The Final Pieces of the Trigger and Allocation Puzzle in New York

With the flurry of major insurance decisions pertaining to long-tail tort claims in the early 1990s, practitioners appear to take New York law largely for granted when assessing trigger and allocation issues. True enough, the basics are now “well settled”: an “injury in fact” trigger (American Home Products Corp. v. Liberty Mut. Ins. Co., 748 F.2d 760 (2nd Cir. 1984) (“AHP“)); an emphatic rejection of the so-called “all sums” approach to allocation (Consolidated Edison Co. v. Allstate Ins. Co., 746 N.Y.S.2d 622 (N.Y. 2002)); and adoption of a pro rata methodology, (Stonewall Insurance Company v. Asbestos Claims Management Corporation 73 F.3d 1178, 1192 n.5 (2nd Cir. 1995) (citing Owens-Illinois v. United Ins. Co., 138 N.J. 437 (N.J. 1994)); Con Ed, 746 N.Y.S.2d 622). All that said, we expect to see highly significant elaborations or refinements of the real world meaning of “injury in fact,” and these open issues may have consequences for a wide range of major claims.

Injury in Fact and Allocation in Fact: From AHP to Con Ed

“Injury in fact” is an approach to trigger that has always stood outside the methodological spectrum from “unitary triggers” like “manifestation” on one end and “continuous triggers” on the other. Injury in fact is agnostic about that spectrum as a matter of law. It permits the facts to govern ' facts pertaining to exposure, epidemiology, symptomatology ' rather than some inflexible judicial rule. Thus, “injury in fact” was born with a problem: what is “injury?”

Our view has always been that “injury in fact” is not a trigger “theory” at all, but a pithy summary of a charge to a jury. There are benefits, one might say, to having a “no rule” rule for certain insurance situations. The uncertainty surrounding a jury trial on trigger issues can encourage settlements, certainly, but a “non-rule” itself can, by its very nature, avoid the excesses and injustices of a formalized, legally mandated, well-defined “trigger.” Thus, “injury in fact” is not a midstation between manifestation and continuous trigger. It is a not-quite-random, outcome- generating machine that is conducted through the lens of jury perception on an ad hoc basis.

Being lawyers and judges and claim managers, practitioners in the insurance litigation marketplace can't help but try to convert “injury in fact” into a specific trigger on the spectrum. Thus, rumor has it that New York has become a “continuous trigger” state; this rumor largely stemmed from the outcome of the jury trial before Judge John S. Martin, Jr., in Stonewall. In actuality, however, one will not find a continuous trigger jurisprudence anywhere in New York, and the state courts have been unusually reticent about adopting any “golden rules” in complex insurance cases. Indeed, even Con Ed, which was about as resounding a rejection of “all sums” allocation as one could ever get, was quite tepid in applying pro rata allocation to the case before it. Read Con Ed yourself: It is as much an “allocation-in-fact” holding as a pro rata one.

In a sense, then, New York law can fairly be summarized as “allocation in fact” based on “injury in fact.” It recognizes discontinuous or uneven triggers and invites us to litigate about the quantum of injury in 1 year or another. In New York, coverage will follow the quantum of injury (read “policyholder liability”) that is inflicted in a given year. And that will likely be a jury issue.

Occurrence Trigger

Besides issues surrounding the fundamental nature of the “in fact” approach to trigger and allocation, New York law invites further scrutiny of policy language and tort law in its ongoing movement toward jurisprudential closure in the trigger/allocation arena. One place where this is happening relates to policies triggered not by injury, but by the occurrence itself, during the policy period.

Under the CGL policy widely adopted by the casualty and property insurance industry in 1966, coverage is triggered by, mainly, bodily injury taking place during the policy period. However, it is not uncommon to find “occurrence triggered” policies written after 1966, which cover only liabilities attributable to occurrences taking place during the policy period. Such policies state that “this policy applies only to occurrences happening anywhere during the policy period” or words to similar effect.

