This case will likely be dissected at Tred's Insurance Law Blog, but wanted to mention it quickly this a.m.
In Ass'n of Apt. Owners of Imperial Plaza v. Fireman's Fund Ins. Co., Civ. No. 11-00758 ACK-KSC , LEXIS 50904, April 9, 2013, senior district court judge Alan Kay ruled on a summary judgment motion that Fireman's Fund owed an indemnity obligation to its insured, the AOAO of Imperial Plaza.
The case involved what was originally a three-story warehouse with a roof consisting of a cement topping slab. An insulation layer was placed on top of the cement roof slab with the roof being placed upon the layer. The insulation layer consisted of a
layer of cork, a layer of canec, and another layer of cork. Canec is a
fiberboard made out of sugar cane bagasse and treated with inorganic arsenic
compounds as an anti-termite agent. In the 1990's, a fourth floor was constructed on top of the existing third floor roof of the building. The builders poured a concrete slab upon the entire existing roof assembly of the building before constructing the fourth floor on top of part of the new slab.
Fourth floor slab deflections led to testing finding that moisture in the insulation layer was decomposing the canec. Tender to the plaintiff's insurer resulted in a denial of coverage. Later plaintiff discovered arsenic in the concrete slab of the fourth floor, after which plaintiff remediated the floor, removing and replacing the slab and insulation layer.
In its suit, plaintiff sought indemnification from its insurer for attributable to damages caused by the arsenic discovery. The insurer inturn argued a number of coverage defenses, including failure to re-tender when the arsenic was discovered (years after the deflection test and original tender). Insurer also argued no damages within the policy period, or applicability of exclusions for gradual deterioration or defective design or construction, or pollution. Insurer argued that the design of the fourth floor construction was improper because it did not call for removal of the canec insulation level.
The court rejected each of these arguments, holding that the plaintiff had no duty to re-tender its claims to insurer, and that it provided notice with the required period since plaintiff notified the insurer shortly after the arsenic discovery. The court likewise rejected the insurer's exclusion claims: moisture intrusion caused by a broken water line, was independent from the alleged design error of failing to remove the canec. Moreover, the pollution exclusion did not apply because the policy covered damage caused by contact with the pollution which was the case in the present matter.
