November 14-15, 2013
Marc S. Gaffrey
Supervising Partner
Toxic Tort/Environmental Litigation Department

Hoagland Longo Moran Dunst & Doukas LL...
Overview of Occurrence-Based Triggers of Coverage
in Lead Paint Litigation






Exposure Theory
Manifestation Theory
Injury-In-Fact Theory
Continuous Trigger Theory
Pro-Rata Allocation (Penn....




Insurance policy is triggered when the
claimant is first exposed to the hazardous
substance
Claimant entitled to ind...




Expiration of the policy would not serve to
terminate an insurers obligations to cover
damages that continued to occ...


Coverage triggered when the injury or disease first
becomes reasonably apparent or known to the
claimant (injury does n...




Date of manifestation for bodily injury cases is
determined by the first of two situations: (1) when
the claimant ha...






The policy or policies in effect when the claimant actually
suffers from an illness or injury would cover the los...






The time of the injury or damage, as opposed to
the time of the alleged negligent conduct that
caused the injury,...




Coverage is triggered upon the first instance of
either exposure, manifestation of injury or damage,
or injury-in-fa...




All insurance policies in existence from the
claimant’s initial exposure to a toxic substance or
pollutant through t...


Trend towards Injury-In-Fact Theory, holding that
this approach requires proration among the
policies in which injury o...




An occurrence takes place, not at the time of
the causative act or omission, but at the time
when injury or damage o...
Penn. Nat’l Mutual Cas. Ins. Co.v. Roberts
668 F.3d 106 (4th Cir. Md. 2012)
Facts
◦ Matter brought in state court by infan...
Penn. Nat’l Mutual Cas. Ins. Co.v. Roberts,
668 F.3d 106 (4th Cir. Md. 2012)
Holding in District Court
◦ Roberts argued th...
Penn. Nat’l Mutual Cas. Ins. Co.v. Roberts,
668 F.3d 106 (4th Cir. Md. 2012)
Overturned by 4th Circuit
◦ Penn Nat’l policy...
Penn. Nat’l Mutual Cas. Ins. Co.v. Roberts,
668 F.3d 106 (4th Cir. Md. 2012)
Potential Negative Impacts on Insureds = Gap ...


Continuous Trigger Theory - liability apportioned
among each affected year on the basis of the risk
that was shared wit...






Exposure theory does not trigger as many different insurance
policies as either the continuous trigger theory or ...
 Marc

Gaffrey
 Hoagland, Longo, Moran, Dunst
& Doukas, LLP
 732.545.4579
 mgaffrey@hoaglandlongo.com
6  insuring the risk hb lead-conf
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6 insuring the risk hb lead-conf

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HB Litigation Conferences Lead Litigation 2013

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6 insuring the risk hb lead-conf

