Supp. 2-F available Mot. Summ. (2006-2007, limits J., Ex. 2007-2008, of 2, & 2008-2009 Hanover umbrella policies). 9 The 2005-2006 differently, Hanover umbrella insuring Porter-Blaine policy for is "those worded sums slightly in excess of underlying insurance that any insured becomes legally obligated to pay as damages" during the policy period which are "caused by an occurrence." Decl., has Ex. 2-C previously material effect 2:09cvl85, 2011 See Mem. (2005-2006 held on W.L. Supp. Hanover that the Mot. the content 2473263 at Summ. umbrella difference of the *3, n. J. , policy). in policy. 8. Ex. 2, Makimoto The wording See court has Dragas, no No. exclusion. The two Citizens policies in question excluded from coverage: (1) "Bodily not injury" have Any loss, at others for, way Claim respond or testing removing, 1-D thermal is fumes, acids, materials & or or escape alkalis, 2005-2006 insured up, the or remove, or effects for behalf damages any Ex. 1, "any of way up, detoxifying responding Decl., Citizens CGL including and waste. gaseous vapor, Waste policy 1-C Any liability contributed to or in expense any way by threatened discharge, release, time escape or the dispersal, existence in any location. arising of actual, seepage, of alleged or or migration, pollutants at soot, Id. excluded out or includes coverage: (A) & policies). liquid, smoke, Ex. reconditioned or reclaimed." umbrella to "pollutants." Makimoto solid, a because cleaning treating, in chemicals Hanover or neutralize, on effects of, 2008-2009 as or monitoring, contaminant, to be recycled, The J., defined irritant the any assess or containing, Summ. (2007-2008 "Pollutants" or statutory clean or authority neutralizing or that to, by for, or assessing Ex. the or suit governmental Mot. order detoxify "pollutants"; Supp. for discharge, release monitor, treat, any of Mem. but would any time. in See part migration, requirement test contain, or or which threatened demand, regulatory of damage" cost or expense arising out of any: Request, (b) whole or seepage, "pollutants" (a) in alleged dispersal, (2) "property occurred actual, of or any from (B) Any loss, (1) cost or expense arising out of any: Request, demand, regulatory others test contain, order requirement for, monitor, treat, (2) pollutants; Claim or of removing, or See Mem. Supp. (2005-2006 "any alkalis, agents Mot. for, liquid, but not limited or J., 2006-2007, excluded (1) "Bodily not dispersal, of (2) See Mem. 2-E, & 2, Supp. 2-F Mot. or up, detoxifying way respond Makimoto to, Decl., is irritant vapor, materials, or soot, Ex. 2-C defined as containment, fumes, hazardous acids, biological materials to 2008-2009 Hanover and "property in cost whole or seepage, be recycled, umbrella damage" or part which but threatened migration, would for the discharge, release or escape at any time. or Summ. (2006-2007, cleaning "Pollutants" smoke, alleged "pollutants" "Pollution a Id. occurred actual, of because coverage: injury" have any thermal 2007-2008, from behalf of pollutants. includes reconditioned or reclaimed." policies in Ex. or to Waste or the effects treating, or radioactive waste. remove, damages monitoring, the effects gaseous on for containing, Summ. chemicals, The or Hanover umbrella policy). solid, including by neutralizing, or assess up, or neutralize, or assess authority testing or or insured or suit governmental statutory any clean detoxify in any way respond to, of or that expense". J., Ex. 2007-2008, 2, & Makimoto 2008-2009 Decl., Hanover Ex. 2-D, umbrella policies). gaseous "Pollutants" or soot, vapor, thermal fumes, includes materials Id. is defined irritant acids, to be or Any loss, "any containment, alkalis, recycled, "Pollution cost or expense" as solid, liquid, including smoke, chemicals and waste. Waste reconditioned or reclaimed." is defined as: cost or expense arising out of any: a. Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of pollutants; or b. Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, way detoxifying respond to, or or neutralizing, assess in any effects the or of "pollutants". Id. Overall, way10 and then, have the policies define similar elements in "pollutants" each in the same absolute pollution exclusion. C. On November 3, diversity The DMC jurisdiction, arbitration 10 2010, seeking award against 2005-2006 Hanover "radioactive categories materials" of filed to suit in enforce Porter-Blaine's umbrella and "pollutants," but this court the Citizens definition biological addition agents" neither application in this case nor any material effect definition of pollutant, and thus all the definitions interpreted in the same way. under $4,900,000 insurers. policy's "hazardous this adds as has on the will be and Hanover responded filed on February 25, the