Delaware High Court Applies NY “Injury-In-Fact” Law And Holds Bodily Injury Occurs From Exposure To Asbestos To Manifestation Of Disease.
The Delaware Supreme Court, applying New York law, determined based on the jury’s findings and the parties’ arguments from the lower court proceedings that bodily injury first occurs from an individual’s significant exposure to asbestos and continues thereafter, thereby requiring all occurrence-based carriers who issued coverage during that time period to respond to the claim.
Viking Pump, Inc. and Warren Pumps, LLC (“Policyholders”) faced asbestos exposure claims based on their purchase of a pump company from Houdaille Industries (“Houdaille”) in the mid-1980s. Houdaille had occurrence-based insurance coverage from 1972 to 1985 at primary, umbrella, and excess levels.
One of the issues addressed in the trial court was “trigger of coverage,” which determines which occurrence-based policies must provide defense and/or indemnity for the asbestos claims at issue. New York applies an “injury-in-fact” trigger. “Injury-in-fact” trigger involves a medical trial, where the jury decides during what periods of time an injury actually occurred. Once the jury has determined the periods in which injury actually occurred, the occurrence-based policies issued during that timeframe are “triggered” and must provide coverage for the claim.
The insurers argued that bodily injury first occurs when the first malignant cell that results in an asbestos-related disease is formed and continues thereafter. The first malignant cell does not develop until relatively shortly before manifestation and typically results in no coverage for the policyholder for recently filed cases because policies issued since 1985 contain asbestos exclusions. In contrast, Policyholders argued that bodily injury first occurs when an individual is exposed to asbestos and continues thereafter. This outcome typically results in more coverage for policyholders, because it implicates all policies issued from the date of first exposure to manifestation of disease.
Based on the jury’s factual findings, the trial court held: “bodily injury first occurs…upon cellular and molecular damage caused by asbestos inhalation, and such … damage occurs during each and every period of asbestos claimant’s significant exposure to asbestos.” In other words, the trial court held that only occurrence-based policies issued during the exposure period are triggered and no occurrence-based policies issued after the date of last exposure are triggered.
Policyholders appealed, arguing that the jury’s findings of “first bodily injury” – together with the parties’ agreement that bodily injury “continues thereafter” – results in the continuous trigger of occurrence based policies from date of first exposure to manifestation of disease.
The Delaware Supreme Court agreed with Policyholders: “[T]he Excess Insurers acknowledged that … they had agreed that once bodily injury … commenced, it continued….Thus, although the opposing parties had different starting points as to when bodily injury first occurred, both agreed that, as to their respective starting point, the injury continued thereafter.” Based on the jury’s finding that bodily injury first occurs at exposure, the Delaware Supreme Court revised the trial court’s findings as follows: “bodily injury first occurs…upon cellular and molecular damage caused by asbestos inhalation, and such … damage occurs during each and every period of asbestos claimant’s significant exposure to asbestos and continues thereafter.” In re Viking Pump, Inc., et al., No. N10C-06-141 (Del. September 12, 2016)