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LEFRAK ORG., INC. v. CHUBB CUSTOM INS. CO.

October 21, 1996

LEFRAK ORGANIZATION, INC., a New York Corporation; CORNELL LEASING CORP., a New York Corporation; and MID-STATE MANAGEMENT CORPORATION, a New York Corporation, Plaintiffs, against CHUBB CUSTOM INSURANCE COMPANY, a Delaware Corporation, Defendant.


The opinion of the court was delivered by: MUKASEY

 MICHAEL B. MUKASEY, U.S.D.J.

 The Lefrak Organization, Inc. ("LOI"), Cornell Leasing Corp., and Mid-State Management Corp. (together, "Lefrak") bring this action against their insurance company, Chubb Custom Insurance, for declaratory relief and damages arising from Chubb's refusal to defend Lefrak in a negligence action alleging lead paint poisoning at Lefrak-owned property. Plaintiffs seek a summary judgment declaring that Chubb must defend them in the negligence action. Chubb has cross-moved for a judgment that it is not so obligated, because lead paint poisoning falls within the pollution exception to the policy in question. Because the pollution exception is ambiguous as applied to the facts of this case, and because ambiguities in insurance contracts must be resolved against the insurer, plaintiffs' motion for summary judgment is granted.

 I.

 When evaluating cross-motions for summary judgment, the court considers each motion separately, and on each views the facts in the light most favorable to the non-moving party. Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993).

 The facts of this case essentially are undisputed: LOI, through affiliated entities including Cornell and Mid-State, owns, manages and rents apartment buildings in New York City. (Compl. P 2) Chubb provides and underwrites liability insurance policies. (Id. P 11) In 1993 Lefrak purchased from Chubb a $ 1.35 million General Liability Insurance Policy for certain of its properties for the policy year June 20, 1993 to June 20, 1994. Lefrak subsequently extended the policy for an additional year, from June 20, 1994 to June 20, 1995. (Klein Aff. P 21)

 The General Liability Insurance Policy, a form insurance contract drafted by representatives of the insurance industry, describes the scope of its coverage in pertinent part as follows:

 
We will pay damages the insured becomes legally obligated to pay by reason of liability imposed by law or assumed under an insured contract because of:
 
bodily injury or property damage caused by an occurrence; or personal injury . . . .
 
We will defend any claim or suit against the insured seeking such damages. We will pay in addition to the applicable limit of insurance the defense expense.

 (Klein Aff., Ex. A at 1)

 Damages resulting from "Pollution" are specifically excluded from coverage under the policy. The scope of that exclusion is defined as follows:

 
1. bodily injury or property damage arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of pollutants:
 
a. at or from premises which are or were at any time owned or occupied by, or rented or loaned to any insured;
 
b. at or from any premises, site or location which is or was at any time used by or for any insured or others for the handling, storage, disposal, processing or treatment of waste;
 
c. which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for any insured or any person or organization for whom you may be legally responsible; or
 
d. at or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured's behalf are performing operations:
 
i. if the pollutants are brought on or to the premises, site or location in connection with such operations by such insured, contractor or subcontractor; or
 
ii. if the operations are to test for, monitor, clean up, remove, contain, treat, detoxify, or neutralize, or in any way respond to, or assess the effects of pollutants. . . .
 
Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes ...

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