Insurance Coverage/Construction Property Damage: Federal Court of Appeal rules on silica dust exclusion | Mitchell, Williams, Selig, Gates & Woodyard, LLC
The United States Court of Appeals for the Eighth Circuit (“Eighth Circuit”) asked in a May 18 opinion whether an insurance policy addressed certain alleged dust-related property damage. See Grinnell Mutual Reinsurance Co. v. Dingmann Brothers Construction of Richmond, Inc., et al.no. 21-2712.
The question examined was whether two insurance policy exclusions unambiguously excluded coverage due to the presence of silica in the dust.
MNDKK, LLC (“MNDKK”) engaged Dingmann Brothers Construction (“DBC”) to install a garage door in its building. The DBC subcontractor dry cut the wall without using dust protection. As a result, the interior of the building and its contents were covered in dust.
The wall from which the garage door was cut tested positive for silica.
MNDKK submitted a claim for cleanup costs and property damage to its insurer, Great Lakes Insurance (“GLI”). GLI paid the debt and its assignee sent a request for subrogation to DBC. DBC’s insurer (Grinnell Mutual Reinsurance Company [“Grinnell”]) refused to indemnify DBC on the grounds that two policy exclusions applied due to the presence of silica in the dust.
The two exclusions cited in the Eighth Circuit advisory include:
- Silica dust exclusion
- Exclusion of asbestos, lead and silica or silica-related dust
Both exclusions define silica-bound dust as:
. . . mixture or combination of silica and other dusts or particles.
The United States District Court granted summary judgment to Grinnell, finding that the exclusions applied unambiguously due to the presence of silica.
The Eighth Circuit, in its analysis of the potential application of the exclusions, noted that the first question was whether there was a genuine issue of material fact as to whether the dust contained silica. He held that, based on the tests that had been performed and the lack of testing by Grinnell, there was no real dispute of material fact.
The Eighth Circuit also addressed DBC’s argument that the exclusions were not applicable because the damage was due to silica or silica-related dust (as opposed to its effects). This argument was based on the placement of a comma with Grinnell claiming that:
. . . the relevant part of the provision applies only to cleaning up the effects of silica or silica-related dust, removing the effects of silica or silica-related dust and responding or assessment of the effects of silica or silica-related dust.
The Eighth Circuit rejected this argument noting that such an interpretation would be problematic due to the difficulty in separating losses due to silica as opposed to losses due to the effects of silica.
The Eighth Circuit also rejected the argument that the property damage provision was unenforceable because it overlapped with the other exclusion. He concludes that such an argument:
. . . assumes there is a conflict when multiple exclusions may apply to the same claim.
A problem would only arise if there was a conflict between an exclusion and a specific grant of coverage.
Finally, the Eighth Circuit also addressed the claim that there was no causal link between the existence of the silica and the damages, thus rendering the exclusions inapplicable. The Eighth Circuit rejected this argument stating that there was a causal connection noting:
. . . the property damage claimed by the defendants is “loss of use” that arises from “actual contact with, . . . or the presence of . . . silica-bound dust. And the resulting cleanup of “silica-bound dust” arose from “actual contact with, . . . or the presence of, . . . ‘silica-bound dust.'”
A copy of the notice can be downloaded here.