Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-07259/USCOURTS-caDC-00-07259-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 20, 2001 Decided January 15, 2002

No. 00-7259

Young Women's Christian Association

of the National Capital Area, Inc.,

a District of Columbia Non-Profit Corporation,

Appellant

v.

Allstate Insurance Company of Canada,

a Canadian Corporation, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 94cv00741)

Bardyl R. Tirana argued the cause and filed the briefs for

appellant.

Elizabeth B. Sandza argued the cause for appellees. With

her on the brief were Michael F. McBride, David M. Ross,

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Ronald W. Fuchs, Richard W. Driscoll, Stuart L. Peacock,

William H. White Jr., John A. Scaldara and Donald J.

Walsh.

Before: Ginsburg, Chief Judge, Rogers and Garland,

Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: The Young Women's Christian

Association of the National Capital Area ("YWCA") appeals

the grant of summary judgment to several insurance companies, contending principally that the district court erred in its

choice of law ruling and, alternatively, in its application of

law, having failed to abide by the language of the insurance

policies and the applicable rules for construction of insurance

contracts. We reverse the district court's choice of law ruling

and its application of law, and we remand the case for

consideration of exclusions under the policies and related

issues.

I.

On November 30, 1979, YWCA contracted with Tiber Construction Company ("Tiber"), a Virginia corporation, for the

construction of a new building at 9th and G Streets, N.W., in

Washington, D.C. By subcontract, dated February 18, 1980,

Tiber engaged Beer Precast Concrete, Ltd. ("Beer"), of Ontario, Canada, to furnish and install precast concrete panels

for the building. Beer cast the panels for the YWCA's

building in April-September 1980 and delivered and installed

the panels August-October 1980. Before shipping them to

the District of Columbia, Beer acid-etched the panels. The

architect on the project advised Tiber, however, that some of

the panels were unacceptable because they were chipped,

warped, cracked, discolored, or without homogenous distribution of aggregate. Beer agreed to patch the precast panels

and wash-down all of the panels at all elevations using

cleaning agents and scrub brushes in an attempt to achieve

uniformity of the finish. The on-site washing took place

around October 1980. Nine years later, in late 1989 or early

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1990, the YWCA became aware of imperfections--cracks,

staining, and blemishes--in the precast concrete panels.

On August 28, 1990, YWCA filed suit in the United States

District Court for the District of Columbia against Tiber for

breach of contract and against Beer for breach of contract,

breach of warranty, negligence, and misrepresentation. Following the grant of summary judgment to Tiber on Tiber's

and Beer's cross-claims for contribution and indemnification,

the parties stipulated that any judgment against Tiber would

be entered against Beer. The misrepresentation claim was

dismissed pretrial. On the remaining claims, YWCA presented evidence at trial regarding three causes of the damage to

the concrete panels. The evidence of YWCA's two experts,

Mark F. Williams and Bernard Erlin as well as Beer's expert,

William F. Logan, showed that the primary cause of the

deterioration of the panels was the introduction of excessive

chloride ions when Beer improperly acid-etched the panels.

This exposure to excessive chloride ions caused the steel

imbedded in the panels to corrode, resulting in the cracking

of the panels. The deterioration was exacerbated by Beer's

failures to manufacture the panels with sufficient concrete

cover over the imbedded steel, and to use galvanized reinforcing mesh, to protect the steel from attack by chloride ions

where the concrete cover was less than one-and-a-half inches

thick, as required by the contract specifications and industry

standards. The corrosion of the imbedded steel and the

resulting cracking was an ongoing, insidious process; the

chloride ions slowly advance through the concrete until they

reach the steel, corroding it on a progressive and continuing

basis.

The jury found that Tiber and Beer had breached their

contract with the YWCA, that Beer was negligent, and that

YWCA had suffered $4.5 million in damages. The jury also

found that Tiber and Beer had failed to prove that the YWCA

knew or reasonably should have known that "there was a

condition in the panels that would cause a person exercising

ordinary care to make further inquiry as to the reasons for

that condition." The district court entered judgment on

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January 31, 1994, for the YWCA in the amount of

$4,504,978.47 (costs included).

