Is My Drywall Chinese? - HB Litigation Conferences

eaching this decision, the New York court also reviewed the genesis of the APE, stating that it
originated with insurers’ efforts to avoid potentially open-ended liability for long-term, gradual
discharge of hazardous waste and byproducts. Finally, the court rejected the insurer’s contention
that the removal of the language “into or upon land, the atmosphere or any water course or below
of water” in the APE was a material difference that indicated an intent to extend the exclusion to
indoor as well as outdoor pollution.
In Richardson v. Nationwide Mutual Insurance Co., 47 the D.C. Court of Appeals reversed
a lower court’s decision which had relieved Nationwide of its duty to defend and indemnify a
policyholder for serious personal injuries, including brain damage, suffered as a result of a faulty
gas furnace that leaked carbon monoxide inside a structure. The district court relied on the
pollution exclusion in barring coverage as a matter of law. On appeal, a majority of the three-
member panel disagreed, holding that the clause did not apply because its intended purpose was
to preclude coverage for traditional environmental pollution that was the subject of federal and
state environmental laws.
In reaching its decision, the majority recognized that the courts are sharply divided
regarding the meaning of the exclusion. However, the majority “rejected the purportedly literal
approach” of some courts and aligned itself with the trend holding that the clause should apply
only to traditional “environmental” pollution. 48 The court found that the clause was drafted in
response to and used the same terminology as CERCLA (or “Superfund”), 42 U.S.C. § 9601, and
other federal and state environmental statutes and regulations. The panel concluded: “The
47
826 A.2d 310 (D.C. June 12, 2003), vacated & reh’g en banc granted, 832 A.2d 752 (D.C.
Sept. 29, 2003). On September 29, 2003, the court granted Nationwide’s petition for rehearing
en banc and vacated its Answer to the Certified Question of Law.
48
Id. at 320.
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