EnergyNorth v. AEGIS et a l . CV-95-591-B 9/30/98 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
EnergyNorth Natural G a s , I n c .
v. C-95-591-B
Associated Electric & Gas Insurance Services, Ltd., et a l .
MEMORANDUM AND ORDER
EnergyNorth Natural Gas, Inc., is the successor-in-interest
to several companies that, at various times from 1852 until 1952,
manufactured coal gas at a plant in Concord, New Hampshire.1
American Home Assurance Co., Century Indemnity Co., Columbia
Casualty Co., International Insurance Co., Lexington Insurance
Co., and Lloyd's, Underwriters at London, are insurance companies
that issued comprehensive general liability (CGL) insurance
policies to EnergyNorth between 1953 and 1986. EnergyNorth
brought this declaratory judgment action, pursuant to 28 U.S.C.A.
§ 2201 (West 1994) and N.H. Rev. Stat. Ann. § 491:22 (1997),
against its insurers, seeking indemnification for costs that
EnergyNorth incurred in investigating and restoring a Concord,
New Hampshire, site polluted with coal tar waste from the
company's manufacturing operations.
1 I hereinafter refer to EnergyNorth Natural Gas, Inc., and its predecessors collectively as "EnergyNorth." EnergyNorth moves for partial summary judgment asserting
that coverage was triggered under all of defendants' CGL policies
by the occurrence of "property damage" while each policy was in
effect. Defendants disagree and submit cross-motions for summary
judgment. To prevail on its motion, EnergyNorth must demonstrate
that (1) defendants' policies embody a "continuous injury-in-
fact" trigger-of-coverage theory in which coverage is triggered
by the occurrence of property damage while the policy is in
effect; and (2) "property damage" occurred while each of
defendants' policies was in effect. While I agree that
defendants' policies are triggered by "continuous injury-in-fact"
during the life of said policies, the record is not sufficiently
developed to permit me to reliably determine whether coverage
triggering property damage occurred during each policy period.
Accordingly, I grant EnergyNorth's motion for summary judgment in
part and deny it in part without prejudice to plaintiff's right
to renew the motion at a later date. I deny defendants' cross
motions for summary judgment and do so without prejudice to the
extent that they raise issues left unresolved by this order.
I. BACKGROUND
A. Site History
From 1852 until 1952, EnergyNorth manufactured coal gas for
lighting, heating, and cooking at a facility in Concord, New
Hampshire. The manufacturing process produced a number of by
products, including an emulsion of coal tar and water that was
2 routinely discharged through a pipe into a marshy area adjacent
to the Merrimack River now known as the "Tar Pond." Most of the
coal tar settled into the sediment and subsoils at the bottom of
the pond. Some of it, however, remained in a free liguid phase
in depressions at the bottom of the Tar Pond.
In 1992, suspecting that the Tar Pond was contaminated with
by-products of the plaintiff's manufactured gas operations, the
New Hampshire Department of Environmental Services ("NHDES")
directed EnergyNorth to conduct a site investigation of the Tar
Pond to determine the location and extent of contamination. The
investigation revealed coal tar and other contaminants including
polycyclic aromatic hydrocarbons (PAH), and benzene, toulene,
ethylbenzene, and xylenes (collectively "BTEX compounds") in the
surrounding surface water, groundwater, and soil. The parties
agree that the PAH and BTEX compounds are constituents of the
coal tar found at the site.
B. Insurance Policies
Although there are numerous policies at issue in this case
with coverage periods spanning several decades, the parties
concede that the policies all fall within one of three different
categories for analytical purposes. Transcript of May 15, 1998,
Hearing at 42, 64-65, 96-97, EnergyNorth Natural Gas, Inc. v.
Associated Elec. & Gas Ins. Servs., Ltd. (D.N.H.) (No. C-95-
591-B) .
1. Occurrence-Based Policies
Between 1966 and 1986, Century, Columbia, International,
3 Lexington, and Lloyd's sold EnergyNorth "occurrence"-based
policies. Three versions of this type of policy are at issue
here. Between 1966 and 1973, all policies issued by Lexington,
and some policies issued by Century, incorporated the following
language by reference:2
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . property damage . . . caused by an occurrence . . . .
"occurrence" means an accident, including injurious exposure to conditions, which results, during the policy period, in . . . property damage neither expected nor intended from the standpoint of the insured . . . .
"property damage" means injury to or destruction of tangible property. . . .
Between 1973 and 1986, all policies issued by Lexington, and
some policies issued by International, either incorporated by
reference or directly set forth the following language:3
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . property damage . . .
2 The Lexington and Century policies, as excess insurance policies, referred to language set forth in policies issued by Fidelity and Casualty Co., one of EnergyNorth's primary insurance carriers. Fidelity and Casualty is not a party to this suit. Endorsements to the Lexington policy amending the definition of "property damage" do not affect the definition in a way material to this action.
3 One Lexington policy issued during this time period provided primary insurance coverage and set forth this language directly. A second Lexington policy, as an excess insurance policy, referred to the language contained in the primary Lexington insurance policy. The other Lexington policies, as well as the International policies, as excess insurance policies, referred to language set forth in policies issued by Fidelity and Casualty. Endorsements to certain Lexington policies amending the definition of "property damage" do not affect the definition in a way material to this action.
4 caused by an occurrence . . . .