The difference between an “injury triggered” CGL policy and an “occurrence triggered” policy would seem crucial in latent disease coverage disputes, where the relevant occurrence (exposure to toxic substances or the decision to permit such exposure) may predate the resulting bodily injury by years or even decades. In such cases, a policy incepting after the policyholder has ceased distributing toxic material should not be required to cover injuries arising from a pre-existing occurrence.

Yet courts rarely have given effect to occurrence-triggered policies. Two leading decisions found the relevant policy language to be ambiguous and contradicted by the carrier's own interpretation in favor of an injury-based trigger. See Stonewall, 73 F.3d at 1192 n.5; Eagle Picher Indus., Inc. v. Liberty Mut. Ins. Co., 682 F.2d 12, 24 (1st Cir. 1982).

In contrast, New York's state courts have uniformly held that occurrence-triggered policies do not cover personal injuries happening during the policy period, if caused by pre-policy exposures. E.g., In re Liquidation of Midland Ins. Co., 709 N.Y.S.2d 24 (1st Dep't 2000). Indeed, unlikely as it seems, it appears that New York appellate courts have addressed the trigger of coverage in the latent disease context primarily under these policies. The New York cases are not only instructive as to the application of occurrence-triggered policies, but also suggestive of a potential schism between New York state and federal courts over the application of injury-triggered policies as well.

Second Circuit Trigger Decisions

Most decisions addressing trigger of coverage under New York law have been decided by federal courts, and have yet to be confirmed by state appellate courts. In 1984, the Second Circuit in AHP held under New York law that coverage for latent disease claims was triggered by an “injury in fact” ' an injury proven to have happened during the policy period, as opposed to one presumed by law, or becoming manifest during the policy period. 748 F.2d at 764. This ruling meant that trigger would be a fact issue, amenable to pretrial disposition only upon proof of undisputed injury facts.

A decade later in Stonewall, the Second Circuit upheld a jury's finding that asbestos-related injuries occur “in fact” from the moment of first exposure and continuously and progressively thereafter. The Stonewall court emphatically distinguished its holding from decisions such as Keene v. INA, which presumed as a matter of law “that inhalation exposure, exposure in residence, and manifestation all trigger coverage” under injury-triggered policies. See Keene Corp. v. Insurance Co. of N. Am., 667 F.2d 1034, 1047 (D.C. Cir. 1981). Since Stonewall, federal courts in New York (and many other states) have followed AHP and Stonewall in applying an injury-in-fact trigger in coverage disputes involving latent diseases.

State Trigger Decisions

This leading role for federal courts in shaping New York trigger doctrine reflects not only from the pre-emptive effect of AHP and Stonewall, but also the notorious penchant of New York state courts to decide cases on the narrowest possible grounds. The Court of Appeals has very deliberately avoided reaching, and certainly elaborating the finer points of, the trigger of coverage issue in the latent disease and pollution contexts. E.g., Continental Cas. Co. v. Rapid American Corp., 593 N.Y.S.2d 966, 971 (N.Y. 1993); Con Ed, 746 N.Y.S.2d at 630 & n.

The Appellate Division has reached the issue, but in most cases an occurrence-triggered policy governed the coverage at issue. Midland involved a claim for coverage under an excess policy for asbestos-related bodily injury asserted against an insurer in liquidation. The excess policy followed form to an umbrella policy that “applie[d] only to occurrences happening anywhere during the policy period.” In re Liquidation of Midland Ins. Co., 623 N.Y.S. 2d 689, 691 (Sup. Ct. N.Y. Cty. 1994). The lower court distinguished cases dealing with injury-triggered policies as inapposite, and denied coverage on the grounds that only asbestos-related bodily injury ' not the exposures that cause those injuries ' could be shown to have occurred during the policy period. Id. at 694. The First Department adopted this reasoning and affirmed. 709 N.Y.S.2d at 32-33. The First Department also suggested the possibility of a similar outcome under an injury-triggered policy, thus signaling some cynicism about the “injury-in-residence” part of the “continuous trigger.”