The YWCA then filed suit, on April 5, 1994, in the District

Court for the District of Columbia against Beer's seven

Canadian insurers ("the Insurers") during 1979 to 1991, the

period spanning the manufacture of the panels to the discovery of the damage:

Kansa General International Insurance Company

("Kansa") issued a comprehensive general liability policy

with a $2 million limit, and an excess umbrella policy for

$5 million, for the term from July 31, 1979 to July 31,

1980.

Allstate Insurance Company of Canada ("Allstate")

issued a comprehensive general liability policy with a $2

million limit, and an excess umbrella policy for $5 million

for the term from July 31, 1980 to July 31, 1981.

New Hampshire Insurance Company ("New Hampshire") issued two comprehensive general liability policies

with terms of July 31, 1982 to July 31, 1983 and July 31,

1983 to July 31, 1984 with limits of $1 million each.

Halifax Insurance Company ("Halifax") issued two

comprehensive general liability policies with terms of

July 31, 1984 to July 31, 1985 and July 31, 1985 to July

31, 1986 with limits of $1 million each.

Norad Reinsurance Company, Ltd. ("Norad") issued a

comprehensive general liability policy with a term of July

31, 1986 to July 31, 1987 and a limit of $5 million.

Richmond Insurance Company (Barbatos), Ltd. ("Richmond") issued a policy for the term of July 31, 1987 to

July 31, 1988.

American Home Assurance Company ("American

Home") issued a comprehensive general liability policy

with a term of June 21, 1989 to July 31, 1991 and a limit

of $3 million.

The YWCA reached a settlement with Allstate, and on May

30, 1995, the district court dismissed YWCA's claims against

Allstate. YWCA's suit against Richmond was dismissed.

The district court entered a default judgment against Norad.

YWCA was unsuccessful in its effort to collect from Kansa.

Kansa filed for bankruptcy in December 1994, and on March

8, 1995, the Superior Court of Quebec ("Quebec Court")

issued a Winding-up Order. On April 9, 1998, the Canadian

Liquidator disallowed YWCA's submission of proof of its

claims against Kansa because (1) there was no injury during

the policy period within the meaning of Kansa's policies, (2)

exclusions under the policies were implicated, (3) YWCA

failed to give timely notice to Kansa of its alleged claims, and

(4) YWCA did not comply with the Liquidator's request that

it disclose the actual amount of its alleged damages. When

YWCA did not, when granted additional time, make the

requested disclosure, the Quebec Court entered a judgment

against YWCA on February 2, 1999, on its claims against

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Kansa.

Meanwhile, in the district court here, on November 21,

1995, YWCA, Kansa, New Hampshire, and Halifax filed

cross-motions for summary judgment. On August 12, 1998,

the Magistrate Judge issued a report and recommendation

that District of Columbia law should apply to the construction

of the insurance policies, and that YWCA's and American

Home's motions for summary judgment should be denied and

New Hampshire's and Halifax's motions for summary judgment should be granted. By Order dated January 26, 1999,

the district court rejected the Magistrate Judge's choice of

law recommendation, concluding instead that Canadian law

applied.

Thereafter, the district court granted Kansa's motion to

dismiss on grounds of comity, and in the alternative granted

Kansa's motion for summary judgment. The district court

also granted summary judgment to the three remaining Insurers. Applying Ontario law to determine whether there

was coverage under the Insurers' occurrence-based policies,

the district court identified four relevant triggers of coverage

under Ontario law. The court rejected the "continuous trigger," which includes all times from exposure to the harm to

its manifestation, because no Canadian court had applied it.

It also rejected the "manifestation trigger," for which the

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trigger is the moment at which the damage becomes apparent

or is discovered, because Canadian courts (other than a

Quebec trial court), including the Ontario court, had rejected

it. The district court distinguished Canadian cases that had

applied an "injury-in-fact trigger," which looks to the time at

which the damage actually occurred, explaining that both

Pickford & Black Ltd. v. Canadian General Insurance Co.,

64 D.L.R (3d) 179, 185 (Can. 1976), and Dawson Creek v.

Zurich Insurance Co., No. 12371, 1998 A.C.W.S.J. LEXIS

86772, at *24-*25 (B.C. Sup. Ct. Sept. 17, 1998), did not

involve a single exposure that inevitably caused damage over

time, but involved both an initial exposure and a later event

that could be said to have caused the injury. In contrast, the

court stated that several Canadian courts had applied the

"exposure trigger," for which the triggering event is the

exposure to the harm that causes the damage rather than the

resulting damage to the property.

