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Insurance ruling favors school district

Judge says providers must pay legal costs

PITTSBURGH — The Butler School District's insurance providers will have to cover the costs associated with a pending federal lawsuit filed over the water issues at Summit Township Elementary School.

The school district and former superintendent Dr. Dale Lumley were sued in federal court in March by the The Netherlands Insurance Co. of Boston and Peerless Insurance Co. of Keene, N.H., both of which are subsidiaries of Liberty Mutual.

The complaint filed by their attorneys argued that they had no obligation under their policies to pay defense costs or pay any judgments in connection with Tait v. Butler School District.

That lawsuit, filed Feb. 11 by district resident Jennifer Tait, is seeking medical monitoring and damages for any individuals exposed to lead and copper in the drinking water at Summit elementary.

Judge Arthur Schwab issued an opinion Friday giving the reasons for denying the insurance companies' claim.

One argument that the insurance companies made was that the Peerless policy contained exclusions for claims involving bodily injuries that were caused by lead or pollution.

The insurers' duty to defend is broad, Schwab wrote in his opinion.

“Under Pennsylvania law, 'when an insured tenders multiple claims to an insurer for defense, the insurer is obligated to undertake defense of the entire suit as long as at least one claim is potentially covered by the policy,'” he wrote citing a 2012 decision in the U.S. Third Circuit Court of Appeals.

He also wrote that the lead exclusion in the insurance policy does not preclude coverage of claims brought from exposure to copper. The attorneys for Tait amended their complaint in April, adding former district administrators Mary Wolf and Glenn Terwilliger as defendants and adding exposure to copper as part of the claim.

After the Tait lawsuit was filed, the district received a letter from the insurance providers stating their intention to dispute the district's claim for coverage.

The district's attorneys, which believed it should be covered under its policies, intended to fight this by filing a lawsuit if necessary, District Solicitor Tom King said after the Liberty Mutual companies filed their claim.

It was unknown Friday how much money the district has spent in legal costs to defend against the Tait lawsuit. School officials had reported in early May that the district had spent more than its $150,000 contingency fund for the 2016-17 school year. The contingency fund is meant for emergencies or unexpected expenses and was used for legal representation and other costs associated with investigating the problems with Summit school and moving the Summit students and teachers temporarily to Broad Street Elementary School in Butler.

The attorneys with Burns White that are representing the district in the lead exposure lawsuit filed a motion to dismiss last week, stating that the plaintiffs had only made one claim based on a federal law and that their federal claim was pre-empted by the Safe Drinking Water Act.

Schwab also is hearing that case.

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