Other defendants, including builders, were grouped into “subclasses.”

Prestige asked its insurance carrier (a risk retention group), National Builders and Contractors Insurance Company (NBCI), for a defense and indemnity. NBCI denied coverage, and Prestige sued.

NBCI moved for summary judgment, contending that its policy's total pollution exclusion endorsement operated to exclude Prestige's claim for defense and indemnity related to Ms. Elmore's lawsuit.

The Policy

The policy provided:

SECTION I—COVERAGES

COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply.

* * *

b. This insurance applies to “bodily injury” and “property damage” only if:

(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”….

The policy defined “bodily injury” as:

bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time. No emotional distress is covered except emotional distress caused by bodily injury.

The policy defined “property damage” as:

a. Physical injuries to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or

b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.

It defined “occurrence” as:

an accident, including continuous and repeated exposure to substantially the same general harmful conditions.

A total pollution exclusion endorsement attached to the policy provided that:

This insurance does not apply to:

Pollution.

(1) “Bodily injury” or “property damage” which would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants” at any time.

(2) Any loss, cost or expense arising out of any:

(a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of “pollutants”; or

(b) Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of, “pollutants.”

It defined “pollutants” to mean:

any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.

The Court's Decision

The court granted NBCI's motion.

The court found that, as the use of the word “total” in the total pollution exclusion endorsement “suggest[ed],” the language was “unambiguous.” It said that applying the “plain meaning” of the terms used in the definition of “pollutants” led it to conclude that the definition encompassed the factual allegations raised in Elmore's complaint, “namely that sulfide and other noxious gases emitted from the 'defective drywall' were the source of Elmore's damages.”

Therefore, the court decided, Ms. Elmore's allegations against Prestige were not covered by the policy based on the total pollution exclusion endorsement.

In sum, the court concluded, the total pollution exclusion endorsement in the policy negated NBCI's duty to defend or indemnify Prestige.

The case is Prestige Properties, Inc. v. National Builders and Contractors Ins. Co. in the U.S. District Court for the Southern District of Mississippi.