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A federal appeals court affirmed a lower court ruling in favor of an Iowa reinsurer in a dispute with a Munich Re unit over cleanup and property damages related to construction that created silica dust.
Cold Spring, Minnesota-based MNDKK LLC hired Cold Spring-based Dingmann Bros. Construction of Richmond Inc. to install a garage in its warehouse, according to Wednesday’s ruling by the 8th U.S. Circuit Court in St. Louis in Grinnell Mutual Reinsurance Co. v. Dingmann Bros. Construction of Richmond, Inc., Great Lakes Insurance SE; MNDKK, LLC.
Dingmann’s subcontractor dry cut the wall without dust protection, and the resulting dust covered the inside of the building and its contents, the ruling said. The wall from which the garage door was cut tested positive for silica.
Munich Re unit Great Lakes paid policyholder MNDKK’s claim for clean-up costs and property damage, then sent subrogation demands to Dingmann. Dingmann’s insurer, Grinnell, refused to indemnify the company based on two policy exclusions related to the presence of silica in the dust.
Grinnell filed suit in U.S. District Court in Minneapolis, which ruled the exclusions “unambiguously” applied.
A three-judge panel unanimously affirmed the lower court. “There is no genuine dispute of material fact about whether the dust contained silica,” the ruling said.
The panel said it disagreed with Great Lakes that the silica-related cleanup and property damage exclusions did not apply, in affirming the lower court ruling.
Grinnell attorney Thomas C. Brock, of Erickson, Zierke, Kuderer & Madsen, P.A. in Minneapolis, said very few cases interpret the “ubiquitous” silica exclusion that is standard in most commercial general liability policies.
“The 8th Circuit properly determined it was an unambiguous exclusion that forecloses any coverage for property damage arising from concrete dust,” he said.
Munich Re’s attorney did not respond to a request for comment.
Last week, the 8th Circuit affirmed a lower court ruling and said Great Lakes does not have to indemnify a bar and its owner for negligence stemming from a bar employee’s attack in the lounge’s parking lot because its policy’s assault-and-battery exclusion applies.