FILED

United States Court of Appeals

Tenth Circuit

July 20, 2012

Elisabeth A. Shumaker

Clerk of Court

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

REPUBLIC UNDERWRITERS

INSURANCE COMPANY;

SOUTHERN INSURANCE

COMPANY,

Plaintiffs-Appellants,

v.

KENNETH MOORE; LINDA

MOORE; CYNTHIA INGLE; DONNA

CRAFTON; JIM CRAFTON; CINDY

CALL; JAKE BEAVER; SHEILA

BEAVER; BB; JACK BENNETT;

MARY CATHERINE BENNETT;

KENNETH BIRKES; CONNIE

BIRKES; STACY MITCHELL; EC;

ROYAL DUNN; ERIC GIBSON;

KENDRA GIBSON; KG; ANITA

HAYES; AH; ROBERT HANSEN;

CHRISTINE HANSEN; DH; HH;

JUSTIN JOHNSON; BELINDA

JOHNSON; SJ; MATTHEW

MITCHELL; JM; GERRY MORTON;

REBECCA MORTON; EM; JOHN

DOE, sued as J. Doe # 7-99; CAITLIN

M SIMPSON; KATHERINE

ELIZABETH REID; CHRISTI

SANDERS; ELLIS BUXTON; LINDA

CASEY-BUXTON; HELENE

LANKFORD; KEVIN CULVER;

RAYMOND GRENINGER;

JONATHAN YBARRA; LU ETTA

MINTON; STACY MITCHELL; TOM

PRAG; BECKY PRAG; PATRINA

WADDLE,

No. 11-5075

(D.C. No. 4:09-CV-00741-PJC)

(N.D. Okla.)
Defendants-Appellees.

ORDER AND JUDGMENT*

Before TYMKOVICH and BALDOCK, Circuit Judges, and BRORBY, Senior

Circuit Judge.

This insurance dispute arose after several hundred people were infected

with E. coli in the largest outbreak of its kind in the country. Many people were

hospitalized and one person died after eating food contaminated with the bacteria. 

The food was prepared and served by the Country Cottage Restaurant, both at the

restaurant location and at a catered church event. Reasoning that the food was

prepared and served at two different places, a magistrate judge concluded that

there were two “occurrences” under the applicable insurance policies, and

therefore the pertinent aggregate limits of the policies applied rather than their

“per occurrence” limits.1

 We exercise jurisdiction under 28 U.S.C. § 1291 and

now reverse the magistrate judge’s decision.

* After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument. This order and judgment is

not binding precedent, except under the doctrines of law of the case, res judicata,

and collateral estoppel. It may be cited, however, for its persuasive value

consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. 

1 The parties consented to the jurisdiction of a magistrate judge. See

28 U.S.C. § 636(c).

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I.

The facts are undisputed. The Country Cottage Restaurant was preparing

and serving E. coli-contaminated food between August 15 and August 25, 2008. 

Some 341 people were infected, 21 of whom consumed food at a church gathering

catered by the restaurant; the rest were sickened after eating at the restaurant. 

There was one fatality. Some food served at the church was prepared at the

restaurant, while other food was prepared onsite at the church event. 

Insurers, who provided primary and secondary coverage to the restaurant

for “bodily injury” caused by an “occurrence,” Aplt. App., Vol. 1 at 144, 174,

took the position that the entire contamination period constituted one continuing

occurrence as defined by the respective policies.2

 When it became apparent that

damages would exceed the policies’ limits, insurers brought this interpleader

action seeking both declaratory relief that the “per occurrence” limits applied,

providing a total of $3 million in coverage, and leave to interplead the $3 million. 

Alternatively, insurers claimed that if there were multiple occurrences, Republic’s

products-completed operations aggregate limit applied, providing $2 million in

2 Insurers are Republic Underwriters Insurance Company (“Republic”) and

Southern Insurance Company (“Southern”). Republic’s policy provides a

per-occurrence limit of $1 million, a general aggregate limit of $2 million, and a

products-completed operations aggregate limit of $2 million. Southern’s policy

provides a per-occurrence limit of $2 million and an aggregate limit of $2 million. 

Southern’s coverage applies “when the ‘underlying insurance’ [Republic’s] does

not provide coverage or the limits of ‘underlying insurance’ have been

exhausted.” Aplt. App., Vol. 1 at 172, 174.

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coverage, along with Southern’s aggregate limit of $2 million, for a total of

$4 million in coverage. 

