UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 11-2057

MITSUI SUMITOMO INSURANCE COMPANY OF AMERICA,

Plaintiff - Appellee,

v.

DUKE UNIVERSITY HEALTH SYSTEM, INC.,

Defendant - Appellant,

and

AUTOMATIC ELEVATOR COMPANY, INC.,

Defendant.

Appeal from the United States District Court for the Middle 

District of North Carolina, at Greensboro. L. Patrick Auld, 

Magistrate Judge. (1:09-cv-00480-LPA-LPA)

Argued: October 25, 2012 Decided: February 11, 2013

Before KING and FLOYD, Circuit Judges, and R. Bryan HARWELL, 

United States District Judge for the District of South Carolina, 

sitting by designation.

Affirmed by unpublished opinion. Judge Floyd wrote the majority 

opinion, in which Judge Harwell joined. Judge King wrote a 

dissenting opinion.

ARGUED: Charles Holton, WOMBLE CARLYLE SANDRIDGE & RICE, PLLC, 

Durham, North Carolina, for Appellant. Richard H. Nicolaides, 
2

Jr., BATES CAREY NICOLAIDES, LLP, Chicago, Illinois, for 

Appellee. ON BRIEF: Julie B. Bradburn, WOMBLE CARLYLE SANDRIDGE 

& RICE, PLLC, Raleigh, North Carolina; Hada de Varona Haulsee, 

WOMBLE CARLYLE SANDRIDGE & RICE, PLLC, Winston-Salem, North 

Carolina, for Appellant. Barbara I. Michaelides, Paula M. 

Carstensen, BATES CAREY NICOLAIDES, LLP, Chicago, Illinois, for 

Appellee.

Unpublished opinions are not binding precedent in this circuit.
3

FLOYD, Circuit Judge:

In 2004, Appellant Duke University Health System, Inc., 

engaged Automatic Elevator Company to renovate two elevators in 

a hospital’s parking deck. After Automatic Elevator completed 

its work, it placed barrels full of used hydraulic fluid in its 

designated storage area at the hospital. Duke employees saw the 

barrels, mistakenly thought they contained surgical detergents 

and lubricants, and ultimately used the hydraulic fluid to wash 

hundreds of surgical instruments. Approximately 127 patients 

who may have come into contact with the tainted instruments sued 

Duke, who settled the claims for over $6 million. Duke then 

sued Automatic Elevator. Thereafter, Appellee Mitsui Sumitomo 

Insurance Company of America—Automatic Elevator’s insurer—

brought this action seeking a declaratory judgment that it owed 

no further obligation to Automatic Elevator. Mitsui Sumitomo 

argued that the hydraulic fluid mistake constituted one 

“occurrence,” obligating it to pay $1 million under the 

applicable insurance policy, which it had already paid to settle 

the surgical patients’ claims against Automatic Elevator. The 

district court agreed, and we now affirm.
4

I.

A.

We draw the following facts from Duke and Mitsui Sumitomo’s 

stipulations of fact, dated June 15, 2010. From 1978 to 2004, 

Automatic Elevator worked with Duke on various elevator 

projects. In keeping with this arrangement, Duke engaged 

Automatic Elevator to renovate two elevators in Duke Health 

Raleigh Hospital’s (DHRH) parking deck. Automatic Elevator 

began its work on the first elevator (Elevator 1) in April 2004, 

and the North Carolina Department of Labor inspected and 

approved its work on June 24, 2004. In July 2004, Automatic 

Elevator commenced its renovation of the second elevator 

(Elevator 2). The North Carolina Department of Labor approved 

its work on Elevator 2 on September 15, 2004.

During Automatic Elevator’s work on Elevator 1, Duke made 

available several empty fifteen-gallon plastic barrels. These 

barrels previously contained surgical detergents called “Mon 

Klenz” and “Klenzyme” and a surgical lubricant known as “Hinge 

Free,” which Duke had purchased from Cardinal Health 200, Inc. 