The district court then turned to the occurrence-based

policies at issue. Observing that the terms of the Halifax

policy speak of "exposure" during the policy period, and

noting that the acid-etching process was the single moment of

exposure at which time the damage became inevitable, the

court found that no triggering event had occurred during

Halifax's policy period. Rather, the exposure took place during the term of Allstate's policy. Finding that the New

Hampshire and American Home policies did not indicate

which trigger applies, the court construed the terms of these

policies, namely, "injury," "destruction," and "damage," to

refer only to the moment of the initial exposure at which time

the damage becomes inevitable. Because, under the district

court's analysis, the acid-etching process was the causative

event when the damage became inevitable and there was no

intervening causative event during the New Hampshire and

American Home policies, it followed that these policies were

not triggered.

II.

On appeal, YWCA contends that the district court erred in

ruling that Canadian law applies to its claims against the

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Insurers arising from Beer's negligence and breach of contract in the District of Columbia. YWCA contends first, that

the district court erred in failing to conclude that there was

no conflict of laws between the District of Columbia and

Ontario because both apply a continuous trigger. YWCA

contends alternatively that, under the substantial interests

test, the correct choice of law is that of the District of

Columbia where the YWCA building is located, and that

under District of Columbia law, a continuous trigger applies

to comprehensive general liability policies when the injury is

continuous or progressive. See Wrecking Corp. of Am., Va.,

Inc. v. Ins. Co. of N. Am., 574 A.2d 1348, 1350 (D.C. 1990).

Alternatively again, YWCA contends that even if Ontario law

applies, the district court erred in relying on law of the

Province of Saskatchewan that conflicts with the law of

Ontario, explaining that in International Comfort Products

Corp. v. Royal Insurance Company of Canada, No.

99-177332, 2000 A.C.W.S.J. LEXIS 48324, at *12

(Ont. Sup. Ct. Mar. 20, 2000), Ontario rejected the exposure trigger

theory adopted in University of Saskatchewan v. Fireman's

Fund Insurance Company of Canada, No. 2172, 1997

A.C.W.S.J. LEXIS 161238 (Sask. Ct. App. Oct. 10, 1997).

YWCA maintains also that Ontario's application of the continuous trigger is consistent with the leading decision of the

Supreme Court of Canada on the construction of insurance

policies, Reid Crowther & Partners Ltd. v. Simcoe & Erie

General Insurance Co., 99 D.L.R. (4th) 741 (Can. 1993), and

that the district court failed to apply this precedent when it

subjected all of the policies to an exposure trigger theory

even though the language of the policies insures against

occurrences.

Because there is diversity of citizenship among the parties

to this litigation, the law of the forum state supplies the

choice of law standards. Klaxon Co. v. Stentor Elec. Mfg.

Co., 313 U.S. 487, 496 (1941). Under District of Columbia

law, the court must first determine if there is a conflict

between the laws of the relevant jurisdictions. Eli Lilly &

Co. v. Home Ins. Co., 764 F.2d 876, 882 (D.C. Cir. 1985)

(citing Fowler v. A & A Co., 262 A.2d 344, 348 (D.C. 1970));

Duncan v. G.E.W., Inc., 526 A.2d 1358, 1363 (D.C. 1987).

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Only if such a conflict exists must the court then determine,

pursuant to District of Columbia choice of law rules, which

jurisdiction has the "more substantial interest" in the resolution of the issues. See Nationwide Mut. Ins. Co. v. Richardson, 270 F.3d 948, 953 (D.C. Cir. 2001); Eli Lilly & Co., 764

F.2d at 882; Greycoat Hanover F St. Ltd. P'ship v. Liberty

Mut. Ins. Co., 657 A.2d 764, 767-78 (D.C. 1995).

It is unnecessary to engage in a conflict of laws analysis.