Exploding this cynicism into full view, in Long Island Lighting Co. v. Allianz Underwriters Ins. Co., 749 N.Y.S.2d 488, 495 (1st Dep't 2002) (“LILCO“), the court addressed the trigger of coverage, again under occurrence-triggered policies issued in the 1970s, for the discharge of hazardous wastes at power plants prior to the late 1950s. The policyholder argued that the ongoing leaching and migration of the waste during the 1970s constituted covered occurrences. The LILCO court found it “illogical to deem the continuing migration of the pre-existing contaminants to be both the damage itself and the cause of the damage,” and denied coverage. Id.

In tension with these cases is another line of Appellate Division cases that address the trigger for coverage of residential lead poisoning, apparently under injury-triggered policies. E.g., Greater New York Mut. Ins. Co. v. Royal Ins. Co., 657 N.Y.S.2d 326, (1st Dep't 1997); United States Liability Co. v. Farley, 626 N.Y.S.2d 371, 372 (2nd Dep't 1995). These cases, which generally concern the trigger for insurers' defense rather than indemnity obligations, appear to assume rather than decide the applicability of the injury-in-fact trigger, applying it broadly under the everyday precepts applicable to the defense duty. Likewise, Frontier Insulation Contrs. v. Merchants Mut. Ins. Co., 91 N.Y.2d 169 (N.Y. 1997), another defense duty case, looks a lot like a continuous trigger, but one must take its explicit cautions seriously.

In the only Court of Appeals case to discuss the trigger for coverage in the asbestos bodily injury context, the court in effect sustained application of an injury-in-fact trigger under an occurrence-triggered policy. In Rapid American, 593 N.Y.S.2d at 971, the insurer conceded the applicability of an injury-in-fact trigger despite clear policy language providing coverage only for injuries arising from occurrences during the policy period. The insurer's only defense to coverage was the policyholder's conduct evincing the adoption of a manifestation-based trigger of coverage. The court rejected that defense, conspicuously noted the failure to “argue for a different test [than injury-in-fact] under New York law,” and held that that the insurer owed a duty to defend the policyholder against asbestos claims. Id.

Continental Casualty demonstrates the importance of policy trigger language. In light of the subsequent Midland and LILCO decisions, the insurer might have prevailed at least in part by arguing that its duty to defend extended only against those claims based on occurrences (exposures to asbestos) taking place during the relevant policy periods. Acquiescence in Stonewall's de facto continuous trigger may be preferable in some situations ' for example, in order to maximize participation by all of a policyholder's insurers. But the Stonewall outcome ' a continuous trigger ' was an answer to a factual question, not a legal question.

Differences in Language or Philosophy?

The holdings in Midland and LILCO may reflect nothing more than a coincidence that the two New York state appellate decisions addressing trigger in the latent disease and pollution contexts happen to have both addressed policies which, unlike the standard CGL form policy language, were triggered by occurrences rather than injury or property damage during the policy period. However, the reasoning of these and other decisions suggests deeper philosophical differences between New York state and federal courts over the real world application of the injury-in-fact trigger now so well established under New York law.

Such differences appear in the numerous New York decisions that disclaimed the authority of AHP and Stonewall. As it carefully sidestepped the trigger issue in Consolidated Edison, the Court of Appeals characterized Stonewall as a statement of what the Second Circuit “perceived to be New York law.” Con Ed, 746 N.Y.S.2d at 626. Even more remarkably, the court ignored Stonewall in the second part of its opinion approving under New York law the pro rata method of allocating losses among policies, even though Stonewall rendered the same holding years earlier.

