Skeleton in Closet (Literally) Leads to PA Coverage Action

Just in time for Halloween comes a bizarre coverage decision  from Pennsylvania.  There are any number of unusual substances that fall within the purview of “microorganism,” “seepage,” or “pollutants” exclusions for property damage. A corpse has now been added to that list by the United States District Court for the Eastern District of Pennsylvania. In Certain Underwriters at Lloyd’s London v. Creagh, et al., William Creagh discovered the decomposing body of one of his tenants, Arthur Doud, in Doud’s apartment. Because he had died about two weeks earlier, fluids seeped into the bathroom floor where he was found, contaminating the bathroom directly below.  Creagh’s costs to sanitize the affected areas of his building amounted to approximately $180,000.

Underwriters denied coverage for the expenses that Creagh incurred, and Creagh filed suit, with both parties moving for summary judgment. The court agreed with Underwriters and found that the damage fell within the microorganism exclusion since the fluids excreted from Doud’s body caused the growth of microorganisms within the apartment. Furthermore, the seepage of fluids from the body caused the damage and therefore the loss also fell within the seepage exclusion. The Court finally noted that although there was a potential that the organic materials in question fell under the pollutants exclusion, there was no need to rule on the issue given that Underwriters had already shown there was no issue of material fact as to whether the property damage fell within the microorganism and seepage exclusion.

Thanks to Thalia Staikos for her contribution to this post.  If you would like more information please write to Mike Bono.