Present: All the Justices
MONTICELLO INSURANCE COMPANY
OPINION BY JUSTICE LEROY R. HASSELL, SR.
v. Record No. 960193 November 1, 1996
MICHAEL BAECHER, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
Luther C. Edmonds, Judge
In this insurance coverage dispute, the dispositive issue is
whether an insurer may enforce an exclusion clause described as a
"health hazard exclusion."
Monticello Insurance Company had issued an "Owners',
Landlords', and Tenants' Liability Insurance" policy to John
Joseph Baecher on property he owned at 1821 LaSalle Avenue in the
City of Norfolk. Upon his death, Monticello issued subsequent
policies to his estate. The insured premises had been occupied
by Louise Conyer and her young grandchild, Shanay Hunter.
Shanay, an infant who sued by Conyer, her next friend, and
Conyer, individually, (collectively, Conyer), filed an action in
the trial court against the co-executors of the estate of John
Joseph Baecher. Conyer alleged that Shanay was injured when she
ingested lead-based paint and that the estate "was negligent
and/or negligent per se for allowing lead-based paint to be upon
its premises."
Monticello's policy of insurance contained numerous
exclusions, including the following health hazard exclusion:
"No coverage is granted by this policy for any claim or
expense (including but not limited to defense costs)
for personal injury (as defined) made by or on behalf
of any person or persons directly or indirectly on
account of continuous, intermittent or repeated . . .
ingestion . . . of, any substance . . . where the
Insured is or may be liable as a result of the
manufacture, production, extraction, sale, handling,
utilization, distribution, disposal or creation by or
on behalf of the Insured of such substance. . . ."
Monticello initiated this action by filing a motion for
declaratory judgment against Michael Baecher and John J. Baecher,
Jr., co-executors of the estate of John Joseph Baecher, deceased,
and Conyer. Monticello sought a declaration that it has no
obligation to defend or indemnify the estate for any claims made
by Conyer in the underlying litigation. The estate and Conyer
asserted, among other things, that the health hazard exclusion is
unenforceable because the lead-based paint was not utilized
within the intendment of the exclusion. The trial court held
that the health hazard exclusion is unenforceable, ruling the
estate did not "utilize" lead-based paint because it was beneath
several layers of paint that did not contain lead. The trial
court entered a decree declaring that Monticello has an
obligation to defend and indemnify the estate. Monticello
appeals.
Monticello argues that the trial court erred by failing to
enforce the health hazard exclusion. Monticello contends that
the exclusion is enforceable because Shanay ingested lead-based
paint that the estate had utilized. Monticello observes that in
the underlying litigation, Conyer asserts that the estate is
liable to her because it used lead-based paint in the leased
premises. The estate responds that neither it nor John Baecher
applied lead-based paint to the walls of the leased premises and,
therefore, the lead-based paint was not utilized within the
meaning of the exclusion. Furthermore, the estate and Conyer
contend that the exclusion is ambiguous and, therefore, must be
construed against Monticello.
Familiar principles of contract interpretation guide our
resolution of this dispute. "Reasonable policy exclusions not in
conflict with statutes will be enforced; to be effective, the
exclusionary language must clearly and unambiguously bring the
particular act or omission within its scope." Floyd v. Northern
Neck Insurance Co., 245 Va. 153, 158, 427 S.E.2d 193, 196 (1993).
Further, "[a]n insurance policy is a contract, and, as in the
case of any other contract, the words used are given their
ordinary and customary meaning when they are susceptible of such
construction." Graphic Arts Mutual Ins. v. C.W. Warthen Co., 240
Va. 457, 459, 397 S.E.2d 876, 877 (1990) (quoting Hill v. State
Farm Mutual Auto Ins., 237 Va. 148, 152, 375 S.E.2d 727, 729
(1989)). In the absence of an ambiguity, we must interpret the
insurance contract by examining the language contained therein.
As we have stated, "where an agreement is complete on its face,
is plain and unambiguous in its terms, the court is not at
liberty to search for its meaning beyond the instrument itself."
Globe Co. v. Bank of Boston, 205 Va. 841, 848, 140 S.E.2d 629,
633 (1965) (citations omitted). Additionally, a word is
ambiguous if it is susceptible of two or more meanings. Berry v.
Klinger, 225 Va. 201, 207, 300 S.E.2d 792, 796 (1983).
Applying these principles, we are of opinion that the health
hazard exclusion clause is enforceable and, therefore, Monticello
has no obligation to defend or indemnify the estate for any
claims arising out of the allegations contained in the underlying
litigation. The word "utilization" is defined as "the action of
utilizing or the state of being utilized." Webster's New
International Dictionary 2525 (3rd ed. 1986). The word "utilize"
means, "to make useful; turn to profitable account or use; make
use of." Id. Contrary to the assertions of the estate and
Conyer, the word "utilization" found in the exclusion is not
ambiguous because within the context of the exclusion,
"utilization" is not "susceptible of two or more meanings."
In the underlying litigation, Conyer seeks to recover
damages for injuries that Shanay incurred as a result of the
ingestion of lead-based paint which was affixed to the walls of
premises the estate owns. The plain language of the exclusion
relieves Monticello of any obligation to pay any claim or provide
a defense for any personal injury caused by the "ingestion . . .
of, any substance . . . where the [estate] is or may be liable as
a result of the . . . utilization . . . of such substance." It
is true, as the estate asserts, that the lead-based paint was
covered by paint which did not contain lead. This fact, however,
does not render the exclusion unenforceable. We are of opinion
that the estate continued to "make use of" the lead-based paint
because the estate allowed that paint to remain on the walls of
its leased premises.
Additionally, we find no merit in the estate's contention
that the term "personal injury" is ambiguous. That term simply
is not susceptible of two or more meanings within the context of
the health hazard exclusion.
In view of the foregoing, we need not consider the
litigants' remaining arguments. Accordingly, we will reverse the
judgment of the trial court, and we will enter a judgment
declaring that Monticello Insurance Company has no duty to defend
and/or indemnify the estate of John Joseph Baecher against the
claims of Louise Conyer and Shanay Hunter.
Reversed and final judgment.