The Appellate Division has not missed the implicit significance of these Court of Appeals decisions. The lead paint trigger cases that assume an injury-in-fact trigger of coverage do not cite AHP or Stonewall as authority. The Midland court, though aware of Stonewall, did not even mention the case in its trigger discussion, and cited AHP merely as proof that “New York does not follow the multiple trigger theory.” 709 N.Y.S.2d at 32.

Ignoring these federal decisions, the Midland court began to lay the groundwork for jury application of an exposure-based trigger under New York law and its “non-rule” pertaining to injury in fact. The court cited Continental Casualty for the proposition that “under New York law, coverage is implicated upon any exposure during the policy period.” Id. at 59. The Midland court then proceeded to address an issue it arguably did not need to reach ' the “dilemma as to what constitutes an 'injury' within the policy period.” Id. at 61. The court found that the injuries of persons exposed to asbestos “first occurred when the individual was actually exposed to asbestos fibers upon inhalation.” Id. at 62.

And then there is Consorti. Consorti v. Owens Corning Fiberglas Corp., 634 N.Y.S.2d 18 (N.Y. 1995) ' an asbestos personal injury case that has nothing to do with insurance claims ' demonstrates one basis on which the Court of Appeals might even go further than merely to permit juries to decide trigger, and rejects a continuous trigger outright.

In Consorti, the plaintiff's decedent was exposed to the defendant's asbestos during the 1960s, married the plaintiff in 1976 after his exposure had ceased, and then developed mesothelioma in 1996. The jury awarded the plaintiff damages for loss of consortium, but New York allows such damages only for tortious injury occurring after marriage.

The Second Circuit certified to the Court of Appeals the question of “whether a cause of action lies for loss of consortium where, prior to the marriage, the plaintiff's spouse was exposed to, and ingested, a substance that remained in his body and eventually caused illness, but the illness did not occur until after the marriage.” Consorti, 634 N.Y.S.2d at 18 (quoting Consorti v. Owens-Corning Fiberglas Corp., 45 F.3d 48, 49 (2nd Cir. 1995). Despite the implicit assertion in the certified question that the injury occurred after marriage, the Court of Appeals answered in the negative.

In response to the plaintiff's argument that the date of her decedent's injury was a factual question decided in her favor by the jury, the court utterly rejected such a “fact based date of medical injury test.” Id. at 19. The Consorti court held that “as a matter of law, the tortious injury is deemed to have occurred upon the introduction of the toxic substance into the body.” Id. This “bright line, readily verifiable rule” is necessary to “provide manufacturers, employers, and other economic actors who are potential defendants with a degree of certainty of predictability in assessing the risk of liability.” Id. The court stressed its unwillingness to change this rule of New York tort law espoused “through succeeding generations of Judges composing this court, over some 60 years.” Id. at 20. The court's unanimous opinion expresses an almost ontological commitment to the concept that toxic injury occurs only during exposure to toxins and ceases when that exposure ceases.

While Consorti is not a coverage case, it is hard to imagine it existing within the same jurisprudential universe as AHP, which was already decided and widely disseminated when Consorti was published. (Interestingly, Consorti was published after Stonewall was fully submitted and argued to the Second Circuit, but just before Stonewall was published.) In 1983, the District Court in AHP distinguished the line of cases on which Consorti relied, all of which concerned the triggering of the statute of limitations for personal injury claims. 565 F. Supp. at 1494. However, the 1995 Consorti case expands the principle equating injury with exposure beyond the limitations context. Lower courts have expanded it yet further. E.g., Besser v. E. R. Squibb & Sons, Inc., 539 N.Y.S.2d 734 (1st Dep't 1989), aff'd, 552 N.Y.S.2d 923 (N.Y. 1990) (claim of New York resident who suffered injury in New York due to her mother's use of DES during pregnancy in Philadelphia was governed by Pennsylvania law).