"occurrence" means an accident, including continuous or repeated exposure to conditions, which results in . . . property damage neither expected nor intended from the standpoint of the insured . . . .
"property damage" means . . . physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom . . . .
Between 1971 and 1986, all policies issued by Lloyd's and
Columbia, and some policies issued by Century and International,
either incorporated by reference or directly set forth the
following language:4
This insurance is to pay on behalf of the Assured all sums which the Assured shall become legally obligated to pay, or by final adjudgment be adjudged to pay, to any person . . . as damages because of . . . injury to or destruction of tangible property of others, including the loss of use thereof (hereinafter referred to as "Property Damage") . . . occurring during the period of insurance mentioned in the Schedule, caused by an occurrence . . . .
The word "occurrence" means an accident, including injurious exposure to conditions, which results, during the period of insurance mentioned in the Schedule, in . . . Property Damage neither expected nor intended from the standpoint of the Assured . . . .
"Property damage" is not defined further by these occurrence-
based policies.
2. Accident-Based Policies
Between 1953 and 1971, Lloyd's sold EnergyNorth "accident"-
based policies. Two varieties of this type of policy are at
4 The Lloyd's policies issued during this time period provided primary insurance coverage and set forth this language directly. The Columbia, Century, and International policies, as excess insurance policies, referred to language set forth in the Lloyd's policies.
5 issue here. The policies issued by Lloyd's between 1953 and 1962
state:
This insurance . . . is to indemnify the Assured . . . for any and all sums which the Assured shall by law become liable to pay . . . as damages . . . (b) for damage to or destruction of property of others . . . caused by accident . . . hereinafter referred to as "Property Damage" . . . .
The word "accident" shall be understood to mean an accident or series of accidents arising out of one event or occurrence. . . .
The policies issued by Lloyd's between 1962 and 1971 state:
[T]he underwriters hereby agree . . . to pay on behalf of the Assured . . . all sums which the Assured shall become obligated to pay, or by final judgment be adjudged to pay . . . as damages . . . (b) for damage to or destruction of property of others . . . (hereinafter referred to as "Property Damage") caused by accident occurring during the period mentioned in the Schedule . . . .
The word "accident" shall be understood to mean an accident or series of accidents arising out of one event or occurrence. . . .
"Property damage" is not defined further by either variety of the
Lloyd's accident-based policies.
3. Non-Standard Occurrence-Based Policies
Between 1980 and 1986, American Home sold EnergyNorth "non
standard" occurrence-based policies. The American Home policies
The Company hereby agrees to indemnify the Insured for all sums which the Insured shall be obligated to pay by reason of the liability imposed on the Insured by law, [or which] are assumed by the Insured under contract or agreement, for damages direct or conseguential, and expenses . . . on account of: . . . 11) Property Damage . . . caused by or growing out of each occurrence.
6 The term "Property Damage" . . . shall include . . . damage to or destruction or loss of property . . . .
The term "Occurrence" . . . shall mean one happening or series of happenings, arising out of or due to one event taking place during the term of this contract. . . .
II. STANDARD OF REVIEW
Summary judgment is appropriate only "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." Fed. R. Civ. P.
56(c); see Lehman v. Prudential Ins. Co. of A m . , 74 F.3d 323, 327
(1st Cir. 1996). A genuine issue is one "that properly can be
resolved only by a finder of fact because [it] . . . may reason
ably be resolved in favor of either party." Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 250 (1986). A material fact is one
that affects the outcome of the suit. I d . at 248. In ruling on
a motion for summary judgment, the court must construe the
evidence in the light most favorable to the non-movant and
determine whether the moving party is entitled to judgment as a
matter of law. Oliver v. Digital Equip. Corp., 846 F.2d 103, 105
(1st C i r . 1988).
Where the nonmoving party bears the burden of persuasion at
trial, it must "make a showing sufficient to establish the
existence of [the] element[s] essential to [its] case" in order
to avoid summary judgment. Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986) . It is not sufficient for the non-movant to
7 "rest upon mere allegation[s ] or denials [contained in that
party's] pleading." LeBlanc v. Great Am. Ins. Co . , 6 F.3d 836,
841 (1st Cir. 1993) (guoting Anderson, 477 U.S. at 256). Rather,
to establish a trial-worthy issue, there must be enough competent
evidence "to enable a finding favorable to the nonmoving party."
I d . at 842 (internal citations omitted).
Where the moving party bears the burden of persuasion at
trial, the movant must support its position with materials of
evidentiary guality. See Desmond v. Varrasso (In re Varrasso),
37 F.3d 760, 763 n.l (1st Cir. 1994) . Further, "[the] showing
must be sufficient for the court to hold that no reasonable trier
of fact could find other than for the moving party." Lopez v.
Corporacion Azucarera de Puerto Rico, 938 F.2d 1510, 1516 (1st
Cir. 1991) .
I have previously determined that EnergyNorth's declaratory
judgment claims are to be judged using the burden of proof
specified in N.H. Rev. Stat. Ann. § 491:22-a. EnergyNorth
Natural Gas, Inc. v. Associated Electric & Gas Insurance
Services, Ltd., et al., CV-95-591-B (D.N.H. September 30, 1998).