On cross-motions for summary judgment, insurers argued that the single

“event giving rise to all of the Claimants’ alleged injuries and damages was

Country Cottage’s preparation, handling, or storage of food that purportedly

became contaminated with E. coli.” Aplt. App., Vol. 1 at 60. Insurers relied on

our decision in Business Interiors, Inc. v. Aetna Casualty & Surety Co., in which

we held that “an occurrence is determined by the cause or causes of the resulting

injury.” 751 F.2d 361, 363 (10th Cir. 1984) (quotation omitted). Because all the

injuries could be traced back to the ongoing preparation, handling, or storage of

contaminated food, insurers insisted there was but one occurrence.

Claimants rejected this contention. They acknowledged that the outbreak

occurred at the restaurant, but they pointed to an investigation report issued by

the Oklahoma Department of Health, which was inconclusive as to how the

bacteria contaminated the restaurant and spread during the outbreak. Claimants

observed that the report suggested multiple likely contributing factors,

including contamination by food-handlers, as well as cross-contamination from

food-preparation equipment, counter surfaces, and storage areas. Because none of

these likely modes of transmission could be confirmed as the single cause for the

spread of E. coli, claimants argued that unlike Business Interiors, insurers here

could cite no single cause of the losses. Instead, claimants asserted that the

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number of occurrences equaled eight alleged acts of negligence, including the

failure to adequately maintain sanitary conditions of the restaurant’s food, drinks,

water, premises, and employees; the failure to train employees how to prevent the

spread of E. coli; and the failure to design and implement a hand-washing policy.

Apart from those arguments, certain claimants (“cross-movants”) filed a

cross-motion for partial summary judgment, arguing that each individual sale of

contaminated food represented a separate occurrence. They argued that under this

court’s decision in Farmers Alliance Mutual Insurance Co. v. Salazar, 77 F.3d

1291, 1296-97 (10th Cir. 1996), an occurrence is marked by its immediately

surrounding circumstances. Since multiple people were injured consuming

different foods prepared by different food-handlers at different times and at two

different locations, cross-movants argued that there were necessarily multiple

occurrences.

Additionally, cross-movants argued that while Republic’s general aggregate

limit (“GAL”) covered injuries sustained at the restaurant, Republic’s

products-completed operations aggregate limit (“PCOAL”) separately covered

injuries sustained at the church gathering. Cross-movants reasoned that the GAL

excluded from coverage the products-completed operations hazard (“PCOH”),

which separately covered injuries sustained off-premises under the PCOAL.3

3 The relevant policy provisions state: “The General Aggregate Limit is the

(continued...)

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Thus, according to cross-movants, Republic’s GAL provided $2 million in

coverage for injuries sustained at the restaurant, its PCOAL provided $2 million

in coverage for injuries sustained at the church gathering, and Southern’s

aggregate limit provided another $2 million, all for a total of $6 million in

coverage.

Insurers disputed cross-movants’ application of Salazar for purposes of

identifying the relevant occurrence, but insurers also pointed out that the PCOH

definition had been modified by an endorsement. They claimed the endorsement

broadened the scope of the PCOH so as to encompass all claims covered under the

PCOAL.4

 Thus, insurers insisted that the GAL was no longer implicated and all

3

(...continued)

most we will pay for the sum of . . . [d]amages under Coverage A, except

damages because of ‘bodily injury’ . . . included in the ‘products-completed

operations hazard.’” Aplt. App., Vol. 1 at 153 (emphasis added). By contrast,

the PCOAL provides that “[t]he Products-Completed Operations Aggregate Limit 

is the most we will pay under Coverage A for damages because of “bodily injury”

. . . included in the [PCOH]”. Id. (emphasis added). Finally, the PCOH is

defined to “[i]nclude[] all ‘bodily injury’ . . . occurring away from premises you

own or rent and arising out of ‘your product’ or ‘your work’ . . . .” Id. at 157. 

4 The PCOH endorsement states:

SCHEDULE

Description of Premises and Operations:

RESTAURANTS

(If no entry appears above, information required to complete this

endorsement will be shown in the Declarations as applicable to this endorsement.)

With respect to “bodily injury” or “property damage” arising out of “your

products” manufactured, sold, handled or distributed:

(continued...)

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claims covered by the Republic policy fell under the $2 million PCOAL. 

Cross-movants countered that because the church was not identified in the

endorsement, the endorsement could apply only if the injuries sustained at the

church arose from the manufacture, sale, handling, or distribution of food “on,

from or in connection with the use of” the restaurant’s premises, which

cross-movants asserted the injuries did not. Aplt. App., Vol. 1 at 166. 

