Is My Drywall Chinese? - HB Litigation Conferences

Decisions by the High Courts in California, New York, and D.C.
In June, July, and August 2003, the highest courts of California, New York, and the
District of Columbia confirmed that the exclusion should be limited to its intended reach –
precluding coverage only in those cases involving true environmental pollution. Other appellate
courts have concurred. 38
In MacKinnon v. Truck Insurance Exchange, 39 the California Supreme Court considered
whether the APE applied to exclude injury to a tenant resulting from a landlord’s negligent use
of pesticides in an apartment building. The court reversed the lower court’s award of summary
judgment in favor of the insurer, Truck Insurance Exchange, and held that the APE did not
clearly exclude ordinary acts of negligence involving toxic chemicals such as pesticides.
(. . . cont’d)
Commercial Ins. Co., 47 F.3d 34, 37 (2d Cir. 1995) (applying New York law); Red Panther
Chem. Co. v. Insurance Co. of State of Pa., 43 F.3d 514 (10th Cir. 1994) (applying Mississippi
law); Regent Ins. Co. v. Holmes, 835 F. Supp. 579, 582 (D. Kan. 1993); Minerva Enters., Inc. v.
Bituminous Cas. Corp., 851 S.W.2d 403, 405 (Ark. 1993); American States Ins. Co. v. Koloms,
687 N.E.2d 72 (Ill. 1997); Sullins v. Allstate Ins. Co., 667 A.2d 617 (Md. 1995); Western
Alliance Ins. Co. v. Gill, 686 N.E.2d 997 (Mass. 1997); West Am. Ins. Co. v. Tufco Flooring,
Inc., 409 S.E.2d 692 (N.C. App. 1991). Contra National Elec. Mfrs. Ass’n v. Gulf Underwriters
Ins. Co., 162 F.3d 821 (4th Cir. 1998) (applying D.C. law; called into question by Richardson v.
Nationwide Mut. Ins. Co., 826 A.2d 310 (D.C. 2003), vacated on reh’g, 832 A.2d 752 (D.C.
2003)); American States Ins. Ins. Co. v. Nethery, 79 F.3d 473 (5th Cir. 1996) (applying
Mississippi law); Brown v. American Motorists Ins. Co., 930 F. Supp. 207 (E.D. Pa. 1996), aff’d,
111 F.3d 125 (3d Cir. 1997).
38
E.g., Doerr v. Mobil Oil Corp., 774 So. 2d 119 (La. 2000), on reh’g, 782 So. 2d 573 (La.
2001), subsequent appeal, 811 So. 2d 1135 (La. App. Ct. 2002), writ denied, 817 So. 2d 105 (La.
2002); Anderson v. Highland House Co., 757 N.E.2d 329 (Ohio 2001); Keggi v. Northbrook
Prop. & Cas. Co., 13 P.3d 785 (Ariz. Ct. App. 2000). Compare Amarada Hess Corp. v. Zurich
Ins. Co., 29 Fed. Appx. 800, 806 (3d Cir. 2002) (noting that insurer’s position rejecting coverage
for policyholder’s handling of toxic chemicals “would have the practical effect of excluding
coverage for all of the [policyholder’s] business activities”).
39
73 P.3d 1205 (Cal. 2003).
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