New York High Court Finds Lead Exposure Injuries to Children of Different Families a Single Loss for Coverage Purposes In its recent decision in Nesmith v. Allstate Ins. Co.,[1] the New York Court of Appeals ruled that lead paint exposure injuries suffered by the children of two different families occupying the same apartment in successive periods constitute a single “accidental loss” subject to a single per-occurrence limit pursuant to the non-cumulation clause in two successive policies issued by a landlord’s insurer.

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NEW YORK HIGH COURT FINDS LEAD EXPOSURE INJURIES TO CHILDREN
OF DIFFERENT FAMILIES A SINGLE LOSS FOR COVERAGE PURPOSES
Carl Pernicone
January 22, 2015
In its recent decision in Nesmith v. Allstate Ins. Co.,[1] the New York Court of Appeals ruled that lead paint exposure
injuries suffered by the children of two different families occupying the same apartment in successive periods constitute
a single “accidental loss” subject to a single per-occurrence limit pursuant to the non-cumulation clause in two
successive policies issued by a landlord’s insurer.
Claim Facts and Decision
In Nesmith, the children of two different families occupied the same apartment in a two-family house in successive
periods. They suffered injuries as a result of exposure to lead paint in the apartment. The landlord’s liability insurer
issued two successive policies during the period in which the children suffered their injuries. The policies had a
$500,000 per-occurrence limit and were subject to a non-cumulation clause that states in relevant part:
All bodily injury and property damage resulting from one accidental loss or continuous or repeated exposure to the
same general conditions is considered the result of one accidental loss.
Both families sued the landlord for their children’s lead exposure injuries. One family settled their claim for $350,000. The
landlord’s insurer took the position that this left only $150,000 in coverage for the second family’s claim. Predictably, the
second family disagreed. They took the position that the lead paint injuries suffered by the children constituted separate
“accidental losses,” each of which was subject to a separate $500,000 limit. The insurer countered that while the lead
exposure injuries were suffered by the children of different families, they occurred in successive periods in the same
apartment and, hence, arose from the same “general conditions” for purposes of the policies’ non-cumulation clause.
Accordingly, the insurer maintained that only one $500,000 limit was available for both claims.
The Court of Appeals sided with the insurer. In so ruling, it held that the children of both families “were exposed to the
same hazard, lead paint, in the same apartment.” Continuing, the Court stated, “Perhaps they were not exposed to
exactly the same conditions, but to say that the ‘general conditions’ were not the same would deprive the word ‘general’
of all meaning.”
Practical Lesson
Nesmith is a natural extension of the 2005 decision by Court of Appeals in Hiraldo v. Allstate Ins. Co.[2] In Hiraldo, the
New York high court held, under a functionally identical non-cumulation clause, that a single child residing in a single
apartment for three successive policy periods could only recover one per-occurrence limit for lead paint exposure
injuries. Here, the court is expanding the Hiraldo rationale to include different children in the same apartment over
successive periods.
The facts indicate that the apartment in question was in a two-family house. Would the outcome have been different if
the children suffering lead paint exposure resided in different apartments in the building during the relevant time period?
The Supreme Court of West Virginia considered a similar question earlier this year in Kosnoski, et al. v. Rogers, et al.,[3]
in the context of carbon monoxide exposure injuries occurring in the same period in different apartments in the same
building. The Kosnoski court ruled that for coverage purposes the carbon monoxide exposure injuries arose from the
“same general harmful conditions” and would be subject to a single per-occurrence limit.
Would the Court of Appeals applying the Hiraldo/Nesmith rationale have reached the same conclusion on similar facts?
Future decisions, no doubt, will determine the answer to this question.
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Notes
[1] 2014 NY Slip Op 08217, November 25, 2014. The decision is available here.
[2] 5 NY3d 508 [2005].
[3] Case No. 13-0494 (2/8/14).
About The Author
Carl J. Pernicone is a partner at Wilson Elser Moskowitz Edelman & Dicker LLP, where he is the co-chair of the
Insurance-Reinsurance Coverage practice. Mr. Pernicone focuses his practice on matters involving toxic tort and
environmental liability claims, including property insurance claims. He may be contacted at
carl.pernicone@wilsonelser.com.