Opinion ID: 2359406
Heading Depth: 2
Heading Rank: 1

Heading: Interpretation of Personal Injury

Text: Because words which are unambiguous in one context may become susceptible to more than one interpretation when applied to a particular set of facts, it is incumbent upon the insurance company, as draftor of the policy, to delineate as precisely as possible the full extent of coverage or bear the consequences for failing to do so. Collister v. Nationwide Ins. Co., 479 Pa. 579, 388 A.2d 1346 (1978) cert. denied, 439 U.S. 1089, 99 S.Ct. 871, 59 L.Ed.2d 55 (1979). Precise definition is particularly important in cases in which an insured purchases a comprehensive general liability policy to protect a business which entails the use of potentially harmful substances possessing debilitating qualities of unknown parameters. In that instance, the insurance company providing coverage should take extra care to assure that the policy leaves no room for question, at peril of being forced to pay for greater coverage than anticipated. Delaware County Construction Co. v. Safeguard Ins. Co., 209 Pa.Super. 502, 509, 228 A.2d 15, 18 (1967). While an insurer is not required to defend an insured against every claim, it is firmly established that an insurer must defend any suit in which from the face of the complaint there exists actual or potential coverage. Gedeon v. State Farm Mutual Automobile Ins. Co., 410 Pa. 55, 58, 188 A.2d 320, 321-22 (1963). The dispute here encountered is whether the allegations set forth in the Peterman complaint sufficiently raise claims of personal injury to fall within the meaning of the policy. It is at this juncture that we disagree with the decision of the lower court and agree with Techalloy. Given the particular considerations which obtain to insurance contracts, we believe the only fair conclusion to be that Peterman alleged personal injury. Even if the allegations were not of sufficient particularity to be cognizable and compensable under Pennsylvania tort law, they were sufficient at least in the context of the contractual obligation of bodily injury, sickness or disease as defined in the policy. While personal injury may be most traditionally construed as a physical injury overtly manifested, that is not its exclusive construction. Furthermore, it is hardly speculative to say that Techalloy reasonably expected, by purchasing the policy, to be insured against financial obligations stemming from charges such as those raised by Peterman. Unfortunately, the only construction of the policy which is consonant with that objective is the one which the lower court denied. In the original Peterman action, the trial judge held for Techalloy on the basis that [e]ven if plaintiff's allegation at paragraph 4 of his complaint that he may possibly have sustained some injury is read to allege that he may have a present injury, such a claim is palpably insufficient to meet the requirement of present injury. (emphasis in original). As we understand this, Peterman alleged insufficient present injury upon which to sustain his cause of action. This assessment is proper when the cause of action alleged is negligence. It should not be the standard, however, for determining the rights and duties of parties to an insurance contract. Such a strict construction of personal injury would result in the insured's being denied coverage when he would most reasonably expect it and would defeat in total the purpose of the policy. It also would equate the duty to defend with the duty to indemnify, which is contrary to the law in cases such as the present in which the insurer contracted to defend even groundless, false or fraudulent accusations. See Gedeon, 410 Pa. at 58, 188 A.2d at 321-22, (The obligation to defend arises whenever the complaint may potentially come within coverage of the policy, even if the actual outcome requires no indemnification.); C. Raymond Davis & Sons, Inc., 467 F.Supp. at 19, (An insurer must defend its insured if there is potential coverage because the duty to defend is broader than the duty to indemnify.). It is apparent that the policy before us is thus susceptible to the following two interpretations: (1) personal injury means physical injury caused by external violence, as advanced by Reliance; and (2) at a minimum, personal injury encompasses allegations of exposure to a hazardous substance, increased risk of injury, anxiety, various internal disorders and tissue damage, as advanced by Techalloy. This compels us to liberally construe the term in Techalloy's favor. In this manner we will not defeat, without a clear necessity, the claim to coverage which was Techalloy's objective in securing the policy. Koser v. American Casualty Co., 162 Pa.Super. 