CRESCENT LAND DEV ASSOC LLC v. ILLINOIS UNION INSURANCE COMPANY (2023)

Order, Supreme Court, New York County (Andrew S. Borrok, J.), entered September 7, 2022, which granted defendant's motion to dismiss the complaint, unanimously affirmed, without costs.

Plaintiffs, owners of a large portfolio of commercial real estate, commenced this action against defendant insurer Illinois Union Insurance Company for remediation coverage related to losses incurred during the COVID–19 pandemic.  Defendant disclaimed coverage because COVID–19 was neither a “pollution condition” or “indoor environmental condition” as defined by the policy to trigger coverage.

We agree with defendant that “pollution condition” within the context of the policy does not encompass viruses or viral material (see Northwell Health, Inc. v. Illinois Union Ins. Co., 2022 WL 912929, *4–5, 2022 U.S. Dist LEXIS 57432, *10-14 [S.D.N.Y. March 29, 2022, No. 20–CV–6893 (LTS/OTW)] [examining similar language used to define “pollution condition”]).  Throughout the policy, viruses are consistently attached to the term “indoor environmental condition,” and not specifically identified in “pollution condition.”

Moreover, endorsement 28 of the policy modified the definition of “indoor environmental condition” to include viruses, provided that the viruses “are not the result of communicability through human-to-human or bodily fluid contact.”  As plaintiffs allege, COVID–19 is a communicable virus because it is “caused by the spread of SARS–CoV–2 virus, which is spread both in the air through respiratory droplets and from surface contact via fomite transmission.”  Therefore, damages and losses related to COVID–19 are excluded from coverage.