Pennsylvania Nat. Mut. Cas. Ins. Co. v. Roberts, No. 10-1987

Decided Feb. 3, 2012

Doctors diagnosed Lakia Roberts with lead poisoning from being exposed to lead in her home. Both the current owner of the property where Roberts lived and the former realty company were found liable by a jury. Though the insurance company only covered the home during roughly forty percent of the time that Roberts was exposed to lead, it was responsible for indemnifying the former realty company because it had been found jointly and separately liable for the entire amount. The insurer therefore brought a declaratory action in federal court arguing that it should only be liable to indemnify the realty company for the forty percent of the time it covered the property. The district court essentially agreed and found the insurer liable for 43.6% of the total damages.

On appeal, the Fourth Circuit affirmed the pro rata reduction of the insurer’s liability because the policy, like any contract, must be interpreted to effect its terms and the insurer “cannot be held liable for periods of risk it never contracted to cover.” The court, however, reversed and remanded the actual determination of the pro rata percentage of damages assigned to the insurer. After the former realty company for Robert’s home sold the premises there was no evidence that the insurer intended to continue covering the home under new ownership. The amount of damages the insurer was liable for was therefore reduced to 40%.

Full Opinion

-C. Alexander Cable

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