Inverse Condemnation and Personal and Advertising Injury Liability Coverage

May 21, 2013

 The insurer filed a motion for a new trial or to amend the court's judgment that the insured is entitled to coverage for damages caused by the insured in condemning and demolishing properties. This case is Lexington Insurance Company v. St. Bernard Parish Government, 2013 WL 870365.

 The dispute between the insured and the insurer arose out of the St. Bernard Parish Government's condemnation and demolition of numerous structures that the parish deemed to be unsafe after Hurricane Katrina devastated the area. After the demolition of certain structures, seventy-three property owners sued the parish, asserting claims of inverse condemnation.

 St. Bernard sought coverage for the lawsuits under policies issued by Lexington Insurance Company. The insurer filed a declaratory judgment action seeking a declaration that the damage to each individual property constituted a separate occurrence, and thus, covered by the insured's $250,000 retained limit, and that the insurer owed no coverage to the insured. The court found a series of related occurrences took place under the terms of the insurance policies and that Lexington owed St. Bernard coverage. The insurer requested a new trial or that the court alter or amend the judgment.

 Lexington contended that the court made several errors in its judgment. The first of these pertains to whether the claims qualified as personal and advertising injuries as defined in the policies. The insurer said that because St. Bernard did not own the properties, the injuries cannot constitute personal and advertising injuries since the wrongful actor in the pertinent definition must be an owner, landlord, or lessor. The court decided that the language in the policies was ambiguous and that the phrase "by or on behalf of its owner, landlord or lessor" can be interpreted to modify the phrase "that a person occupies". Under this interpretation, the language "by or on behalf of" ensures that the person impacted can just have a legal right to occupy the property from which he has been evicted. Moreover, the court said, many courts have held that a personal and advertising injury had occurred even though the actor did not own the property at issue. Lexington put forth no evidence that the court's judgment contains a manifest error of law or fact.

 Another contention by the insurer was that the court erred in its finding that the demolitions conducted by St. Bernard were related occurrences such that a single $250,000 retained limit applied to the injuries sustained. The court noted a policy provision stating that the retained limit "applies separately to each and every occurrence or series of continuous, repeated, or related occurrences". In arguing that St. Bernard dealt with each property separately and thus that the demolitions are not related, Lexington failed to explain to the court how, under its interpretation of the policies, actions could be deemed separate occurrences but also qualify as related occurrences. By the terms of the policies, the court said that it must be possible for occurrences to be related in some way but not related acts in order for the phrase "series of continuous, repeated, or related occurrences" to have any meaning. The court thus found that Lexington did not demonstrate that the court committed a manifest error of law in holding that the demolitions formed a series of related occurrences under the terms of the insurance policies.

 The final error claimed by the insurer pertained to the court's ruling that the demolitions were related. Lexington said that if the demolitions were related, they constitute a single occurrence that actually took place when St. Bernard condemned the properties. This happened on January 22, 2008 and the Lexington policies did not take effect until February 1, 2008; therefore, Lexington had no duty to provide coverage. The court said that a personal and advertising injury stems from a wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy. St. Bernard's condemnation of a property alone, without the ensuing demolition, did not produce a personal and advertising injury. It was not disputed that the demolitions occurred during the periods in which the Lexington policies provided coverage. So again, there was no manifest error of law in the court's holding that St. Bernard's actions in demolishing properties qualified as personal and advertising injuries and merited coverage under the Lexington policies.

 The court denied Lexington's motion for a new trial or to alter or amend the judgment.

 Editor's Note: The United States District Court, E.D. Louisiana, found that claims for inverse condemnation were personal and advertising injury claims. These claims were covered by the policies issued by Lexington. The court also decided that the actual demolition of the condemned properties did not constitute separate and distinct occurrences, but that the demolitions were related because they shared as their genesis a single action by the insured, that is, the condemnation order. As such, the retained limit did not apply to each and every demolition, that is, to multiple occurrences, but to one occurrence.