Absolute pollution exclusion does not unambiguously exclude coverage for Chinese Drywall claims under Massachusetts law

Absolute pollution exclusion does not unambiguously exclude coverage for Chinese Drywall claims under Massachusetts law

Source: http://www.lexology.com, October 31, 2013
Bby: Jan A. Larson, Jenner & Block

A Colorado state court applying Massachusetts law recently denied an insurer’s motion for summary judgment, holding that its absolute pollution exclusion and the term “pollutant” are ambiguous as applied to Chinese Drywall and should be construed in favor of coverage for the insured. ProBuild Holdings, Inc. v. Travelers Prop. Cas. Co. of America, No. 10-0378 (Colo. Dist. Ct. Oct. 4, 2013). In general, Massachusetts looks to the reasonable expectations of the insured in determining coverage, and has refused to apply the absolute pollution exclusion to activities that arise in the course of normal activities simply because the accident happens to involve a “discharge, dispersal, release or escape of an irritant or contaminant,” as those terms commonly appear in an insurance policy’s exclusionary language. Appreciating the nuances of Massachusetts law, the court distinguished external environmental contamination from internal property damage and personal injury, even where caused by the same substance. The court noted that “context is key” and held that the term “pollutants” is ambiguous as applied to any substances potentially emitted from Chinese Drywall installed in a residential home. In so holding, the court distinguished a contrary, unpublished decision from the Eleventh Circuit interpreting Massachusetts law – Granite State Ins. Co. v. American Building Materials, Inc., 504 F. App’x 815 (11th Cir. 2013).

 

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