As part of Automatic Elevator’s renovation of Elevator 1, it 

removed hydraulic fluid from the elevator and stored it in the 

plastic barrels. Automatic Elevator’s employees then disposed 

of the hydraulic fluid at a waste disposal site. During the 

course of Automatic Elevator’s work on Elevator 2, it used the 
5

same plastic barrels to store hydraulic fluid from that 

elevator.

When Automatic Elevator completed its renovation of 

Elevator 2, it left the barrels containing hydraulic fluid in 

its designated storage area at DHRH’s parking deck. A DHRH 

employee saw the barrels and mistakenly thought that they 

contained surgical detergents and lubricants. The employee

therefore contacted Cardinal and asked it to return the barrels 

to Cardinal’s warehouse, and Cardinal complied with the request. 

On November 4, 2004, Cardinal sold the barrels to DHRH, Durham 

Regional Hospital (DRH), and two other hospitals, believing that 

they contained surgical detergents and lubricants rather than 

hydraulic fluid. The barrels that Cardinal delivered to DHRH 

and DRH were labeled “Mon Klenz.”

After receiving the deliveries from Cardinal, employees at 

DHRH and DRH mistakenly used the hydraulic fluid to clean 

surgical instruments. At DRH, hundreds of surgical instruments

came into contact with the hydraulic fluid when employees used 

hydraulic fluid in three different washing machines in December 

2004. Hundreds of surgical instruments were also exposed to 

hydraulic fluid at DHRH, where employees used hydraulic fluid in 

two different washing machines in November and December 2004. 

Duke employees discovered the error in late December 2004 and 

sent letters explaining the situation to 3,650 surgical patients 
6

who may have come into contact with the affected instruments. 

Approximately 150 of these patients asserted claims against 

Duke, Cardinal, and Automatic Elevator, alleging negligence, 

negligent infliction of emotional distress, and loss of 

consortium. By May 2008, Automatic Elevator had settled with 

every individual who brought a claim against it. Duke entered 

into settlement agreements with approximately 127 claimants, 

resolving its liability for over $6 million.

B.

Mitsui Sumitomo issued two insurance policies to Automatic 

Elevator that coincide with the time periods when Automatic 

Elevator worked on the two DHRH elevators: the 2003-2004 

policy, which was effective from August 1, 2003, to August 1, 

2004, and the 2004-2005 policy, which was effective from August 

1, 2004, to August 1, 2005. Both policies include a $1 million 

limit for “any one occurrence.” The policies define 

“occurrence” as “an accident, including the continuous repeated 

exposure to substantially the same harmful condition,” but 

neither policy defines “accident.” The policies include a $3 

million aggregate limit, and both policies contain a “per 

elevator” endorsement that applies the aggregate limit to “each 

and every elevator . . . that is either serviced, repaired, 

installed, renovated, refurbished or worked upon by [Automatic 
7

Elevator] during the policy period.” Thus, if the hydraulic 

fluid mistake involved at least three occurrences and the “per 

elevator” endorsement applies, Mitsui Sumitomo is obligated to 

pay $6 million on Automatic Elevator’s behalf.

After settling the tort claims against it, Duke sued 

Automatic Elevator for breach of contract, indemnity, and 

negligence in the General Court of Justice, Superior Court 

Division, in Wake County, North Carolina, in a case styled Duke 

University Health System, Inc. v. Automatic Elevator Co., Inc., 

Case No. 08 CVS 011270. That court stayed the case, which 

remains pending. Mitsui Sumitomo then brought this suit against 

Automatic Elevator and Duke, seeking a declaratory judgment that 

it owed no further defense or indemnity obligation to Automatic 

Elevator because the insurance policy set a $1 million per 

occurrence limit, which Mitsui Sumitomo satisfied when it paid 

$1 million to settle the claims that surgical patients brought 

against Automatic Elevator. To support its contention, Mitsui 

Sumitomo argued that Automatic Elevator’s alleged negligence in 

storing the barrels was a single “occurrence” under the policy. 

Mitsui Sumitomo also contended that the “per elevator” 

endorsement did not apply because Automatic Elevator serviced 

only one elevator—Elevator 2—during the 2004-2005 policy year. 

