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More than four years after the insurer denied coverage for an asbestos-related claim, the insured asked the insurer to reevaluate the claim, stating that its loss was caused by vandalism. The insurer resisted. This case is Woodcliff Lake Board of Education v. Zurich American Ins. Co., 2013 N.J. Super. Unpub. LEXIS 2041 (N.J. Super. Ct. App. Div. 2013). Please note that this case is unpublished and therefore has limited precedential value.

In 2005, the Board had construction projects in progress at certain schools. Asbestos material was discovered and the Board hired asbestos abatement contractors to remove the asbestos. As a result of the abatement schedule, none of the construction contractors were permitted to be in the affected areas. However, when the abatement team showed up, it discovered two plumbers working in the prohibited area. The team also found that asbestos had been improperly disturbed and appeared to be strewn about the area.

The New Jersey Department of Community Affairs and the EPA got involved, and the Board was ordered to clean up the area. The Board incurred over $150,000 in expenses for the emergency abatement services. The Board was insured by Zurich under a commercial insurance policy, and the insured made a claim for the cost of the abatement. Zurich denied the claim based on the pollution exclusion.

Four years later, the Board requested Zurich to reevaluate the decision, contending that the pollution exclusion was inapplicable because the disturbance of the asbestos had resulted from vandalism, one of the specified causes of loss that are exceptions to the exclusion. Zurich declined and both sides went to court seeking summary judgment. The trial court ruled in favor of the insurer and this appeal followed.

The Superior Court of New Jersey, Appellate Division noted that the case required it to interpret the pollution exclusion. The Board contended that the pollution exclusion did not apply because the loss resulted from vandalism since the disturber of the asbestos caused property damage by willfully and maliciously tearing out asbestos that he was not authorized to disturb. Zurich argued that the pollution exclusion is clear in its wording and that the insured had the burden of showing that the loss was caused by vandalism.

The court looked to the standard dictionary and Black's Law Dictionary for an accepted meaning of the term "vandalism." Based on the definitions, the court ruled that the damage must be caused intentionally with malice, or at least with reckless or wanton disregard for the rights of others in order for vandalism to occur. The court could find no evidence showing that the disturbance was the result of any malicious act and in fact, the court said that there was no evidence of any trespasser coming onto the premises to wreak havoc with the asbestos.

The court found the exclusion unambiguous and concluded that the pollution exclusion applied. The exception for the escape or dispersal of pollutants caused by any specified cause of loss—in this case, vandalism—did not apply. The opinion of the trial court was affirmed.

Editor's Note: This is one of those "Nice Try, But…" cases. The pollution exclusion in the policy did allow coverage if the pollutant was dispersed or released because of certain perils, such as vandalism. However, the insured could not show that the contractors intended to damage the property, so although the plumbers' actions may have been inappropriate and unauthorized, their actions did not rise to the level of vandalism as defined in dictionaries.

The appeals court noted that courts must be careful not to disregard the clear intent of a policy's exclusion and in this instance, the claim of the insured was too far-fetched of an interpretation to create an ambiguity requiring coverage.

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