Opinion ID: 1870584
Heading Depth: 2
Heading Rank: 2

Heading: the scope (or stacking) of coverage

Text: As noted, the scope of coverage refers to the extent of an insurer's obligation once its policy has been triggered. When more than one of a single insurer's policies are triggered, a stacking question arises. 15A Couch on Insurance 2d,  56:34 (1983). And when the triggered policies were issued to the same insured over a horizontal time line, a horizontal stacking question arises. Selman, Exposure to a Manifest Injustice: The Argument Against Horizontal Stacking in Latent Injury and Damage Cases, 5 Mealey's Litig. Rep.: Insurance 16, 21 (1990) (hereinafter referred to as  Selman ). As with other insurance coverage disputes, contrary to INA's suggestion, there is no uniformity in the decisions addressing the question of stacking. 8D Appleman, Insurance Law and Practice,  5192 (1981). Indeed, one commentator notes that [w]hile there is opposition to this practice of `stacking,' the trend today appears in favor of stacking. 2 Freedman, Richards on the Law of Insurance  11.7[b] (6th Ed.1990) (citing Holmes v. Reliance Insurance Co., 359 So.2d 1102 (La.App. 3rd Cir.), writ denied, 362 So.2d 1120 (La.1978), in which the stacking of 160 policies was permitted). [56] This case presents the res nova issue of whether in a personal injury, asbestos case, multiple policy limits should be available to compensate the injured party. This issue has rarely, if ever, been addressed because a particular insured defendant in an asbestos case rarely, if ever, [has been] called upon to pay damages to one plaintiff which exceeded the aggregate limit of liability of even one insurance policy triggered under a multiple trigger theory. Selman, supra at 18 (noting that this issue has not arisen in asbestos suits involving personal injury, as opposed to property damage, claims); See also Nothstein, Toxic Torts  21.10, p. 635 (1984) (noting that generally these cases have involved disputes over the trigger, not the scope, of coverage). INA argues that only one policy limit should be available. INA's anti-stacking argument is built primarily upon language contained in a footnote in Forty-Eight Insulations, supra . Particularly, INA relies upon the following language contained in footnote 28 of that opinion: The district court recognized the problem which stacking presented. The court stated: In any event, no insurer should be held liable in any one case to indemnify Forty-Eight for judgment liability for more than the highest single yearly limit in a policy that existed during the period of the claimant's exposure for which judgment was obtained. 451 F.Supp. at 1243. We agree with the district court. The initial exposure to asbestos fibers in any given year triggers coverage. However, under the terms of the policies, additional exposure to asbestos fibers is treated as arising out of the same occurrence. Forty-Eight Insulators, 633 F.2d at 1226 n. 28 (emphasis supplied). INA argues, based on the above excerpt, especially the highlighted language, that its liability for each plaintiff should be limited to the per accident and/or occurrence coverage issued in any one policy, despite that it issued over thirty annual policies. Conversely, in support of their pro-stacking argument, plaintiffs, supported by the Third Circuit and the trial judge, rely upon two cases: Houston v. Avondale Shipyards, Inc., 506 So.2d 149 (La.App.4th Cir.), writ denied, 512 So.2d 459, 460 (La.), reconsideration denied, 513 So.2d 813 (La. 1987); and Ducre v. Mine Safety Appliances Co., 645 F.Supp. 708 (E.D.La.1986), aff'd, 833 F.2d 588 (5th Cir.1987). [57] Plaintiffs point out that in both of these cases, INA's anti-stacking argument was expressly rejected. In Ducre II, supra, the district court noted that footnote 28 addresses the problem of stacking and avoids ad infinitum coverage by creating a factual fiction `extending the policy language so that each insurer would face no more liability per claim than the maximum limit it wrote during any applicable year of coverage.' 645 F.Supp. at 712 (quoting Forty-Eight Insulations, supra ); See also Houston, 506 So.2d at 150 (noting factual construction of a single injury (or reinjury) each year is adopted to avoid infinite liability exposure). The Ducre II court further found that in the context of footnote 28, the phrase `each insurer,' means the insurer for any particular year of coverage. 645 F.Supp. at 712. Concluding, the Ducre II court found that the insurer's liability under the policies shall be determined on a yearly basis and that the insurer is at risk for each plaintiff asserting a claim for each policy period during which that plaintiff was exposed. Id. Significantly, the Ducre II court emphasized the payment of annual premiums as a factor supporting its holding: the fact that [the insurer] issued six separate contracts of insurance to Avondale [the employer], for which Avondale paid separate premiums, is an additional reason for holding that CU is on the risk for each policy issued. 645 F.Supp. at 713. Relying on this language in Ducre II, supra, plaintiffs, as noted, argue that INA's receipt of annual premiums for over thirty years refutes its attempt to telescope coverage. In contrast, INA, as would be expected, argues that the courts in Ducre II, supra, and Houston, supra, misconstrued Forty-Eight Insulations, supra . More particularly, INA argues that the courts in those cases failed to recognize the distinction between triggering of policies and rendering all of the triggered policies' limits at risk for each claim, i.e., stacking. INA's reliance on Forty-Eight Insulations, supra, is misplaced. There, horizontal stacking was not at issue. Indeed, one commentator has cited Forty-Eight Insulations, supra, as an example of why the scope of coverage issue, i.e., stacking, rarely arises in asbestos, bodily injury suits: [A]s a result of the Insurance Co. of North America v. Forty-Eight Insulations