CAUSE AND EFFECT: ONE OCCURRENCE / MULTIPLE OCCURRENCES UNDER THE “CAUSE THEORY”
By: Matthew M. Jackson, Esquire
Boyle, Gentile & Leonard, P.A.
A typical liability policy has an aggregate policy limit for claims within a single policy period, and a lower limit for each “Occurrence” within the policy period. For example, a one-year liability policy might provide a $1,000,000 limit per “Occurrence” with a $2,000,000 aggregate limit for all “Occurrences” within the one-year policy period no matter how many “Occurrences” there may be. This structure creates a scenario where plaintiffs’ counsel asserting covered losses in excess of the “Occurrence” limit can access additional funds if it is successfully argued that the claims asserted, constitute multiple “Occurrences” within the policy period. In short, assuming coverage otherwise exists, a claim deemed to be one “Occurrence” with $2,000,000 in covered losses would be subject to the $1,000,000 “Occurrence” limit; while the same fact pattern, if deemed to be two “Occurrences” with $1,000,000 in covered losses each, would net the full $2,000,000 aggregate.
In a typical policy, “Occurrence” is defined to mean: “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
A majority of jurisdictions use what is termed the “Cause Theory” in determining what constitutes a single accident with repeated or continuous exposure, and what constitutes multiple accidents; and therefore multiple “Occurrences.”
Application of the cause theory has most commonly been in conjunction with asbestos litigation, featuring multiple plaintiffs with repeated exposure. However, markedly different results stem from ostensible application of the same theory depending on what each court determined as the “cause.” For example, one Court held:
“(Defendant) is being sued by thousands of claimants alleging exposure to (asbestos product) on hundreds of job sites, on thousands of different dates, and under a variety of conditions over a period of six years. Not everyone exposed to asbestos is affected and not all claimants were exposed under the same circumstances or to the same lot of asbestos. I hold that the “cause” of the injuries in question is the exposure of each individual to asbestos. That exposure thus constitutes an occurrence for the purposes of determining the number of occurrences.” Pittsburgh Corning Corp. v. Travelers Indemnity Co., No. 84–3985, 1988 WL 5302 (E.D. PA 1988).
Taken to the logical extreme, if exposure of each plaintiff is deemed the “cause,” then multiple plaintiffs that might have sat in adjacent offices to be exposed at the same time and in the same place to the same harmful conditions would still constitute multiple occurrences. However, it is clear that a spatial and temporal analysis is inherent in the “cause theory:”
“the claims… do not result from exposure at one site to one person or group. Indeed, this is not a case where there was a single product distributed to a very limited number of customers. Here, the claimants’ alleged bodily injuries stem from exposure to different lots of asbestos, multiple different products (not all distributed at the same time), and in different industrial settings. The bodily injuries were caused by varying types of exposure to a variety of products in a multitude of different locations over many decades.” Westfield Insurance v. Continental Insurance, 2015 WL 1549277 (N.D. Ohio 2015).
Florida is among the majority and follows the cause theory. See Koikos v. Travelers Ins. Co., 849 So. 2d 263, 268 (Fla. 2003) citing American Indem. Co. v. McQuaig, 435 So. 2d 414 (Fla. 5th DCA 1983). Florida’s litigation has resulted in multiple “Occurrences” even when the temporal and spatial analysis might indicate that one “Occurrence” would apply.
In the McQuaig case, the resident of a home fired three shots at two police officers (McQuaig and Pope), injuring both. The insurance company argued that there was only one occurrence because the injury was caused by one instrumentality of danger (the shotgun), in one very specific location and in close duration. The insurance company cited a string of cases for the proposition that the shots could be considered one occurrence. In finding that the shots constituted three separate occurrences and in distinguishing the cases cited by the insurer, the fifth district explained: “In each of these cases (cited by the insurer)… there was a single force, that once set in motion caused multiple injuries. Analogous to this would be if a single shot had injured both McQuaig and Pope. This was not the case.” Id. In other words, if there had been only one shot causing multiple injuries, then there would have been only one “occurrence”- but there were multiple shots, and so multiple occurrences.
The vague, amorphous definition of “Occurrence” in the typical liability policy will undoubtedly continue to engender litigation for the foreseeable future, as courts and counsel grapple with the individual facts of “exposure” cases.