Covington moved for summary judgment as to its duty to defend and indemnify and for reimbursement of the fees and costs it incurred in defending Hillsborough and Mr. Davidson.

The Covington Insurance Policy

The Covington insurance policy provided that it did not apply to:

[b]odily injury”, “property damage” . . . which would not have occurred, in whole or in part, but for the actual, alleged, or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of, any “fungi”, bacteria, or mold on or within a building or structure, including its contents, regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such “bodily injury”, “property damage”. . . .

[This insurance does not apply to any] loss, cost or expense arising out of the abating, testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, neutralizing, remediating or disposing of, or in any way responding to, or assessing the effects of, “fungi”, bacteria or mold, by any insured or by any other person or entity. 

The district court granted summary judgment to Covington on the duty to defend and indemnify.

In its decision, the district court explained that the damages the Stearns sought were based on mold/fungal infections that they alleged had caused damage to Ms. Stearns' lung and kidneys, and that the Stearns alleged that the site of the contamination that infected Ms. Stearns was their rental apartment.

The district court said that although Florida law required policy exclusions “to be read narrowly,” the facts were uncontested: The Stearnses contended that they had been injured by mold/fungi infection from their apartment.

The district court then ruled that the Covington policy “simply does not cover mold/fungi infection.”

The district court was not persuaded by the argument put forth by Hillsborough and Mr. Davidson that Ms. Stearns' mold infection likely came from elsewhere, or by the Stearnses' argument that there was no evidence as to the “delivery device” of the mold. In the district court's opinion, that was “not relevant.”

The district court reasoned that the case was “about a mold infection alleged from a damp apartment,” and Covington “simply does not cover such mold/fungi liability in this policy.”

Accordingly, the district court concluded that Covington had no duty to indemnify Hillsborough and Mr. Davidson against the Stearnses' mold/fungi claims.

However, the district court rejected the insurer's request that it be reimbursed for the fees and costs it incurred in defending the Stearnses' suit under a reservation of rights.

The district court reasoned that Covington's reservation of rights “did not expressly reserve future reimbursement of fees/costs, with the option of the insureds to accept or reject this defense.” Rather, thd district court said, Covington defended until the case clearly showed the alleged cause of injury was mold/fungal infection at the apartment.

On these facts, the district court concluded, Covington's request to recover costs and fees was “due to be denied.”

The case is Covington Specialty Ins. Co. v. Hillsborough, LLC, No. 8:18-cv-1299-T-02SPF (M.D. Fla. Feb. 20, 2019).