decision cited above, the obligations of Forty-Eight Insulations' insurers were based on the exposure theory. Thus, if a claimant was exposed to the insured's asbestos-containing products over a five-year period, five different insurance policies were triggered. However, Forty-Eight Insulations was one of many defendants, and its part of the settlement never came close to being in the amount of even one aggregate limit of liability. Selman, supra at 18. Moreover, a pro-stacking argument was advanced by one of the insurers in Forty-Eight Insulations, supra ; as noted by a commentator, the Travelers acknowledged that `the available limit for each policy year of coverage can be stacked.' Oshinsky, Comprehensive General Liability Insurance: Trigger and Scope of Coverage in Long-Term Exposure Cases, 17 Forum 1035, 1036 n. 3 (1982) (hereinafter  Oshinsky ) (quoting from Traveler's brief to the Sixth Circuit in Forty-Eight Insulations, supra ). INA also relies upon Keene, supra, in which footnote 28 of the Forty-Eight Insulations case was construed as permitting the plaintiff to choose the policy with the highest limits and as precluding the plaintiff from horizontally stacking policies. Keene, supra, however, is easily distinguishable because, unlike the instant case in which we apply an exposure theory, the court in Keene adopted and applied the continuous or triple trigger theory. This distinction is significant because the policy considerations underlying the exposure theory, which we adopt and apply herein, are significantly different from the considerations underlying the other trigger theories. The general economic effect of the exposure theory is to spread losses back over numerous years of primary insurance coverage, with the result that manufacturers, particularly those which are no longer in the asbestos business, will not be faced with increased liability insurance costs. It is also, however, a clear benefit to the more recent excess insurers which will not be forced to make indemnity payments since all applicable primary limits will not be exhausted as rapidly as they would be under a manifestation approach. [58] Mansfield, Asbestos: The Cases and The Insurance Problem, 15 Forum 860, 877 (1980). Another distinction between these theories is that while the exposure theory attempts to parallel the insurer's coverage with the insured's tort liability, the continuous or triple trigger theory does not. Keene, 667 F.2d at 1051-52. Significantly, a commentator, critiquing the Keene decision, noted the appropriateness of horizontal stacking in the unique context of asbestos cases: [The Keene court held that o]nly one policy's limits may apply to each claim, although the court did not address whether this rule applies to claims that might exceed each of the annual policy limits in force during a period of continuing injury. This part of the court's holding is incorrect and probably a moot point in asbestos cases where the claims usually cost each policyholder a sum well within individual insurance limits. However, according to some insurance companies, a stacking of limits result would be consistent with the policy language and insurance industry practices. Oshinsky, supra at 1036 (citing Traveler's brief, discussed above). See also Note, Adjudicating Asbestos Insurance Liability: Alternatives to Contract Analysis, 97 Harv.L.Rev. 739, 743 n. 23 (1984) (noting that while the Keene rule bars stacking of successive primary policy limits, Ochinsky, supra, suggests that stacking may be possible when a single injury claim exceeds any of the individual policy limits). Further support for our conclusion that horizontal stacking is appropriate is found in general principles of insurance law. As a general rule the claimant may recover under all available coverages provided that there is no double recovery. 15A Couch on Insurance 2d,  56:34 (1983); See also 8D Appleman, Insurance Law and Practice,  5192 (1981) (noting that under pro-stacking rule, while an insured may not recover in excess of his actual loss, an insured may recover under each policy providing coverage until the total loss sustained is indemnified). Indeed, it has been suggested that the 1966 revisions to the standard policy language defining an occurrence as injurious exposure to conditions which results in injury were intended to mean that `[i]n some exposure types of cases involving cumulative injuries, it is possible that more than one policy will afford coverage. Under these circumstances, each policy will afford coverage to the bodily injury or property damage which occurs during the policy period.' Comment, Liability Insurance For Insidious Disease: Who Picks Up the Tab?, 48 Fordham L.Rev. 657, 684 n. 152 (1980) (quoting Elliott, The New Comprehensive General Liability Policy, in Liability Insurance Disputes 12-3, 12-5 (S. Schreiber ed. 1968)); See also Nothstein, Toxic Torts  21.10, p. 635 (1984) (noting that the intended trigger of coverage is bodily injury occurring during the policy period and that once the policy is triggered, the carrier would be required to pay all sums which the insured may become legally obligated to pay as a result of the underlying toxic tort claim.) Finally, as suggested by one of the amici, we question whether this case really involves a question of stacking at all. Indeed, the notion that this is not a stacking issue has been recognized, albeit in the context of multiple insurers: [w]here the damages exceed a single policy limit, it has even been stated that the issue of stacking is not involved. Rather, where separate policies are involved, such a procedure may be essential to enforce contribution between insurers. 8D Appleman, Insurance Law and Practice,  5192 (1981). The same reasoning seems to be applicable here, as the Third Circuit's decision, which we affirm, merely spreads each plaintiff's judgment over the applicable INA policies, thereby, in effect, enforcing INA's contribution rights against itself.