Accordingly, cross-movants maintained there was a total availability of coverage

of $6 million.

The magistrate judge ultimately concluded there was a total of $4 million in

available coverage under Republic’s PCOAL and Southern’s general aggregate

limit. The magistrate judge reasoned, however, that the basis for finding multiple

occurrences was neither the eight alleged acts of negligence nor each individual

sale of contaminated food, but rather the two separate locations where the food

4

(...continued)

1. On, from or in connection with the use of any premises described in the

Schedule, or

2. In connection with the conduct of any operation described in the

Schedule, when conducted by you or on your behalf, 

Paragraph a. of the definition of “Products-completed operations hazard” in

the DEFINITIONS Section is replaced by the following:

“Products-completed operations hazard”:

a. Includes all “bodily injury” and “property damage” that arises out of

“your products” if the “bodily injury” or “property damage” occurs after

you have relinquished possession of those products.

Aplt. App., Vol. 1 at 166.

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was prepared and served. The magistrate judge began with the meaning of

“occurrence,” which both policies define as “an accident, including continuous or

repeated exposure to substantially the same general harmful conditions.” Id. at

157, 187. He agreed that the causation rule from Business Interiors required the

court to examine the cause of the injuries. But without pinpointing the definitive

cause of claimants’ injuries—that is, without resolving whether the injuries were

singularly the result of the preparation, handling, and storage of contaminated

food or the various factors that led to the contamination—the magistrate judge

concluded that under Salazar, there were two occurrences because the injuries

were caused at two different places.

Insurers filed a “Motion for Clarification,” which the magistrate judge

denied. The magistrate judge explained that his decision had not rejected either

insurers’ or claimants’ cause theories, but rather, he did “not reach the argument

because the Court [found] more than one occurrence even under the Insurers’

more limiting cause theory, due to the geographical distinction between the”

restaurant and the church.5

 Aplt. App., Vol. III at 847 (quotation omitted). 

Dissatisfied with this explanation, insurers appealed.

In this court, insurers insist that the only occurrence was the continuing

preparation, handling, and storage of contaminated food. They refer us, as they

5 Our disposition forecloses claimants’ alternative cause theories.

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did the magistrate judge, to Business Interiors, where we applied the causation

rule to conclude that an employee’s continuing dishonesty in committing multiple

acts of fraud constituted one occurrence. According to insurers, Salazar is

distinguishable and Business Interiors controls because all injuries can be

similarly traced back to the restaurant’s continuing preparation and service of

contaminated food, notwithstanding the two locations where injuries were caused. 

Under this approach, insurers contend, the separate locales cannot support a

finding of two occurrences.

II.

We review the magistrate judge’s summary judgment decision de novo. 

Greystone Constr., Inc. v. Nat’l Fire & Marine Ins. Co., 661 F.3d 1272, 1277

(10th Cir. 2011). In this diversity case, the facts are undisputed and the only

question is whether the preparation and service of contaminated food at two

different locations supports a finding of two occurrences rather than one for

purposes of liability coverage.6

 This issue is resolved by proper application of

the causation rule, which we followed in Business Interiors, 751 F.2d at 363.

The causation rule states that “an occurrence is determined by the cause or

causes of the resulting injury.” Id. (quotation omitted). In Business Interiors, we

applied the causation rule to determine whether the claimed loss—$53,000 taken

6 The parties do not dispute that this case is governed by Oklahoma law,

which, we note, governed our decisions in both Business Interiors and Salazar.

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by the insured’s employee who forged or altered forty separate checks—was

caused by the employee’s singularly dishonest intent or forty separate acts of

dishonesty. See id. at 362. We concluded that “the cause of Business Interiors’

loss was the continued dishonesty of one employee,” and thus “the employee’s

fraudulent acts constituted a single loss for Business Interiors.” Id. at 363. 

Insurers here argue that the injuries were similarly caused by the continued

preparation and service of contaminated food. We agree. 

The causation rule requires that we determine whether “there was but one

proximate, uninterrupted, and continuing cause which resulted in all the injuries

and damage.” Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676 F.2d 56, 61

(3d Cir. 1982) (brackets and quotations omitted). “As long as the injuries stem

from one proximate cause[,] there is a single occurrence.” Id. Here, all the

injuries were proximately caused by the restaurant’s ongoing preparation of

contaminated food. Hence, there was but one occurrence. It does not matter that

the food was served with other food items prepared at another location because

the contamination originated at the restaurant. Nor does it matter that the precise

underlying cause of the contamination is unknown because the fact remains that

the contamination originated at the restaurant. 

