Opinion ID: 2164986
Heading Depth: 1
Heading Rank: 5

Heading: Joint-and-Several Allocation

Text: Assuming that every phase from exposure to manifestation of disease is a period of continuous bodily injury, does that trigger the sum of all policies in force during the years of exposure, exposure in residence, and manifestation? Recall that in our hypothetical the building owners were insured only during the middle three years of the workers' occupancy. Keene, supra, 667 F. 2d 1034, is the leading case for the proposition that any triggered policy must respond for the entirety of a claim, subject to the effect of `other insurance clauses' and principles of equitable contribution, but without assigning responsibility for a portion of coverage to the policyholder even if it were uninsured or self-insured. David W. Steuber, et al., Emerging Issues in Environmental Insurance Coverage Litigation, in Fifth Annual Litigation Management Supercourse 331 (PLI Litig. & Admin. Practice Course Handbook Series No. 496, 1994), available in WESTLAW, PLI-LIT Database, []60. Monsanto Co. v. C.E. Health Compensation and Liability Insurance Co., ___ A. 2d ___, n. 6 (Del. 1994), describes the Keene rule as the majority rule, citing, among other authorities, ACandS Inc. v. Aetna Casualty & Surety Co., 764 F. 2d 968, 974 (3d Cir.1985); Zurich Insurance Co., supra, 112 Ill.Dec. at 699, 514 N.E. 2d at 165; and J.H. France Refractories Co. v. Allstate Insurance Co., 534 Pa. 29, 626 A. 2d 502, 508 (1993). Sandoz, Inc. v. Employer's Liability Assurance Corp., 554 F. Supp. 257, 266 (D.N.J. 1983), accepted that in certain cases medical evidence might establish the extent to which bodily damage occurred during a policy period, thus allowing for apportionment. In default of such evidence, it accepted the Keene approach. The conceptual model employed by the Keene court is that of a pleated accordion surrounding the entire occurrence and representing the time span from exposure to manifestation. Its solution to the problem of indivisible injury was to collapse the injuries in the accordion into a single year. It wrote: The principle of indemnity implicit in the policies requires that successive policies cover single asbestos-related injuries. That principle, however, does not require that Keene be entitled to stack applicable policies' limits of liability. To the extent possible, we have tried to construe the policies in such a way that the insurers' contractual obligations for asbestos-related diseases are the same as their obligations for other injuries. Keene is entitled to nothing more. Therefore, we hold that only one policy's limits can apply to each injury. Keene may select the policy under which it is to be indemnified. [667 F. 2d at 1049-50.] That theory is sometimes referred to as one of joint-and-several allocation. The Keene court explained that it did not mean that a single insurer will be saddled with full liability for any injury. Keene held that when more than one policy applies to a loss, the other insurance provisions of each policy provide a scheme by which the insurer's liability is to be apportioned. Id. at 1050. [1] The Appellate Division adopted the Keene theory of joint-and-several allocation. What the Keene decision would mean in the context of our office-building example is not perfectly clear to us. By way of illustration, the Keene opinion states that only one policy's limits can apply to each injury. Id. at 1049. But what did the Keene court mean by injury? Did it mean each claim of injury, or each cause of injury? Some language in the opinion has led commentators to believe it meant the latter: The key to the Keene court's decision was its conclusion that there was only a single occurrence. The court's concern was that the insurers' liability for a long-term exposure injury be the same as their obligations for other types of losses. William R. Hickman & Mary R. DeYoung, Allocation of Environmental Cleanup Liability Between Successive Insurers, 17 N.Ky.L.Rev. 291, 301 (1990). If the Keene court's concern was that the insurance companies' liability for long-term exposure to injury be the same as their obligations for other types of losses, only one policy's limits would seem to apply to all claims arising out of the same occurrence, as would have been the case had an asbestos-laden steam pipe exploded in the fourth year of our illustration, causing immediate injury to thirty of the building occupants. We surmise, however, that the Keene court's holding is that one policy's limits apply to each claim of injury, and that in our office-building hypothetical the building owner might have assigned ten of the claims to year four, ten to year five, and ten to year six. The cross-indemnity among the policies would neutralize the effect of contribution on policy limits. In Air Products and Chemicals, Inc. v. Hartford Accident and Indemnity Co., 707 F. Supp. 762 (E.D.Pa. 1989), aff'd in part, vacated in part, 25 F. 3d 177 (3d Cir.1994), the district court applied a per-claim analysis to triggered policies but did not permit the policyholder the discretion to select the policy for coverage. Following Pennsylvania law, that court directed that liability among triggered policies `should be apportioned chronologically and seriatim.' 707 F. Supp. at 769 (quoting J.H. France Refractories Co. v. Allstate Ins. Co., No. 3933 (Phila.Ct.C.P. Apr. 18, 1986), vacated on other grounds, 372 Pa.Super. 575, 539 A. 2d 1345 (1988), rev'd, 521 Pa. 91, 555 A. 2d 797 (1989), on remand, 396 Pa.Super. 185, 578 A. 2d 468 (1990), aff'd in part, rev'd in part, 534 Pa. 29, 626 A. 2d 502 (1993)). The Third Circuit Court of Appeals in Air Products and Chemicals citing the Pennsylvania Supreme Court decision on this subject in the J.H. France litigation, 626 A. 2d at 508, supra, rejected the lower court's apportionment method in favor of joint-and-several allocation allowing the insured to select the policy under which it is to be indemnified. 25 F. 3d at 181. One anomaly in the Keene court's analysis is that a single claim for the cost of cure of a long-term release of contaminants that polluted a city water supply would be limited to one policy's limits, whereas if 300 residential wells were affected, the limits of multiple policies would be available, though the occurrence (cause) was the same. Another anomaly is that although the opinion's premise is that all damages can be claimed in any one of the years, it nonetheless calls for contribution from other policies. By definition, if all damages occurred in one of the years (in the sense of that year's injury establishing the damages), none of the other policies would be triggered.