Pennsylvania National Mutual Casualty Insurance v. Block Roofing Corp.
754 F. Supp. 2d 819
E.D. Va.2010Background
- Block performed roofing work at Sentara Leigh Hospital in early 2007, applying adhesives, sealants, chemicals, and materials to the roof.
- Chewning, a Sentara Hospital medical assistant, later sued Block in state court for injuries from exposure to vapors allegedly arising from Block’s work.
- Block had CGL and Umbrella Insurance Contracts with Penn National; Penn National reserved defenses based on pollution exclusions.
- This declaratory judgment action sought to determine Penn National’s defense and indemnity obligations regarding the Underlying Action.
- The court previously stayed the case and later lifted the stay; a summary judgment hearing was held on November 23, 2010, at which partial summary judgment was granted to Block.
- The court focused on the CGL Contract’s pollution exclusion and its exception, and applied the Eight Corners Rule to assess coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the CGL Contract’s exception to the pollution exclusion apply? | Penn National contends no coverage because materials were not brought inside the building. | Block argues the exception applies if fumes originate from materials Block brought into the building. | Yes; the exception unambiguously affords coverage, and ambiguity would favor Block. |
| Does Penn National have a duty to defend Block under the Eight Corners Rule? | Under the Eight Corners Rule, Chewning’s complaint could not state a covered claim under the CGL. | Chewning’s allegations could state a covered claim because vapors could arise from materials brought into the building. | Yes; Block is entitled to a defense under the CGL Contract (duty to defend exists). |
| Is there a duty to indemnify Penn National if Block is found liable? | Indemnification is not guaranteed until facts are proven; the duty to indemnify depends on outcome of underlying action. | Indemnity follows from the facts established at trial; based on current posture, no determinate indemnity issue yet. | The duty to indemnify remains unresolved pending the underlying adjudication. |
Key Cases Cited
- Capitol Environmental Servs., Inc. v. North River Ins. Co., 536 F. Supp. 2d 633 (E.D. Va. 2008) (duty to defend depends on potential covered claims under Eight Corners Rule)
- American Online, Inc. v. St. Paul Mercury Ins. Co., 207 F. Supp. 2d 459 (E.D. Va. 2002) ( Eight Corners Rule formulation)
- Solers, Inc. v. Hartford Cas. Ins. Co., 146 F. Supp. 2d 785 (E.D. Va. 2001) (exclusive pleading and potentiality rules for defense obligations)
- Travco Ins. Co. v. Ward, 715 F. Supp. 2d 699 (E.D. Va. 2010) (ambiguity and interpretation standards for insurance contracts)
- Resource Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631 (4th Cir. 2005) (duty to defend versus indemnity distinction; pleading standards)