|
|
Publications
Three Strikes You're Out: Louisiana Court Rejects Exclusions in a Chinese Drywall Case
Insurance Law Update
Civil District Court of Louisiana
In an action to recover insurance benefits for property damage caused by Chinese drywall, a Louisiana civil district court held that policy exclusions for "pollution or contamination," "gradual or sudden loss," and "faulty, inadequate or defective planning" did not apply to exclude coverage for damages from defective Chinese drywall.
In Finger v. Audubon Ins. Co., 2010 WL 1222273 (Civ. Dist. Ct. of La. March 22, 2010), the plaintiffs brought an action for benefits under a homeowners "all risk" policy for damage to property caused by Chinese drywall. After the defendant answered, the court granted the plaintiffs' motion to strike three affirmative defenses based upon three policy exclusions.
First, the court held that the "pollution or contamination" exclusion did not apply to residential homeowners' claims for damages caused by substandard building materials. Rather, the exclusion was construed to apply only to incidents that cause "environmental damage" or an "injurious [to the environment, not the claimant] presence in and upon the land, the atmosphere, or any watercourse or body of water of solid, liquid, gaseous or thermal contaminants, irritants or pollutants." The court concluded that the fact that Chinese drywall releases various gases into the home does not render it a "pollutant" under the pollution exclusion.
The court next held that the "gradual or sudden loss" exclusion did not apply to bar coverage because the plaintiffs' losses related to the drywall off-gassing, which was held not to constitute wear, tear and/or gradual deterioration. The court stated that the exclusion was intended to apply where corrosion, rust or the like is the cause of the property damage; but it was not intended to preclude coverage when the rust or corrosion is the damage itself. The court concluded that the exclusion would not apply because here, the corrosion of metals caused by sulphurous gases released by Chinese drywall was the loss, not the cause of the loss.
Finally, the court rejected the "faulty, inadequate or defective planning" exclusion, finding it undisputed that the Chinese drywall "defect" was not one that rendered the drywall unable to perform its intended purpose. Therefore, the court held that it was not "defective" within the meaning of the exclusion.
|
Related People
Related Offices
Related Practices
|