New York Appeals Court Allows Grouping of Claims to Avoid Individual Deductibles
One of the threshold – if not determinative – issues in many insurance coverage disputes is the number of “occurrences” that are presented by a particular set of facts relating to a claim submitted by the policyholder. In a recent decision, a New York appeals court has concluded not only that the relevant policy language allows for grouping of claims into similar “occurrences,” but that additional discovery may be conducted of the parties’ intent and the insurers’ underwriting guidelines and procedures relating to the relevant policy terms. In Mt. Kinley Ins. Co. v. Corning Inc., the Court affirmed the Trial Court’s denial of summary judgment, concluding that the insured’s comprehensive general liability (“CGL”) policies’ “occurrence”-related terms allowed for grouping of claims arising at a common location or at approximately the same time, which may result in a drastically reduced number of deductibles under the applicable policies. Thousands of individuals had brought separate claims against the insured — Corning Inc. — as a result of exposure to two asbestos-containing products. At issue on summary judgment was whether each of these individual claims constituted a separate “occurrence” under Corning’s primary, excess, and umbrella CGL policies, such that each claim would be individually subject to a deductible before the insurers’ coverage was implicated.
The Court noted that each of the policies had similar language regarding what constitutes a single “occurrence”, with a representative provision stating: “all bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence.” The Court noted, in the absence of specific policy language, that in order to determine whether numerous claims amounted to a single or multiple occurrences, New York courts typically apply the “unfortunate-event” test set forth by the New York Court of Appeals in Arthur A. Johnson Corp. v. Indemnity Ins. Co. of N. Am. and Appalachian Ins. Co. v. General Electric Co. That test examines the cause and the nature of the incident giving rise to the damages, and focuses on, “whether there is a close temporal and spatial relationship between the incidents giving rise to injury or loss, and whether the incidents can be viewed as part of the same causal continuum, without intervening agents or factors.” Appalachian Ins. Co. In Appalachian Ins. Co., the Court of Appeals concluded that the myriad asbestos-exposure-related claims presented by the insured were each a separate occurrence under the unfortunate event test, which severely limited the availability of coverage because liability for most of the claims did not exceed the deductible.
The Corning court found that the language in the policies at issue allowed for the grouping of claims, such that “any group of claims arising from exposure to an asbestos condition as a common location, at approximately the same time … may be found to have arisen from the same occurrence.” However, the Court left open the question of whether any of the multiple claims could actually be grouped, stating, “a more fully developed evidentiary record is required before the number of ‘occurrences’ into which the underlying claims can be grouped may be determined.” The Court also stated that the parties may pursue discovery “concerning the intended meaning of the relevant policy language and the insurers’ underwriting guidelines and procedures insofar as there is any ambiguity concerning the application of the grouping provision to the circumstances of the underlying action.” Once the evidentiary record is more fully developed, the Court concluded that it could then be determined whether and how to group the claims into similar “occurrences.”
Because Corning leaves open the issue of whether the asbestos claims will actually be grouped, the ultimate significance of this case has yet to be seen. It does, however, further promote the ongoing debate between insurer and policyholder on how the number of occurrences will be determined, the number of deductibles to be applied, and ultimately the extent of insurance coverage available for multiple claims under the applicable policies.