West Virginia Adopts Continuous-trigger Theory for Occurrence Based Policies
Answering a certified question, the West Virginia Supreme Court of Appeals adopted the continuous-trigger theory when interpreting occurrence based policies. Westfield Ins. Co. v. Sistersville Tank Works, Inc., 2023 W. Va. LEXIS 455 (W. Va. Nov. 8, 2023).
Sistersville Tank Work, Inc. ("STW") manufactured, installed, and repaired various types of tanks at industrial sites throughout the world, including several chemical plants in West Virginia. From 1985 to 2010, STW was protected under CGL policies it purchased from Westfield.
At different points in 2014, 2015, and 2016, three men were diagnosed with various forms of cancer. In 2016 and 2017, the claimants sued STW in three separate lawsuits. In each case, the claimants alleged that STW had carelessly manufactured, installed, inspected, repaired or maintained tanks at a chemical plant in West Virginia. The claimants alleged they were repeatedly exposed to cancer-causing chemical liquids, vapors or fumes that escaped from the tanks. The claimants alleged that the cancers were, in some part, caused by STW's tanks.
STW sought coverage from Westfield. Coverage was denied, however. Westfield filed a complaint in federal district court against STW for declaratory relief, asserting it had not duty to provide a defense or indemnification to STW because the claimants were diagnosed four years or more after the expiration of the last CGL policy and, therefore, STW could not establish that an "occurrence" had happened within the policy period sufficient to trigger coverage. The parties filed competing motions for summary judgment.
The district court granted a judgment in favor of STW and found Westfield owed a duty to defend and to indemnify. The court ruled that the language in Westfield's policy did not clearly identify when coverage was "triggered" in instances where a claimant alleged repeated chemical exposures and the gradual development of a disease over successive policy periods. The court predicted that West Virgina would apply the continuous-trigger theory to clarify the ambiguous language in Westfield's policy.
Westfield appealed to the Fourth Circuit. Westfield argued that the manifestation trigger should be applied. The Fourth Circuit certified the following question to the West Virginia Supreme Court of Appeals:
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 development of a latent illness?
Under the manifestation trigger advocated by Westfield, the claimant's disease could be said to occur only when the disease was first diagnosed, that is, when it became manifest, Therefore, only the policy in effect at diagnosis was triggered to cover the claim,
On the other hand, STW argued that the occurrence language incorporated a "continuous" trigger theory of coverage. STW pointed out that, by definition, an "occurrence" under Westfield's policy included "continuous or repeated exposure" to a "harmful condition" that resulted in "bodily injury, sickness or disease."
The court noted that the occurrence and bodily injury provisions that Westfield chose to incorporate into its insuring agreement failed to precisely articulate a trigger of coverage. Therefore, the CGL policy was ambiguous and supported a continuous-theory trigger. Further support for this interpretation was found as follows.
First, the history of the CGL policy showed that the "occurrence" language incorporated into the policy was designed with the goal of affording coverage for singular, repeated, or continuous exposures to hazardous substances if those exposures caused either a singular or a progressive bodily injury, sickness, or disease. Second, the drafters of the CGL policy declined to incorporate a manifestation trigger into the policy's provisions, finding after extensive debate that such a trigger was arbitrary and unworkable. Third, the majority of jurisdictions that had considered the question had concluded that occurrence-based CGL policies incorporated a continuous trigger of coverage in the context of bodily injuries. No court was found that followed the manifestation trigger in the context of a bodily injury, sickness or disease. Finally, there was no support for a manifestation trigger in the language of the insurance agreement in Westfield's policy.
Therefore, a continuous-injury trigger applied to determine when coverage was activated under the insuring agreement of an occurrence-based CGL policy if the policy was ambiguous as to when coverage was triggered.
