Apportioning Coverage Responsibility of Consecutive Insurers When the Actual Occurrence of Injury Cannot Be Ascertained: Who Has to Contribute in a Settlement? - Rob S. Register

• Citation: Vol. 49 No. 4
• Publication year: 1998

COMMENT

Apportioning Coverage Responsibility of Consecutive Insurers When the Actual Occurrence of Injury Cannot be Ascertained: Who Has to Contribute in a Settlement?

I. Introduction

Injuries cannot always be traced to a specific point of causation. Sometimes injuries are discovered after years of exposure to conditions precipitating the actual damage. In those circumstances the term "continuous injury" is used.¹ If a lawsuit is brought, it is common for the liable party to discover that insurance policies covering the years of exposure were provided by more than one insurance company.² In some cases, it is impossible to determine when the injury occurred or when the injury-causing conditions existed. This leads to questions regarding the responsibility for coverage among the liability insurers.³ Often a settlement is entered into and paid with the knowledge that the decisions regarding apportionment of liability and indemnification from other responsible insurers will be left to a court.

An initial review of the case law in this area may lead to the false perception of inconsistency among the courts. However, it is important to note that minor variations in the facts lead to entirely different apportionment standards. Let us not forget that determining the appropriate method of apportionment is ultimately a matter of contract interpretation.⁴ The courts are required to apply the wording of the policy language to the facts surrounding each injury.⁵ Also, the courts usually decide these cases in a manner that will provide the maximum coverage for the insured.⁶

The settlement of a continuous injury claim presents even more problems in this complex area of litigation. Usually, as a result of the settlement, the court is left to make an apportionment decision without the benefit of a trial court's fact finding. This leaves the parties with an imprecise determination of the actual occurrence of the injury. Most of the court decisions that address a settlement situation may not deal with all of the issues that are actually present when an attorney is confronted with indemnification among the liable insurers.⁷ Consequently, when involved in these matters, the parties should look to case law from other states and circuits to construct a complete argument to the court. This comment addresses the diverse issues involved in determining the appropriate apportionment of and indemnification for the settlement amount among contributing insurers, including: triggers of coverage, how to apportion liability for the settlement amount, contribution, and subrogation. This comment also analyzes the cases in which a court focused on the determination of amounts owed by consecutive insurers to an insured in the settlement of a case involving injuries that span several policy periods.

II. Which Insurance Policies are "Triggered"

Prior to 1966, a standard Comprehensive General Liability ("CGL") policy covered liability for bodily injury and property damage that was "caused by accident."⁸ The courts interpreting the provision considered this language to be ambiguous.⁹ As a result, insurers redrafted their policies changing the language to cover liability for injuries resulting from an "occurrence."¹⁰ The theory behind this change of policy terms arose because of three ambiguities that the courts found in the term "accident."¹¹ First, there were contradicting opinions regarding the proper perspective to be chosen in deciding whether an act was accidental or intended.¹² The insurers believed the victim's perspective should be the pivotal point while some courts ruled otherwise.¹³ Second, there were ambiguities about the understood definition of accident.¹⁴ Insurers concluded that the historical meaning of accident was "a sudden and unexpected event that is identifiable in time and place," but some courts had already ruled that an injury resulting from a gradual exposure to conditions was also an accident.¹⁵ Third, there was an ambiguity about when an accident actually happened.¹⁶ The majority opinion shared by courts and insurers alike was that an accident occurred when an injury took place; however, some courts held that an accident occurred when the negligent act was taken.¹⁷

The language of CGL policies written after this change use the key word "occurrence" that was defined as "an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended."¹⁸ As history has shown, this change did little more than shift the ambiguity to the new words. In reality the only significant difference is that the policies now include a term that requires expertise to discern.¹⁹ These policies do not, and probably for a specific reason, include a precise definition of what triggers the coverage liability.²⁰ As a result, courts have been forced to decide on an appropriate method to determine exactly what constitutes an occurrence. As expected, the decisions are varied and conflicting. Four main theories have emerged: (1) the exposure trigger; (2) the manifestation trigger, (3) the injury in fact trigger, and (4) the continuous trigger.²¹ Note that the use of the word "trigger" is a judicially created term meant to incorporate the event or events that instigate coverage responsibility under a particular policy.

