(Article from Insurance Law Alert, September 2021)
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A Missouri federal district court granted an insurer’s summary judgment motion, ruling that policy limits for bodily injury claims applied on a per-occurrence, rather than a per-claim basis and that the bodily injury claims at issue arose out of a single occurrence. Fluor Corp. v. Zurich Am. Ins. Co., 2021 WL 3145794 (E.D. Mo. July 25, 2021).
Fluor, a defendant in suits alleging lead-related bodily injury, sought coverage under four general liability policies issued by Zurich. Each policy included a limits of liability provision that specifically applied to “each occurrence.” In addition, all policies defined “occurrence” as “an accident, including continuous or repeated exposure to a condition, which results in bodily injury.” Fluor claimed that each underlying plaintiff constituted a separate occurrence under the policies, subject to its own per-occurrence limit. Fluor additionally argued that endorsements in two of the policies allowed it to obtain bodily injury coverage on a “per claim” basis.
Addressing a preliminary matter, the court ruled that the insured bears the burden of establishing policy limits, rejecting Fluor’s contention that policy limits provisions should be treated like policy exclusions for purposes of allocating burdens of proof. With respect to the number-of-occurrences dispute, the court concluded that under Missouri’s cause-oriented approach, the alleged underlying injuries arose out of a single occurrence—the lead smelter plant’s operations. The court rejected Fluor’s assertion that the immediate cause of each plaintiff’s injury turned on his/her unique exposure to contamination, emphasizing that Fluor’s analysis improperly focused on “when and where” the underlying injuries occurred rather than “the negligent actions that caused the injury.” The court distinguished decisions finding multiple occurrences from environmental harm, noting that those cases involved distinct incidents of property damage at numerous sources of contamination, requiring different remediation techniques.
In addition, the court ruled that endorsements in two policies did not create per-claim limits for bodily injury claims. The endorsement stated: “LIMITS OF LIABILITY FOR COMPREHENSIVE GENERAL LIABILITY AS DESIGNATED UNDER ITEM 3 OF THE POLICY DECLARATIONS IS AMENDED TO READ: 500,000 EACH CLAIM 500,000 EACH AGGREGATE AS RESPECTS INCIDENTAL PROFESSIONAL LIABILITY ENDORSEMENT.” Citing the “clear reference” to professional liability coverage, the court rejected Fluor’s contention that the endorsement amended the per-occurrence bodily injury limits stated on the Declarations forms. The court explained:
It strains credulity to think the phrase ‘500,000 EACH CLAIM’ would be left blank as to the type of coverage it applied to, while the second phrase immediately below it for the aggregate limit specifically references an entirely different type of coverage. The Court declines to create ambiguity where none exists and will read policies as a whole.