Opinion ID: 2164986
Heading Depth: 1
Heading Rank: 7

Heading: Does the Language of the Policies Resolve the Allocation Issue?

Text: Each side relies on the same language in the policies. O-I emphasizes that the language is unambiguous, the meaning clear. It contends that once a policy is triggered, an insurance company is liable, under the United policy, for all sums which the insured shall become legally obligated to pay    as damages, and under the OIL policy, for the sum actually paid    in the settlement or satisfaction of any claim or suit. The policies do not state that the insurer shall pay only some of the damages sustained, or that the insurers must pay only a portion of the ultimate net loss sustained during the policy period. Instead, the policies expressly require that when personal injury or property damage occurs during a policy period, the insurers must pay all sums resulting from that injury or property damage. The Insurance Companies emphasize with equal certainty that the language of the policies is clear. They insist that the Appellate Division's opinion ignores the plain language of the policies and applicable law. They contend that in its citation of the policy language, the Appellate Division omitted the language limiting the insurers' liability to injury which occurs during the policy period. [2] For example, the United policy, after reciting that the company would pay all sums which the insured shall become legally obligated to pay    as damages because of personal injury or property damage, qualified that statement by its definition that [t]his insurance applies only to personal injury or property damage which occurs during the policy period   . Similarly, the OIL excess policy states that it applies only to personal injury    which occurs during the policy period   . Property damage is defined in the OIL policy as physical injury to or destruction of tangible property which occurs during the policy period   . The policies do not apply to injuries that occur outside the policy period. Coverage is provided only for personal injury or property damage to which this insurance applies and the insurance applies only to personal injury or property damage which occurs during the policy period. The policy language, the Insurance Companies urge, leaves no doubt that coverage is not afforded for any injury or damage taking place outside the policy period. Both arguments are flawed. As to the Insurance Companies' argument that all injury (or damages) must occur in the policy period or that indemnity is awarded for only the part of the injury that occurs during the policy period, consider the simple case of an automobile accident in 1994 with a definite prognosis that an injured occupant's spine will deteriorate in 1996 resulting eventually in paralysis. The policy in effect during 1994 must indemnify for all damages attributable to the 1994 accident even though the full extent of the damages or the injury will not take place until a future date. Conversely, to convert the all sums or ultimate net loss language into the answer to apportionment when injury occurs over a period of years is like trying to place one's hat on a rack that was never designed to hold it. It does not work. The language was never intended to cover apportionment when continuous injury occurs over multiple years. In addition, the argument that all sums to be assessed because of long-term exposure to asbestos could have been established in any one of the policy years is intuitively suspect and inconsistent with our developing jurisprudence in the field of toxic torts. Supra, at 458, 650 A. 2d at 985, citing Ayers, supra, 106 N.J. 557, 525 A. 2d 287, and Mauro, supra, 116 N.J. 126, 561 A. 2d 257. The problem is how to apply the abstract concepts of law and the related provisions of the insurance contract to the realities of environmental disease. The legal concepts of injury, defect, negligence, and damages are well-suited to the prototype accident of an exploding steam boiler. A defective weld in a boiler may have been present years before but the occurrence (an explosion) and the attendant injuries are easily identified as falling within a particular policy period. Even though all sums due from the accident might not be known with certainty at the time of the explosion, by the time of trial a claimant would be able to establish, within a reasonable degree of medical probability, what damages would flow from the injury. That is not so in the case of gradual release of contaminants. Even in cases such as Ayers, supra, 106 N.J. 557, 525 A. 2d 287, in which bodies were admittedly exposed to damaging contaminants, all sums due because of the injury simply cannot be determined in each of the years of exposure or exposure in residence, and perhaps not even when there has been a manifestation. In a refreshing display of candor, Judge Barry acknowledged in Lac d'Amiante du Quebec, supra, 613 F. Supp. at 1551, that the differing interpretations of which occurrence constitutes the injury contemplated by the language of insurance policies is due, in part, to the desire of some courts to maximize coverage even when to do so requires judicial sleight of hand. It was precisely that sleight of hand or leap of logic that all the damages can be thought to be imposed in any one of the years of exposure or release that led Judge Wald to depart from the majority of her court in Keene, supra, 667 F. 2d at 1058 n. 7. The truth of the matter is undoubtedly that some of the damages (at least in the case of personal injury) occur in each of the years of the exposure in residence. Hence, Judge Wald was unable to agree with that aspect of the majority opinion as it applied to the uninsured period prior to the time when coverage for asbestos damages could no longer be obtained. She wrote: I just do not understand why an asbestos manufacturer, which has consciously decided not to insure itself during particular years of the exposure-manifestation period should have a reasonable expectation that it would be exempt from any liability for injuries that were occurring during the uninsured period. Id. at 1058. She found it thus logical and fair to adopt a pro-rata allocation formula similar to the result in Forty-Eight Insulations.