Section 491:22-a provides that when a suit is brought under
section 491:22 to determine insurance coverage, "the burden of
proof concerning coverage shall be upon the insurer whether he
institutes the petition or whether the claimant asserting the
coverage institutes the petition." N.H. Rev. Stat. Ann. §
491:22-a. Accordingly, when addressing guestions of fact
concerning policy coverage, defendants must prove that their policies do not afford EnergyNorth the coverage it seeks. I
apply these standards to the parties' summary judgment motions.
III. DISCUSSION
Defendants' insurance policies must be interpreted in
accordance with New Hampshire law. See Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938) (court must apply state law to
resolve substantive legal issues in diversity of citizenship
cases). Accordingly, I first outline New Hampshire's relevant
rules of policy construction and then apply those rules to the
specific guestions presented by the motions for summary judgment.
A. Policy Construction Rules
Determining the meaning of a provision contained in an
insurance policy presents a guestion of law that must be resolved
by the court. High Country Assocs. v. New Hampshire Ins. Co . ,
139 N.H. 39, 41 (1994). When answering this guestion, the court
must first determine whether judicial precedent "clearly defines
[the] term at issue." Coaklev v. Maine Bonding & C a s . Co . , 136
N.H. 402, 409-10 (1992). If such precedent exists, the court
"need look no further than that definition." Id.
If a prior Supreme Court decision has not previously defined
a disputed policy term and the policy itself does not define the
term, the court "must construe the policy in the light of what a
more than casual reading of the policy would reveal to an
ordinarily intelligent insured." Coaklev, 136 N.H. at 410
(internal guotations omitted). If the policy term is unambiguous when construed from this perspective, the court must give the
term its plain meaning. I d . If, however, an ordinarily
intelligent insured could reasonably interpret the policy in more
than one way and one of the plausible interpretations favors
coverage, the policy must be construed "in favor of the insured
and against the insurer." High Country Assocs., 139 N.H. at 41.
In determining whether a term reasonably can be interpreted
in more than one way. New Hampshire courts look to (1) the plain
language of the policy provision in dispute, see High Country
Assocs., 139 N.H. at 41; (2) whether differences of opinion exist
among other jurisdictions concerning the meaning of the term, see
Hoepp v. State Farm Ins. Co . , 142 N.H. 189, 191 (1997); and (3)
whether dictionaries provide alternative definitions of the term,
see Hudson v. Farm Family Mutual Ins. Co . , 142 N.H. 144, 146-47
(1997); Coaklev, 136 N.H. at 417.
B. Trigger of Coverage
1. Background
The term "trigger" never appears in the language of CGL
policies. Owens-Illinois, Inc. v. United Ins. Co . , 650 A. 2d 974,
979 (N.J. 1994), cited in James M. Fischer, Insurance Coverage
for Mass Tort Exposure Claims: The Debate over the Appropriate
Trigger Rule, 45 Drake L. Rev. 631-32 (1997). Rather, the term
describes the type of event that must occur before the insurer
must respond to a claim. See Owens-Illinois, 650 A. 2d at 979;
Fischer, supra, at 631-32. Determining the type of event that
will trigger coverage under the particular language of a policy
10 is the first step in assessing whether the policy provides
coverage for the claim made against it. See Fischer, supra, at
631 ("[T]he trigger concept . . . acts as a gatekeeper, matching
particular claims with . . . particular insurance policies.").
The occurrence of any one of three events will trigger
coverage depending upon the language used in the policy and the
relevant state law.5 I d . at 640. Each type of event corresponds
to a "trigger-of-coverage" theory of the same name. The
"exposure" theory holds that coverage is triggered under the
policy in effect when property is first "exposed" to an injury-
producing agent, regardless of whether injury occurs at the
moment of exposure.6 See Continental Ins. Co. v. Northeastern
Pharm. & Chem. Co., 811 F.2d 1180, 1189 (8th Cir. 1987); Montrose
Chem. Corp. v. Admiral Ins. Co . , 913 P.2d 878, 893 (Cal. 1995);
Fischer, supra, at 643. But see Cessna Aircraft Co. v. Hartford
Accident & Indem. Co., 900 F. Supp. 1489, 1501 (D. Kan. 1995)
(noting that in the context of an environmental-contamination
insurance-coverage dispute, exposure of groundwater to
contaminants and injury from exposure could occur virtually
simultaneously).
The "injury-in-fact" theory provides that coverage is
triggered under the policy in effect when property is "injured"
5 I exclude "claims made" policies from this discussion as that type of policy is not at issue here.
6 The policies at issue also cover claims for personal injury. I need not consider such claims, however, as EnergyNorth seeks coverage only for amounts it has incurred in responding to property damage.
11 by a harmful event. Staefa Control-Svstem, Inc. v. St. Paul Fire
& Marine C o ., 847 F. Supp. 1460, 1473, amended by 875 F. Supp.
656 (N.D. Cal. 1994); Montrose, 913 P.2d at 894; Fischer, supra,
at 641. If a policy requires the use of an injury-in-fact
trigger-of-coverage theory, mere exposure to a harmful agent
without injury will not trigger coverage. Eagle-Picher Indus.,
Inc. v. Liberty M u t . Ins. Co., 682 F.2d 12, 19 (1st Cir. 1982).
Further, coverage will not be defeated simply because the injury
was not immediately observable. American Home Prods. Corp. v.
Liberty Mut. Ins. Co., 748 F.2d 760, 765 (2d Cir. 1984).