instant February 17, 2011.1X Motion 2011, on and February the 1, 2011. insurers DMC replied on The Motion is now ripe for consideration. II. Summary record as a nonmoving material as a judgment whole party, fact matter Liberty Lobby, that (4th Cir. 1985). rest "specific, v. on 623-24 the must be M Med. Fed. 477 v. Supplies U.S. facts a is is in McNallen 2011, of the Serv., form of 477 U.S. Inc. v. genuine P. 56 (c) ; (1986); but 763 for must give the 477 and of judgment Anderson F.2d v. Floor 604, 610 summary judgment instead rise at exhibits 317, to show to a that genuine 62 F.3d 619, reasonably U.S. the issue nonmovant must could the to Terry's (In re McNallen), fact] Anderson, favorable Inc., that In essence, Catrett, & alone, viewing entitled 248-50 Indus., court, no Civ. 242, a most party R. exist [trier party. presented 11 On May 27, moving 1995). which Celotex Corp. the Hagan v. non-moving light there pleadings material "on that when A party opposing a motion (4th Cir. evidence the Burlington the triable issue." in See Inc., Inc. may not and law. Fashions, appropriate finds and of is 252. present find" Such for facts sworn affidavits. 324 (1986); see also M & Pleasant Valley Hosp., this court granted Citizens' Inc., and Hanover's Motion for Leave to Submit Recently-Decided Authority in Further Support ## 76, of 81. Motion for Partial Summary Judgment. See Docket 981 F.2d may not 160, not be 163 (4th Cir. defeated by 1993) evidence sufficiently probative."' ("A motion for summary judgment that is 'merely colorable1 (quoting Anderson, 477 U.S. or at 'is 249- 50)) . On summary judgment, and determine 249. from Instead, Zenith facts in party. Corp., a element 475 Anderson, light most 574, to rebut a result "[T]he plain language of essential will bear the 322; see also (4th Cir. sufficient to that burden Felty v. 1987) ... . of . summary Rule against a to establish party's case, proof at district prevent from proceeding to trial." 10 party on Co., 818 have Ltd. motion v. who which when of unsupported to an party U.S. F.2d 1126, an the fails that 477 a with mandates existence (citing Celotex, the However, Celotex, courts 'factually 323-24)). and to judgment 56(c) the trial." Graves-Humphreys (finding to . (1986). at inference Co., defendant's in U.S. favorable Indus. 587-88 evidence 477 permissible Elec. U.S. judgment to "weigh the any will showing defenses' the Matsushita plaintiff summary obligation draw evidence appropriate. of See is not matter." will by a the court sufficient make of the Radio failure truth court underlying the nonmoving entry the the at 1128 "affirmative claims 477 U.S. and at III. Citizens judgment, for the the seeking periods Hanover costs and a 2007-2008 policies, remediating absolute have declaration of umbrella of Hanover pollution damage the homes the exclusion insurer; should is (2) be caused exclusion in considers policy to and, seepage, if the whether so, migration, with is whether the drywall whether there release or for the argue sulfur was a a escape" the coverage for gases construed the (1) the unreasonable and (3) there or release Virginia is law, "discharge, the is of this ambiguous "pollutant" of from against and by of that contentions: exclusion was the discharge, required the all prevents coverage; any dispersal, analysis as judgment substantively of policies the homes because three be summary CGL well insurers reduced should favor evidence of court turns the and Under then by as the to clearly ambiguous pollutants. first and partial Citizens of The responds construed insufficient recovery DMC the the 2008-2009, exclusion. non-ambiguous drywall. for the property damage is defective that and bar exclusion to moved and under the dispersal, pollutant in question. A. Turning first initially determine different policies to the issue whether may be all of ambiguity, of construed 11 the the court exclusions together or must in the if any substantive difference individually. as the all question that umbrella is would the excluded have is and all occurred of in is the whole discharge, release or escape 'pollutants' Hanover umbrella arising out alleged or release, location." J., Ex. policy) existence Ex. Hanover 2, e.g., 2-D, Decl., (emphasis added). in 2-F policies) 2-C Thus, Mot. harm is not but instead the exclusion limited includes dealing to "any with to (2005-2006 which actual, 2005-2006 expense actual, migration, time in any J., Summ. Mem. that Ex. 2, 2007-2008, Supp. Mot. Hanover & Summ. umbrella the 2005-2006 Hanover policy in "bodily injury" liability causation 12 any (2006-2007, Hanover the by at & policy or pollutants Supp. no migration, the seepage, question is broader than the other absolute the seepage, way is one the liability any umbrella damage' for