Builders Mutual Insurance v. Parallel Design & Development LLC
2011 U.S. Dist. LEXIS 55279
| E.D. Va. | 2011Background
- Edmonds sued Parallel in state court alleging defective drywall caused health issues and property damage; Edmonds asserted twelve counts.
- Builders Mutual issued multiple Virginia policies to Parallel (2006–2007, 2007–2008, 2008–2009) and agreed to defend Parallel in Edmonds' state action under a reservation of rights.
- The Applicable Policy (June 2006–June 2007) includes a Total Pollution Exclusion and a Your Work exclusion; pollutants are not defined in this endorsement.
- Builders Mutual filed a diversity-based declaratory action in the EDVa seeking to void defense/indemnity for Edmonds' claims under the Total Pollution Exclusion and Your Work exclusion.
- Edmonds argued that pollutants could be read broadly to include indoor, nontraditional pollutants like gases from defective drywall; the court focused on statutory interpretation under Virginia law.
- The court denied in part Builders Mutual’s motion, held pollutants ambiguous (in this context) and thus not unambiguously excluding coverage, granted summary judgment for the Defendants on the duty to defend, and held indemnity in abeyance pending underlying trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Total Pollution Exclusion unambiguously bars defense/indemnity | Builders Mutual contends exclusion is clear and applicable. | Edmonds contends exclusion may be read broadly or ambiguously and may not apply indoors. | Ambiguity found; exclusion does not unambiguously bar coverage. |
| Whether the term 'pollutants' is ambiguous in this policy context | Pollutants unambiguously include any harmful substances. | Pollutants could be read to encompass only traditional environmental pollutants. | Pollutants is ambiguous; construed in favor of coverage. |
| Whether the Your Work exclusion eliminates the insurer's duty to defend | Your Work exclusion should negate coverage for Edmonds’ claims. | Even if some claims are excluded, other covered claims trigger defense obligation. | Your Work exclusion cannot eliminate the duty to defend; some claims fall within policy. |
Key Cases Cited
- City of Chesapeake v. States Self-Insurers Risk Retention Grp., Inc., 271 Va. 574 (2006) (policy defines 'pollutants' for ruling on environmental exclusions)
- Seals v. Erie Ins. Exch., 277 Va. 558 (2009) (ambiguity doctrine; policy interpretation favors insured when ambiguous)
- Granite State Ins. Co. v. Bottoms, 243 Va. 228 (1992) (ambiguity construed in insured's favor; avoid narrowing coverage)
- Res. Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631 (4th Cir. 2005) (ambiguity rule for insurance contracts; burden on insurer to prove exclusions)
- Uniwest Constr., Inc. v. Amtech Elevator Servs., 280 Va. 428 (2010) (interpretation of ambiguous contract terms under Virginia law)