Both YWCA and the Insurers agree that the relevant jurisdictions are the District of Columbia and Ontario. Examination of both forums' laws reveals that no conflict of laws exists

because both would apply a continuous trigger to the occurrence-based policies where the damage can be characterized

as being continuous or progressive.1

__________

1 In ruling that Canadian law applied, the district court relied

upon Liberty Mutual Insurance Co. v. Travelers Indemnity Co., 78

F.3d 639 (D.C. Cir. 1996). In Liberty Mutual, the court examined

which state law should govern a liability insurance policy and stated

that "[u]nder District law, insurance contracts are governed by the

substantive law of the state in which the policy is delivered." Id. at

642; see also CSX Transp., Inc. v. Commercial Union Ins. Co., 82

F.3d 478, 482 (D.C. Cir. 1996) (citing Liberty Mutual with approval). It is not altogether clear that Liberty Mutual correctly characterized the District of Columbia's choice of law rules. This court's

decision in Nationwide Mutual Insurance Co., applying the District

of Columbia Court of Appeals decision in Greycoat Hanover suggests that the District of Columbia applies the law of the jurisdiction with the more substantial interest in the litigation, in considering what law to apply to insurance policies. Nationwide Mut. Ins.

Co., 270 F.3d at 953; cf. Ideal Elec. Sec. Co. v . Int'l Fid. Ins. Co.,

129 F.3d 143, 148 (D.C. Cir. 1997). Liberty Mutual addressed

neither Greycoat Hanover nor the more substantial interest test,

relying instead on D.C. Court of Appeals decisions involving life

insurance policies rather than liability policies. Liberty Mut., 78

F.3d at 642 (citing Levin v. John Hancock Mut. Life Ins. Co., 41

A.2d 841 (D.C. 1945), and Raley v. Life & Cas. Ins. Co. of Tenn.,

117 A.2d 110 (D.C. 1955)). Those District of Columbia cases are

specific, however, to life insurance policies and rely on Supreme

Court cases holding that the place of delivery of life insurance

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A.

Neither the highest court in Ontario nor the Supreme

Court of Canada has addressed which trigger theory applies

to occurrence-based policies. But in Reid Crowther & Partners Ltd. v. Simcoe & Erie General Insurance Co., 99 D.L.R.

(4th) 741 (Can. 1993), the Supreme Court of Canada set forth

general principles for interpreting insurance contracts that

direct courts to the language of the particular insurance

policy:

In each case the courts must examine the provisions of

the particular policy at issue (and the surrounding circumstances) to determine if the events in question fall

within the terms of coverage of that particular policy....

In each case, the courts must interpret the provisions of

the policy at issue in light of general principles of interpretation of insurance policies, including, but not limited

to:

(1) the contra proferentem rule;

(2) the principle that coverage provisions should be

construed broadly and exclusion clauses narrowly; and

(3) the desirability, at least where the policy is ambiguous, of giving effect to the reasonable expectations of

the parties.

Id. at 751-52.

Examination of the language in the Insurers' policies indicates the appropriateness of applying a continuous trigger.

The Halifax policies cover "occurrences" and define an "occurrence" as including "a continuous or repeated exposure

during the Policy Period to a condition or conditions which

__________

polices determines what state law should apply. See Mut. Life Ins.

Co. of N.Y. v. Johnson, 293 U.S. 335, 339 (1934); Northwestern

Mut. Life Ins. v. McCue, 223 U.S. 234, 248 (1912); Mut. Life Ins.

Co. of N.Y. v. Cohen, 179 U.S. 262, 264 (1900).

The instant appeal, however, does not present the occasion to

decide whether Liberty Mutual correctly characterized District of

Columbia choice of law rules because it is unnecessary to engage in

a conflict of laws analysis.

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result in injury to or destruction of property neither expected

nor intended from the standpoint of the Insured." Similarly,

the American Home policy covers "accidents" and defines

"accident" as including "continuous or repeated exposure to

conditions which results in property damage neither expected

nor intended from the standard point of the Insured." The

plain terms of these policies support application of the continuous trigger where, as here, the exposure to the damaging

excessive chloride ions was continuous in nature. Although

the Insurers, like the district court, take the position that

there was only a single exposure that caused continuous

damage, this characterization of the nature of the damage is

belied by undisputed evidence describing the damage. That

evidence showed that the damage was the result of continued

exposure to excessive chloride ions that migrate through the

concrete, and that the initial exposure to the chloride ions

thus resulted in continuous exposure to those same ions as

they migrated through the concrete and slowly corroded the

steel.

