Opinion ID: 1973725
Heading Depth: 1
Heading Rank: 4

Heading: analysis: trigger of coverage

Text: It seems somewhat difficult to contend that the policies in the present case are clear and unambiguous, at least as applied to the controversies presented to us. Nothing in the policies leads us to a clear and unequivocal application to the asbestos related disease scenario. This does not necessarily mean that we will automatically attempt to construe the policies against the insurers, per se. However, inasmuch as we are not led by the terms of the policies to one precise methodology, we will do our best to provide a reasonable construction of the policies in question, keeping in mind, almost as was done in Keene, that the policies were obtained with certain purposes and goals in mind, and that the policies necessarily purported to provide some degree of liability coverage. In essence, our goal will be to provide a construction consistent with, what we believe would be, a reasonable person's expectations in light of the factual scenario presented. The proponents of the exposure theory point to the medical evidence indicating that distinct bodily injury, on a cellular level, occurs almost contemporaneously with exposure to asbestos. The evidence establishes that individual cells in the trachea die within thirty minutes of being invaded by an asbestos fiber. This, they contend, constitutes a discreet injury which, if one continues to be exposed to asbestos, will result in asbestosis, mesothelioma or other asbestos related disease. Under this theory, the asbestos related disease is, primarily, the consequence of an accumulation of discreet cellular injuries directly or indirectly caused or triggered by the embedding of an asbestos fiber in the individual cells of the trachea or lungs. Since the policies define bodily injury as bodily injury, sickness or disease. . . . without greater clarification, and since there are undeniable injuries, albeit on a cellular level, it is contended that this form of injury triggers coverage under the policy. In contrast, the proponents of the manifestation theory argue that the term injury as used in the policy must be given its every day or common meaning. They argue that the average person does not consider cellular changes in the body to constitute injury. Rather, they contend, the common understanding implies some recognizable loss or impairment of bodily function. Thus, they would contend, injury does not occur until such time as there is a diagnosable or identifiable indication that one has the disease, in other words, when the disease manifests. Undoubtedly, either theory or approach to the construction of the key phrases in the asbestos context can find legal, logical and medical support. To the extent that asbestos exposure immediately causes such physical consequences as outlined above, it is not difficult to conclude that there is bodily injury upon exposure. Further, considering that the impairment results as a consequence of an accumulation of the rather discreet injuries, there is adequate reason to focus upon these discreet injuries as true and material bodily injuries which trigger coverage under the policy. Conversely, to the extent the actual physical impairment does not occur until some time after initial exposure, and to the extent that this is the more precise factor upon which the claim rests, it is not entirely unreasonable to focus upon this occurrence either. However, to focus simply upon the medical questions to determine the legal questions posed, seems, to us, to be focusing on less than the whole picture. We believe it is equally necessary to consider the various non-medical factors as well. It must be remembered that the essence of the purchase of insurance is a contractual undertaking regarding the deferral and spreading of risk. France purchased insurance in a general effort to limit its level of risk of liability. The insurers issued policies purporting to accept and assume a definite level of that risk in exchange for the payment of premiums. The question we believe to be dispositive is under what circumstances can France reasonably conclude that coverage is provided for the occurrence of asbestos related diseases? Clearly this requires reference to the terms of the policies, but, particularly in light of our conclusion that those terms do not lead an objective individual to one specific methodology in the asbestos disease context, there are other questions to consider. Utilizing this approach to examine the exposure theory, we inquire whether it is reasonable for a manufacturer to conclude that the purchase of insurance, contemporaneously with the manufacturing and distribution of asbestos containing products, would result in the indemnification for liability imposed upon the manufacturer for a third party's contraction of asbestos related disease when it is later discovered that those products cause cellular injuries shortly after exposure and that extended exposure will likely result in substantial impairment of important bodily functions. Along this line of inquiry a reasonable individual would examine the policy and see the definitions of bodily injury and consider the evidence that an individual exposed to asbestos products is being harmed, even if on a cellular level, from almost the moment he or she is exposed to it, and that such discreet injuries will continue to accumulate until serious bodily impairment or death occurs. One would also examine the definition of occurrence and see that it defines occurrence as including continuous or repeated exposure to conditions, which result in bodily injury. . . ., a phrase that would appear to provide coverage for such injuries that require substantial periods of exposure to discreetly harmful conditions. One would also consider the general expectation a manufacturer might develop from the fact that the manufacturer was purchasing liability coverage on an ongoing basis; in other words, the expectation of security one might reasonably derive from the fact that it was continuously operating with liability coverage rather than without it. When all of these factors are considered we find the conclusion that exposure triggers coverage under the policy almost inescapable. First of all, the medical evidence seems to unavoidably establish that the ultimate bodily injury and incapacitation sued for is a result of an accumulation of discreet injuries on a cellular level. Thus, there would be no liability without extensive exposure. Exposure being the ultimate cause of the eventual incapacitation, it would seem almost completely incongruous to conclude that exposure does not trigger the liability coverage. Secondly, clearly the definitions found