A narrow majority of the court rejected both arguments, holding that only the first policy —the policy in effect “when either bodily injury or property damage becomes reasonably apparent”—was required to cover the contractor’s liability. Id., at *42 (citing D’Auria v. Zurich Ins. Co., 507 A.2d 857, 861 (Pa. Super. 1986)). The majority declined to apply a “multiple trigger” like that adopted in J.H. France Refractories Co. v. Allstate Insurance Co., 534 Pa. 29, 37-39, 626 A.2d 502, 507 (1993), on two principal grounds.
First, St. John involved observable, short-term property damage—a herd of dairy cows sickened within a year after first drinking contaminated water—rather than latent, long-term damage or injury. The majority thus distinguished multiple-trigger cases like J.H. France and the seminal Keene decision (Keene Corp. v. Ins. Co. of N. Am., 667 F.2d 1034 (D.C. Cir. 1981), because, unlike the asbestos cases, the dairy’s “damage was not concealed and undiscoverable for decades,” and “did not lay dormant for an extended period.” St. John, 2014 Pa. Lexis 3313, at *51, *61. The majority also emphasized a key justification for the multiple trigger theory in long-term damage cases:
The “multiple trigger” theory is applied in latent disease cases, like asbestosis or mesothelioma, because such injuries may not manifest themselves until a considerable time after the initial exposure causing injury occurs. The overriding concern in latent disease cases is that application of the D’Auria “first manifestation” rule would allow insurance companies to terminate coverage during the long latency period (of asbestosis); effectively shifting the burden of future claims away from the insurer to the insured (manufacturers of asbestos), even though the exposure causing injury occurred during periods of insurance coverage.
Id. at *60 (citations omitted).
Second, the contractor’s policies in St. John contained language limiting coverage for any known “continuation, change or resumption of that ‘bodily injury’ or ‘property damage’ after the end of the policy period,” id., at *55-56, whereas the older CGL policies in J.H. Francecontained no such limitation. The St. John court observed that this provision “lends support to the interpretation that only the policy in effect when an occurrence first arises is answerable for the ensuing bodily injury or property damage.” Id.,at *56.
The majority in St. John stated that the Pennsylvania Supreme Court’s earlier, multiple-trigger decision in J.H. France “remains an exception to the general rule under Pennsylvania jurisprudence,” whose application was not warranted under “the circumstances of the damage to Appellants’ dairy herd, coupled with the language of the Penn National policies.”Id.,at *61-62.
The dissent criticized the majority’s reasoning on several grounds.
First, it “does not hew to the policy language.” Id.,at *64 (Saylor, J., dissenting). For example, all parties agreed that the damage to the herd occurred continuously during three years of exposure to contaminated drinking water. The policies covered property damage during the policy period. Therefore, under the policies’ plain language, each policy should have provided coverage, even with the newer restrictive language the majority cited to distinguishJH France.
Both the dissent and the majority expressly acknowledged the conceptual difference between an “occurrence” and a “trigger of coverage.” But, the dissent noted, “the majority cites affirmatively to cases which conflate these insurance-law concepts.” Id.,at *67-68.
The dissent also observed that the majority acknowledged at least two reasonable interpretations of the policy language, thus “discern[ing] a critical ambiguity in the policy language,” id.,at *69, but failed to apply contra proferentem, the rule of construction—long-standing in Pennsylvania—that requires the policy to be construed in the policyholder’s favor and against the insurer. Id., at *54-55 (“Fairly read, this language can be given one of two meanings.”). Similarly, the majority relied on “the parties’ reasonable expectations” to defeat the policyholder’s interpretation rather than to uphold it. The dissent pointed out that the doctrine of reasonable expectations would dictate the opposite result. Id.,at 69-70.
Finally, the dissent observed that the court in St. John has done little to “fashion an opinion which would offer meaningful guidance beyond the idiosyncratic parameters set by the arguments.” Id., at *65. If that view of the case prevails, coverage litigators should not expect a widespread revival of the manifestation trigger.
Keywords: insurance, coverage, litigation, Pennsylvania, coverage, commercial general liability, CGL, long-tail, trigger, manifestation, continuous trigger, multiple trigger
John Buchanan and Suzan Charlton are with Covington & Burling LLP, Washington, DC.
The authors’ views are their own and not that of their firms or their clients.