Mitsui Sumitomo and Duke each moved for summary judgment.
8

The district court entered judgment in favor of Mitsui 

Sumitomo, finding that Automatic Elevator’s negligence 

constituted one occurrence and the “per elevator” endorsement

did not apply. Mitsui Sumitomo Ins. Co. of Am. v. Automatic 

Elevator Co., No. 1:09-CV-00480, 2011 WL 4103752, at *14 

(M.D.N.C. Sept. 13, 2011). The district court also held that 

this case involves only the 2004-2005 policy, a finding that 

Duke does not dispute. Id. Duke timely appealed, and we have 

jurisdiction pursuant to 28 U.S.C. § 1291. Automatic Elevator 

has been administratively dissolved by the North Carolina 

Secretary of State and is not a party to this appeal.

II.

Pursuant to Rule 56(a) of the Federal Rules of Civil 

Procedure, summary judgment is appropriate only if “there is no 

genuine dispute as to any material fact and the movant is 

entitled to judgment as a matter of law.” A district court 

considering a summary judgment motion must view the facts in the 

light most favorable to the non-moving party. United States v. 

Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam). Because 

we review de novo the district court’s decision to grant Mitsui 

Sumitomo’s motion for summary judgment, we must use the same 

standard that applies at the district court level. Shaw v. 

Stoud, 13 F.3d 791, 798 (4th Cir. 1994).
9

We are sitting in diversity, so the choice of law rules of 

the state in which the district court sat—North Carolina—apply 

in this case. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 

487, 496-97 (1941). Under North Carolina law, the law of the 

place where the contract was made governs a contract dispute. 

Fast v. Gulley, 155 S.E.2d 507, 509-10 (N.C. 1967). Automatic 

Elevator and Mitsui Sumitomo executed the insurance contract at 

issue in this case in North Carolina. Consequently, North 

Carolina law applies, and “our role is to apply the governing 

state law, or, if necessary, predict how the state’s highest 

court would rule on an unsettled issue.” BP Prods. N. Am., Inc. 

v. Stanley, 669 F.3d 184, 188 (4th Cir. 2012) (quoting Horace 

Mann Ins. Co. v. Gen. Star Nat’l Ins. Co., 514 F.3d 327, 329 

(4th Cir. 2008)) (internal quotation marks omitted).

III.

Duke alleges that the hydraulic fluid mistake involved 

multiple occurrences, entitling Automatic Elevator to more than 

$1 million under the 2004-2005 policy. Specifically, Duke 

argues that (1) Automatic Elevator’s decision to leave the 

barrels in its designated storage area at DHRH cannot constitute 

an occurrence in and of itself because that choice was a 

“volitional act” rather than an “accident” and (2) the district 

court should have looked to the “most immediate cause” of the 
10

injury—such as each surgery or each use of hydraulic fluid to 

wash surgical instruments—to determine the number of 

occurrences. For the reasons we outline below, the district 

court correctly determined that the hydraulic fluid incident 

involved a single occurrence.

A.

Automatic Elevator’s insurance policy defines an 

“occurrence” as an “accident.” Duke therefore contends that the 

“question of how many occurrences there are is answered in the 

most straight-forward fashion by counting how many accidents, or 

unforeseen events, occurred and resulted in injury.” To support 

its argument that this case involves multiple accidents and 

hence multiple occurrences, Duke looks to two definitions of the 

word “accident.” First, Black’s Law Dictionary defines 

“accident” as “[a]n unintended and unforeseen injurious 

occurrence; something that does not occur in the usual course of 

events or that could not be reasonably anticipated.” Black’s 

Law Dictionary 15 (8th ed. 2004). Second, in Gaston County 

Dyeing Machine Co. v. Northfield Insurance Co., the Supreme 

Court of North Carolina defined “accident” as an “unplanned and 

unforeseen happening or event, usually with unfortunate 

consequences.” 524 S.E.2d 558, 564 (N.C. 2000). Duke then 

juxtaposes these definitions with Black’s Law Dictionary’s 
11

definition of “volition”—“[t]he ability to make a choice or 

determine something; . . . the act of making a choice or 

determining something”—and concludes that Automatic Elevator’s 

volitional act of leaving the barrels in its storage space could 

not be an accident. Black’s Law Dictionary 1605 (8th ed. 2004). 

