(Article from Insurance Law Alert, November 2023)
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Holding
The West Virginia Supreme Court ruled that a continuous trigger applied to potentially trigger occurrence-based policies in effect from initial exposure through manifestation of bodily injury in a case involving a latent cancer. Westfield Ins. Co. v. Sistersville Tank Works, Inc., 2023 W.Va. LEXIS 455 (W. Va. Nov. 8, 2023).
Background
From 1985 through 2010, Sistersville Tank Works was insured under a series of general liability policies issued by Westfield. The policies covered bodily injury “which occurs during the policy period” and defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
In 2014, 2015 and 2016, three former employees of Sistersville were diagnosed with cancer and sued the company, alleging negligent failure to maintain tanks at a chemical plant in West Virginia. The claimants had worked at the plant for various times between 1960 and 2006 and were allegedly exposed to harmful materials and fumes during the course of their employment.
Westfield denied coverage for the suits and sought a declaration of no duty to defend or indemnify the claims. Westfield argued that there was no “occurrence” within any policy period because the claimants were not diagnosed with cancer until after the expiration of the last liability policy. Ruling on the parties’ cross-motions for summary judgment, the district court granted Sistersville’s motion, finding policy language ambiguous as to when coverage was triggered. The district court also predicted that the West Virginia Supreme Court would apply a continuous trigger to determine each insurer’s coverage obligations over successive policy periods. On appeal, the Fourth Circuit noted the absence of West Virginia authority on this issue and certified the following question to the West Virginia Supreme Court: “At what point in time does bodily injury occur to trigger insurance coverage for claims stemming from chemical exposure or other analogous harm that contributed to development of a latent illness?”
Decision
The West Virginia Supreme Court deemed the insuring clause of the policy ambiguous as to what event(s) triggers coverage in the context of latent or progressive diseases. Noting that ambiguities must be resolved in favor of the insured, the court endorsed the continuous trigger theory. The court also found support for a continuous trigger theory in the drafting history of general liability policies. In particular, the court found “occurrence” language to encompass gradual or repeated exposure to harmful conditions which inherently may occur over the course of several policy periods.
Additionally, the court found that a continuous trigger promotes cost efficiency because it “spread[s] the risk of loss widely to all of the occurrence-based insurance policies in effect during the entire process of injury or damage.”
Finally, the court observed that while exposure to a harmful substance may not necessarily cause an “immediate or discrete injury,” it is part of an ongoing injurious process, and therefore constitutes “injury” under the continuous trigger theory.
Comments
The West Virginia Supreme Court expressly rejected a manifestation trigger theory in the context of latent disease, deeming it inconsistent with both drafting history and the law adopted by the majority of courts in other jurisdictions. The court noted that it had “found no court that currently follows the manifestation trigger in the context of a bodily injury, sickness, or disease.” In addition to the absence of historical or legal authority for a manifestation trigger, the court also deemed it inconsistent with policy language. In particular, the court explained that the policy provides coverage for injuries taking place during the policy period and thus “does not make coverage dependent on the time of the discovery.”