Under the "manifestation" theory, coverage is triggered when
the injury first becomes "reasonably apparent or known to the
claimant." Fischer, supra, at 644; accord New Hampshire Ball
Bearings v. Aetna Cas., 848 F. Supp. 1082, 1092 (D.N.H. 1994)
("Ball Bearings"), rev'd on other grounds, 43 F.3d 749 (1st Cir.
1995); Montrose, 913 P.2d at 893. Neither the exposure of
property to a harmful agent nor injury to property resulting from
exposure will trigger coverage before it is reasonably possible
to detect the harm caused under a manifestation trigger-of-
coverage theory. See Ball Bearings, 848 F. Supp. at 1092-93.
A fourth trigger-of-coverage theory, the "continuous
trigger" theory, does not attempt to match a single coverage-
triggering event to the policy period in which that event first
took place. Instead, coverage is triggered during all policy
periods in which any coverage-triggering event occurs. Fischer,
supra, at 64 6; accord New Castle Countv v. Continental Gas Co .,
12 725 F. Supp. 800, 812-13 (D. Del. 1989); Montrose, 913 P.2d at
894. Under a continuous injury-in-fact theory, for example,
coverage would be triggered under all policies in effect when an
injury-in-fact occurs. See Fischer, supra, at 647. A variant,
the "multiple-trigger" theory, provides that coverage is
triggered during all policy periods in which any type of
coverage-triggering event takes place, including exposure of
property to a harmful agent, injury resulting from exposure, and
manifestation of the injury. I d . at 646-47.
2. Analysis
EnergyNorth proposes that each type of CGL policy at issue
here reguires the use of a continuous injury-in-fact trigger-of-
coverage theory. Specifically, plaintiff contends that: (1)
under each type of policy, coverage is triggered when damage
occurs during a policy period; and (2) where damage occurs in
multiple policy periods, coverage is triggered under each policy
in effect when the damage occurs. I examine this argument by
reviewing each of the three policy types in turn.
(a) Occurrence-based policies
Defendants have taken inconsistent positions as to the
trigger-of-coverage theory their occurrence-based policies
embody. At various times, the defendants appear to concede that
their policies reguire the use of an injury-in-fact trigger. At
other times, certain defendants argue that, while the language of
their policies could reasonably be interpreted to adopt an
injury-in-fact trigger. New Hampshire law reguires the use of a
13 manifestation trigger. Other defendants argue that only a
manifestation trigger is consistent with the language of their
policies.7 I reject the contention that New Hampshire law
reguires that occurrence-based policies must be interpreted to
embody a manifestation trigger-of-coverage theory.
Defendants rely on United States Fidelity & Guar. Co. v.
Johnson Shoes, Inc., 123 N.H. 148 (1983), to show that New
Hampshire has adopted a manifestation trigger for occurrence-
based policies. That case, however, provides no support for
defendants' argument. In Johnson Shoes, the insured sought a
defense and indemnification from liability claims asserted
against it by its landlord. The landlord sued to recover costs
incurred correcting damage caused by a leaking underground oil
storage tank formerly used by Johnson Shoes. Id. United States
Fidelity & Guaranty Corp. ("USF&G") insured Johnson Shoes from
the time it first occupied the premises until it terminated its
operations in 1972. Id. Although the evidence demonstrated that
the oil tank had been leaking since at least 1971, when USF&G was
still insuring Johnson Shoes, USF&G argued that it was not
obligated to defend or indemnify Johnson Shoes because the bulk
7 Two defendants. Century and Columbia, take the position that manifestation is the only trigger-of-coverage theory that is consistent with the relevant language of their occurrence-based policies. Other defendants. International, Lexington, and Lloyd's, acknowledge that their policies can reasonably be read to also embody an injury-in-fact trigger-of-coverage theory. Because the American Home occurrence-based polices contain materially different language from the standard occurrence-based policies discussed in this section, American Home did not express an opinion as to which trigger-of-coverage theory the standard occurrence-based policies embody.
14 of the property damage occurred in 1973, after the last USF&G
policy had expired. I d . at 151.
In rejecting this argument, the court focused on the fact
that Johnson Shoes proved that the tank was leaking while a USF&G
policy was in effect. The court did not specify which trigger-
of-coverage theory the USF&G policy embodied and the court never
used the term "manifestation" in its opinion. See i d . at 153.
Accordingly, Johnson Shoes does not support defendants' claim
that New Hampshire has adopted a manifestation trigger-of-
coverage theory for occurrence policies. At most, the decision
stands for the proposition that coverage can be triggered under
an occurrence-based policy by the occurrence of property damage
while the policy is in effect.
Because the New Hampshire Supreme Court has not yet
specified which trigger-of-coverage theory or theories an
occurrence-based policy embodies, and because the policies at
issue here do not expressly adopt any particular trigger-of-
coverage theory, I must construe the relevant policy language "in
the light of what a more than casual reading of the policy would
reveal to an ordinarily intelligent insured." Coaklev, 136 N.H.
at 410. If a reasonably intelligent insured could interpret the
policy language in more than one way and one interpretation
favors coverage, "an ambiguity exists" that must be construed "in
favor of the insured and against the insurer." High Country
Assocs., 139 N.H. at 41.
