Opinion ID: 2509803
Heading Depth: 2
Heading Rank: 2

Heading: Joe Harden

Text: In Joe Harden, we were asked to answer the following certified question: Where defective construction causes progressive property damage that is otherwise covered by insurance, is the property damage deemed to occur: 1. When the concrete frame is constructed out of plumb; 2. When the masonry contractor knowingly builds the defective brick wall; 3. When the failure of the brick wall is manifest; 4. When the owner actually discovers the failure of the brick wall; or 5. At some other time? 326 S.C. at 232-33, 486 S.E.2d at 89-90. Clearly, this question focused on what must happen in order to trigger coverage under a particular policy. We surveyed four common theories. First, we looked to the theory that coverage is triggered at the time of the injury-causing event. We explained that, [u]nder this theory, coverage is triggered at the time of the underlying injury-causing event, even though no damage has yet occurred, and the policy in effect at the time of this underlying event covers all the ensuing damage. Id. at 234, 486 S.E.2d at 90. The final phrase of this explanation covers all the ensuing damageis the logical result of the theory itself. If coverage results from the injury-causing event, and there is only one event, responsibility for full coverage would rest with a single policy. Coverage responsibility could only be spread among multiple policies if the court considered the underlying event to have been ongoing or repetitive, such that it spanned multiple policy periods. The next theory we considered was that coverage is triggered when [the] injury manifested. We said, [u]nder this theory, damage is deemed to occur at the time it is manifested or discovered, thus triggering coverage for all the ensuing damage under the policy in effect at the time of manifestation, even if some damage actually occurred earlier but was undetected. Id. Like the first theory, the logical result here would be to place full responsibility on a single policy, unless the manifestation of an injury could somehow be construed as ongoing or repetitive. The third theorywhich we ultimately adoptedwas different from the first two. We explained: Under this [third] theory, coverage may be triggered at any point from the time of the underlying injury-causing event until the damage is complete, allowing coverage under any policy in effect during this entire time. Some courts have adopted this theory to give effect to the language in the standard occurrence policy which provides coverage for a continuous or repeated exposure to conditions. Id. at 235, 486 S.E.2d at 91 (emphasis added). What makes this theory unique versus the first two is that it is logically consistent with indemnity under multiple policies: it allow[s] coverage under any policy in effect during th[e] entire progression of the damage. Notably missing from our explanation, then, was the mention of any one policy covering all ensuing damage. Though we adopted this continuous trigger theory, thereby allowing coverage under multiple policies, we expressed disapproval regarding the aspect of the theory that allowed coverage under policies that preceded the first actual injury: We find this trigger gives effect to the policy provision regarding a continuous or repeated exposure but that it suffers from the same problem as the first theory discussed above because it triggers coverage from the time of the injury-causing event even if no damage has yet occurred. Again, such an interpretation conflicts with the plain language of the policy which provides that damage must occur during the policy period. Accordingly, we adopt a continuous trigger theory but modify it as discussed below. Id. at 236, 486 S.E.2d at 91 (emphasis added). For that reason, we adopted what we called a modified continuous trigger. The modification was that, rather than defining the damage period as beginning with the injury-causing event and ending with manifestation, we defined the damage period as the term during which actual injuries occurred. Before we made this modification, however, we described the fourth general theory regarding the trigger of coveragethat coverage is triggered at the time of an injury-in-factas follows: Under this theory, coverage is triggered whenever the damage can be shown in fact to have first occurred, even if it is before the damage became apparent, and the policy in effect at the time of the injury-in-fact covers all the ensuing damages. Id. (emphasis added). Like the first two theories we discussed and rejected, this theory is logically consistent with indemnity only by a single policy: an injury can only have first occurred on a single occasion. See Montrose Chemical Corp., 42 Cal.Rptr.2d 324, 913 P.2d at 895 n. 17 (noting an insurer's argument that once an injury-in-fact is established, even retrospectively, all potential coverage is cut off . . . and only the insurer on the risk at the time the injury-in-fact first `occurs' is liable to indemnify the insured). In order to make an injury-in-fact trigger consistent with coverage under multiple policies, we had to recognize the ongoing or repetitive nature of the injuries in a progressive damage case. We did precisely that by (a) adopting the continuous trigger theory (theory three), and (b) modifying it to require an injury-in-fact during each policy period. Thus, we stated: Because we find the injury-in-fact trigger consistent with the policy's requirement that damage occur during the policy period, we adopt it in conjunction with a continuous trigger of coverage. See U.S. Gypsum Co. v. Admiral Ins. Co., 268 Ill.App.3d 598, 205 Ill.Dec. 619, 643 N.E.2d 1226 (1994) (injury-in-fact trigger and continuous trigger are on the same continuum and are complementary); Industrial Steel Container Co. v. Fireman's Fund Ins. Co., 399 N.W.2d 156 (Minn.Ct.App.1987) (rejecting argument that there can be only one occurrence in continuous injury case and applying actual injury rule). 326 S.C. at 236, 486 S.E.2d at 91 (emphasis added). The Industrial Steel Container Co. case we cited in support explains that where a court considers there to have been ongoing injuries-in-fact, there is the potential for coverage under more than one policy. 399 N.W.2d at 159 (We view this `actual injury' rule to be sufficiently broad to recognize that in cases involving long exposure to a toxic substance there can be damage with more than one manifestation and more than one insurance policy can afford coverage. We reject the argument that there can be only one occurrence in a case where property damage results from continuous or repeated conditions of exposure.). Our holding in Joe Harden was this: We hold coverage is triggered at the time of an injury-in-fact and continuously thereafter to allow coverage under all policies in effect from the time of injury-in-fact during the progressive damage. 326 S.C. at 236, 486 S.E.2d at 91. This statement was a complete answer to the certified question before the Court. Unlike theories one, two, and fourwhich contemplated that a single policy would cover all ensuing damagetheory three included no statement as to the scope of coverage that would be provided by each triggered policy. Thus, the holding in Joe Harden did not answer the allocation question with which we are now presented. Yet the Joe Harden Court then went one step further, making a statement in dictum that has been the source of much confusion. We said: [T]his theory of coverage will allow the allocation of risk among insurers when more than one insurance policy is in effect during the progressive damage. Id. at 237, 486 S.E.2d at 91. This statement could be taken as a mere summation of the fact that theory three allows coverage under multiple policies. Nevertheless, it may be mistakenly construed to mean that (1) risk can only be allocated among insurers, and no portion of the risk can be borne by policyholders who allow insurance to lapse during some portion of the damage period; and (2) where there is only one insurance policy in effect during the progressive damage, that policy must bear the full risk. We attribute no such weighty meaning to this dictum. We turn now to Century Indemnity, in which we were squarely presented with a question as to how much coverage each triggered insurer must provide.