In addition, the language of the New Hampshire policies

also indicates the appropriateness of applying the continuous

trigger. The New Hampshire policies cover "physical injury

to or destruction of property which occurs during the policy

period," and define "occurrence" as including "injurious exposure to condition which results, during the policy period, in

bodily injury or property damage neither expected nor intended from the standpoint of the Insured." The district

court interpreted this language as setting forth an exposure

trigger. Yet the policy language provides that it is the

property damage and not the exposure to it that must occur

during the policy period. The language is thus consistent

with the continuous trigger theory, which defines damage

broadly to include the entire process of damage from exposure to manifestation when the damage is of a continuous and

progressive nature. Cf. Keene Corp. v. Ins. Co. of N. Am.,

667 F.2d 1034, 1045-47 (D.C. Cir. 1981).

Even if the Insurers' policies might reasonably be read

differently, the contract interpretation principles set forth by

the Supreme Court of Canada point to application of the

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continuous trigger. First, the policy is to be construed

against the drafters. See Reid Crowther, 99 D.L.R. (4th) at

751-53. Neither Halifax, nor New Hampshire, nor American

Home contend in their brief that the contra proferentem rule

is inapplicable to its policy because it did not draft it. Nor do

they contend that the language of the policies was imposed by

statute. Second, even if there is doubt as to which party

drafted the policies, the coverage provisions are to be interpreted broadly. Id. Thus, under Canadian principles of

contract interpretation, the court is to interpret the policies to

maximize coverage, which also points to application of the

continuous trigger theory.

This result is consistent with the law of Ontario, which

recognizes a continuous trigger theory. In a case not cited

by either side in their briefs, an Ontario Superior Court judge

in Alie v. Bertrand & Frere Construction Co., No. 2104-1992,

2000 A.C.W.S.J. LEXIS 56664 (Ont. Sup. Ct. Apr. 17, 2000),

provided a thorough and persuasive analysis of the relevant

considerations in applying trigger theories. In Alie, the court

considered which of the four triggers to apply for coverage of

property damage consisting of continuous deterioration of the

foundations of homes caused by the use of fly ash in the

concrete. Id. at *19-*20, *190-*91. The court rejected the

exposure theory as being inconsistent with the language of

the policies. Id. at *194. The policies provided coverage for

property damage occurring during the policy period. Id.

Because the damage was continuous, the court rejected limiting coverage to only the policy that covered the period of

exposure. Id. The court rejected the manifestation theory,

as being inconsistent with the policies' language, which focuses on the damage and not the discovery of the damage. Id.

at *198. The court approved of the injury-in-fact theory

because it was most consistent with the language of the

policies. Id. at *199-*200. Nonetheless, recognizing the

practical difficulty of determining when the damage actually

occurred because it was progressive over time, id. at *200-

*01, the court adopted a combination of the injury-in-fact and

the continuous triggers, applying the principle that "[a]ll

carriers who were on the risk from the inception of harm to

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the time the loss was no longer contingent should be liable to

the insured." Id. at *203 (quoting Zurich Ins. Co. v. Transamerica Ins. Co., 34 Cal. Rptr. 2d 913, 922 (Cal. Ct. App.

1994), superseded by 38 Cal. Rptr. 2d 345 (Cal. 1995)); id. at

*205-*06. The court reasoned that because the injury was

ongoing, this combined approach was necessary in order to

apportion the damage equitably over time, id. at *204, that

this theory was most consistent with the policy language, id.

at *206, and that this theory was consistent with the intention

of the parties, id. at *204-*06.

The Insurers' post-argument submissions do not persuade

us of any reason to doubt the Alie judge's analysis of Ontario

law. First, although Alie is a trial court decision currently on

appeal, that it represents persuasive authority as to which

trigger Ontario law would apply is reflected in International

Comfort Products Corp. v. Royal Insurance Company of

Canada, No. 99-177332, 2000 A.C.W.S.J. LEXIS 48324 (Ont.