The exposure trigger defines an "occurrence" at the earliest possible time, usually when the exposure to injury causing conditions first occurs.²² This theory arose from asbestos litigation.²³ Recently it has gained support in the areas of toxic torts and environmental litigation.²⁴ These types of cases often trigger concurrent insurance policies that are liable for one continuous or progressive injury.²⁵ Under this theory, if there are multiple exposures to the injury-causing conditions then the CGL coverage liability is triggered every time the exposure occurs no matter how many policy periods are included.²⁶ This trigger disregards the actual moment of injury because many times that moment cannot be discovered or proven precisely.

The manifestation trigger defines an "occurrence" at the latest possible time, according to when the injury is discovered. The event giving rise to liability is considered to occur when the injury manifests itself in an ascertainable form no matter how or why it occurred. Under this theory, if the injury has been discovered, or should have reasonably been discovered during a policy period, then that specific policy is triggered.²⁷ This method of determining responsibility for the coverage results in the most narrow determination of liability because once the trigger is invoked no other policies are liable.²⁸ The policy triggered bears the loss in its entirety.²⁹

The injury in fact trigger is also known as the actual injury trigger. This theory requires a finding of actual injury during the exposure to the conditions causing the injury. This is different from the manifestation trigger in that coverage liability can be found even if the injury is not discoverable during the policy period.³⁰ If the injury can be traced to prior events, this theory limits the liability to the policy covering the coverage period or periods in which the events occurred.³¹ If the circumstances allow for identification of the injury causing event, this theory reflects an interpretation of the policy's plain language and supports the reasonable expectations of the parties.³²

The continuous trigger, also known as the triple trigger or multiple trigger, requires evaluation of the injury from exposure to manifestation. This theory affords the broadest coverage by deeming liable all policies that covered the periods from the initial event through discovery of the injury.³³ The rationale is that the injury may have occurred at any number of points during the coverage periods.³⁴ In cases of injuries where the causation cannot easily be pinpointed, this method offers the most common sense analysis. Also, the competing interests of the insured and insurer are accommodated best under this trigger.³⁵

In evaluating the varied theories of when policies are triggered, it is important to remember that though needed to categorize the opinions of courts, the usefulness of trigger theories can be deceptive.³⁶

In reality, reference to trigger theories is more useful in describing what has been decided than in determining what the decision should be in a given case. The Court can discern no consistent pattern in the myriad trigger cases that prescribes the specific trigger theory to apply in a specific type of case. Furthermore, reference to trigger theories can be deceiving. Comparison of the manifestation theory with the injury in fact theory is absolutely meaningless unless there is some real possibility of a substantial time lag between the actual injury and the resulting manifestation. Similarly, comparison of the injury in fact theory with the exposure theory means nothing unless the advocate of the exposure theory presses for a ruling that coverage was triggered prior to the point when injury in fact occurred. Moreover, in all of these scenarios, "real" or "actual" injury must be defined in temporal relation to initial exposure or ultimate manifestation. Any effort to logically organize all of the trigger cases along these lines would be perforce ineffectual. Consequently, trigger rulings are most appropriately derived by reference to the operative policy language, as opposed to the judicial gloss placed upon similar language in ostensibly analogous cases.³⁷

To underscore the problems associated with reliance upon a particular trigger theory, it becomes apparent upon review of the case law that some courts categorically apply a theory without an in depth evaluation of the factual basis upon which each trigger turns.³⁸ The rules of contract interpretation dictate that courts interpret insurance policies in favor of the nondrafting party to the extent...