The AHP court also rejected the policy rationale underlying the Consorti line of cases, finding that the need to afford certainty to potential defendants in civil litigation had “no bearing on the construction of insurance contracts.” 565 F. Supp at 1494. Indeed, as we noted at the outset, that very uncertainty is the core rationale for a doctrine as vague as “injury in fact.” In contrast, the Midland court ' without citing Consorti ' adopted a similar rationale in reasoning that “[t]o the extent equity is a concern, it favors Midland, which did not insure [the policyholder] at the time of actual exposure.” 709 N.Y.S.2d at 32.

The tug of war between a predictable or certain trigger somewhere on the traditional spectrum, and the “give it to the jury” philosophy of the “injury in fact” non-rule, will certainly continue. Although rumor has it that New York law has settled into a comfortable, continuous trigger, pro rata coverage architecture, we think the better view would anticipate the discomforts of discontinuous triggers, uneven allocations, and jury trials.

With the flurry of major insurance decisions pertaining to long-tail tort claims in the early 1990s, practitioners appear to take New York law largely for granted when assessing trigger and allocation issues. True enough, the basics are now “well settled”: an “injury in fact” trigger ( American Home Products Corp. v. Liberty Mut. Ins. Co. , 748 F.2d 760 (2nd Cir. 1984) (“ AHP “)); an emphatic rejection of the so-called “all sums” approach to allocation ( Consolidated Edison Co. v. Allstate Ins. Co. , 746 N.Y.S.2d 622 (N.Y. 2002)); and adoption of a pro rata methodology, ( Stonewall Insurance Company v. Asbestos Claims Management Corporation 73 F.3d 1178, 1192 n.5 (2nd Cir. 1995) (citing Owens-Illinois v. United Ins. Co. , 138 N.J. 437 (N.J. 1994)); Con Ed, 746 N.Y.S.2d 622). All that said, we expect to see highly significant elaborations or refinements of the real world meaning of “injury in fact,” and these open issues may have consequences for a wide range of major claims.

Injury in Fact and Allocation in Fact: From AHP to Con Ed

“Injury in fact” is an approach to trigger that has always stood outside the methodological spectrum from “unitary triggers” like “manifestation” on one end and “continuous triggers” on the other. Injury in fact is agnostic about that spectrum as a matter of law. It permits the facts to govern ' facts pertaining to exposure, epidemiology, symptomatology ' rather than some inflexible judicial rule. Thus, “injury in fact” was born with a problem: what is “injury?”

Our view has always been that “injury in fact” is not a trigger “theory” at all, but a pithy summary of a charge to a jury. There are benefits, one might say, to having a “no rule” rule for certain insurance situations. The uncertainty surrounding a jury trial on trigger issues can encourage settlements, certainly, but a “non-rule” itself can, by its very nature, avoid the excesses and injustices of a formalized, legally mandated, well-defined “trigger.” Thus, “injury in fact” is not a midstation between manifestation and continuous trigger. It is a not-quite-random, outcome- generating machine that is conducted through the lens of jury perception on an ad hoc basis.

Being lawyers and judges and claim managers, practitioners in the insurance litigation marketplace can't help but try to convert “injury in fact” into a specific trigger on the spectrum. Thus, rumor has it that New York has become a “continuous trigger” state; this rumor largely stemmed from the outcome of the jury trial before Judge John S. Martin, Jr., in Stonewall. In actuality, however, one will not find a continuous trigger jurisprudence anywhere in New York, and the state courts have been unusually reticent about adopting any “golden rules” in complex insurance cases. Indeed, even Con Ed, which was about as resounding a rejection of “all sums” allocation as one could ever get, was quite tepid in applying pro rata allocation to the case before it. Read Con Ed yourself: It is as much an “allocation-in-fact” holding as a pro rata one.

In a sense, then, New York law can fairly be summarized as “allocation in fact” based on “injury in fact.” It recognizes discontinuous or uneven triggers and invites us to litigate about the quantum of injury in 1 year or another. In New York, coverage will follow the quantum of injury (read “policyholder liability”) that is inflicted in a given year. And that will likely be a jury issue.

