Insurance Company Must Defend Against Lead Poisoning Claim

Facts: Tenant sued landlord, claiming her child was injured by lead paint exposure in tenant's apartment. Tenant sought $3 million in compensatory damages and $1 million in punitive damages. Landlord asked its insurance company to defend against tenant's action in accordance with its general liability policy. The insurance contract required the insurance company to pay damages on landlord's behalf based on bodily injury occurring at the building. The insurance company claimed that lead paint poisoning wasn't covered because damages from ``pollution'' were excluded from coverage under landlord's policy. Landlord then sued the insurance company, claiming that the insurer was required to defend landlord under the terms of its contract. Court: Landlord wins. The pollution exception in the insurance contract wasn't clear and so any question of whether landlord was covered for tenant's lead paint claim had to be decided in landlord's favor. The pollution exception clause in landlord's policy excluded from coverage claims for bodily injury or property damage that arose from the ``discharge, dispersal, seepage, migration, release or escape of'' pollutants, which were defined as any ``irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.'' A standard pollution exception clause is generally considered to be concerned with environmental pollution but, in this case, the injury took place in tenant's apartment and it was unclear how the lead paint exposure occurred.

Lefrak Organization v. Chubb Custom Ins. Co.: 1996 U.S. Dist. LEXIS 15567 (S.D.N.Y. 10/21/96) (Mukasey, J)