Although this semantic argument is intriguing, it lacks merit.

Contrary to Duke’s assertions, North Carolina precedent 

indicates that the definition of “accident” has no bearing on 

the number of occurrences. Instead, the cases that Duke cites 

prove that the definition of “accident” is relevant when 

determining whether the insurance company must provide coverage 

at all or pinpointing the date an event triggered coverage. See

Gaston Cnty., 524 S.E.2d at 564-65 (considering whether there 

was an occurrence and the trigger of coverage date); Waste Mgmt. 

of Carolinas, Inc. v. Peerless Ins. Co., 340 S.E.2d 374, 379-380 

(N.C. 1986) (whether there was an occurrence); Alliance Mut. 

Ins. Co. v. Guilford Ins. Co., 711 S.E.2d 207 (N.C. Ct. App. 

2011) (unpublished table decision) (trigger of coverage date); 

Davis v. Dibartolo, 625 S.E.2d 877, 880-83 (N.C. Ct. App. 2006)

(whether there was an occurrence); McCoy v. Coker, 620 S.E.2d 

691, 694-95 (N.C. Ct. App. 2005) (same); Wash. Hous. Auth. v. 

N.C. Hous. Auths. Risk Retention Pool, 502 S.E.2d 626, 630 (N.C. 

Ct. App. 1998) (same); City of Wilmington v. Pigott, 307 S.E.2d 

857, 859 (N.C. Ct. App. 1983) (same). Because Mitsui Sumitomo 
12

does not dispute the trigger of coverage date or whether the 

hydraulic fluid mistake constituted an occurrence, Duke’s 

definitional argument is misplaced. As discussed below, the 

Supreme Court of North Carolina has adopted a specific test for 

calculating the number of occurrences.

B.

North Carolina courts have adopted a cause test to 

determine how many occurrences an event encompassed. See Gaston 

Cnty., 524 S.E.2d at 565. Under this type of test, the number 

of occurrences “is determined by the cause or causes of the 

resulting injury.” Appalachian Ins. Co. v. Liberty Mut. Ins. 

Co., 676 F.2d 56, 61 (3d Cir. 1982). The cause test stands in 

opposition to the effect test, which treats each injury as a 

separate occurrence. Michael Murray, Note, The Law of 

Describing Accidents: A New Proposal for Determining the Number 

of Occurrences in Insurance, 118 Yale L.J. 1484, 1499 (2009). 

Therefore, to determine how many occurrences stemmed from the 

hydraulic fluid mistake, we must evaluate the cause or causes of 

the incident rather than its effects.

Courts have adopted various formulations of the cause test. 

Under the “proximate cause theory,” courts consider an event to 

constitute one occurrence when “there was but one proximate, 

uninterrupted, and continuing cause which resulted in all of the 
13

injuries and damage.” Id. at 1496 (quoting Appalachian Ins. 

Co., 676 F.2d at 61) (internal quotation marks omitted). In 

contrast, courts employing the “liability event theory” look to 

the immediate event or events that gave rise to liability to 

determine the number of occurrences. Id. at 1497. For example, 

in Michigan Chemical Corp. v. American Home Assurance Co., the 

Sixth Circuit held that each shipment of toxic flame retardant 

that had been mislabeled as animal feed supplement qualified as 

a separate occurrence, even though the problem arose from a 

single event: the mislabeling itself. 728 F.2d 374, 383 (6th 

Cir. 1984). Duke implies that North Carolina’s courts have 

adopted the liability event theory because it argues that they 

look to “the most immediate cause of the injury” to calculate 

the number of occurrences. The district court rejected this 

approach and employed the proximate cause theory, finding that 

the “proper application of the cause approach . . . requires 

asking which negligent act, or continuum of negligent acts, on 

the part of the insured gave rise to liability.” Mitsui 

Sumitomo, 2011 WL 4103752, at *13. As discussed below, the 

district court did not err in making this determination.

