Court Denies Insurer Declaratory Judgment Motion Over Mold Coverage

Plaintiff retained consultant to abate mold at residence in 2004. Consultant mixed mold disinfectant product with bleach solution per labeling instructions and applied to porous surfaces. Manufacturer indicated that product was suitable for wood surfaces.

Plaintiffs alleged that the mixture started a chemical reaction that produced a variety of carcinogenic and volatile chemicals that were absorbed by wood structures of residence, requiring home to be demolished. Plaintiff sued manufacturer and consultant and home insurer. Plaintiff settled with home insurer.

Insurer of consultant sought declaratory judgment that there was no coverage by virtue of mold exclusion  under the Environmental Consultant Professional LIability (ECPL)  and Contractor's Pollution Liability  (CPL) policies. The Mold, Mildew, Fungus Exclusion endorsement excluded coverage for damage arising out of mold remediation but there was a Microbial Decontamination Limited Coverage Endorsement (MDL) policies.

The court said under Georgia law, exclusions are to be intepreted narrowly and coverage endorsements broadly. The court said that the underlying complaint did not state that their home became inhabitable because of mold release but because of the chemical release as a result of the alleged negligent mixture of the product and bleach. Thus, there was coverage under the ECPL.

Turning to the CPL, the court said the policy coveredpollution incidents caused by performance of covered contracting activities. The court noted that public policy disfavors insurance provisions that permit an insurer to  avoid risks for the insurer has been paid and that a reasonable insured expects would be covered. The court said a reasonable insured would expect that chemicals released by a mix of bleach and the product would be covered by the CPL.

The court also rejected claims based on the manufactured goods eclusion under the Covered Professional Activities endorsement as well as  the ECPL Endorsement covering Laboratory Analysis,Indoor Air Quality Consulting, Soil Testing and Underground Storage Tank System Testing.

The court also denied insurer's motion for summary judgment on  failure to provide notice to insuer within ten days since the facts were unclear when a supervisory employee of the consultant became aware of the pollution incident or when they were aware of an occurance that might result in a claim. Minkoff v Action Remediation, Inc., 2010 N.Y. Misc. LEXIS 4857 (Sup. Ct-Nassau Cty 9/30/10)