time," well provide dispersal, Mem. Ex. but any as there The vproperty "[a]ny to of 2-E, umbrella Makimoto thus policies part at excludes discharge, Compare, Decl., 2008-2009 or issue, 2005-2006 dispersal, contributed threatened escape MakimotO policy or or threatened the interpreted Hanover and other injury' or or at 2008-2009 language, alleged of be policies language "'Bodily of to interpreted together. different Where them CGL same they may be policy. not Citizens 2007-2008, contain contains what two 2006-2007, policies, that The requires or exclusions, or "property damage" expense." appears because to The be part of materially the same, for any the rest whole because injury of or the in policies part" of initial matter, by may excluded under 2005-2006 all any policy way" coverage "actual, of injury in policy, the then the if an as injury would an various policies, it "in threatened" concludes, because, all while caused or court of coverage pollutants, exclusions language umbrella for the the by denies alleged, together, standard Hanover in deny considered the Hanover Therefore, that be to the pollutants. policies be 2005-2006 "contributed release the the is except certainly so excluded under that policy given its greater breadth. B. Virginia law interpretation of is well-settled insurance with contracts and regard to exclusions, the and this court sitting in diversity is bound to apply it.12 The of interpretation law. Group, L.L.C., contract that of Bentley is a contract Funding 609 S.E.2d construed as were not included Holyfield, 313 S.E.2d presents a L.L.C. v. Group, 49, 53 written, by 396, the 398 {Va. without SK & 2005) . adding parties. {Va. question R The terms Wilson 1984) . v. When the terms in a contract are clear and unambiguous, the contract is construed according to its plain meaning. Bridgestone/Firestone, Inc. v. Prince William Square Assocs. , 463 S.E.2d 661, 664 (Va. 1995) . "Words that the parties used are normally given their usual, ordinary, and popular meaning. No word or clause in the contract will be treated as meaningless if a reasonable meaning presumption 12 See that Erie R.R. (establishing that Co. can be the parties v. federal given to Thompkins, courts under diversity jurisdiction). 13 it, have apply and not 304 there used U.S. substantive is a words 64 (1938) state law needlessly." 452 City of Inc., Chesapeake 628 S.E. Under ambiguous when it State Virginia refers Ins. disagree is law, may a term as or more things 415 meaning, nor to Thus, law construes of and declining to not intend. 196 (Va. v. (E.D. read Floyd v. Cement Va. 2007) rule: plain and search for because the writing is the Repair, an unambiguous to the same 134 is Grp., v. any (Va. contract giving the An parties 162 on S.E. by other question 2d at S.E. the 541-42. their plain meaning, its is 474 427 F. S.E. 2d 193, D.C. Supp. complete 2d to on 779, the its the court beyond the instrument the repository of final is agreement 788 'plain face terms, meaning did Washington, of adheres its 14 Co., Co. strictly agreement in Ins. Inc., 2d strictly to effectuate terms Ins. or Granite 1992) . reached bearing way time." Plunkett, 628 considered one merely because Chesapeake, Firemen's ("Virginia liberty Retention than conclusion Northern Neck also where County, in an ambiguity or meaning the parties see Son of more 131, 2d have parties, & meaning' is the 1993) ; Kline at S.E. the ambiguity City Risk contract in Plunkett does law. intentions a understood under Virginia the of considered ambiguous 2006) , Arlington 2006). be Bottoms, its Virginia v. Self-Insurers (Va. v. to jurisdictions 541 Inc. 1995). States two not (Va. (Va. to Co. as 42 v. it McClain, 662 2d 539, "when exclusion 39, D.C. S.E.2d 659, not and at itself between the parties." However, burden in is (internal interpreting on the the insurer. (Va. exclusions insurer courts are to construe 318 quotation marks and citation omitted)). to to prove the the terms of Transcon. Ins. Co. insurance v. coverage, the applies, and exclusion exclusions RBMW, strongly against Inc., 551 S.E. 2001). The court thus turns to the interpretation of in question and the question of whether case is not the first to present this it is issue the exclusion ambiguous. not even the exclusion's Co. 1988396 Ward, (E.D. F. also Proto v. Cir. Ct. find it May Overlook, Va. that the in this Supp. 2d 699 Futura Grp., 6, 2011) . weight of (E.D. Va. L.L.C., court the which See Nationwide Mut. Supp. (Davis, J.