Lexplug logoLexplug

Appalachian Insurance v. General Electric Co.

New York Court of Appeals
8 N.Y.3d 162, 863 N.E. 2d 994 (2007)
ELI5:

Rule of Law:

Under New York's 'unfortunate-event' test, multiple claims arising from long-term, widespread exposure to a hazardous substance at different times and locations do not constitute a single 'occurrence' for insurance liability purposes. The focus is on the specific incident causing injury (the exposure), not the single underlying cause (the failure to warn).


Facts:

  • Between 1966 and 1986, General Electric Company (GE) designed, manufactured, and sometimes installed steam turbines that were insulated with asbestos-containing products made by other companies.
  • These turbines were installed at more than 22,000 work sites throughout the United States.
  • Over several decades, thousands of individuals were exposed to asbestos from these turbines and subsequently filed personal injury claims against GE, alleging it failed to warn them of the dangers.
  • GE maintained primary general liability insurance with Electric Mutual Liability Insurance Company (EMLICO) with a per-occurrence liability limit, typically $5 million, but no annual aggregate limit.
  • GE also held excess liability insurance policies with Appalachian Insurance Company and others, which were triggered only when a claim exceeded the per-occurrence limit of the primary EMLICO policy.
  • The EMLICO policies defined an 'occurrence' as 'an accident, event, happening or continuous or repeated exposure to conditions which unintentionally results in injury or damage.'
  • Until 1992, EMLICO and GE treated each individual asbestos claim as a separate occurrence, with no single claim approaching the $5 million limit.
  • In response to a surge in claims, GE and its primary insurer, EMLICO, entered into a 'Claims Handling Agreement' to retroactively group all asbestos claims related to turbines into a single annual occurrence, thereby exceeding the primary policy limit.

Procedural Posture:

  • Allstate Insurance Company filed a declaratory judgment action in New York Supreme Court (a trial-level court) against GE, EMLICO, and GE's excess insurers, including Appalachian Insurance Company.
  • After Allstate settled, the trial court substituted Appalachian Insurance Company as the lead plaintiff.
  • Appalachian and other excess insurers moved for summary judgment, seeking a declaration that each asbestos claim was a separate occurrence; GE cross-moved for summary judgment, arguing all claims constituted a single occurrence.
  • The Supreme Court granted summary judgment to the excess insurers, holding that each exposure was a separate occurrence and GE's primary policies had not been exhausted.
  • GE, as appellant, appealed to the Appellate Division of the Supreme Court (an intermediate appellate court), which affirmed the trial court's decision.
  • The Court of Appeals of New York (the state's highest court) granted GE leave to appeal.

Locked

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does a company's alleged single decision to not warn about asbestos dangers in its products transform thousands of individual asbestos exposure claims, occurring over decades at different locations, into a single 'occurrence' for the purpose of triggering excess insurance liability coverage?


Opinions:

Majority - Graffeo, J.

No. A company's single decision not to warn does not transform thousands of individual asbestos exposures into a single occurrence; rather, the claims constitute multiple occurrences. Applying the 'unfortunate-event' test from Arthur A. Johnson Corp., the court focuses on the incident giving rise to the injury, not the single originating cause. This test evaluates the temporal and spatial relationship between incidents and whether they are part of a continuous, unbroken causal chain. Here, the 'unfortunate event' is each individual claimant's 'continuous or repeated exposure' to asbestos. These exposures occurred over decades, at thousands of different locations, and varied widely in duration and intensity. They lack the close temporal and spatial relationship required to be grouped as a single occurrence. The court explicitly rejects GE's 'sole-proximate-cause' argument, stating that the cause (failure to warn) must not be conflated with the incident (exposure).



Analysis:

This decision solidifies New York's adherence to the 'unfortunate-event' test for determining the number of occurrences in mass tort liability cases. It prevents insureds from bundling geographically and temporally disparate claims into a single occurrence by tracing them back to a common corporate decision or failure. The ruling significantly protects excess insurers from liability in long-tail, mass tort situations like asbestos litigation, placing a higher financial burden on the insured and their primary carriers. This precedent makes it more difficult for policyholders to access excess coverage for widespread, gradual harm unless the policy language explicitly provides for such aggregation.

G

Gunnerbot

AI-powered case assistant

Loaded: Appalachian Insurance v. General Electric Co. (2007)

Try: "What was the holding?" or "Explain the dissent"