Sup. Ct. Mar. 20, 2000), in which another Ontario trial judge

had previously adopted the continuous trigger, reasoning that

the continuous nature of the damage made it difficult to

determine when damage occurred during the policy periods.

Id. at *12. The Insurers' attempt to distinguish International Comfort as applying only to the broader duty to defend

rather than the duty to indemnify misses the mark. They

rely on St. Paul Fire and Marine Insurance Co. v. Durabla

Canada Ltd., 29 O.R. (3d) 737 (Ont. Ct. App. 1996), in which

the Ontario Court of Appeals held that because the duty to

defend is broader than the duty to indemnify it was unnecessary to determine which trigger to apply in determining

whether there was a duty to defend. Id. at 739. However,

the court in International Comfort was not deciding whether

the insurers had a duty to defend; the insurers conceded this.

Int'l Comfort, 2000 A.C.W.S.J. LEXIS 48324, at *11. Rather,

the question before the court was how to apportion the costs

of the defense among the insurers. Id. at *11-*12. Indeed,

the court distinguished Durabla on this ground. Id. Thus,

although International Comfort involved the duty to defend,

there is no indication in the opinion that, in determining

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which trigger to apply, the court viewed the insurers' duty as

being any broader than in an indemnity case.

Second, contrary to the Insurers' contention, Alie does not

conflict with Sullivan Entertainment Inc. v. General Accident Assurance Company of Canada, No. RE 7657/97 1998

Ont. Sup. C.J. LEXIS 482 (May 29, 1998), an Ontario trial

court opinion rejecting the manifestation trigger. Id. at *17-

*21. The damage in Sullivan was not of a continuous and

progressive nature and hence was complete before the insurer came to the risk. Thus, the court had no occasion to

consider whether to apply the continuous trigger. See id. at

*1.

Third, Alie is not suspect, as the Insurers maintain, for

failing to adopt the holding in Cansulex Ltd. v. Reed Stenhouse Ltd., 1986 A.C.W.S.J. LEXIS 30665 (B.C. Sup. Ct. Mar.

10, 1986), which the Insurers characterize as adopting the

exposure trigger. Although Cansulex held that the damage

began upon exposure, triggering coverage, id. at *61, *72-

*74, it did not have occasion to determine whether the

continuous process of damage would have also triggered

coverage under future policy periods, and thus is not inconsistent with the adoption of the continuous trigger.

Fourth, although the Insurers urge this court in both their

brief and post-argument submissions to follow the district

court in relying on University of Saskatchewan v. Fireman's

Fund Insurance Company of Canada, No. 2172 1997

A.C.W.S.J. LEXIS 161238 (Sask. Ct. App. Oct. 10, 1997), in

which the Saskatchewan Court of Appeal overturned the trial

court's adoption of the manifestation theory, id. at *29, we

decline to do so. The court of appeal held that the policy

language did not support the manifestation theory because it

refers to damage during the policy period and not the "discovery" of damage, id. at *23; that the manifestation theory

is inconsistent with the concept of risk because it allows

coverage even though the process of damage begins and the

ultimate damage becomes inevitable before the insurer comes

on the risk, id. at *25; and that if an insurer covered damage

that occurred before it came on the risk, such coverage would

be in the nature of warranty and not indemnity, id. at *27.

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University of Saskatchewan is distinguishable from the instant case in a material way. Although it involved continuous

and progressive damage, id. at *5-*6, the damage was complete before the insurer came on the risk, id. at *20, causing

the court to reject application of the continuous trigger

theory on this factual basis. Id. at *20. By contrast, the

damage at issue, while inevitable from the date of Beer's acidetching of the concrete panels, continued through the policy

period of each of the Insurers. The court of appeal's rejection of the manifestation theory as contrary to the concept of

risk is inapplicable where unknown and continuing damage

occurs during the policy period. Because in University of

Saskatchewan the damage did not progress into the policy

period, it provides no guidance as to whether a continuous

trigger should apply. Indeed, the court of appeal stated in

University of Saskatchewan that all four trigger theories

were not before it; rather, it was considering only whether

the manifestation trigger theory should apply. Id. at *19-

*20. Moreover, whatever the merits of this case may be for

the Province of Saskatchewan, the University of Saskatchewan is not binding authority for the highest court of Ontario.