15 The policy provision at issue here states that coverage is
provided in the event of "property damage . . . caused by an
occurrence . . . during the policy period." EnergyNorth proposes
that under this language: (1) coverage is triggered where
property-damage-causing injury occurs during a period in which a
policy is in effect; and (2) where damage occurs in multiple
policy periods, coverage is triggered under each policy in effect
when damage occurs. The relevant policy language clearly
supports EnergyNorth's first assertion, as it expressly provides
that coverage is triggered by the occurrence of property damage
during the policy period. See High Country Assocs., 139 N.H. at
41. Because an insured could reasonably interpret the contested
policy language in the way that EnergyNorth proposes, I must
construe the language in EnergyNorth's favor and need not
determine whether the contested language could also reasonably be
construed to embody a different trigger-of-coverage theory. See
High Country Assocs., 139 N.H. at 41.
The relevant policy language also supports EnergyNorth's
contention that injury which continues to occur over multiple
policy periods can trigger multiple policies. See High Country
Assocs., 139 N.H. at 41. Nothing in the relevant policy language
suggests that injury that occurs in subseguent policy periods
cannot trigger coverage in those policy periods, even if the
injuries arose from a single causative event.8 Thus, I hold that
8 Although most defendants accept this conclusion. Century and Columbia took a different position during the oral argument held on August 27, 1998. Because they cite no case law to
16 the language of the occurrence-based policies embodies the theory
proposed by EnergyNorth — that where damage occurs in multiple
policy periods, coverage is triggered under every policy active
when the damage occurs, as long as new damage occurs during each
relevant policy period.
(b) Accident-based policies
EnergyNorth argues that the accident-based policies issued
by Lloyd's embody the same trigger-of-coverage theory as do the
occurrence-based policies discussed above. Lloyd's disagrees,
asserting that for coverage to be triggered: (1) both the event
that causes damage to property and the damage itself must occur
during a policy period in which a policy is in effect; and (2)
the causative event has to be discrete in nature rather than
continuous. I consider each assertion in turn.
(i) Timing of causative event
The policy provision at issue here provides coverage in the
event of "damage to or destruction of property . . . caused by
accident occurring during the [policy] period."9 Lloyd's argues
that for coverage to be triggered under this policy language,
both the event that produces the damage and the damage itself
support their argument and cannot point to language within their policies that would contradict EnergyNorth's claim, their assertion merits no discussion. See F.D.I.C. v. Slinqer, 913 F.2d 7, 14 (1st Cir. 1990) (argument regarding meaning of contract term rejected where unsupported by language of contract).
9 Lloyd's and EnergyNorth agree that the definition of property damage contained in the 1953-62 policies and the 1962-71 policies do not materially differ. Transcript of May 15, 1998, Hearing at 42.
17 must occur during the policy period. Alternatively, it contends
that coverage is triggered when the insured commits the act that
produces the damage, rather than when the damage occurs.
EnergyNorth challenges both arguments and instead contends that
coverage is simply triggered under these policies when the damage
occurs.
The New Hampshire Supreme Court has not construed the
precise policy language at issue here. However, the court's
decision in Peerless Ins. Co. v. Clough, 105 N.H. 76 (1963),
supports EnergyNorth's position. In that case, the insured
negligently constructed fireplaces in two homes that were later
damaged by fires caused by the insured's negligence. The insured
sought coverage under an insurance policy that was in effect when
the fires occurred, but not when the insured committed his
negligent acts. The policy in guestion provided that "this
policy applies only to occurrences during the policy period." In
concluding that the policy was triggered by the occurrence of the
fires rather than by the insured's negligent acts, the court
stated "the majority — and we believe the better rule — is that
the time of the occurrence resulting in the loss or damage, and
not the time of the negligence, determines whether there is
coverage under the policy." I d . at 78.
None of the Lloyd's policies defines the term "accident" or
otherwise specifies when an accident is deemed to occur. Under
these circumstances, it is certainly plausible to follow the
general rule and construe the policies to provide that an
18 accident occurs when the injury occurs rather than when the
insured commits the act that later produces the injury. Since
this interpretation favors the insured in this case, I reject
Lloyd's argument to the contrary. Further, nothing in the
language of the policies suggests that injury that continues into
subseguent policy periods cannot also trigger coverage in those
policy periods even if the continuing injury arose from a single
causative event. Therefore, I hold that the language of the
Lloyd's accident-based policies embodies the theory proposed by
EnergyNorth — that where damage occurs in multiple policy
periods, coverage is triggered under each active policy when the
damage occurs, as long as damage occurs.
(ii) Nature of causative event
The parties also disagree as to whether Lloyd's accident-
based policies provide that coverage can be triggered by
continuous, gradual injury to property. The dispute centers on
the meaning of the term "accident." Lloyd's asserts that the
term "accident" unambiguously means a sudden, discrete event
occurring within a policy period. Thus, where property damage
does not occur suddenly or discretely, but rather gradually over
a number of years, Lloyd's contends that the damage is not caused
by accident and cannot trigger policy coverage. EnergyNorth
responds by contending that the term "accident" simply means an
unintentional act. By this interpretation, injury to property
can trigger coverage under the policies at issue whether or not
the injury occurs suddenly and discretely or as the result of a
19 gradual process. Thus, to determine whether the language of the
Lloyd's accident-based policies provides that coverage can be
triggered by continuous, gradual injury to property, I must
determine the meaning of the term "accident" as used in the
policies.
