Chubb not obligated to defend building operator in pesticide case

A Chubb Ltd. unit is not obligated to defend a building operator sued in connection with spraying pesticides because of its coverage’s pollution exclusion, said a federal appeals court Wednesday, in upholding a lower court ruling.

Oklahoma City-based MHJ Properties Ltd. was sued in state court by two individuals for spraying pesticides that allegedly contained toxic chemicals and caused them substantial harm, according to Wednesday’s ruling by the 10th U.S. Circuit Court of Appeals in Denver in MJH Properties LLC v. Westchester Surplus Lines Insurance Co.

Plaintiffs sued the company for various claims, including negligence and vicarious liability.

Chubb unit Westchester Surplus refused to defend it, on the basis its “total pollution exclusion” excluded coverage because the plaintiffs alleged pollutants caused their injuries.

MJH filed suit in U.S. District Court in Oklahoma City, charging Westchester Surplus had breached its policy by refusing to defend it and had acted in bad faith.

The U.S. District Court ruled in Chubb’s favor, dismissing the case, and was upheld by a unanimous three-judge appeals court panel. MJH “has failed to state a breach of contract or bad faith claim,” said the ruling.

As in a previous ruling, “we find no ambiguity here and conclude the district court did not err in determining that at least one of the underlying petition’s three alleged substances is a ‘pollutant’ with the defined term’s plan and ordinary meaning,” said the ruling.

“MJH failed to show coverage under the policy, which is necessary to prevail on a bad faith claim, said the ruling also, in affirming the lower court’s dismissal.

Attorneys in the case could not be reached for comment.