in the policy are at least as equally susceptible to this interpretation, if not more so, than any other. Thirdly, it would seem to frustrate the reasonably objective purpose and intent of a liability policy to conclude otherwise. We believe that any manufacturer who is operating with liability coverage has a reasonable expectation that any liability, reasonably encompassed within the policy, which is tied to that manufacturing and distributing process will be covered. After all, that is the primary reason the policy was purchased in the first place. We further find that a contrary interpretation could provide results that seem, to us, far beyond the reasonable expectations of the parties. Consider, for example, a hypothetical situation where a manufacturer of asbestos containing products operates for a twenty year period with liability coverage provided by XYZ company, at which time, for whatever reason, XYZ company refuses to issue further coverage. Assume further that within the next several years a number of suits are filed asserting asbestos related injury caused by the manufacturer's products and that all periods of exposure are found to be within the twenty year insured period although manifestation occurred after the insured period. Under these facts the manufacturer would have paid twenty years worth of premiums yet, unless exposure would be found to trigger coverage, the manufacturer would be left totally unprotected; this, despite the fact that the liability would be directly tied to the cumulative effect of the injuries derived from exposure to the asbestos products over the twenty year insured period. Not only would such an interpretation seem to be grossly inequitable, it would seem to frustrate the generally attributable purpose of purchasing insurance. The insured must be assumed to have purchased the coverage in expectation that the manufacturing efforts would be insulated from liability, and that liability traced to exposure to its products during the insured period would be within the scope of coverage purchased. Further, to the extent this is considered a reasonably imputed expectation of the contracting parties under such a scenario, it must be considered part of the contract. In contrast, should exposure be found not to trigger coverage, the insurer would reap an unwarranted windfall. It would be insulated from bearing the liability protection it was reasonably construed to be offering, and thus the risk it was assuming, even though it collected premiums for the entire relevant period. We conclude that such a scenario cannot be considered a reasonable expectation of the parties considering the relevant factors and the phrasing of the policies in question. Thus, we conclude that exposure to asbestos triggers coverage of the liability policy. We turn next to the inquiry of whether or not it is reasonable to expect that the purchase of liability insurance would cover liability for incapacity developing and manifesting during a period of time when the policy was in effect. Turning to the definition of injury we see that it states bodily injury, sickness or disease sustained by any person which occurs during the policy period, . . . . Of course, the manifestation proponents have already provided some of the arguments for finding this theory of trigger valid. The term injury, in common parlance, may very well focus on an incapacitation of a bodily function or functional impairment. The fact that one has sustained numerous cellular injuries is, of course, relevant. But, from a practical standpoint, the manifestation is just as relevant since it focuses on the end result of the accumulation of cellular injuries. It is noteworthy that injury is defined as encompassing not only injury in fact, but also sickness and disease. These terms, given their general meaning, encompass progressive and/or transitory processes of the body, more so than a momentary occurrence of injury which produces an immediate physical incapacitation. Since, within the policy, the phrase injury is defined in a rather broad fashion to include disease and sickness, and keeping in mind the clinical definition of disease provides that disease is injury and response to injury, it is not difficult to conclude, considering only the terminology used, that the policy encompasses the entire disease process, from exposure to manifestation of incapacitation. Noting as well that liability insurance policies are generally occurrence-based policies focusing on the legally compensable occurrence, we consider the proposition that the occurrence of manifestation is an appropriate trigger. Certainly the utilization of this trigger has an appealing simplicity and practicality to it. The manifestation of disease is a recognizable event which has substantial legal significance. It signals the start of the limitations period and marks the point in time that there is a legally cognizable tort action available to the sufferer. Further, the nature of the disease is progressive; clearly incapacity can develop and worsen even after exposure has ended. [3] Thus, given the policy language and the progressive nature of the disease, a reasonably objective individual/manufacturer could expect coverage to be provided when there is a manifestation of the disease within the policy period. Therefore, we conclude, as did the trial court, that the entire process of asbestosis and asbestos related disease, from initial exposure to manifestation, triggers coverage under the policies in question. Our decision that the entire process from exposure to manifestation triggers coverage is consistent with this court's decision in Vale Chemical Company v. Hartford Accident and Indemnity, 340 Pa.Super. 510, 490 A.2d 896 (1985). In that case, a panel of this court concluded, in considering a latent disease case where the disease was caused by the ingestion of a drug during pregnancy, that the theory espoused in Keene, supra, best effectuated the reasonable expectations of the parties and the general expectations of the insured. We would note that there existed stronger logical reasons for adopting an exposure-only theory in Vale. In Vale the plaintiff was claiming injury suffered from a drug her mother ingested during the pregnancy in which she carried the plaintiff. As such, the exposure period was well defined and all subsequent injuries tied to the drug must have originated from that particularly specific period of time. Nevertheless, the panel of this court found that the entire disease process triggered coverage under the applicable policies. Our decision is also consistent with that reached by the Third Circuit Court of Appeals in ACandS, Inc. v. Aetna Casualty and Surety Company, 764 F.2d 968 (3d Cir. 1985).