Although the New Hampshire Supreme Court has not defined the
term "accident" in the context of an accident-based policy, the
court has construed the term in a closely related context. In
Hudson, the plaintiff sought coverage for injury caused over time
by the continuous exposure of his livestock to "stray voltage,"
an electrical current present in metal farm structures such as
watering troughs. See 142 N.H. at 144. The policy language at
issue provided coverage for harm "caused by . . . sudden and
accidental damage from artificially generated electrical
current." Id. The plaintiff argued that the phrase "sudden and
accidental" merely meant "unexpected and unintended" and,
therefore, gradual exposure to stray voltage could constitute
harm caused by sudden and accidental damage. I d . at 146, 148.
In opposition, the defendant contended that the phrase meant
"guick or abrupt" and, conseguently, damage had to occur as the
result of a guick or abrupt event to trigger coverage. Id.
After canvassing the body of law examining the meaning of
the phrase "sudden and accidental," the court found it to be
ambiguous in that an ordinarily intelligent insured could
reasonably interpret the policy language in more than one way.
I d . at 148. Holding that "the term 'sudden and accidental' is .
20 . . reasonably susceptible to an interpretation consistent with
'unexpected and unintended,'" the court found that injury caused
by gradual and continual exposure to harm would trigger coverage
under the policy. I d . at 148-49. In reaching this conclusion,
the court endorsed a decision by the Third Circuit Court of
Appeals stating that "simply put, sudden means unexpected and
accidental means unintended." I d . (guoting New Castle County v.
Hartford Ace and Indem. Co., 933 F.3d. 1162, 1194 (3d Cir.
1991)) .
In the instant case, the pertinent policy language is
functionally eguivalent and nearly identical to the policy
language interpreted by the Hudson court. The phrase "sudden and
accidental" in the Hudson policy plays the same functional role
as does the term "accident" in the Lloyd's accident-based
policies in that it modifies the type of injury that must occur
to trigger coverage. The one significant difference between the
policies -- the use of the word "sudden" in the Hudson policy --
only strengthens the argument that the New Hampshire Supreme
Court would interpret "accident" in an accident-based policy
similarly to the way in which it interpreted "sudden and
accidental" in the Hudson policy. Because the court found the
term "sudden and accidental" could reasonably be interpreted to
mean "unexpected and unintended," and because "sudden" has a such
a strong connotation of abruptness, see Aeroguip Corp. v. Aetna
C a s . & Sur. C o ., 26 F.3d 893, 894 (9th Cir. 1994); Lumbermens
Mut. Cas. Co. v. Belleville Indus., Inc., 555 N.E.2d 568, 572
21 (Mass. 1990), it is difficult to believe that the court would
interpret "accident" when used by itself to mean only an abrupt
event.
The New Hampshire Supreme Court has found that a
functionally equivalent, nearly identical term is reasonably
susceptible to the definition EnergyNorth urges I adopt. Thus,
in interpreting the meaning of the contested term, I "need look
no further than [the] definition" the Hudson court accepted as
reasonable. Coaklev, 136 N.H. at 409-10. Accordingly, I hold
that the term "accident" as used in the Lloyd's accident-based
policies simply means an unintentional act10 and, therefore, that
under the language of these policies, continuous, gradual injury
to property can trigger coverage.11
10 A number of other jurisdictions have reached a similar conclusion when construing the meaning of the term "accident" as used in an accident-based policy. See, e.g.. Chemical Leaman Tank Lines, Inc. v. Aetna Cas. & Sur. Co . , 817 F. Supp. 113 6, 1147-48 (D.N.J. 1993) (holding that the term "accident" does not necessarily have a temporal component); St. Paul Fire & Marine Ins. Co. v. McCormick & Baxter Creosotinq Co . , 923 P.2d 1200, 1212-13 (Or. 1996) (same); City of Kimball v. St. Paul Fire & Marine Ins. C o ., 206 N.W.2d 632, 635-36 (Neb. 1973) (same); c f . Hecla Mining Co. v. New Hampshire Ins. Co . , 811 P.2d 1083, (Colo. 1991) (holding that in the context of a sudden-and-accidental pollution exclusion, the term "sudden and accidental" does not necessarily have a temporal component).
11 Lloyd's contends that I should allocate the losses stemming from the case among the triggered policies according to the time each policy was on the risk. Lloyd's asserts that this approach was expressly adopted by a New Hampshire court in Conductron Corp. v. American Employers Ins. Co., Nos. 93-E-149, 93-C-599, slip op. at 16 (N.H. Super. C t . Mar. 4, 1997) (Arnold, J.), and, therefore, is the approach the New Hampshire Supreme Court likely would adopt. Because the issue of allocation of losses has not been briefed by all the parties involved, I decline to review the issue at this time.
22 Lloyd's citation to Vermont Mut. Ins. Co. v. Malcolm, 128
N.H. 521 (1986), for the proposition that the New Hampshire
Supreme Court has defined "accident" as a discrete event is of no
avail. In that case, the court examined the meaning of the term
"accident" in the context of an occurrence-based policy. I d . at
522-23. The court stated in dictum that, because the term
"occurrence" was explicitly defined to include injurious exposure
to continuing conditions and the term "accident" was not, the
term "accident" must be taken to mean a discrete event. Id.
Given the Supreme Court's more recent contrary holding in Hudson,
however, Malcolm must be read to stand for the limited
proposition that the term "accident" means a discrete event only
when used in conjunction with a term given an explicitly broader
meaning. Reading the decision in this manner, it provides no
support for defendants' interpretation.
