Typically, where the provisions of a policy are clear and unambiguous, they are enforced as written.  That was not the case in Mesa Underwriters Specialty Ins. Co. v. Fire Stars Hotels, LLC.

A fire occurred at Five Star Hotels, LLC resulting in a smoke inhalation death of an individual.  A wrongful death action was commenced against Five Star, and Five Star sought coverage from its insurer, Mesa Underwriters Specialty Ins. Co.

Mesa commenced a declaratory judgment action, and moved for summary judgement asserting there was no coverage for the wrongful death action based on the policy’s pollution exclusion. In determining whether the pollution exclusion barred coverage, the court noted that the exclusion defined pollutants as, “smoke”, “vapor” and “fumes”.  Thus, the court concluded that based on the plain language of the policy, the exclusion could bar coverage for damages caused by smoke inhalation.

However, despite this, the court denied Mesa’s motion.  The court noted the policy was meant to provide coverage for the insured’s property, including coverage from fire loss.  Since the insured purchased insurance covering fire loss, Five Star could establish that it reasonably expected the policy to provide coverage for smoke damage caused by fire loss.

This case illustrates that despite seemingly plain and unambiguous policy language, a court may deny a motion for summary judgment if it determines that an insured could have reasonably expected coverage under the policy.  Consequently, it is important to address the insured’s expectations through the course of discovery, as to potentially avoid a court denying summary judgment on a similar basis.

Thanks to Collen Hayes for her contribution to this post.