736 S.E.2d 321
Va.2012Background
- Virginia Supreme Court certified a question on interpreting all-risk homeowners policy exclusions as applied to Chinese drywall.
- Ward sought coverage from TravCo; TravCo denied and the district court granted summary judgment for exclusion.
- Ward’s home (built 2007) in Virginia Beach had drywall installed that allegedly off-gassed sulfur compounds, damaging HVAC, electronics, and emitting odors.
- Policy exclusions at issue: latent defect; faulty, inadequate or defective materials; rust or corrosion; and pollutants.
- The Court employs de novo interpretation of the contract, holds each exclusion unambiguous, and finds them to preclude coverage for the drywall losses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Latent defect exclusion applies | Ward argues noscitur a sociis creates ambiguity; defect hidden and undiscoverable. | TravCo argues exclusion is plain and unambiguous; drywall problem is latent. | Subpart (a) affirmed; exclusion plainly excludes damage. |
| Faulty/inadequate/defective materials exclusion applies | Ward contends terms undefined; drywall not defective in function. | TravCo asserts drywall is defective and exclusion applies. | Subpart (b) affirmed; drywall deemed defective and exclusion applicable. |
| Rust or other corrosion exclusion applies | Ward contends no gradual corrosion; noscitur a sociis limits meaning. | TravCo argues plain language covers corrosion and no temporal reading is warranted. | Subpart (c) affirmed; corrosion exclusion applies to drywall-related damage. |
| Pollution exclusion applies | Ward claims exclusion is overbroad/ambiguous and not limited to traditional pollution. | TravCo contends sulfur gases are irritants/contaminants, within plain language. | Subpart (d) affirmed; pollution exclusion covers emission of sulfur gases from drywall. |
Key Cases Cited
- PBM Nutritionals, LLC v. Lexington Ins. Co., 283 Va. 624 (Va. 2012) (unambiguous exclusions must be enforced as written)
- City of Chesapeake v. States Self-Insurers Risk Retention Group, Inc., 271 Va. 574 (Va. 2006) (contract language construed in line with insured's coverage)
- Transcontinental Ins. Co. v. RBMW, Inc., 262 Va. 502 (Va. 2001) (de novo review for insurance contracts)
- Glens Falls Ins. Co. v. Long, 195 Va. 117 (Va. 1953) (latent defect definition for insurance contexts)
- Cuccinelli v. Rector & Visitors of the Univ. of Virginia, 283 Va. 420 (Va. 2012) (noscitur a sociis doctrine applied in Virginia context)