Duke argues extensively that Gaston County Dyeing Machine 

Co. v. Northfield Insurance Co. supports its argument that the 

Supreme Court of North Carolina determines the number of 

occurrences by pinpointing the most immediate cause or causes of 
14

the harm. In Gaston County, the Supreme Court of North Carolina 

considered whether the rupture of a pressure vessel and the

resulting contamination of multiple lots of medical imaging dye 

qualified as a single occurrence or multiple occurrences. 

However, rather than engaging in this inquiry to determine how 

much the policy obligated the insurer to pay, the court was 

evaluating whether the incident had triggered one insurance 

policy or multiple policies. 524 S.E.2d at 565. Duke contends 

that Gaston County supports its position that the Supreme Court 

of North Carolina looks to the most immediate cause of the 

injury to determine the number of occurrences because the court 

considered the valve rupture—not more remote causes, such as the 

vessel’s defective design or manufacturing—to be the accident.

Duke’s reliance on Gaston County is inappropriate for at 

least two reasons. First, as noted above, Duke implies that the 

Gaston County court actively considered whether it was the valve 

rupture or the product defects that constituted the occurrence. 

However, the court never analyzed this issue, instead 

considering only whether the valve rupture was an occurrence at 

all and, if so, when it happened. 524 S.E.2d at 564-65. 

Second, Duke overlooks the Gaston County court’s conclusion that 

the incident involved a single occurrence because, when “all 

subsequent damages flow from the single event, there is but a 

single occurrence.” Id. at 565. This statement evokes the 
15

proximate cause theory. Consequently, even if Gaston County

applies to this case—which is debatable in light of its focus on 

the trigger of coverage issue—it does not support Duke’s 

argument.

Both the district court and Mitsui Sumitomo relied on 

Christ Lutheran Church v. State Farm Fire & Casualty Co. as an 

indication that North Carolina’s courts have adopted the 

proximate cause theory. 471 S.E.2d 124 (N.C. Ct. App. 1996). 

In Christ Lutheran, a North Carolina appeals court concluded 

that multiple acts of embezzlement constituted a single 

occurrence. Id. at 126. However, the insurance policy at issue 

in that case defined an “occurrence” as “[a]ll loss involving a 

single act, or series of related acts, caused by one or more 

persons,” and the court was specifically concerned with whether 

the acts of embezzlement were a “series of related acts.” Id.

at 125-26 (internal quotation marks omitted). The insurance 

policy at issue in this case contains no similar grouping 

language, so the district court erred in using Christ Lutheran

to determine the number of occurrences in this case.

In light of the distinctions between Gaston County’s and 

Christ Lutheran’s holdings and this case, North Carolina

precedent does not strongly favor either Duke or Mitsui 

Sumitomo. However, we believe the Supreme Court of North 

Carolina would find that this case involves one occurrence for 
16

three reasons. First, there is no reason to suspect that the 

Supreme Court of North Carolina would not apply the test that it 

enunciated in Gaston County to determine the number of 

occurrences in contexts other than trigger of coverage. 

Numerous other courts have applied a similar test to determine 

the number of occurrences in cases analogous to this one, 

including the United States District Court for the Eastern 

District of North Carolina in a case interpreting North Carolina 

law. See W. World Ins. Co. v. Wilkie, No. 5:06-CV-64-H, 2007 WL 

3256947, at *4-5 (E.D.N.C. Nov. 2, 2007); see also, e.g., 

Fireman’s Fund Ins. Co. v. Scottsdale Ins. Co., 968 F. Supp. 

444, 448 (E.D. Ark. 1997) (concluding that preparation of 

contaminated food was one occurrence despite multiple sales of 

that food); Doria v. Ins. Co. of N. Am., 509 A.2d 220, 224-25 

(N.J. Super. Ct. App. Div. 1986) (holding that insureds’ failure 

to properly fence their pool was one occurrence regardless of 

the number of resulting injuries). Second, Koikos v. Travelers 

Insurance Co., 849 So.2d 263 (Fla. 2003)—the primary case that 

Duke relies on to support its contention than an occurrence is 

the “most immediate cause of the injury”—has been discredited by 

other courts. See Wilkie, 2007 WL 3256947, at *3-4 (declining 

to apply Koikos in part because it was inconsistent with Gaston 

County); Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286, 295 

(Pa. 2007). There is no indication that the Supreme Court of 
17

North Carolina would adopt the rule that the Florida Supreme 

Court developed in Koikos rather than turning to the standard it 

enunciated in Gaston County.