(c) American Home policies
The American Home policies each state that coverage exists
for property damage "caused by or growing out of each occurrence
. . . [which term] shall mean one happening or series of
happenings, arising out of or due to one event taking place
during the term of this contract." The parties dispute whether
this language provides that coverage can be triggered by
continuous, gradual injury to property during the policy period.
The dispute centers on the meaning of the term "event." American
Home asserts that the term "event" unambiguously means a sudden.
23 discrete event occurring during the policy period.12 Conversely,
EnergyNorth argues that the term "event" in the American Home
policies does not refer to a sudden, discrete event. Instead,
plaintiff asserts that the term simply means an unintentional act
and, therefore, injury to property can trigger coverage under the
policies at issue whether or not the injury occurs suddenly and
discretely or as the result of a gradual process. Thus, to
determine whether the language of the American Home policies
provides that coverage can be triggered by continuous, gradual
injury to property, I must determine the meaning of the term
"event" as used in the policies.
The New Hampshire Supreme Court has not yet construed the
meaning of term "event" as used in the context of a policy
providing coverage for property damage "caused by . . . [a]
series of happenings, arising out of or due to one event taking
place during the term of th[e] contract." Because the court has
not defined the term "event" in this context, and because the
American Home contract itself contains no informative explanation
of the term, I must construe the term "in the light of what a
ordinarily intelligent insured." Coakley, 136 N.H. at 410. If I
12 American Home implies that the juxtaposition of the term "event" with the phrase "taking place during the term of this contract" lends a temporal component to the definition of what type of injury triggers coverage under the American Home policies. This argument has no merit. If, as EnergyNorth asserts, "event" merely means an unintentional act causing harm, then gradual exposure to pollutants could constitute a coverage- triggering event occurring during the policy period just as much as discrete event causing harm could.
24 find that an ordinarily intelligent insured could reasonably
interpret the term "event" as used in the American Home policies
in a way that favors coverage, I must construe the meaning of the
term "in favor of the insured." See High Country Assocs., 139
N.H. at 41.
To determine whether the term "event" is reasonably
susceptible to more than one interpretation, I look to whether
differences of opinion exist among other jurisdictions over the
meaning of the term, see Hoepp, 142 N.H. at 191; Hudson, 142 N.H.
at 147-48, and whether dictionaries contain differing
definitions, see Hudson, 142 N.H. at 146-47, Coaklev, 136 N.H. at
417. Other jurisdictions have construed the meaning of the term
"event" differently, as it is used in the context of policies
similar to those issued by American Home. Some courts have held
that the term "event" unambiguously means a sudden, discrete
event that precludes continuous, gradual injury to property from
triggering coverage. See, e.g., Indiana Gas Co. v. Aetna Cas. &
Sur. C o ., 951 F. Supp. 780, 789 (N.D. Ind. 1996) (finding that in
the context of an environmental-contamination insurance-coverage
dispute, "event" refers only to a discrete act such as a spill or
leak), judgment vacated on other grounds sub nom. Indiana Gas Co.
v. Home Ins. C o , 141 F.3d 314 (7th Cir. 1998); Public Serv. Elec.
& Gas Co. v. Certain Underwriters at Lloyd's of London, No. 88-
4 8 1 1 (JCL), 1994 U.S. Dist. LEXIS 21072, at *13-16 (D.N.J. Sept.
30, 19 94) (same).
25 Other courts, however, have acknowledged that the term
"event" is reasonably susceptible to more than one interpre
tation, including simply an unintentional act, the interpretation
proposed by EnergyNorth. See, e.g., Cessna Aircraft, 900 F.
Supp. at 1504 (finding that in the context of an environmental-
contamination insurance-coverage dispute, the term "event" can
refer to a non-discrete act such as exposure of groundwater to
contaminants); Outboard Marine Corp. v. Liberty M u t . Ins. Co.,
670 N.E.2d 740, 747-48 (111. A p p . C t . 1996) (same); Pittsburgh
Corning Corp. v. Travelers Indem. Co . , No. 84-3985, 1988 WL 5301,
at *1-3 (E.D. Pa. Jan. 21, 1988) (finding that in the context of
an asbestos-exposure insurance-coverage dispute, the term "event"
can refer to a non-discrete act such as exposure of humans to
asbestos).
Further, dictionaries define the term "event" in a variety
of ways, supporting each party's interpretation of the term. The
Random House Unabridged Dictionary recognizes both a non-temporal
and temporal meaning of the term, defining "event," in pertinent
part, both as "something that happens" and as "something that
occurs in a certain place during a particular interval of time."
Random House Unabridged Dictionary 671 (2d ed. 1993) . Black's
Law Dictionary also recognizes both a non-temporal and temporal
meaning, defining "event" both as "[s]omething that happens . . .
which takes place independent of the will" and "that in which an
action, operation, or series of operations, terminates." Black's
Law Dictionary 554-55 (6th ed. 1990) .
26 After consulting these sources regarding the meaning of the
term "event" as used in the context of the American Home
policies, I conclude that the term is reasonably susceptible to
more than one interpretation. Further, I hold that an ordinarily
intelligent insured could reasonably interpret the term "event"
to simply mean an unintentional act.
