Allied Prop. & Cas., Ins. Co.v. Zenith Aviation, Inc., 2018 U.S. Dist. LEXIS 147627, 2018 WL 4112588 (E.D. Va. Aug. 29, 2018)
In 2017, Zenith Aviation, Inc. (“Zenith”) hired Abby Construction Company (“Abby”) to install an elevator at its warehouse. Abby used a wet saw to cut away eight inches of concrete. Abby, however, did not use any water with the wet saw, which generated concrete dust that settled on everything inside the building. As a result, Zenith’s inventory stored in the warehouse as well as its automated electronic retrieval system was damaged. Zenith had a commercial insurance policy (the “Policy”), which was issued by Allied Property and Casualty Company, Inc. (“Allied”).
The Court held that the Policy’s “Pollution Exclusion” did not exclude coverage for Zenith’s loss. Words used in an insurance policy are given their ordinary and customary meaning. Where language in an insurance policy is ambiguous, courts apply the rule of contra proferentem to construe the insurance policy’s language in favor of an interpretation that grants coverage. The Policy defines “pollutant” as “any solid . . . irritant or contaminant, including smoke . . .” Given the Policy’s definition of “pollutant,” the Court held that concrete dust is clearly a pollutant because it can function as both an “irritant” and a “contaminant.” The Policy’s “Pollution Exclusion” removes from coverage any “loss or damage caused by or resulting from [the] . . . dispersal . . . [or] migration . . . of ‘pollutants’” unless (1) the dispersal or migration of the pollutant is itself caused by a “specified cause of loss” or (2) the dispersal or migration of the pollutant results in a “specified cause of loss” and the “specified cause of loss” cause the loss or damage. The Policy defined “specified causes of loss” as including “smoke.” The Policy did not define “smoke” and the Court held that the definition of “smoke” was unclear, with one or more reasonable definitions. Applying Virginia’s law regarding the interpretation of insurance policies, the Court adopted the interpretation of “smoke” that favored insurance coverage for Zenith’s loss.