Third, looking to the number of surgeries or instances of 

using hydraulic fluid to wash surgical instruments to determine 

the number of occurrences would turn the focus in this case from 

Automatic Elevator’s alleged negligence to Duke’s actions. 

Because Automatic Elevator is the insured party, calculating the 

number of occurrences based on Duke’s conduct would contradict 

other courts’ conclusions that it is more appropriate to “focus 

on the act of the insured that gave rise to their liability.” 

Donegal, 938 A.2d at 295; see also RLI Ins. Co. v. Simon’s Rock 

Early Coll., 765 N.E.2d 247, 251 (Mass. App. Ct. 2002) (“[W]e 

must look to the ‘cause’ of the injury by reference to the 

conduct of the insured for which coverage is afforded.”); Bomba 

v. State Farm Fire & Cas. Co., 879 A.2d 1252, 1255-56 (N.J. 

Super. Ct. App. Div. 2005) (holding that the insureds’ 

negligence in storing their firearms was the appropriate focus 

in calculating number of occurrences, not the gunman’s 

intervening acts). The only action that Automatic Elevator took 

in this case was placing the barrels of hydraulic fluid in its 

designated storage area at DHRH. Consequently, although we 

recognize that these out-of-state holdings are not binding 

precedent in North Carolina, the consensus among these courts 
18

suggests that the Supreme Court of North Carolina would find 

that the hydraulic fluid mistake involved one occurrence because 

it would similarly look to Automatic Elevator’s single act of 

negligence rather than Duke’s intervening actions.

C.

Duke correctly points out that we should resolve any 

ambiguity in the policy’s definition of “occurrence” in Duke’s 

favor and that we should interpret the policy in favor of 

coverage as long as Duke’s argument is reasonable. Wachovia 

Bank & Trust Co. v. Westchester Fire Ins. Co., 172 S.E.2d 518, 

522-23 (N.C. 1970). However, even in light of these rules of 

construction, Duke cannot prevail. As explained above, Duke’s 

contention that the hydraulic fluid incident involved multiple 

occurrences is unreasonable. First, Duke makes an unfounded 

semantic argument that this case involved more than one 

occurrence because an accident cannot be a volitional act. 

Second, Duke mischaracterizes Gaston County’s holding in a way 

that obscures that case’s support of the proximate cause theory. 

And finally, Duke suggests that the Supreme Court of North 

Carolina is likely to adopt a controversial standard from a 

Florida Supreme Court case rather than extending its own holding 

in Gaston County. Because Duke’s interpretation is 

unreasonable, we believe that Gaston County controls this case. 
19

Therefore, we hold that Automatic Elevator’s alleged negligence 

in leaving the barrels in its storage area constituted a single 

occurrence.

IV.

Finally, Duke contends that the policy’s “per elevator” 

endorsement applies in this case because Automatic Elevator 

serviced two elevators during the project that culminated in the 

hydraulic fluid mistake. However, we need not consider this 

issue because the endorsement specifies that the policy’s $3 

million aggregate limit—not its $1 million per occurrence limit—

applies to each elevator that Automatic Elevator serviced during 

the policy period. Because we hold that this case involves only 

one occurrence and does not trigger the policy’s aggregate 

limit, the “per elevator” endorsement cannot apply here. 

V.

For the foregoing reasons, we affirm.

AFFIRMED
20

KING, Circuit Judge, dissenting:

I respectfully dissent from the opinion of the panel 

majority, because I believe that it has incorrectly determined 

the amount of insurance coverage available from Mitsui Sumitomo. 

