A federal appellate court upheld a lower court decision in favor of an Iowa reinsurer in a dispute with a Munich Re unit on redevelopment and property damage related to construction that created silica dust.
Cold Spring, Minnesota-based MNDKK LLC hired Cold Spring-based Dingmann Bros. Construction of Richmond Inc. to install a garage in its warehouse, according to Wednesday’s decision by the 8th U.S. District Court in St. Louis. Louis i Grinnell Mutual Reinsurance Co. v. Dingmann Bros. Construction of Richmond, Inc., Great Lakes Insurance SE; MNDKK, LLC.
Dingmann’s subcontractor dry-cut the wall without dust protection, and the resulting dust covered the inside of the building and its contents, it was stated in the judgment. The wall from which the garage door was cut tested positive for silica.
The Munich Re unit Great Lakes paid the policyholder MNDKK̵7;s claims for redevelopment costs and property damage and then sent subrogation claims to Dingmann. Dingmann’s insurer, Grinnell, refused to reimburse the company based on two policy exceptions related to the presence of silica in the dust.
Grinnell brought an action before the U.S. District Court in Minneapolis, which ruled that the exceptions were “unequivocally” applied.
A panel of three judges unanimously confirmed the lower court. “There is no genuine dispute as to material facts as to whether the dust contained silica,” the verdict said.
The panel said it did not agree with the Great Lakes that the silica-related remediation and exemptions from property damage did not apply, to confirm the lower court ruling.
Grinnell’s attorney, Thomas C. Brock, of Erickson, Zierke, Kuderer & Madsen, PA in Minneapolis, said that very few cases interpret the “prevalent” exclusion of silica that is standard in most commercial public liability insurance policies.
“The 8th Circuit correctly determined that it was an unequivocal exception that excludes all coverage for property damage resulting from concrete dust,” he said.
Munich Re’s lawyer did not respond to a request for comment.
Last week, the 8th Circuit upheld a lower court decision, saying the Great Lakes do not need to indemnify a bar and its owners for negligence resulting from a bar employee’s attack on the lounge parking lot because its policy excludes attacks and batteries.