  1. 1. November 14-15, 2013
  2. 2. Marc S. Gaffrey Supervising Partner Toxic Tort/Environmental Litigation Department Hoagland Longo Moran Dunst & Doukas LLP New Brunswick, NJ New York, NY Buffalo, NY Philadelphia, PA
  3. 3. Overview of Occurrence-Based Triggers of Coverage in Lead Paint Litigation
  4. 4.      Exposure Theory Manifestation Theory Injury-In-Fact Theory Continuous Trigger Theory Pro-Rata Allocation (Penn. Nat’l Mutual Cas. Ins. Co.v. Roberts, 668 F.3d 106 (4th Cir. Md. 2012)
  5. 5.   Insurance policy is triggered when the claimant is first exposed to the hazardous substance Claimant entitled to indemnification by the insurance policy in effect during the time when the claimant first came into contact with the injurious condition
  6. 6.   Expiration of the policy would not serve to terminate an insurers obligations to cover damages that continued to occur after the initial exposure Courts have also held that lead related injuries occur immediately or soon after being first exposed to lead ◦ Chantel Assocs. v. Mount Vernon Fire Ins. Co., 656 A.2d 779 (Md. 1995).
  7. 7.  Coverage triggered when the injury or disease first becomes reasonably apparent or known to the claimant (injury does not occur until disease manifests) ◦ Eagle-Picher Indus. v. Liberty Mut. Ins. Co., 682 F.2d 12 (1st Cir. 1982)  Coverage would be triggered when diagnosis is first possible in a bodily injury case or when the damage is first discoverable in a property damage case.
  8. 8.   Date of manifestation for bodily injury cases is determined by the first of two situations: (1) when the claimant has actual or constructive knowledge of the disease; or (2) when the disease is diagnosed. The manifestation is the narrowest determination of insurer liability since liability is limited to only the policies in effect when the injury becomes manifested in ascertainable form
  9. 9.    The policy or policies in effect when the claimant actually suffers from an illness or injury would cover the loss ◦ Continental Casualty Co. v. Rapid-American Corp., 609 N.E.2d 506 (N.Y. 1993) In continuous damages cases, the injury may occur repeatedly through numerous consecutive policy periods All CGL policies are triggered if they are in effect during the time the injury is shown to have actually taken place, even if the injury or damage continues over time.
  10. 10.    The time of the injury or damage, as opposed to the time of the alleged negligent conduct that caused the injury, is the triggering event under the policy. Courts have ruled differently as to when “injury” occurs with some holding that the policies were triggered when an injury was contracted, discovered, or diagnosed. Case by case analysis of the facts and policy language has been utilized in light of the vagueness of the theory
  11. 11.   Coverage is triggered upon the first instance of either exposure, manifestation of injury or damage, or injury-in-fact (“triple trigger”) All policies in effect during the collective trigger period would be responsible to provide coverage for any loss (maximum coverage)
  12. 12.   All insurance policies in existence from the claimant’s initial exposure to a toxic substance or pollutant through to manifestation of the disease and up to death will be triggered Operates upon the assumption that the claimant’s personal injury gets worse over time ◦ Keene Corp. v. Insurance Co. of North America, 667 F.2d 1034 (D.C. Cir. 1981)
  13. 13.  Trend towards Injury-In-Fact Theory, holding that this approach requires proration among the policies in which injury occurred in proportion to the amount of injury in each year ◦ Continental Cas. Co. v. Rapid-American Corp., 80 N.Y.2d 640, 609 N.E.2d 506, 593 N.Y.S.2d 593 (1993)
  14. 14.   An occurrence takes place, not at the time of the causative act or omission, but at the time when injury or damage occurred Injury or damage that falls outside the period during which the policy was in effect is not covered
  15. 15. Penn. Nat’l Mutual Cas. Ins. Co.v. Roberts 668 F.3d 106 (4th Cir. Md. 2012) Facts ◦ Matter brought in state court by infant tenant victim of lead poisoning, which occurred from birth in January 1991 and was diagnosed September 1992, with elevated blood lead levels until August 1995. ◦ Defendants were two landlords who owned property; sale occurred November 1, 1993. ◦ Penn Nat’l sought determination in federal court that it was obligated to indemnify landlords for no more than 22 months of judgment (pro-rata) and Roberts argued that Penn Nat’l was responsible for entire judgment under joint and several liability
  16. 16. Penn. Nat’l Mutual Cas. Ins. Co.v. Roberts, 668 F.3d 106 (4th Cir. Md. 2012) Holding in District Court ◦ Roberts argued that because landlords were jointly and severally liable, Penn Nat’l was contractually required to pay entire judgment ◦ Continuous Trigger theory applies and Penn Nat’l is on the hook for the full policy term of 24 months based on pro rata allocation
  17. 17. Penn. Nat’l Mutual Cas. Ins. Co.v. Roberts, 668 F.3d 106 (4th Cir. Md. 2012) Overturned by 4th Circuit ◦ Penn Nat’l policy did not cover injuries that occurred outside of the policy period. ◦ Policy restricted to premises that the landowner owned, and thus plaintiff's coverage ended once the property was sold, which meant coverage was for a period of 22 months, not 24. ◦ Law that applied to joint and several liability was entirely different and separate from MD’s pro-rata allocation law ◦ "an insurance company cannot be held liable for periods of risk it never contracted to cover."
  18. 18. Penn. Nat’l Mutual Cas. Ins. Co.v. Roberts, 668 F.3d 106 (4th Cir. Md. 2012) Potential Negative Impacts on Insureds = Gap in Coverage
  19. 19.  Continuous Trigger Theory - liability apportioned among each affected year on the basis of the risk that was shared with an insurer or, to the extent that insurance could have been purchased but was not, in accordance with the amount of risk retained by the insured.  Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437(1994)
  20. 20.    Exposure theory does not trigger as many different insurance policies as either the continuous trigger theory or the injuryin-fact theory (less coverage = popular with insurers) Preferred theory for insurance companies is the manifestation theory since the single occurrence of manifestation only triggers the one policy in effect at that time Continuous trigger results in joint and several liability among all insurers who were at risk for coverage during any of the three stages (more coverage = popular with insureds)
  21. 21.  Marc Gaffrey  Hoagland, Longo, Moran, Dunst & Doukas, LLP  732.545.4579  mgaffrey@hoaglandlongo.com
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