Title: Monticello Insurance Co. v. Baecher
Citation: N/A
Docket Number: 960193
State: Virginia
Issuer: Virginia Supreme Court
Date: November 1, 1996

Present:  All the Justices 
 
MONTICELLO INSURANCE COMPANY 
 
OPINION BY JUSTICE LEROY R. HASSELL, SR. 
v.   Record No. 960193                  November 1, 1996  
 
MICHAEL BAECHER, ET AL. 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK 
 
Luther C. Edmonds, Judge 
 
 
In this insurance coverage dispute, the dispositive issue is 
whether an insurer may enforce an exclusion clause described as a 
"health hazard exclusion."  
 
Monticello Insurance Company had issued an "Owners', 
Landlords', and Tenants' Liability Insurance" policy to John 
Joseph Baecher on property he owned at 1821 LaSalle Avenue in the 
City of Norfolk.  Upon his death, Monticello issued subsequent 
policies to his estate.  The insured premises had been occupied 
by Louise Conyer and her young grandchild, Shanay Hunter.   
 
Shanay, an infant who sued by Conyer, her next friend, and 
Conyer, individually, (collectively, Conyer), filed an action in 
the trial court against the co-executors of the estate of John 
Joseph Baecher.  Conyer alleged that Shanay was injured when she 
ingested lead-based paint and that the estate "was negligent 
and/or negligent per se for allowing lead-based paint to be upon 
its premises."   
 
Monticello's policy of insurance contained numerous 
exclusions, including the following health hazard exclusion: 
 
"No coverage is granted by this policy for any claim or 
expense (including but not limited to defense costs) 
for personal injury (as defined) made by or on behalf 
of any person or persons directly or indirectly on 
account of continuous, intermittent or repeated . . . 
ingestion . . . of, any substance . . . where the 
Insured is or may be liable as a result of the 
manufacture, production, extraction, sale, handling, 
utilization, distribution, disposal or creation by or 
on behalf of the Insured of such substance. . . ."   
 
 
Monticello initiated this action by filing a motion for 
declaratory judgment against Michael Baecher and John J. Baecher, 
Jr., co-executors of the estate of John Joseph Baecher, deceased, 
and Conyer.  Monticello sought a declaration that it has no 
obligation to defend or indemnify the estate for any claims made 
by Conyer in the underlying litigation.  The estate and Conyer 
asserted, among other things, that the health hazard exclusion is 
unenforceable because the lead-based paint was not utilized 
within the intendment of the exclusion.  The trial court held 
that the health hazard exclusion is unenforceable, ruling the 
estate did not "utilize" lead-based paint because it was beneath 
several layers of paint that did not contain lead.  The trial 
court entered a decree declaring that Monticello has an 
obligation to defend and indemnify the estate.  Monticello 
appeals.   
 
Monticello argues that the trial court erred by failing to 
enforce the health hazard exclusion.  Monticello contends that 
the exclusion is enforceable because Shanay ingested lead-based 
paint that the estate had utilized.  Monticello observes that in 
the underlying litigation, Conyer asserts that the estate is 
liable to her because it used lead-based paint in the leased 
premises.  The estate responds that neither it nor John Baecher 
applied lead-based paint to the walls of the leased premises and, 
therefore, the lead-based paint was not utilized within the 
meaning of the exclusion.  Furthermore, the estate and Conyer 
contend that the exclusion is ambiguous and, therefore, must be 
construed against Monticello.   
 
Familiar principles of contract interpretation guide our 
resolution of this dispute.  "Reasonable policy exclusions not in 
conflict with statutes will be enforced; to be effective, the 
exclusionary language must clearly and unambiguously bring the 
particular act or omission within its scope."  Floyd v. Northern 
Neck Insurance Co., 245 Va. 153, 158, 427 S.E.2d 193, 196 (1993). 
 Further, "[a]n insurance policy is a contract, and, as in the 
case of any other contract, the words used are given their 
ordinary and customary meaning when they are susceptible of such 
construction."  Graphic Arts Mutual Ins. v. C.W. Warthen Co., 240 
Va. 457, 459, 397 S.E.2d 876, 877 (1990) (quoting Hill v. State 
Farm Mutual Auto Ins., 237 Va. 148, 152, 375 S.E.2d 727, 729 
(1989)).  In the absence of an ambiguity, we must interpret the 
insurance contract by examining the language contained therein.  
As we have stated, "where an agreement is complete on its face, 
is plain and unambiguous in its terms, the court is not at 
liberty to search for its meaning beyond the instrument itself." 
 Globe Co. v. Bank of Boston, 205 Va. 841, 848, 140 S.E.2d 629, 
633 (1965) (citations omitted).  Additionally, a word is 
ambiguous if it is susceptible of two or more meanings.  Berry v. 
Klinger, 225 Va. 201, 207, 300 S.E.2d 792, 796 (1983). 
 
Applying these principles, we are of opinion that the health 
hazard exclusion clause is enforceable and, therefore, Monticello 
has no obligation to defend or indemnify the estate for any 
claims arising out of the allegations contained in the underlying 
litigation.  The word "utilization" is defined as "the action of 
utilizing or the state of being utilized."  Webster's New 
International Dictionary 2525 (3rd ed. 1986).  The word "utilize" 
means, "to make useful; turn to profitable account or use; make 
use of."  Id.  Contrary to the assertions of the estate and 
Conyer, the word "utilization" found in the exclusion is not 
ambiguous because within the context of the exclusion, 
"utilization" is not "susceptible of two or more meanings."  
 
In the underlying litigation, Conyer seeks to recover 
damages for injuries that Shanay incurred as a result of the 
ingestion of lead-based paint which was affixed to the walls of 
premises the estate owns.  The plain language of the exclusion 
relieves Monticello of any obligation to pay any claim or provide 
a defense for any personal injury caused by the "ingestion . . . 
of, any substance . . . where the [estate] is or may be liable as 
a result of the . . . utilization . . . of such substance."  It 
is true, as the estate asserts, that the lead-based paint was 
covered by paint which did not contain lead.  This fact, however, 
does not render the exclusion unenforceable.  We are of opinion 
that the estate continued to "make use of" the lead-based paint 
because the estate allowed that paint to remain on the walls of 
its leased premises.     
 
Additionally, we find no merit in the estate's contention 
that the term "personal injury" is ambiguous.  That term simply 
is not susceptible of two or more meanings within the context of 
the health hazard exclusion.   
 
In view of the foregoing, we need not consider the 
litigants' remaining arguments.  Accordingly, we will reverse the 
judgment of the trial court, and we will enter a judgment 
declaring that Monticello Insurance Company has no duty to defend 
and/or indemnify the estate of John Joseph Baecher against the 
claims of Louise Conyer and Shanay Hunter. 
 
Reversed and final judgment.