Evanston Ins. Co. v. Harbor Walk Dev. LLC

814 F.Supp.2d 635

EVANSTON INSURANCE COMPANY, Plaintiff,

v.HARBOR WALK DEVELOPMENT, LLC; The Porter–Blaine Corp.; Genesis Group, Inc.; Wermers Development, Inc.; Clark–Whitehill Enterprises, Inc.; Venture Supply, Inc.; Tobin Trading, Inc.; Traderscove Corp d/b/a/ The Henin Group; Premier International Realty, Inc., d/b/a/ Henin Realty; International Property Investments of Central Florida, Inc., d/b/a/ Henin International Services; Higgerson–Buchanan, Inc.; M & M Contracting; P & P Skilled Contractors; Work Company, Drywall & Plaster; Jerome Henin, individually; David Daniels, individually; and Michelle Germano; Denis Jackson; Sharon Jackson; Jason Dunaway; Lisa Dunaway; individually and on behalf of all others similarly situated, Defendants.

Civil Action No. 2:10cv312.

United States District Court, E.D. Virginia,Norfolk Division.

Sept. 9, 2011.

R. Steven Rawls, Rebecca C. Appelbaum, Robert J. Witmeyer, Butler Pappas Weihmuller Katz Craig LLP, Tampa, FL, for Plaintiff.

Richard A. Saunders, Furniss, Davis, Rashkind and Saunders, P.C., Norfolk, VA, Local Counsel for Plaintiff.

John W. Drescher, Jeffrey A. Breit, Michael F. Imprevento, Breit, Drescher & Imprevento, P.C., Norfolk, VA, Richard D. Serpe, Law Offices of Richard D. Serpe, P.C., for Defendants Michelle Germano, Dennis Jackson, Sharon Jackson, Jason Dunaway and Lisa Dunaway.J. Brian Slaughter, McKenry, Dancigers, Dawson & Lake, Virginia Beach, VA, for Defendant Clark–Whitehill Enterprises, Inc. T. Jeffrey Salb, Gregory D. Surber, Breeden, Salb, Beasley & Duvall, P.C., Norfolk, VA, for Defendants Traderscove Corp., d/b/a The Henin Group, Premier International Realty, Inc., d/b/a Henin Realty, International Property Investments of Central Florida, Inc. d/b/a Henin International Services, Jerome Henin, David Daniels, M & M Contracting.Todd M. Fiorella, Fraim & Fiorella, P.C., Norfolk, VA, for Defendant Work Company, Drywall & Plaster.

ORDER

RAYMOND A. JACKSON, District Judge.

This matter is before the Court on Plaintiff Evanston Insurance Company's (“Plaintiff” or “Evanston”) Motion for Summary Judgment. The motion has been fully briefed and is ripe for disposition.

I. FACTS

A. The Three Underlying Lawsuits

The dispute in the above-captioned case concerns three lawsuits (the “Underlying Lawsuits”) filed by Defendants Jason Dunaway, Lisa Dunaway, Michelle Germano, Dennis Jackson, and Sharon Jackson (collectively, the “Homeowner Defendants”) against Harbor Walk Development, LLC (“Harbor Walk”). The three lawsuits that comprise the Underlying Lawsuits are as follows.

On May 1, 2009 by the Homeowner Defendants, individually, and on behalf of all others situated, filed a class action suit in the Eastern District of Virginia ¹ against Harbor Walk, The Porter–Blaine Corp., Taishan Gypsum Co. LTD, and Venture Supply Inc. (“Class Action Lawsuit”). Compl., Exh. A. On October 6, 2009, Defendant Michelle Germano filed an individual action in the Circuit Court for the City of Norfolk against Harbor Walk, Genesis Group, Inc., Wermers Development, Inc., Clark–Whitehill Enterprises, Inc., Venture Supply, Inc., The Porter–Blaine Corp., and Tobin Trading, Inc. (“Germano Lawsuit”). Compl., Exh. B. Finally, Defendants Dennis and Sharon Jackson filed an action in the Circuit Court for the City of Norfolk against Harbor Walk, Traderscove Corp., Premier International Realty, Inc., International Property Investments of Central Florida, Inc., Jerome Henin, David Daniels, Venture Supply, Inc., The Porter–Blaine Corp., Tobin Trading, Inc., Clark–Whitehill Enterprises, Inc., Higgerson–Buchanan, Inc., M & M Contracting, P & P Skilled Contractors, and Work Company, Drywall & Plaster (“Jackson Lawsuit”). Compl., Exh. C.²

In the Underlying Lawsuits, the Homeowner Defendants allege that the Chinese drywall installed in their homes emits sulfides and other noxious gases ³ and that this causes corrosion and damage to property such as air-conditioning and ventilation units, refrigeration coils, copper tubing, faucets, metal surfaces, electrical wiring, utensils, electronic appliances, and other personal items. Compl., Exh. A at ¶¶ 21–22; Exh. B at ¶ 13; Exh. C at ¶ 3. The Homeowner Defendants also claim that the compounds emitted by the drywall cause bodily injury, such as allergic reactions, respiratory afflictions, and sinus and bronchial problems requiring medical attention, including headaches. Compl., Exh. A at ¶ 23; Exh. B at ¶ 14; Exh. C at ¶ 4.