}; 2010) No. Initially, the concern drywall. F. 2011) indeed it is district with regard to the L.L.C., May 13, decisive, located one, to do so application to Chinese v. 715 first This for determination as regards the pollution exclusion under Virginia law; Ins. 2d 313, Travco CL09-2455, that pollution , is Ins. in in W.L. Co. S.J.); op. court does the cases all no court, question, has v. see slip. the exclusion, precedent 2011 (Doumar, and while notes 2d (Va. not it save ever found the exclusion ambiguous.13 The Supreme leading Court's case on decision the pollution in City of 13 See infra note 15. 15 exclusion Chesapeake, is 628 the Virginia S.E. 2d 53 9. In that case, a group of women sued the claiming that exposure to trihalomethanes supply have City went caused before them the to Virginia Chesapeake, ("THMs") miscarriages. Supreme of Court The on in the water case initially liability, and the court held that the suit was barred by sovereign immunity. City then sought fees spent insurer agreed, holding supply. at argues it pollution case from its was the The by caused the of by court The the Virginia language injury substantial insurer. barred plain While its pollution the not that City City of issues insurer that of Chesapeake in because extends environmental this it case does to Chesapeake and not all pollution. does not water the the policy instead speak or essence, concerned a DMC pollution, harm is the case offers different 16 than no to chemical guidance normal the provides to whether pollution In resolve environmental of the interpret which would be considered traditional, type Court pollution in water supply, the City's Supreme THMs did legal clear and not ambiguous. guidance because of policy. the exclusion traditional cost concurred with the exclusion only minimal the 541. language was plain, pollution in encompassed Id_;_ the recovery that policy in depth, DMC that that contained exclusion that recover litigating argued exclusion to The the only claims in the large-scale here where environmental pollution.14 uniform: The precedent on this point under Virginia law is Virginia makes no distinction between traditional and non-traditional pollution when no such distinction exists in the policy. law, See Travco, pollutant 715 F. exclusions are environmental pollution.'"); hold [otherwise] into the would writing the Supp. contrary court is 717 ("Under Virginia limited 474 F. to Supp. this Court the elemental to to at not Kline, require 2d construe the to 'traditional 2d at 796 interject rule contract ("To words that function of made by parties, and not to reformulate a contract for them.") ,15 the the The court will not break with the weight of precedent on this point and holds that the pollution exclusion in the instant policies 14 DMC cites a number of cases from around the states of the Fourth Circuit, which hold that the exclusion only applies to traditional environmental pollution. E.g., NGM Ins. Co. v. Carolina's Power Wash & Painting, 2010) No. 2:08-cv-3378-DCN, (D.S.C. South Carolina Fed. Appx. 653 law), aff'd sub nom. NGM Ins. Co. v. (4th Cir. 2011); Auto-Owners Ins. Co. 105 Fed. Appx. law) . However, January 12, L.L.C., 2010 WL 146482 (unpublished) (applying Kuras, 407 v. Potter, 484 (4th Cir. 2004) (applying North Carolina these decisions are not dispositive here and do not offer particular guidance per the Virginia Supreme Court's express admonition that decisions by other jurisdictions as to the pollution exclusion do not control when Virginia law relies on the plain meaning rule. City of Chesapeake, 628 S.E. 2d at 541-42 15 The Court court for does the note City one of dissenting Norfolk in opinion Unisun from the Insurance Circuit Co. v. Schulwolf, 53 Va. Cir. 220, 2000 W.L. 33340659 (Va. Cir. Ct. 2000) . In that case, the Circuit Court held that the exclusion was ambiguous and applied only to environmental pollution. Id. at *3. before The City court remarks, Chesapeake of however, as and, subsequent precedent. 17 that such, this is decision abrogated was by is not limited definition of to traditional "pollutant" environmental pollution, as the evinces no such intent on the part of the parties.16 Given that conclusion, DMC argues that if that is the case, then the pollution exclusion is such that it should making this cases, Virginia 677 S.E. Bottoms, from argument, DMC relies Supreme 2009), 2d 131 (Va. Court for health of a court found that "the . in Supreme Court v. Williams, Insurance Co. an . Granite exclusion . . . v. to the due to nature," Granite State, is . State, the policy- ... the any service or treatment professional language In as well as a host of cases "bodily injury broad so as to be ambiguous. The that insurers. Co. State First, to render or Insurance 1992), found the Virginia and Granite or failure to two Mutual providing no coverage conductive on Bureau jurisdictions.17 rendering of against (Va. 415 S.E. other construed Farm 2d 299 Virginia be overly broad and thus ambiguous so was 415 S.E. broad that overly 2d at 133. it may be 16 While this question is not before the court in this case, the court notes the centrality of the definition in this determination by reference to another case from this district, Builders Mut. Ins. Co v. Parallel Design & Dev. L.L.C., F. Supp. 2d , 2011 W.L. 1988402 (E.D. Va. May 13, 2011) (Davis, J.), which held that in a policy where "pollutant" was not defined, the exclusion was limited to traditional environmental pollution, because that was the ordinarily understood definition of the term. 17 Again, Virginia. the See court does supra note not consider 14. 