115 A.3d 799
N.H.2015Background
- Doug and Gayle Mellin owned and later sold a condominium where a pervasive cat-urine odor was detected beginning ~2009–2010; remediation failed and a health inspector advised temporary relocation.
- Plaintiffs filed a homeowner’s insurance claim in Dec. 2010 under Section I (Coverages A and D); insurer Northern denied coverage and moved for summary judgment.
- Coverage A (endorsement) insures "direct loss to property" only if it is a "physical loss to property," and includes a pollution exclusion barring loss caused by "discharge, dispersal, seepage, migration, release or escape of pollutants" (with a definition listing "vapor," "fumes," etc.).
- Coverage D (Loss of Use) provides additional living expenses and lost rental value for a "loss covered under this Section" that makes the premises unfit to live in; an endorsement modified Coverage D language for New Hampshire.
- Trial court granted summary judgment for Northern, holding the odor was not a "physical loss" and that the pollution exclusion barred coverage; plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pervasive odor constitutes a "physical loss" under Coverage A | Odor is a physical, tangible change (perceptible by smell) and thus a "physical loss" | "Physical loss" requires tangible alteration visible or touchable; odor is intangible and not covered | Court: "Physical loss" can include sensory (odor) changes absent structural damage but must be a distinct, demonstrable alteration that renders use impaired; trial court's ruling vacated and remanded to apply this standard |
| Whether the pollution exclusion unambiguously bars coverage for cat urine odor | Exclusion targets traditional environmental contamination; domestic cat urine in a residence is not the sort of industrial/environmental pollution excluded | Policy definition of "pollutants" (including "vapor," "fumes") is clear and thus excludes the odor | Court: Exclusion ambiguous in this context (definition too broad, terms read in context yield reasonable alternative meanings); ambiguity construed for insureds — exclusion does not preclude coverage; trial court reversed on this issue |
| Whether Coverage D applies absent an enumerated peril when Coverage A provides coverage | Coverage D covers "losses covered under this Section" (Section I) and thus applies if Coverage A covers the loss, without requiring an enumerated peril | Coverage D applies only when loss of use results from an enumerated Peril Insured Against | Court: Coverage D is tied to losses "covered under this Section" (Section I); because Coverage A was remanded for further fact-law application, Coverage D ruling was vacated and remanded as well |
Key Cases Cited
- Weaver v. Royal Ins. Co. of America, 140 N.H. 780 (N.H. 1996) (pollution-exclusion language ambiguous in lead-paint spread context)
- Western Fire Ins. Co. v. First Presbyterian Church, 437 P.2d 52 (Colo. 1968) (contaminating vapors rendering building uninhabitable constitute direct physical loss)
- Koloms v. American States Ins. Co., 687 N.E.2d 72 (Ill. 1997) (interpreting broad pollution-exclusion language and its scope)
- TRAVCO Ins. Co. v. Ward, 715 F. Supp. 2d 699 (E.D. Va. 2010) (toxic gases in drywall rendered home uninhabitable — physical loss)
- Yale Univ. v. Cigna Ins. Co., 224 F. Supp. 2d 402 (D. Conn. 2002) (asbestos/lead contamination can constitute physical loss)
- Deni Associates of Fla., Inc. v. State Farm Ins. Co., 711 So. 2d 1135 (Fla. 1998) (ammonia release held pollutant under exclusion)
- Murray v. State Farm Fire & Cas. Co., 509 S.E.2d 1 (W. Va. 1998) (physical loss may exist without structural damage)