The district court determined there was a duty to defend based upon allegations that the insured's pillows and mattresses emitted an odor causing bodily injury and property damage to the underlying plaintiffs. Hartford Fire Ins. Co. v. Tempur-Sealy Int'l, Inc., 2016 U.S.Dist. LEXIS 6706 (N.D. Cal. Jan. 20, 2016). The insured faced a class action lawsuit, alleging it failed to inform consumers that its pillows and mattresses emitted an odor containing formaldehyde, a known human carcinogen. There were numerous allegations regarding injuries to persons and property suffered by purchasers of the insured's products. Hartford denied coverage. It argued there was no duty to defend because the underlying complaint did not allege specific claims for bodily injury or property damage. According to Hartford, the duty to defend did not extend to any imaginable claim. The court disagreed. The underlying complaint contained 18 pages of allegations detailing the factual basis for a potential covered claim. The exclusions relied upon by Hartford did not support its denial of a defense. While Exclusion k barred coverage for any property damage to the insured's products, i.e., the mattresses, the underlying complaint alleged extensive damage to property other than the insured's product. Exclusion m was also inapplicable. While property damage arising out of a defect or dangerous condition in "your product" was excluded, the exclusion did not apply to the loss of use of other property arising out of sudden and accidental physical injury to "your product" after it was put to its intended use. The underlying complaint contained numerous allegations of loss of use of property due to the sudden and accidental odor produced by the insured's product. Hartford also argued there was no occurrence because the insured knew its product was harmful, failed to disclose this fact, and misrepresented the safety of its products. But Hartford ignored the causal series of events leading to the damage sustained as a result of the insured's alleged misrepresentation. The underlying complaint did not provide a reason to think that the alleged mattress defects were expected by the insured. This was sufficient to demonstrate potential liability for an occurrence.
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