As a result of these factual allegations, the Homeowner Defendants have asserted various legal theories against Harbor Walk and the other homebuilder defendants, seeking inter alia damages for injuries to person ⁴ and property ⁵ and for the inspection, removal, and replacement of the drywall, including testing for and monitoring the alleged harmful effects of drywall. Compl., Exh. A at ¶ 88; Exh. B at ¶¶ 59, 62; Exh. C at ¶¶ 90, 93. These claims are relevant to this action because Evanston has sold three commercial general liability insurance policies to Harbor Walk that contain language which obligates Evanston to defend and indemnify Harbor Walk from lawsuits if certain conditions are met. Compl., Exhs. D; E; F. Evanston filed the declaratory action with this Court on June 29, 2010, requesting a judgment declaring that Evanston owes no duty to defend or indemnify Harbor Walk in the three Underlying Lawsuits based on the provisions in the insurance policies. Compl. at ¶ 58.

B. The Insurance Policies

Evanston issued three commercial general liability insurance policies to Harbor Walk (the “Evanston Policies”). The Evanston Policies were delivered to Harbor Walk in Virginia.⁶ Reply, Exh. A at ¶¶ 5, 8, *8.⁷ The first policy, Policy No. 03GLP1006568, was initially effective from February 10, 2003 to February 10, 2004. Compl., Exh. D at 4. The policy was amended on February 10, 2004 to expire on February 1, 2005. Id. at 48. The policy has a general aggregate limit of $2,000,000, a products-completed operations aggregate limit of $1,000,000, a per occurrence limit of $1,000,000, and a $25,000 per occurrence deductible. Id. at 5, 14.

The second policy, Policy No. 05GLP1007502, was effective from February 10, 2005 to February 10, 2006.⁸ Compl., Exh. E at 4. This policy has a general aggregate limit of $2,000,000, a products-completed operations aggregate limit of $1,000,000, a per occurrence limit of $1,000,000, and a $25,000 per occurrence deductible. Id. at 6, 13.

The third policy, Policy No. 06GLP1007502, was effective from February 10, 2006 to October 8, 2007.⁹ Compl., Exh. F at 4, 57–58. The policy has a general aggregate limit of $2,000,000, a products-completed operations aggregate limit of $1,000,000, a per occurrence limit of $1,000,000, and is subject to a $50,000 per occurrence self-insured retention. Id. at 6, 13.

The Evanston Policies contain an Insuring Agreement that provides that Evanston will “pay those sums that the [insured] becomes legally obligated to pay because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” Compl., Exh. D at 29; Exh. E at 32; Exh. F at 35. This includes the duty to defend any “suit” seeking those damages. Id. The Insuring Agreement limits coverage to “bodily injury” or “property damage” caused by an “occurrence” that “occurs during the policy period.” Id.

The Evanston Policies define “occurrence” to mean “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Compl., Exh. D at 40; Exh. E at 43; Exh. F. at 46. The Evanston Policies define “bodily injury” to mean “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” Compl., Exh. D at 38; Exh. E at 41; Exh. F at 44. The Evanston Policies define “property damage” to mean: “(a) Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or (b) Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the ‘occurrence’ that caused it.” Compl., Exh. D at 40; Exh. E at 43; Exh. F at 46.

The Evanston Policies contain exclusions to coverage. One of which is a pollution exclusion, which states the following:

f. Pollution

(1) “Bodily injury” or “property damage” which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time.

(2) Any loss, cost or expense arising out of any:

(a) Request, demand or order 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;

(b) Claim or “suit” by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of pollutants.

Pollutants means any solid, liquid gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, electromagnetic fields and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

Compl., Exh. D at 30; Exh. E at 33; Exh. F at 36. The Evanston Policies also limit the coverage provided to only those premises and projects listed in the endorsements. Specifically, the endorsement entitled “Limitation of Coverage to Designated Premises or Project” limits the commercial general liability coverage to either a specified project or premises. Compl., Exh. D at 28; Exh. E at 31; Exh. F at 34. General Change Endorsements specify that the policy only applies to losses arising out of bodily injury and property damage at certain locations. Compl., Exh. D at 51; Exh. E at 46; Exh. F at 48, 55–56.

II. PROCEDURAL HISTORY

On June 29, 2010, Evanston...