Last April saw decisions handed down in Pennsylvania and Florida that addressed the ghoulish question of whether first-party policies cover property damage from a decomposing body, and the courts in both jurisdictions held that the answer in no. A word of warning – the balance of this post is not for the squeamish.
The first decision was Certain Underwriters at Lloyds of London v. Creagh, — Fed.Appx. —, 2014 WL 1408868 (3rd Cir. , April 14, 2014). The insured owned a building in Philadelphia where a tenant died in the bathroom of a second floor apartment. The body went undiscovered for two weeks, by which time bodily fluids had seeped through the floor, contaminating both the apartment itself and parts of the first floor unit below, and there was “a powerful foul odor” in the entire structure. The policyholder spent $180,000 to sanitize, remediate, and even rebuild portions of the building, and he then sought coverage from his property insurance carrier, Certain Underwriters at Lloyds of London.
Lloyds denied, and the matter went into suit. The Eastern District of Pennsylvania granted summary judgment to the insurer, and the Third Circuit affirmed earlier this year, holding that coverage was barred by two exclusions in the Lloyds policy. The first was a “Microorganism Exclusion” that recited as follows:
This Policy does not insure any loss, damage, claim, cost, expense or other sum directly or indirectly arising out of or relating to: mold, mildew, fungus, spores or other microorganism of any type, nature or description, including but not limited to any substance whose presence poses an actual or potential threat to human health.
The unanimous appellate panel agreed with the lower court’s finding that “the fluids that escaped from the decedent’s body and contaminated the premises contained bacteria, which is a microorganism,” and it rejected the policyholder’s argument that the bacteria were confined to the body as opposed to the bodily fluids in the absence of any evidence to that effect. Lloyds had presented expert testimony that all of the damages, including the smell, arose out of the bacteria “which caused the fluid to escape the body and grew in the fluid after it left the body.”
In addition, Judge Thomas M. Hardiman’s opinion held that the contract of insurance’s “Seepage and/or Pollution and/or Contamination Exclusion” also operated to preclude coverage. That provision stated:
[T]his Certificate does not ensure: (a) any loss, damage, costs or expense, or (b) any increase in insured loss, damage cost or expense . . . which arises from any kind of seepage or any kind of pollution and/or contamination[.]
The exclusion went on to recite that it specifically excluded coverage for losses caused by seepage of “any substance designated or defined as toxic, dangerous, hazardous or deleterious to persons or the environment under any . . . Federal, State, Provincial, Municipal or other law, ordinance or regulation[.]” As the Court of Appeals explained, “the safety precautions that [the] sanitation contractor took and the classification by the Occupational Safety and Health Administration of such bodily fluids as potentially toxic and hazardous demonstrate the health and safety risk posed” by such substances.
Nine days later an intermediate level appellate court in Florida rejected similar claims in Rodrigo v. State Farm Florida Ins. Co. — So.3rd —, 2014 WL 1612494 (Fla.App. 4 Dist., April 23, 2014). The policyholder owned a condominium, and she made a claim for damage to personal property after her next door neighbor died. Once again, the body went undiscovered for days, and it leaked bodily fluids which infiltrated the walls and penetrated the insured’s unit. The insurer, State Farm Florida Insurance Company, afforded personal property coverage only for named perils, and it denied liability because a decomposing body was not one of them.
The insured filed suit, contending that her property damage was caused by the named peril of “explosion,” but the trial court disagreed, granting summary judgment to State Farm. The District Court of Appeals was in accord, and it affirmed. The policyholder had presented a physician’s affidavit attesting to the fact that the decedent’s body “underwent advanced decomposition” and “the internal contents of her body explosively expanded and leaked.” The unanimous appellate panel was having none of that, however. As Judge Melanie G. May’s opinion explained, the fact that the term “explosion” was not defined meant that it had to be construed in accordance with the word’s plain meaning. In the words of the court:
Rather than stretching common sense, the trial court correctly gave the term “explosion” its “plain and unambiguous meaning as understood by the ‘man-on-the-street.’ “ . . . The plain meaning of the term “explosion” does not include a decomposing body’s cells explosively expanding, causing leaking of bodily fluids . . . [A]lthough novel in her attempt to do so, the insured could not establish that the decomposing body was tantamount to an explosion.