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Lead exclusions in a school district’s liability policies may not exclude losses resulting from a toxic tort class action class action that alleges the district should have known there were excessive levels of lead and copper in its water supply, a federal judge ruled June 9.
Ruling in The Netherlands Insurance Co., Peerless Insurance Co. v. The Butler Area School District, U.S. District Court Judge Arthur J. Schwab in Pittsburgh, ruled that the two units of Liberty Mutual Holding Co. Inc. must defend the Pennsylvania school district in the class action suit that alleges the district concealed dangerous levels of lead and copper in its water.
“The court will not countenance the insurers' invitation to turn Pennsylvania law relative to the duty to defend on its head so as to allow the potential exclusion of a single type of claim to relieve them of their duty to defend, when the law actually requires a defense when a single potentially covered claim is alleged,” Judge Schwab wrote in his ruling.
The school district installed a chlorinator prior to the 2016/2017 school year into the Summit Elementary School's potable water system and failed to operate it properly, according to court records.
As a result, the water system quickly corroded and resulted in a slow and continuous movement of dangerous levels of lead and copper into the school’s water system, court records say.
In January, the school district informed parents in a letter that students and staff at the elementary school had been told not to drink the water from a well on the property because it had been contaminated with lead. Attorneys suing the district in federal court in February said the administration knew of the problems in August last year.
Peerless issued a commercial umbrella insurance policy to the district, while Netherlands issued a commercial package policy. The policies had pollution exclusions and lead exclusions. The two insurers told the defendants in February that they would not participate in their defense or pay any amounts to satisfy any settlement achieved or judgment rendered in the litigation and later sought a declaration that they have no duty to defend or indemnify.
Judge Schwab’s ruling said the pollution exclusions were “ambiguous in the context of an alleged exposure to lead or copper in drinking water; and therefore, must be interpreted in favor of coverage.”
The lead exclusion, which excludes coverage for losses “arising, in whole or in part” from exposure to lead, do not exclude losses from exposure to copper, the ruling states.
“There are allegations of potential injury from copper that are not dependent on lead injury nor stem from lead injury. Copper is potentially a separate and distinct cause of injury,” Judge Schwab’s ruling states.
“Liberty Mutual does not publicly comment on litigation," a spokesman said.
Wherever plenty of outrage and blame are going around, plenty of litigation is likely to follow — and so far the Flint, Michigan, water crisis is no exception.