Each instance of a waste-laden medical instrument being used to 

operate on an unsuspecting patient at the Duke Hospitals gave 

rise to an “occurrence.” Duke’s argument to that effect is not 

simply “intriguing,” ante at 11, it is plainly correct.

An occurrence is defined in the Mitsui Sumitomo policy as 

an accident (“‘Occurrence’ means an accident”). North Carolina 

precedent counsels that to the extent possible, “every word and 

every provision [of an insurance policy] is to be given effect,” 

and this principle instructs us to analyze the word “accident” 

within the context of the policy’s definition of an occurrence. 

Gaston Cnty. Dyeing Mach. Co. v. Northfield Ins. Co., 524 S.E.2d 

558, 563 (N.C. 2000) (internal quotation marks omitted). Mitsui 

Sumitomo agreed by its policy to provide coverage to Automatic 

Elevator for “bodily injury or property damage” up to $1,000,000 

for “any one occurrence” (which means “an accident”), and an 

aggregate limit of $3,000,000 per elevator. Giving effect to 

the policy’s definition of an “occurrence,” the term “accident” 

means an “unplanned and unforeseen happening or event.” Gaston

Cnty., 524 S.E.2d at 564. North Carolina precedent also 

dictates that “[w]hether events are ‘accidental’ and constitute 
21

an ‘occurrence’ depends upon whether they were expected or 

intended from the point of view of the insured.” Waste Mgmt. of 

Carolinas, Inc. v. Peerless Ins. Co., 340 S.E.2d 374, 380 (N.C. 

1986). An “occurrence” is therefore not a volitional act, such 

as leaving barrels in the Duke Health parking lot. An 

occurrence, or accident, must instead be an unplanned or 

unforeseen happening or event from the perspective of Automatic 

Elevator. The district court thus erred in concluding that the 

volitional decision of leaving the barrels of used hydraulic 

fluid in the parking lot gave rise to Automatic Elevator’s 

liability.

In addition to the requirement that an accident be an 

unplanned happening or event, the presence of injuries or 

damages is a prerequisite to coverage. This proposition makes 

sense, inasmuch as there is nothing for the insurer to 

compensate until injuries or damages have arisen. For example, 

if an elevator repairman intentionally leaves his tools in a 

public walkway for easy access and no one uses the walkway, 

there can be no accident because an unforeseen event will not 

have occurred. Moreover, there is yet no need for coverage 

because no damages or injuries have been suffered. If a person 

uses the obstructed walkway, however, and injures himself 

falling over the tools, an accident has occurred and the 

resultant damages are compensable under the policy.
22

In the foregoing example, the “occurrence” was the fall and 

the resulting injuries. The repairman’s placing of the tools 

was an act of volition, but the resulting injuries were 

unintended by the repairman and his employer and, thus, 

accidental. The facts of this case present a materially similar 

scenario. Automatic Elevator, after servicing the Duke Health 

parking garage, intentionally left the barrels of used hydraulic 

fluid in the parking lot. Those actions do not satisfy the 

definition of an accident and thus, at that point, there had 

been no occurrence. When scores of surgeries were conducted 

using instruments that had been “cleaned” with the contents of 

those barrels, however, there were multiple occurrences, as each 

of the surgeries caused severe injury and damage. Insurance 

coverage for such injuries is what the policy is all about. 

The Supreme Court of North Carolina’s decision in North 

Carolina Farm Bureau Mutual Insurance Co. v. Stox, 412 S.E.2d 

318 (N.C. 1992), exemplifies the foregoing. In that case, Stox 

suffered injuries from a fall after she was pushed by Gordon 

Owens. The insurer had issued a homeowners liability policy to 

Owens, under which Owens sought indemnification for Stox’s 

injuries. The state court of appeals ruled that the policy did 

not cover Stox’s injuries because those injuries were subject to 

an exclusion as “expected or intended.” Id. at 321. The state 

supreme court reversed, ruling that the court of appeals had 
23

improperly focused on the intentional nature of Owen’s act in 

pushing Stox, rather than on the resulting injury. Id. at 322. 

The supreme court decided that, because Stox’s injuries were 

unintentional, the occurrence was not subject to the policy 

exclusion. Id.

