Suits Against Insurers For Indemnity and Breach of Duty to Defend - U.S. Third Circuit
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Suits Against Insurers For Indemnity and Breach of Duty to Defend

In Devcon Int'l Corp. v. Reliance Ins. Co., No. 07-4602, the Third Circuit dealt with a plaintiff's claim that its insurer was required to defend and indemnify plaintiff in a nuisance action brought against it, arising from a construction to extend an airport that generated large amounts of dust which drifted over nearby property.  In affirming the district court's entry of a declaratory judgment in favor of the insurer, the court held that the insurer has carried its burden to show that the plain language of the pollution exclusion removes coverage for the plaintiffs' alleged harms.   

Specialty Surfaces Int'l, Inc. v. Cont'l Cas. Co., No. 09-2773, also concerned a plaintiffs' action against its insurer, seeking a declaratory relief that the insurer had a duty to defend and indemnify plaintiffs in an underlying action. 

In affirming the district court's grant of summary judgment in favor of the insurer, the court held that Pennsylvania has a far greater interest in having the coverage issue determine in accordance with its law than California.  Accordingly, the court held that the insurer did not have a duty to defend after receiving notice of the original complaint.  In addition, the insurer was not required to defend plaintiff because the allegations in the amended complaint do not support a determination that any damage was caused by an "occurrence," as any damages to plaintiff's own work product based on plaintiff's alleged negligence claims are claims of damage based on faulty workmanship.   

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