The magistrate judge concluded that there were two occurrences based on

our decision in Salazar, but that case is inapposite. In Salazar, a mother and son

were both insured under a homeowner’s policy that covered “bodily injury . . .

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caused by an occurrence and arising out of the ownership, maintenance or use of

the” home. 77 F.3d at 1295. The mother had negligently supervised her son’s

possession of two guns that he and a friend later used to murder someone at

another location. Id. at 1293. The insurer denied coverage, but the district court

determined that the mother’s negligent supervision was a covered occurrence. Id.

We reversed that ruling. Id. at 1297. We observed that whether there was a

covered occurrence depended on “what event or events in the causal chain leading

to [the injury] should be the focus of [the court’s] inquiry.” Id. at 1295. We

concluded that the time and place of the injury controlled, id. at 1296, which

precluded coverage for the mother’s antecedent negligence.

The magistrate judge read Salazar to require separate occurrences based on

the separate locations where the injuries occurred in this case, but that approach

conflicts with the causation rule we previously adopted in Business Interiors. 

This conflict need not arise, however, because when properly read, these cases

involve different inquiries tailored to different purposes.

Salazar did not address the issue we confront here—the number of

occurrences—but rather the distinct question of whether there was a covered

occurrence at all. To answer that question, Salazar analogized to cases examining

the time and place of an occurrence, observing that the issue of timing generally

arose when “the initial wrongdoing in a causal chain fell within the policy period

but the resulting injury occurred after the expiration of the policy.” Id. at 1295. 

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In that context, we noted “it is well-settled that the time of an occurrence of an

accident . . . is not the time when the wrongful act was committed, but the time

when the complaining party was actually damaged.” Id. at 1296 (quotation

omitted). This is because an insured reasonably expects to be covered during the

policy period, but has no reason to seek indemnification until an injury actually

occurs, even if the proximate cause of the injury occurred earlier in time. As for

the place of an occurrence, which is typically disputed when coverage is limited

to a particular territorial jurisdiction or work site, we held that “[t]he location of

an ‘occurrence’ is determined by the place where the injury happened; it does not

matter that a precipitating event took place elsewhere.” Id.

Salazar naturally examined the time and place of the injury to determine

whether there was an occurrence because only if there is an injury can there be

any possibility of an occurrence. See Appalachian Ins. Co., 676 F.2d at 62

(recognizing that “injury is a prerequisite to liability”). Hence, we focused our

analysis on the circumstances immediately surrounding the injury:

We find that when determining whether a bodily injury was caused

by an ‘occurrence’ the question of whether there was an ‘occurrence’

should be resolved by focusing on the injury and its immediately

attendant causative circumstances. If the time and place of an

‘occurrence’ are determined by the time and place of the injury, then

the acts which are said to constitute the ‘occurrence’ must

necessarily fall within the same temporal and spatial parameters.

Salazar, 77 F.3d at 1296 (emphasis added). But this does not mean that every

injury that occurs at a different time and place necessarily constitutes a separate

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occurrence. Consequently, the test used in Salazar is ill-suited to the distinct

question of how many occurrences should be attributed to circumstances that have

given rise to multiple injuries.

Instead, as explained above, the proper test for ascertaining the number of

occurrences is whether there was one or more causes of the injuries. See Business

Interiors, 751 F.2d at 363. Other courts have recognized the distinct tests

employed for determining the time or place of an occurrence and the number of

occurrences. See, e.g., Appalachian Ins. Co., 676 F.2d at 61-62 (distinguishing

between the test used for determining the time of an occurrence, which is “when

the injurious effects of the occurrence took place,” and the causation test used for

determining the number of occurrences in circumstances involving multiple

injuries); Ace Am. Ins. Co. v. RC2 Corp., 600 F.3d 763, 768-69 (7th Cir. 2010)

(distinguishing between the test used for determining the place of an occurrence

and the causation test used for determining the number of occurrences in

circumstances involving multiple injuries). Applying the causation rule here

leads to the inescapable conclusion that there was only one occurrence. All the

injuries were caused by the restaurant’s ongoing preparation of contaminated

food. That the contaminated food was prepared and served at another location is

irrelevant.

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III.

Accordingly, the decision of the magistrate judge is REVERSED, and this

case is REMANDED to the district court with instructions to enter judgment in

favor of appellants consistent with this order and judgment.

Entered for the Court

Wade Brorby

Senior Circuit Judge

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