HB Litigation Conferences Lead Litigation 2013

1. November 14-15, 2013

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. Overview of Occurrence-Based Triggers of Coverage
in Lead Paint Litigation

4. 
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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. 
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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. 
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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. 
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. 
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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. 
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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. 
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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. 
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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. 
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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. 
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. 
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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. 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. 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. 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. 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. 
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. 
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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)

22.  Marc
Gaffrey
 Hoagland, Longo, Moran, Dunst
& Doukas, LLP
 732.545.4579
 mgaffrey@hoaglandlongo.com