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Rice Painting Company, Inc. v. Depositors Insurance Co.

United States District Court, E.D. Missouri, Eastern Division

November 20, 2017

RICE PAINTING COMPANY, INC., Plaintiff,
v.
DEPOSITORS INSURANCE COMPANY, Defendant.

          MEMORANDUM AND ORDER

          JOHN M. BODENHAUSEN UNITED STATES MAGISTRATE JUDGE

         This matter is before the Court on the motion of plaintiff Rice Painting Company for summary judgment, pursuant to Rule 56, Fed.R.Civ.P. Defendant Depositors Insurance Company has filed a response in opposition and the issues are fully briefed. All matters are pending before the undersigned United States Magistrate Judge, with consent of the parties, pursuant to 28 U.S.C. § 636(c).

         I. Factual Background

         A. The Raineri Contract

         Plaintiff is a professional painting contractor. On June 10, 2013, Raineri Construction (“Raineri”) hired plaintiff to provide painting and remediation work as a subcontractor on a St. Louis Public Schools' (“SLPS”) project at Roosevelt High School. Complaint at ¶ 5 [Doc. #7]. Raineri's contract with SLPS provided that “all painted surfaces and buildings constructed prior to 1980 should be assumed to contain lead within the paint, ” and that “Raineri was to require their tradesmen to conduct their business in accordance with OSHA . . . and USEPA's Renovation on Repair and Painting Rule (RRP).” Raineri Const. LLC v. Special Admin. Bd. of the Trans. Dist. of the City of St. Louis, Mo. at al., Cause No. 1522-CC10210, First Am. Pet. at ¶ 7 (“Raineri petition”). [Doc. # 38-8]. After plaintiff began work, SLPS's environmental consultant conducted a site inspection for lead dust at Roosevelt High School. Following this inspection, the consultant issued a report that recommended cleaning the areas that failed the “lead dust clearance testing.” Id. at ¶ 22.

         SLPS undertook cleanup operations between June 29, 2013, and September 20, 2013. Id. at ¶ 23. SLPS incurred substantial costs remedying the lead contamination and refused to pay Raineri for its services until it was reimbursed for these costs. See id. at ¶¶ 25-26. Raineri filed suit against SLPS to recover the remainder of its fees for the Roosevelt project. Raineri also named plaintiff as a defendant to the suit on the theory that plaintiff should be responsible for the damages if the court found SLPS was not required to pay Raineri the remainder of its fees.[1] Id. at ¶ 27. Raineri alleges in the underlying action that plaintiff failed to properly scrape and remove the existing paint, secure the work site to prevent the spread of lead contaminants to other areas, follow required environmental precautions, require its employees to wear protective equipment, and use proper controls to minimize reintroducing lead into the air. Id. at ¶ 58. Plaintiff claims it has incurred significant expense to defend itself in the Raineri proceeding. Statement of Uncontroverted Material Facts (“SUMF”) at ¶ 15 [Doc. # 38].

         B. The Depositors Insurance Company Policy

         Prior to the SLPS project, plaintiff purchased from defendant a policy of commercial general liability insurance coverage (the “Policy”) with a limited pollution coverage endorsement (the “Pollution Endorsement”) for the policy period of June 28, 2012 to June 28, 2013. [Doc. # 38-1]. After Raineri made demand on plaintiff for indemnification [Doc. # 38-5], plaintiff made a written demand upon defendant to provide a defense and indemnification against SLPL's claims, pursuant to the Pollution Endorsement. SUMF at ¶ 12. In response, defendant determined that the claim was not covered by the Policy and notified plaintiff that it was denying the claim. Denial letter [Doc. # 38-7]. Plaintiff filed this declaratory judgment action, [2] seeking a declaration that defendant is obligated to provide a defense in the Raineri action.

         As relevant to this dispute, the Policy includes a “Commercial General Liability Coverage Form” (the “Coverage Form”), which sets out the basic insuring agreement; an endorsement entitled “Limited Pollution Coverage - Job Sites” (the “Pollution Endorsement”); and an endorsement entitled “Exclusion - Asbestos, Electro-Magnetic Radiation, Lead and Radon” (the “Lead Exclusion”).

         The introductory paragraph of the Coverage Form states that “[v]arious provisions in this policy restrict coverage” and the insured should “read the entire Policy carefully to determine rights, duties and what is and is not covered.” Policy at p. 22 [Doc. # 38-1]. Section 1 of the Coverage Form states that defendant “will pay those sums that the insured becomes legally obligated to pay as damages because of property damage to which the insurance applies.” Id. The Coverage Form also states that defendant has the duty to defend the insured against any suit seeking those damages. Id. However, this duty to defend does not extend to an action against the insured for damages to property or bodily injury to which the insurance does not apply. Id.

         The Pollution Endorsement provides additional coverage beyond what appears in the Coverage Form and provides in relevant part: “We will pay those sums that the insured becomes legally obligated to pay . . . [a]s clean-up costs because of ‘environmental damage' which directly results from physical injury to tangible property . . . to which this insurance applies. We will have the right and duty to defend any ‘suit' seeking these damages. We may at our discretion investigate any ‘pollution incident' and settle any claim or ‘suit' that may result.” Pollution Endorsement, Section A.1, Id. at p. 55. Plaintiff argues it is entitled to a defense under this provision. Complaint at ¶ 14 [Doc. # 7].

         The pollution insurance applies to environmental damage only if:

1) The . . . “environmental damage” arises out of a ...

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