63, 64, 56 A.2d 301 (1948) (allocatur refused). For their persuasive reasoning and instructive value, we draw analogy to a series of cases which evolved from the discovery of diseases associated with asbestos products. A common issue, for purposes of determining which insurance company was on risk, was when did the injury occur when exposure to the hazardous element did not result in immediate manifestation of the disease. In the case of Keene Corp. v. Insurance Co. of North America, 667 F.2d 1034 (D.C.Cir. 1981), cert. denied, 455 U.S. 1107, 102 S.Ct. 1644, 71 L.Ed.2d 875 (1982), reh'g denied, 456 U.S. 951, 102 S.Ct. 2024, 72 L.Ed.2d 476 (1982), the court had to determine the extent to which each of a number of insurance companies was liable when Keene, a manufacturer of products containing asbestos, was named as a co-defendant in litigation involving manufacturer's liability for asbestos-related diseases. Controversy arose because each company had issued a comprehensive general liability policy to Keene but at varying times. The key to determining which company was liable lie in the court's ability to ascertain when the injury complained of occurred: when the plaintiffs were first exposed to the asbestos or when the disease later became physically manifest. The court acknowledged that in the particular circumstances surrounding the suit, each insurance company had failed to develop policy language that would directly address the full complexity entailed by asbestos-related diseases. Id., at 1041. Giving due consideration to insurance concepts, the Keene court held that for purposes of insurance coverage, each insurer with a policy in effect from the time the plaintiffs were initially exposed to the asbestos until their diseases became physically manifest would be liable to Keene for indemnity and defense costs. Stated plainly, injury occurred, for insurance purposes, at the time of the exposure to the hazard causing substance. The court deduced that it would be inconsistent with the objective of insurance protection to hold that there was no coverage when the injurious process began if there clearly would be coverage had the diseases become apparent spontaneously upon inhalation. Consequently, any part of the injurious process was sufficient to constitute bodily injury in accordance with the policies. [1] The better reasoned approach in the case before us dictates that from the perspective of Peterman's allegations, Reliance erroneously constricted the purview of personal injury. The insurer's denunciation of the exposure theory as completely irrelevant and inapplicable is misguided. Reliance distinguishes the asbestos cases on the ground that in those suits plaintiffs at time of trial had already developed asbestosis and other asbestos-related illnesses. This distinction is inapposite. The relevance attaches insofar as in both the asbestos cases and the case at bar, the courts had to determine if and when an insurance company would be liable when the manifestation of a disease was not simultaneous with its inception. Although exposure may not be a new theory of tort liability as espoused by Techalloy, it is relevant for our purposes of deciding whether the Peterman complaint alleged an injury within the meaning of Techalloy's insurance coverage. Our decision here should be read only in the context of the insurance interpretation in which it is made. It should not be understood that we are assuming that any member of the plaintiff class will at any time in the future suffer that type of physical manifestation which would afford compensation under the law. Rather, we hold that the term personal injury, modified only by the standard insurance industry definition of bodily injury, sickness or disease, is ambiguous as applied to the potentially progressive physical ailments alleged by Peterman. As was recognized in a predecessor to Keene, there is a clear distinction between when bodily injury occurs and when the bodily injury which has occurred becomes compensable. Forty-Eight Insulations, 633 F.2d at 1223. Since the Peterman complaint alleged exposure to, ingestion and use of water contaminated with a highly-dangerous chemical capable of causing severe physical damage, there were sufficient allegations of personal injury to render the complaint at least potentially within the policy's coverage. [2] Reliance could have easily tailored the language in its otherwise standard policy so that it would more accurately reflect the coverage it intended to provide. Given the nature of Techalloy' business, this should have been one of Reliance's more apparent concerns. Precision in delineating the confines of personal injury would have eliminated all ambiguity and would have alerted Techalloy to the restrictions so that the insured could have procured adequate coverage elsewhere.