Insurance – Insurance Policy – Remediation Efforts – Consequential Damages – Direct Physical Loss or Damage

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Master-in-equity erred in finding insurance policy covered several categories of consequential damages, but properly awarded costs for cleaning the affected structures.

We affirmed in part, reversed in part, and remanded for further findings.

In an action for recovery under an insurance policy, Insurance Reserve Fund appealed the findings of the master-in-equity, arguing the master erred by finding coverage and making an award for covered loss under the Building and Personal Property Policy issued by the Fund; (2) wrongly interpreting and applying regulations governing land application of biosolids1 and the National Pollutant Discharge Elimination System (NPDES) permits issued to Renewable Water Resources (ReWa); (3) failing to make specific findings of fact and conclusions of law; (4) allowing inadmissible summary exhibits; (5) failing to consider the Policy’s $3,000 deductible per occurrence; and (6) denying the Fund’s new trial motion.

The Fund argued the master erred in finding the Policy covered ReWa’s remediation efforts at the three facilities. We agreed the master erred in finding the Policy covered several categories of consequential damages but found the master properly awarded costs for cleaning the affected structures. We determined the Fund conceded the costs associated with cleaning the Pelham facility’s holding tanks were covered under the Policy.

Next, we found the cleaning of the affected structures in the Mauldin Road and Lower Reedy facilities was also covered under the Policy. We acknowledged the structures in these facilities did not exceed the fifty-ppm-threshold under the Act; however, the uncontroverted evidence showed contaminated biosolids adhered to the walls of these structures even after initial washing. We found this constitutes direct physical loss or damage, which is covered under the Policy. We also found the adherence of contaminated materials to tank walls meets the triggering language of direct physical loss or damage.

Additionally, we found the master correctly applied the holding of Ocean Winds Council of Co-Owners, Inc. v. Auto-Owners Insurance Co. in analyzing whether ReWa’s actions to prevent further damage to the structures were covered under the Policy. Here, the Policy stated it provided coverage for “risks of direct physical loss.” We found the master correctly found coverage for a portion of the expenses incurred in preventing imminent damage through further contamination of the structures, such as providing for the sequestration of incoming waste.

However, the master erred in awarding damages for several categories of consequential damages. Accordingly, we reversed this portion of the damages award and remanded to the master for recalculation of the award after excluding expenses falling into these categories of consequential damages.

We found the master’s order sufficiently stated its reasoning behind finding the cleaning costs were covered under the Policy; however, we reversed and remanded for removal of the specified consequential damages from the overall award.

Finally, the Fund argued the master erred in failing to consider the Policy’s deductible when calculating the damages award. We agreed. Accordingly, we directed the master to subtract $3,000 from the revised damages award.

Affirmed in part, reversed in part, remanded.

Renewable Water Resources v. Insurance Reserve Fund (Lawyers’ Weekly No. 011-012-24, 9 pp.) (Paula H. Thomas, J.) Appealed from Greenville County (Chales B. Simmons Jr., Master-In-Equity) Andrew F. Lindemann, of Lindemann Law Firm, P.A., of Columbia, for appellant; William Stevens Brown, V and Miles Edward Coleman, both of Nelson Mullins Riley & Scarborough, LLP, of Greenville; and Rivers Samuel Stilwell, of Maynard Nexsen PC, of Greenville, all for respondent. South Carolina Court of Appeals