18 the cases from outside understood in more many ways." almost id. any at 134. condition classified as any than one way; indeed, 1V [0] ne could function of 'conducive to health' of injuries or negligently it may be construed in caused an there which would gut the rest of Thus, court the language the costs of construed treating a resident adult argue home are who the was Id. badly from at policy be hence, excluded the policy. of that could the residents and, coverage," the reasonably 135. to burned cover in the bath when left unattended. In Williams, policy ambiguous case, the the the that in manifests coverage 2d policy, for at Court in favor of amount provided 3 03. stated person' two Thus, given find ambiguous. finds First, that the The injury' neither contrary pollution exclusion or the the of these to DMC's itself 'property of the for of 'each the total Williams, inconsistency 677 in the the higher amount. on point argument, is so provides damage,' 19 extent cases exclusion auto court held that policy." in favor of an limits liability internal a In that under The of found coverage. different limits under again recoverable an ambiguity regarding the 'each court here. "'bodily the the court construed it This not Supreme recoverable per person per accident. person' facts was policy "disparity S.E. Virginia and construed it issue insurance amount the which the broad no with court as not does to coverage would the be for have occurred in whole or threatened discharge, escape part 'pollutants' seems of to solid, be liquid, including and waste." plain, this tests the here. is as definition substance, be said principle by reference this 18 Compare Litig., and F. Virginia split Supp. many at 2d follow law on pollutant not whether the that thereof) of the 841 (D. court's virtually 20 products, guided be we focus omitted)). La. any could by the determined on the Furthermore, in Granite State, Drywall Prods. Liab. 2010) (noting Louisiana exclusion decision law"). policy's to facts, exclusions from Louisiana is exclusion pollution that inquiry Rather, set is ("The pertinent necessary lack to inquiry ambit. pollution courts the Manufactured this is and like 822, the of chemicals It could be possible broad (citation Chinese that authority (or issue." Supp. 791 so its "any- contaminant, Virginia that contends, is not but or quarrel itself: alkalis, definition 2d at particular re to other main or or release and unlikely hypothetical useful within holding declining "the F. certainly In 759 precedent of is acids, the insured] a product case that exclusion, ambiguity to irritant the *pollutant' come that specific 474 including to like DMC's "pollutant" fumes, alleged migration, though of implausible the [the of soot, actual, and not overly broad.18 of See Kline, time," thermal finds wholly bounds not, or court, issue, some any the seepage, definition vapor, unambiguous, devise at the The for dispersal, gaseous smoke, consider to with but is is in on overly Travco the broad because other side in which and plausible demonstrated that specific the breadth examples of the of potential exclusion were claims easily ascertainable. In addition, the court pollution exclusion broadly, concern *23. in Granite Finally, there State. is no that would lead the court coverage as in that to required by as would not nullify the rest of a finds its interpret the plain language, the policy's provisions, which was See also internal Overlook, 2011 inconsistency W.L. at in the policy to construe the exclusion in favor of Williams. Instead, the policy is consistent, plain, and not overly broad.19 Therefore, this court finds that the absolute pollution exclusion is not ambiguous and will enforce the plain meaning of its terms. 