Uniroyal, Inc. v. Home Insurance
707 F.Supp. 1368, 1988 U.S. Dist. LEXIS 14646, 1988 WL 148677 (1988)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Under a comprehensive general liability policy, a manufacturer's continuous and routinized process of delivering a defective product constitutes a single 'occurrence.' The policy's war risk exclusion does not apply to an occurrence that takes place within the United States, even if the ultimate injuries happened in a foreign war zone.
Facts:
- Between 1961 and 1971, the U.S. military sprayed millions of gallons of 'Agent Orange' herbicides in Vietnam.
- Uniroyal Inc. entered into three contracts with the U.S. military to produce Agent Orange between 1966 and 1967.
- From October 1966 to March 1968, Uniroyal made 110 separate deliveries of Agent Orange to military depots on the West Coast of the United States in a routinized, repetitive, and continuous process.
- Once Uniroyal delivered the herbicides to the military in the U.S., it had no further control over their transport, mixing, or application in Vietnam.
- Uniroyal purchased five consecutive Comprehensive General Liability insurance policies from The Home Insurance Company (Home) covering the relevant period.
- These policies defined an 'occurrence' as 'an accident or a happening or event or a continuous or repeated exposure to conditions' and contained a 'war risk exclusion' for occurrences outside the U.S. and Canada.
- Vietnam veterans and their family members later alleged that exposure to Agent Orange caused severe health problems, including cancers, genetic damage, and birth defects.
Procedural Posture:
- A class of approximately 2.5 million Vietnam veterans and their family members sued Agent Orange manufacturers, including Uniroyal, in a mass toxic tort action.
- The class action was settled in 1984, with seven manufacturers, including Uniroyal, agreeing to pay the class $180 million.
- Uniroyal's share of the settlement was approximately $9 million, with an additional $3 million in defense costs.
- Uniroyal filed suit against its insurer, The Home Insurance Company (Home), in the U.S. District Court for the Eastern District of New York, seeking reimbursement for its settlement and defense costs, as well as a declaration of future coverage.
- Both Uniroyal and Home filed cross-motions for summary judgment in the district court.
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 manufacturer's continuous and routinized delivery of a hazardous product to the military over seventeen months constitute a single 'occurrence' for insurance coverage purposes, thereby making a war risk exclusion inapplicable where the deliveries took place in the United States but the injuries occurred in a foreign combat zone?
Opinions:
Majority - Weinstein, District Judge
Yes. A manufacturer's continuous and routinized delivery of a hazardous product constitutes a single 'occurrence' for insurance coverage purposes, and a war risk exclusion does not apply when that occurrence takes place in the United States. The court determined that the policy language distinguishes between the 'occurrence' (the cause) and the 'injury' (the result). Applying New York's 'unfortunate event' test, the court found the single 'occurrence' was Uniroyal’s entire continuous delivery process, not each individual spraying in Vietnam. This interpretation is supported by the fact that the 110 deliveries were a 'unified and continuous function,' not distinct events. Because these deliveries took place in the United States, the exception to the war risk exclusion applies, rendering the exclusion inapplicable. The court further held that since this single continuous occurrence spanned two policy periods, the liability must be allocated proportionally between the two policies based on the percentage of the product delivered during each period.
Analysis:
This decision significantly shapes the interpretation of 'occurrence' in mass tort and product liability insurance disputes. It establishes a pro-insured framework by consolidating numerous individual harmful events into a single occurrence when they originate from a continuous business process, thereby limiting the insured's exposure to multiple per-occurrence deductibles. This 'cause-based' approach provides greater certainty and coverage for companies facing large-scale liabilities. Furthermore, the ruling narrowly construes the war risk exclusion by tying its applicability to the location of the insured's causative act (delivery), not the location of the ultimate injury, which is a critical precedent for companies supplying products to the military.
Unlock the full brief for Uniroyal, Inc. v. Home Insurance