Because I conclude that the term "event" is reasonably
susceptible to more than one interpretation and that an
ordinarily intelligent insured could reasonably interpret the
term in the manner EnergyNorth advocates, ordinarily I would have
to adopt EnergyNorth's proposed definition. See High Country
Assocs., 139 N.H. at 41. American Home, however, has raised an
issue that prevents me from doing so. American Home asserts that
it did not draft the policy language at issue but, rather, that
EnergyNorth or one of its agents drafted the disputed language.
If American Home is correct, the rationale behind construing an
insurance contract in favor of the insured -- namely, preventing
the drafter of a contract from benefitting from an ambiguity of
its own creation -- would not apply. See Coaklev, 136 N.H. at
410 .
American Home has reguested additional limited discovery in
an effort to gather evidence in support of its position. As I
indicated I would at the September 26, 1997, hearing held before
me, I now grant American Home 60 days to complete such discovery.
Until such time, I deny without prejudice both EnergyNorth's and
American Home's motions for summary judgment with respect to
27 which trigger-of-coverage theory the American Home policies
embody, and invite the parties to renew this aspect of their
motions when the limited discovery period is complete.
C. Definition of Property Damage
EnergyNorth next contends that "property damage" triggering
policy coverage occurs whenever contaminants are released into
the surface water, groundwater, or surrounding sediments from
hazardous waste previously deposited at a site. Defendants
respond that property damage only occurs in this kind of case
when the hazardous waste is first deposited at the site. Thus,
defendants argue that no property damage occurred while their
policies were in effect because EnergyNorth had stopped disposing
of coal tar at the site long before defendants' policies went
into effect.
The New Hampshire Supreme Court has not addressed this
issue. Courts in other jurisdictions, however, have reached
differing conclusions. Some courts have held that the term
"property damage" unambiguously refers only to the release of a
harmful agent into the environment and not to the contamination
that resulted from the release. See, e.g., Indiana Gas Co. v.
Aetna C a s . & Sur. Co., 951 F. Supp. 767, 772-73 (N.D. Ind. 1996)
(finding that in the context of an environmental-contamination
insurance-coverage dispute, "property damage" refers only to the
release of the harm-causing agent into the environment), iudgment
vacated on other grounds sub nom. Indiana Gas Co. v. Home Ins.
Co, 141 F.3d 314 (7th Cir. 1998); Inland Waters Pollution
28 Control, Inc. v. National Union Fire Ins. Co . , 997 F.2d 172, 187
(6th Cir. 1993) (same); SCSC Corp. v. Allied Mut. Ins. Co . , 536
N.W.2d 305, 318 (Minn. 1995) (same). Other courts have
acknowledged that the term can reasonably be interpreted in more
than one way, including continuous, gradual injury to property
resulting from prolonged exposure to contaminants — the
interpretation proposed by EnergyNorth. See, e.g.. Chemical
Leaman Tank Lines, 817 F. Supp. at 1152-54 (finding that in the
context of an environmental-contamination insurance-coverage
dispute, "property damage" refers not only to the release of
contaminants into the environment but also to the leaching or
migration of contaminants into surrounding materials), cited in
Public Serv. Elec. & Gas Co . , 1994 U.S. Dist. LEXIS 21072, at
*16-18; Montrose, 913 P.2d at 888, 890, 894 (same); c f . Keene
Corp. v. Insurance Corp. of N. A m . , 667 F.2d 1034, 1044-46 (D.C.
Cir. 1981) (finding that in the context of an asbestosis
insurance-coverage dispute, "bodily injury" refers not only to
inhalation exposure to asbestos but also to exposure to asbestos
already lodged in the lungs).
This issue is a difficult one to resolve, and it has not yet
been adeguately briefed. Accordingly, I decline to answer the
guestion on the present record. Instead, I deny EnergyNorth's
motion for partial summary judgment on this issue without
prejudice to its right to renew the motion on a more fully
developed record. As I cannot determine at the present time
whether EnergyNorth's proposed interpretation of the phrase
29 "property damage" is correct, I likewise decline to determine
whether any facts material to EnergyNorth's claim that property
damage occurred in each policy period remain in dispute.
IV. CONCLUSION
For the foregoing reasons, I hold that, with the exception
of the American Home policies, (1) defendants' CGL policies all
embody a continuous injury-in-fact trigger-of-coverage theory. I
decline to determine the remaining issues on the present record.
Accordingly, EnergyNorth's motion for partial summary judgment
(document no. 128) is granted in part and denied in part without
prejudice. American Home's individual motion for summary
judgment (document no. 139) is denied without prejudice. To the
extent that the other defendants' motions for summary judgment
(document nos. 129, 135, 138 and 140) raise issues not resolved
by this order, these motions too are denied without prejudice.13
SO ORDERED.
Paul Barbadoro Chief Judge
September 30, 19!
13 Defendants have also submitted a joint motion to strike certain factual allegations made by EnergyNorth as not properly supported by affidavit (document no. 152). Because I do not rely on the contested information in reaching my decision, I deny the motion. Finally, Lloyd's has submitted a cross-motion for summary judgment with respect to the issues of fortuity, expectation, and intent (document no. 150). For reasons discussed above, I do not address these issues herein, and, thus, I deny the motion without prejudice.
30 cc: Bruce Felmly, Esq. Robert Gallo, Esq. Vincent Ziccolella, Esq. Donald Uttrich, Esq. Emily Rice, Esq. Paul Leodori, Esq. John Putnam, Esq. Jeffrey Osburn, Esq. John Guarascio, Esq. Michael Aylward, Esq.