19 DMC makes a related argument concerning contending that the pollution exclusion is unreasonable and thus should be construed DMC particularly relied on Williams and in its favor overbreadth, substantively of statement coverage. that "when an insurer seeks to limit coverage under a policy, the insurer must use language that is reasonable, clear, and unambiguous." Williams, 677 S.E. 2d at 302 (emphasis added) . However, this court follows Judge Davis's excellent reasoning in Overlook and holds that "a Virginia court does not engage in a substantive analysis of whether it believes an insurance exclusion is in fact reasonable. In fact, such a test would be contrary to established principles of Virginia contract law." Overlook, 2011 W.L. 1988396 at *21. A court in Virginia, especially a federal court sitting in diversity, is not free to substitute its own conception of moral rectitude upon an agreement reduced to writing by the parties who are so bound by it. While public policy is a concern to the court in the situation presented, it must set those issues aside and interpret the contract before it. 21 c. As this court written, the Chinese drywall next source of enforce question under by the policy. the will to these be facts the reduced inflicted on the made of gypsum, often can pollution addressed was a sulfur homes. contain DMC is a gases as whether the is as defined that the drywall was which were a pollutant as evidenced by the damage they responds naturally sulfur. exclusion "pollutant" Citizens and Hanover argue because they were a contaminant, out the Thus, it that drywall, occurring is not which substance a pollutant, is that because it is used every day around the country to build houses. "Pollutant" liquid, is gaseous smoke, vapor, Waste or includes reclaimed." Decl., 1-C policies); The policy The & Ex. Ex. does so that in 1-D 2, the acids, to be Mot. Makimoto & "any chemicals Summ. (2007-2008 as containment, recycled, solid, including and waste. reconditioned J., Ex. 2008-2009 Decl., Ex. 1, Makimoto Citizens 2-D, or 2-E, & CGL 2-F & 2008-2009 Hanover umbrella policies).20 define what considers Hanover umbrella not or alkalis, court are policies irritant Supp. not the 2005-2006 categories Mem. 2007-2008, contaminant, 20 fumes, materials id. , (2006-2007, thermal soot, See Ex. defined pertinent 10. 22 to is meant their irritant ordinary meaning. policy this by has case. two See or W_^ additional supra note Am. Ins. (E.D. Co. Va. v. Johns 2006) . Bros., The "something that defined "to excite Third New as Webster's Similarly, corrupt, policy be used, the not necessity Safe court pollutant is why the the that will any 2d as "irritate" displeasure Dictionary as defined use the court where it 1197 these in." "something as "to that soil, Id. is (1968). stain, at 491. specialized meaning even may a commonly this it question of Chesapeake, a contaminant Drinking Water Act. or rendered looks is to of a The was to understood the court because City of 23 not in a which specific facts in that of general, THMs regulated Chesapeake, 628 F. a not situations, common-sense are is Virginia found they drywall normally certain substance taken that substance so the DMC is pollutant. have the with sourced, product be court agrees is characteristics whether considering City the However, a that indication matter determine In or defined "contaminate" outset, no normally case, is 516 while anger, International 511, "irritant" defines excites," impatience, Supp. in interpreting the policy. pollutant. and no so definitions itself, or F. or infect by contact or association." makes At irritates with 435 dictionary "contaminant" contaminates," Inc., the to courts approach. were under Supp. by the 2d at 541.21 Similarly, in Kline, the epoxy/eurathane floor sealant were deemed irritants, they 474 could F. irritate Supp. or 2d at injure 790. the from the because it was uncontested respiratory Finally, fumes in Johns system. Brothers, Kline, the court found it self-explanatory that fuel oil leaking into the ground, which necessitated Johns Bros., 435 F. $25,000 Supp. Likewise, pollutants are courts have in cleanup costs, was a contaminant. 2d at 516. considering looked to whether their reduced gases Overlook effects. sulfur found that the gases were both irritants and contaminants because they caused health Chinese damage issues drywall to the in was the inhabitants installed, homes. as Overlook, 2011 Travco employed this same reasoning. 718.22 focus This court should be on agrees. the sulfur well First, gases of the as that where extensive W.L. Travco, the homes court came 1988396, 715 F. from property at Supp. concurs the *26. 2d at that the the drywall, 21 However, subsequent decisions in this court have noted that the court should not resort to reference to classifications by regulatory regimes, unless such regulation is directly implicated by the case, like it was in City of Chesapeake. E.g. , Kline, 474 F. Supp. 2d at 78 9 (calling reference to such statutes "unnecessary and inappropriate"). 22 Compare 842 In re (finding Chinese Manufactured Drywall, that the Chinese drywall because it caused only property damage). 