Insurer Not Obligated to Defend Apartment Building Owner Where Tenants Complained of Asbestos and Other Contaminants after Renovation of Their Unit

July 31, 2013 | Insurance Coverage

A federal district court in California has ruled that claims of asbestos and other contamination brought by tenants against the owner of their apartment building after it renovated their unit were not covered by the owner’s insurance policy.   

The Case 

Parklyn Bay Company, LLC, owned an apartment building in San Francisco. After it began renovating one of the units, the tenants claimed that large quantities of dust, debris, and unknown contaminants had entered their unit. The tenants also claimed that they were told by a contractor that the ceilings had tested positive for asbestos. After that, they said, they learned that the carpet in their unit contained asbestos. 

The tenants sued Parkyn, which tendered the defense to its insurance carrier, Atain Specialty Insurance Company. 

Atain disclaimed coverage and sought a declaratory judgment that it did not have to defend Parklyn. The insurer moved for summary judgment. 

The Court’s Decision 

The court ruled in favor of Atain, concluding that it did not have a duty to defend Parklyn against any of the underlying claims. The court reasoned that: 

(1) Claims stemming from Parklyn’s acts as the landlord, rather than as a contractor, were not covered by the policy;

(2) Intended, expected events were not “occurrences” covered by the policy; and

(3) The policy excluded coverage of asbestos-related claims. 

The case is Atain Specialty Ins. Co. v. Parklyn Bay Co., LLC, No. CV 12-05665 CRB (N.D. Cal. July 24, 2013).

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