The Stox court also assessed whether Owen’s act was a 

covered “occurrence,” which — as in this case — was defined in 

the policy as “an accident.” Id. at 324. Since an “accident” 

was not defined in the policy, the court gave the term the 

dictionary definition similarly applicable here — “‘an event 

that takes place without one’s foresight or expectation; [an]

undesigned, sudden, and unexpected event; chance; contingency.’” 

Id. at 325 (quoting Iowa Mut. Ins. Co. v. Fred M. Simmons, Inc., 

128 S.E.2d 19, 22 (N.C. 1962)). Guided by the settled rule that 

insurance policy provisions “which extend coverage must be 

construed liberally so as to provide coverage, whenever possible 

by reasonable construction,” the state supreme court concluded 

that the injury resulting from Owen’s intentional act of pushing 

Stox was itself an unintended injury covered by the homeowners 

policy. Stox, 412 S.E.2d at 324-35. As the court explained: 

where the term “accident” is not specifically defined 

in an insurance policy, that term does include injury 

resulting from an intentional act . . . . Competent 

evidence supported the trial court’s finding in the 

case sub judice that the injury to Stox was an 

unintended injury resulting from Owens’ intentional 

act. Therefore, the trial court correctly concluded 
24

from that finding that Owens’ liability, if any, for 

that injury was covered under the policy as an 

“occurrence” or “accident[.”]

Id. at 325. Put simply, the accident (i.e., the occurrence) in 

that case, according to the high court of North Carolina, was 

the unintended injury to Stox, rather than the intentional 

conduct of Owen.

Pursuant to the foregoing, I am convinced that North 

Carolina law defines an “accident” as an unplanned or unforeseen

happening or event that carries unfortunate consequences. 

Furthermore, the ordinary meaning of the term “accident” is an 

event that was not anticipated. As a result, an intentional or 

volitional act of the insured simply cannot be an “accident.” 

Accidents, however, may be unexpected harmful events (i.e., 

multiple surgeries with contaminated instruments) that flow from 

volitional acts such as leaving mislabeled barrels in the Duke 

Health parking lot. This interpretation of the word “accident” 

is entirely reasonable, and would prevail under North Carolina 

law even if “accident,” as used in the policy, could somehow be 

deemed ambiguous.

From the perspective of Automatic Elevator, its abandonment

of barrels of hydraulic fluid could not have been an accident, 

let alone an accident covered by the policy, in that the 

abandonment was volitional, that is, actually intended, and the 

abandonment did not itself result in any injuries or damages. 
25

The accidents (i.e., the occurrences) took place when the 

damages arose — when, unintended by Automatic Elevator, 

surgeries were performed on unsuspecting Duke hospital patients 

with contaminated medical instruments that had been unknowingly 

“cleaned” with used elevator hydraulic fluid. Such occurrences 

were repeated on at least 127 occasions, and Mitsui Sumitomo, as 

the insurer, is responsible for those occurrences, up to the 

aggregate limits of its coverage.*

Because there were two elevators being repaired at the Duke 

Hospital, and because the hydraulic fluid came from repair work 

that was performed on both of them, I would rule that Mitsui 

Sumitomo is liable to its insured for coverage up to $6,000,000.

I respectfully dissent.

 * The majority primarily rests its decision on North 

Carolina’s adoption of a “cause test” to determine which event 

constituted the occurrence. I am not convinced, however, that 

North Carolina has ever adopted such a test. The only North 

Carolina decision that the majority relies on for this test is 

Gaston County, yet the opinion states that “Duke’s reliance on 

Gaston County is inappropriate.” Ante at 14. In Gaston County, 

the court gave weight to the term “accident,” and the accident 

there was the “sudden, unexpected leakage” of a pressure vessel, 

causing property damage. “Sudden, unexpected leakage” readily 

fits the definition of an accident because it was unplanned and 

unintentional. In my view, Gaston County did not adopt a “cause 

test,” it simply applied the definition of “accident” to the 

facts of the case to determine which incident qualified as an 

occurrence.