Federal appeals court upholds insurer win on pollution claim denial
Reprints
A federal appeals court has upheld a lower court ruling and found the owners of a property that was once a dry cleaning facility do not have coverage because the pollution at issue occurred before their policies’ inception.
Juan and Maria Garcia purchased commercial property in Lake Station, Indiana in 2004, according to Friday’s ruling by the 7th U.S. Circuit Court of Appeals in Chicago in Atlantic Casualty Insurance Company v. Juan Garcia and Maria Garcia.
The property had been used as a dry cleaning facility from about 1946 until 2000, according to the ruling. In 1999, the dry cleaning company reported a newly-discovered leak from its solvent tanks to the Indiana Department of Environmental Management, said the ruling.
The Garcias said they had no knowledge of the preexisting environmental contamination before obtaining commercial general liability coverage from Goldsboro, North Carolina-based Atlantic Casualty.
They filed a claim for insurance coverage with the insurer, which sought a declaratory judgment from the U.S. District Court in Hammond, Indiana that it was not obligated to provide coverage.
The Garcias in turn filed counterclaims for breach of their policies and bad faith for denial of their claim. The district court granted Atlantic summary judgment dismissing the case, which was upheld by a three-judge appeals court panel.
The ruling pointed to an exclusion in the coverage for bodily injury or property damage that occurred “prior to the inception date.”
The Garcias argue this exclusion is ambiguous, said the ruling. “We disagree with the Garcias and find the exclusion language unambiguous,” the opinion said.
“We read the exclusion to preclude coverage for losses or claims for damages arising out of property damage - known or unknown - that occurred or was in the process of occurring before the policy’s inception,” said the ruling, in affirming the district court’s judgment.
Read Next
-
Insurer prevails in grain bin explosion coverage dispute
RSUI Indemnity Co. is not obligated to provide $3 million in property damage caused by a grain bin explosion under an exclusion in its policy, said a federal appeals court in upholding a lower court ruling.
