Continuous-Trigger theory, Construction Defects Coverage Update

Joshua LaBar | Plunkett Cooney

The West Virginia Supreme Court of Appeals answered the following certified question from the U.S. Court of Appeals for the Fourth Circuit: “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 the development of a latent illness?” The Supreme Court concluded that the language in occurrence-based Commercial General Liability (CGL) policies was ambiguous and determined that a “continuous-trigger” theory applied to the policies. Under this theory, “damages that are caused, continuous, or progressively deteriorating throughout successive policy periods are covered by all the occurrence-based policies in effect during those periods.”

Beginning on Jan. 1, 1984, respondent Sistersville Tank Works, Inc. (STW) was covered under a CGL policy purchased from petitioner Westfield Insurance Company (Westfield). Westfield renewed coverage under a series of policies over 25 years until April 15, 2010. At different points between 2014 and 2016, three men were diagnosed with various forms of cancer. They filed a lawsuit against STW, claiming that they worked around tanks at STW’s chemical plant in West Virginia. They also claimed that they were exposed from 1960 to 2006 to cancer-causing chemical liquids, vapors or fumes that escaped from the tanks. The men alleged that the cancers were, in some part, caused by STW’s tanks. 

Westfield denied coverage for the three lawsuits and filed a complaint for declaratory relief in the U.S. District Court for the Northern District of West Virginia. Westfield asserted that it did not have a duty to provide a defense or indemnification to STW because the claimants were diagnosed four or more years after expiration of the last CGL policy, and, therefore, STW could not establish an occurrence within the policy period sufficient to trigger coverage. The district court concluded that the insuring language in the Westfield policy was ambiguous and applied the continuous-trigger theory to clarify the ambiguous language. Westfield appealed to the Fourth Circuit and asserted that the district court should have adopted a “manifestation” trigger to limit the meaning of an occurrence to the point when an injury is diagnosed, discovered or manifested.

The Fourth Circuit certified the question to the West Virginia Supreme Court of Appeals, which held that a continuous-trigger theory applies, meaning “when a claim is made alleging a progressive injury caused by chemical exposure or other analogous harm, every occurrence-based policy in effect from the initial exposure, through the latency and development period, and up to the manifestation of the bodily injury, sickness, or disease, is triggered and must cover the claim.” 

By: Joshua LaBar

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