R. v. Wolf, 2 S.C.R. 107 (Can. 1974). The appellate court of

Ontario is only bound by decisions of the Supreme Court of

Canada, id., which has not expressly adopted the exposure

trigger. Nor have the Insurers suggested why it would be

prudent to rely on the Supreme Court of Canada's non-merits

dismissal of the appeal in University of Saskatchewan as an

implicit approval of its holding.

Nothing in the cases from the Supreme Court of Canada,

the courts of Ontario, nor any relevant statute indicates that a

continuous trigger theory is disfavored in Ontario. Furthermore, the Supreme Court of Canada has stated that insurance policies, to the extent they are ambiguous, are to be

construed against the insurers and broadly in favor of coverage. Accordingly, in light of Ontario law and the language of

the policies, where the nature of the damage is continuous,

the continuous trigger applies.

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B.

Our analysis of District of Columbia law is to the same

effect. In Wrecking Corporation of America, Virginia, Inc.

v. Insurance Company of North America, 574 A.2d 1348

(D.C. 1990), the D.C. Court of Appeals adopted the manifestation trigger as a general rule, noting that "the prevailing rule

is that 'property damage occurs' at the time the damage is

discovered or when it has manifested itself." Id. at 1350.

Relying on this holding in contending that District of Columbia law applies a manifestation trigger, the Insurers fail to

observe that in Wrecking the D.C. Court of Appeals recognized an exception to this general rule when the damage to

the property can be characterized as "continuous or progressive." Id. Unlike in Wrecking, in which there was no

evidence that the property damage was of a "continuous and

progressive" nature, the evidence of Beer's negligence establishes that the corrosion caused by the exposure to excessive

chloride ions was of a continuous and progressive nature. As

such, this evidence suffices to bring the instant case within

the exception recognized in Wrecking. Accordingly, as under

Ontario law, District of Columbia law applies the continuous

trigger where the damage is of a continuous nature. Furthermore, to the extent the language of the policies is ambiguous, District of Columbia law interprets ambiguities against

the insurers. Chase v. St. Farm Fire & Cas. Co., 780 A.2d

1123, 1127 (D.C. 2001). Thus, under District of Columbia law,

given the language of the policies and the continuous nature

of the damage, the continuous trigger applies.

III.

On appeal, the Insurers have pointed to no evidence to

create a dispute as to a genuine issue of material fact

regarding YWCA's evidence that the exposure to the chloride

ions occurred in 1980 and that the damage caused by the

excessive chloride ions began to manifest itself around

November-December 1989 or early 1990. Applying the continuous trigger to the Insurers' policies, there is coverage

under New Hampshire's policies, Halifax's policies, and

USCA Case #00-7259 Document #650986 Filed: 01/15/2002 Page 15 of 16
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American Home's policy. Accordingly, we reverse the district court's grant of summary judgment to these Insurers,

and remand the case to the district court to address their

claims that coverage is precluded by exclusions in the policies.

To the extent YWCA challenged the district court's extension of comity to the Quebec Court's resolution of YWCA's

claims against Kansa in its opening brief, YWCA contends

only that the district court acted contrary to the Ontario

Court's view that one court should decide all of the claims

against the Canadian insurers. No argument is made that

the Ontario Court's reasoning for staying Halifax's declaratory judgment action was binding on the district court, and the

mere existence of this reasoning does not defeat the extension

of comity to the decision of the Quebec Court. The Quebec

Court considered all of YWCA's present claims on the merits,

and YWCA fails to point to a distinction between the United

States and Canadian justice systems that would weigh against

comity. See Clarkson Co., Ltd. v. Shaheen, 544 F.2d 624,

629-30 (2d Cir. 1976); see also Canada S. Ry. Co. v. Gebhard,

109 U.S. 527 (1883). Accordingly, we affirm the district

court's ruling on comity.

Finally, because the issues of whether the Insurers are

liable to YWCA for breach of their duty to defend and

attorneys' fees turn on the applicability of the policy exclusions and the district court did not address these issues, we

remand these issues as well.

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