24 was 759 F. not Supp. a 2d at pollutant not the drywall itself. that the home. gases blacking, pitting, sulfur and Under the corrupt, or reduced sulfur electronics {noting Ex. at that the it it 12 contact not components corroding, all over soil, is the wiring, for use. factor to See to property supposed report by association" it or the damage contaminant "to "corrupted" caused (expert Therefore, of important was level of metal them unsafe another where extensive tarnishing by rendering present caused gases when The court finds it determinative definition infect that contaminant 2, Id.23 submitted Mem. by the 9 a it Mot. which n. gas that Opp. and 718, sulfur was DMC, clear at finding be) ; stain, pipes, id. damage the S. was J. explains corrosion on wiring was unsafe). the court from the drywall were finds that the reduced sulfur gases a pollutant under the policies. D. The final pollutant reduced dispersal, Hanover issue sulfur seepage, argue the that court gases must decide is were the result migration, release or escape. this question is a with an whether of the discharge, Citizens obvious and answer: 23 The Final Pretrial Order in this case makes it clear that no party contests gases in the that homes, gases were formed. the was homes other also drywall though they See Docket # defective components supra note the of the and was do 86 caused homes the not 1 7 25 agree ("The property where 2. source it was as of to the sulfur how those Chinese drywall damage to in certain installed."); see If the parties elemental homes, then sulfur, and it that is released. a there was policy ordinary meaning Overlook, of up means "to id. at define escape," the words to to W.L. 1988396, at relevant a charge, and set 1917. in to load, Dictionary go from Each of the * this 644, ways," id. restraint, these or was exposed formed, of and, again thus, seepage, looks the policy, this to issue. 474 F. Webster's means the have E.g., 2d means at "to Third New "to cause and 653, confinement, as Supp. "discharge" at to the policy. dispersal, Kline, "disperse" discharged sulfur court burden," gases, sulfur was terms case, the the interpret 13; at of of were consider or different free gas levels sulfur either "discharge, so courts International break of the reduced formation elemental in elevated in the damage were the the by required by the not or resulted gases terms the relieve compounds had caused that which Virginia 2011 Of was those argues in release other 798. that does drywall the drywall no movement as migration, the the the damage again that The the process, such that that clear DMC natural air agree "release" or terms carries Motion, DMC servitude," some insurers' to element of movement. In an exhibit Mot. DMC its S. to J. response the report Ex. 2, to investigate of Docket the the Gerald #56. causes 0. Mr. of 26 Davis, Davis the P.E. is property an submitted See Mem. expert damage at Opp. hired the as by two developments. damage to caused by In the was homes reduced the parties, as defective finds this to a it is sulfur parties that the need to exact somehow, clear not a the in damage. CGL source sulfur it the sulfur caused the academic when is clear the the court reduced dispersed Recovery policies and finds sulfur the drywall and is the no the sulfur, the air. the pollution gases in this under the 2007-2008 Hanover exclusion case were causing atmosphere the the there that in When determining the of the atmosphere into all or by which damage, of drywall therefore, move. was exercise it the so addition, discharge, process did the and was Chinese court, into the drywall and into sum, the In dispersal, exact that drywall 12. The drywall of gases the and that Citizens the mobility ambiguous property of somehow of pollutant case that moved out of is damage. certain not at agreed that clear through Therefore, the concluded Chinese Id. the that method compounds. from reduced go Davis to the moved is agree Mr. traceable caused be elemental it was sulfur and While form, report, recounted above, release. gas his the and excess 2008-2009 policies is thus barred by the exclusion.24 24 The before No. July 2005-2006 the court. 2:10cv547, 21, and 2006-2007 See F. Dragas Supp. Citizens Mgmt. 2d , 2011) 27 Corp. 2011 CGL policies remain v. Hanover Ins. W.L. 2982097 (E.D. Co., Va. IV. Accordingly, Motion, the determining 2008-2009 Citizens policies is Clerk DIRECTED is court that CGL barred by to GRANTS recovery policies the forward a under and absolute copy Citizens' all the the this Hanover's 2007-2008 Hanover pollution of and umbrella exclusion. Opinion to and The counsel for all parties. IT IS SO ORDERED. /S/ Rebecca Beach Smith United States District Judge REBECCA BEACH Norfolk, Virginia August g , 2011 28 SMITH UNITED DISTRICT JUDGE STATES
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