Insurance Law

Dist. Ct. erred in finding that commercial general liability insurance policy issued by plaintiff covered losses incurred by defendant (insured manufacturer of toys) where losses were generated by lawsuits filed by U.S. citizens who purchased toys containing lead paint that had been manufactured in China. Plaintiff's policy excluded coverage for injuries that occurred within U.S., and policy-triggering occurrences took place in U.S. where purchasers were exposed to lead paint, and not in China where toys had been manufactured.

Dist. Ct. did not err in granting defendants' motion for summary judgment in breach of contract action alleging that defendants improperly declined to defend insured in class action alleging that gas from insured's gas station leaked out of underground tank and contaminated groundwater. Exclusion in defendant's policy, that precluded coverage for property damages caused by pollutants that included motor fuel, applied to gasoline leak at issue in underlying lawsuit. Ct. rejected plaintiff's claim that subject exclusion was required to specifically mention gasoline in order for exclusion to apply. Ct. also found that umbrella policy also did not apply where products-hazard clause in umbrella policy covered only knowing market transactions and abandoned products, while underlying lawsuit concerned accidental leak. (Dissent filed.)

Dist. Ct. erred in granting defendant-insurance company's motion for summary judgment in action by plaintiff-insured alleging that defendant breached terms of insurance policy by failing to pay for loss arising out of fire damage to plaintiff's home. While defendant attempted to rescind policy by returning premiums after it discovered that plaintiff had not been living in her home for 4.5 years, fact that insured may not have occupied her home is not type of breach that would have entitled defendant to rescind policy. However, defendant will be permitted on remand to establish whether plaintiff's non-occupancy of home substantially increased risk of loss and/or whether vandalism was cause of fire so as to excuse defendant from payment of loss under vandalism or increase-in-hazard exclusions contained in policy.

Dist. Ct. erred in entering judgment in favor of plaintiff-insured in action seeking reformation of insurance policy so as to require defendant-insurance company to pay for environmental cleanup costs on property owned by plaintiff. Record showed that there was no meeting of minds regarding actual property that plaintiff wished to insure, which served to defeat instant reformation action. Moreover, plaintiff knew at all relevant times that policy did not include coverage for subject property.