On March 24, 2010, Judge Rebecca Beach Smith of the U.S. District Court for the Eastern District of Virginia dismissed claims filed by a Virginia Beach-based builder seeking insurance coverage for the costs of voluntarily remediating Chinese Drywall.
In Builders Mutual Insurance Company v. Dragas Management Corporation, the insurers sought a declaration that the insurance policies did not cover Dragas’ efforts to remediate 73 condominiums constructed with drywall manufactured in China because the builder’s remediation efforts were voluntary and had not been compelled by court or governmental order. The Court agreed, ruling that Dragas had not proven that it was legally obligated to pay for the remediation, a prerequisite to coverage of the insurance claim. The Court allowed Dragas 14 days within which to amend its claims to demonstrate that it was legally obligated to remediate the condominiums. The Court’s opinion did not address the applicability of the total pollution exclusion.