Opinion ID: 772184
Heading Depth: 3
Heading Rank: 3

Heading: Third Generation Claims4

Text: 59 One injury suffered by members of the second DES generation is an abnormality of the cervix that impairs their ability to carry children to term. The resulting premature deliveries cause birth defects of the lung, heart, eye, and brain (including cerebral palsy) in the next generation. These grandchildren of women who ingested DES during pregnancy are the third-generation claimants. See, e.g., Enright v. Eli Lilly & Co., 77 N.Y.2d 377, 570 N.E.2d 198, 199-200, 568 N.Y.S.2d 550 (N.Y. 1991). 60 The district court granted summary judgment in favor of Squibb on the question of whether the policies in question cover claims presented by third-generation claimants. The court reasoned that the third-generation claimants' injuries are covered because they were causal consequences of occurrences -- in utero injuries-in-fact to the reproductive systems of the second DES generation -- that took place during the period of coverage. It explained that once there is an occurrence within the policy period the insurer can be liable for injuries resulting from that occurrence that take place in subsequent periods. We review de novo the district court's grant of summary judgment, see Commercial Union Assurance Co. v. Oak Park Marina, Inc., 198 F.3d 55, 59 (2d Cir. 1999), and we affirm. 61 On appeal, there is no dispute as to the three key facts: (1) members of the second DES generation suffered injury-in-fact in utero during the relevant policy periods; (2) the third-generation claimants' injuries are consequences of their mothers' in utero injuries; and (3) the third-generation claimants' injuries did not occur until after the relevant policy periods. The applicable policy language provides coverage for all sums which the Assured shall be obligated to pay by reason of the liability . . . for damages, direct or consequential . . . [imposed for personal injuries] . . . caused by or arising out of each occurrence happening anywhere in the world. 62 We agree with the district court that the policy means what it says when it declares that coverage extends to all personal injuries caused by or arising out of each occurrence. There is no dispute that the third-generation injuries are caused by or arise out of a covered occurrence. The Excess Insurers' protestations that, during the relevant policy periods, there were no injuries-in-fact to the third-generation claimants (who, after all, were years away from conception) are simply beside the point. This is so unless we are to read into the policy the limitation that personal injuries caused by an occurrence are covered only if the same person suffers both the triggering injury-in-fact and the later consequential injury. 63 We find no basis for imposing such a restriction on these broadly written policies. Cf. Uniroyal, Inc. v. Home Ins. Co., 707 F. Supp. 1368, 1376 (E.D.N.Y. 1988) (noting, in an Agent Orange products liability case, that New York's canon of construing insurance policies against the insurer would seem to have special vigor when applied to a policy . . . which is by its own terms denominated a 'comprehensive general liability policy.') (quoting National Screen Serv. Corp. v. United States Fidelity and Guar. Co., 364 F.2d 275, 279-80 (2d Cir. 1966)). Every court to consider similar issues, including a New York court, has agreed that when a policy provides coverage for consequential damages, such coverage extends to claims by persons other than the one whose injury triggered coverage. In County of Chemung v. Hartford Casualty Insurance Co., 130 Misc. 2d 648, 496 N.Y.S.2d 933 (Sup. Ct. 1985), for instance, the New York court considered claims arising from a policy under which coverage was triggered by the rape of a child. The court held that the insurer was required to indemnify the policyholder for the resulting damages recovered by the child's parents, reasoning that these were damages arising out of the bodily injury to [their daughter]. 496 N.Y.S.2d at 936; see also Commercial Union Ins. Co. v. Gonzalez Rivera, 358 F.2d 480, 483-84 (1st Cir. 1966) (awarding, under a consequential damages theory, indemnity for damages granted to compensate children for their suffering on account of their father's accident, where it was the father's accident that triggered insurance coverage); Danek v. Hommer, 28 N.J. Super. 68, 100 A.2d 198, 203 (N.J. Super. Ct. App. Div. 1953) (requiring indemnity for a husband's damages deriving from his wife's injuries, where it was her injuries that triggered coverage under her employer's policy). Moreover, in the one other decision to address an issue substantially similar to the one presented here, the court ruled, under New York law, that third-generation DES claims were within the scope of a nearly identical policy because so long as the subsequent injury may be considered a consequence of the first [triggering injury], it may be considered part of the same accident. Burroughs Wellcome Co. v. Commercial Union Ins. Co., 632 F. Supp. 1213, 1221 (S.D.N.Y. 1986). Judge Leisure's opinion in Burroughs Wellcome has received no hint of disapproval from the New York courts. 64 The Excess Insurers observe that, in addition to affecting persons other than those suffering injury-in-fact during the relevant period, the third-generation injuries are, of necessity, quite remote in time from the triggering injuries-in-fact. 5 Their point in both respects, we take it, is essentially that there may be something unfair, and perhaps unmanageable, about requiring coverage for claims that are, in some sense, far removed from the events triggering coverage. This objection has some surface appeal. But that appeal diminishes rapidly when one realizes that the underlying tort law governing consequential claims itself provides limits on insurers' liability. For the policies confine themselves to indemnification for sums paid by reason of . . . liability, and hence do not apply to any injuries deemed too distant to give rise to tort liability. 6 In this case, the Excess Insurers have not argued that Squibb's settlements were not made by reason of liability. 65 To the extent that it seeks to deny coverage even when the propriety of payments on account of possible liability was conceded, the Excess Insurers proposed reading has the strong disadvantage that it tends to create unintended exposure for potential tortfeasors. There is no indication in the policy, however, that Squibb meant to bear the risks at issue. Denying coverage here would run contrary to the sound practice of construing insurance policies in a manner related both to time on the risk and the degree of risk assumed, Stonewall Ins. Co., 73 F.3d at 1203 (quoting Owens-Illinois Inc. v. United Ins. Co., 138 N.J. 437, 650 A.2d 974, 995 (N.J. 1994)). It would impute to Squibb the intent to self-insure 7 with respect to one class of risks -- that reproductive injuries would have intergenerational effects -- in the absence of any basis in the policy for such distinctions among the types of injury that might be caused by or arise[] out of triggering occurrences. Cf. Stonewall, 73 F.3d at 1203-04 (distinguishing between decisions to assume a risk and the assumption of risk because no insurance is available). This we decline to do. 66 Given that the terms of the agreement at issue, the case law, and the relevant considerations of policy all point toward coverage of the third-generation claims, we think the resolution of this question is sufficiently clear that its certification to the New York Court of Appeals is inappropriate. In this respect we are, naturally, also influenced by the failure of any party to seek such certification, by the eighteen or so years that this case has been sub judice, and by the parties' joint, and tenacious, desire that their dispute be decided in the federal courts. 67 Accordingly, we affirm the district court's decision with respect to the third-generation claims.