The United States District Court for the Northern District of Georgia recently held that an insurer had a duty to defend under a CGL policy and umbrella policy against claims relating to a hotel guest’s alleged contraction of Legionnaire’s Disease from a dirty hot tub. Nationwide Mut. Fire Ins. Co. v. Dillard House, Inc., No. 2:08-CV-254-WCO (N.D. Ga. Aug. 28, 2009). A copy of the decision can be found here.

Stuart Hecht died after allegedly contracting Legionnaire’s Disease from a hot tub at the Dillard House, a hotel and restaurant complex. Hecht’s wife sued Dillard House, and Dillard House’s insurer then sued Hecht’s estate and its insured for a declaratory judgment that there is no coverage.

On cross motions for summary judgment, the District Court held that the insurer had a duty to defend Dillard House, but postponed a determination on the duty to indemnify.

First, the District Court rejected the insurer’s argument that the hotel’s alleged “conscious, voluntary failure” to maintain sanitary conditions did not constitute an accidental “occurrence,” pointing out that under this interpretation, nearly every negligence claim could be interpreted to result from some original “conscious” decision to adopt a negligent practice.

Second, the District Court addressed the application of the policy’s “Fungi or Bacteria” exclusion, which excluded damages resulting from the “inhalation of, or ingestion of, contact with, exposure to, existence of, or presence of, any ‘fungi’ or bacteria.” The policy excepted from this exclusion, however, “any ‘fungi’ or bacteria that are, are on, or are contained in, a good or product intended for bodily consumption.”

The parties agreed that Hecht had contracted the disease by “inhaling” the steam from the hot tub. Rather, the parties disputed whether the hot tub water was a “product intended for bodily consumption” such that the exception to the exclusion applied. The court cited the dictionary definitions of each of the words “product,” “bodily,” and “consumption” in isolation, leading to the conclusion that hot tub water is indeed a “good or product intended for bodily consumption.” Specifically, the court found that hot tub water “is a ‘good’ because it is ‘something that has economic utility’; it is intended for ‘consumption’ because it is meant for the ‘utilization … in the satisfaction of wants’; and, specifically, it is intended for ‘bodily consumption’ because it is specifically meant for the ‘utilization … in the satisfaction of wants … relating to the body.’” Based on this reasoning, the court found that the allegations in the complaint fell within the policy’s duty to defend.