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(Article from Insurance Law Alert, April 2017)

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Applying Pennsylvania law, the Fourth Circuit ruled that injuries caused by a fireworks-related accident arose from a single occurrence, regardless of the number of victims or alleged negligent acts.  Hollis v. Lexington Ins. Co., 2017 WL 1076706 (4^th Cir. Mar. 22, 2017).

During a fireworks show, Kathryn Hollis and her two sons sustained serious injuries caused by the misfiring of a firework into the crowd.  Hollis sued numerous parties, alleging negligence based on the violation of nineteen separate duties of care.  Lexington, which insured the fireworks company, sought a declaration that its coverage obligation was limited to a $1 million per-occurrence limit.  Lexington argued that under Pennsylvania’s cause-based test, the underlying claims arose from a single occurrence -- the fireworks incident.  A Virginia federal district court agreed and granted Lexington’s summary judgment motion.   The district court rejected Hollis’s argument that the claims arose from nineteen occurrences, corresponding with the number of duties that the fireworks company allegedly breached.   The district court noted that “[a]lthough many breaches of duty contributed to this accident as but-for causes, those breaches involved only one proximate cause of injury: the negligent explosion of the firework shell.  Consequently, the Underlying Complaint alleges only a single occurrence under Pennsylvania law.”  The district court also rejected the argument that the existence of multiple tortfeasors supports a finding of multiple occurrences.  The Fourth Circuit affirmed for the reasons cited by the district court.