Occurrence Trigger

Besides issues surrounding the fundamental nature of the “in fact” approach to trigger and allocation, New York law invites further scrutiny of policy language and tort law in its ongoing movement toward jurisprudential closure in the trigger/allocation arena. One place where this is happening relates to policies triggered not by injury, but by the occurrence itself, during the policy period.

Under the CGL policy widely adopted by the casualty and property insurance industry in 1966, coverage is triggered by, mainly, bodily injury taking place during the policy period. However, it is not uncommon to find “occurrence triggered” policies written after 1966, which cover only liabilities attributable to occurrences taking place during the policy period. Such policies state that “this policy applies only to occurrences happening anywhere during the policy period” or words to similar effect.

The difference between an “injury triggered” CGL policy and an “occurrence triggered” policy would seem crucial in latent disease coverage disputes, where the relevant occurrence (exposure to toxic substances or the decision to permit such exposure) may predate the resulting bodily injury by years or even decades. In such cases, a policy incepting after the policyholder has ceased distributing toxic material should not be required to cover injuries arising from a pre-existing occurrence.

Yet courts rarely have given effect to occurrence-triggered policies. Two leading decisions found the relevant policy language to be ambiguous and contradicted by the carrier's own interpretation in favor of an injury-based trigger. See Stonewall, 73 F.3d at 1192 n.5; Eagle Picher Indus., Inc. v. Liberty Mut. Ins. Co., 682 F.2d 12, 24 (1st Cir. 1982).

In contrast, New York's state courts have uniformly held that occurrence-triggered policies do not cover personal injuries happening during the policy period, if caused by pre-policy exposures. E.g., In re Liquidation of Midland Ins. Co., 709 N.Y.S.2d 24 (1st Dep't 2000). Indeed, unlikely as it seems, it appears that New York appellate courts have addressed the trigger of coverage in the latent disease context primarily under these policies. The New York cases are not only instructive as to the application of occurrence-triggered policies, but also suggestive of a potential schism between New York state and federal courts over the application of injury-triggered policies as well.

Second Circuit Trigger Decisions

Most decisions addressing trigger of coverage under New York law have been decided by federal courts, and have yet to be confirmed by state appellate courts. In 1984, the Second Circuit in AHP held under New York law that coverage for latent disease claims was triggered by an “injury in fact” ' an injury proven to have happened during the policy period, as opposed to one presumed by law, or becoming manifest during the policy period. 748 F.2d at 764. This ruling meant that trigger would be a fact issue, amenable to pretrial disposition only upon proof of undisputed injury facts.

A decade later in Stonewall, the Second Circuit upheld a jury's finding that asbestos-related injuries occur “in fact” from the moment of first exposure and continuously and progressively thereafter. The Stonewall court emphatically distinguished its holding from decisions such as Keene v. INA, which presumed as a matter of law “that inhalation exposure, exposure in residence, and manifestation all trigger coverage” under injury-triggered policies. See Keene Corp. v. Insurance Co. of N. Am. , 667 F.2d 1034, 1047 (D.C. Cir. 1981). Since Stonewall, federal courts in New York (and many other states) have followed AHP and Stonewall in applying an injury-in-fact trigger in coverage disputes involving latent diseases.

State Trigger Decisions

This leading role for federal courts in shaping New York trigger doctrine reflects not only from the pre-emptive effect of AHP and Stonewall, but also the notorious penchant of New York state courts to decide cases on the narrowest possible grounds. The Court of Appeals has very deliberately avoided reaching, and certainly elaborating the finer points of, the trigger of coverage issue in the latent disease and pollution contexts. E.g., Continental Cas. Co. v. Rapid American Corp., 593 N.Y.S.2d 966, 971 (N.Y. 1993); Con Ed, 746 N.Y.S.2d at 630 & n.

The Appellate Division has reached the issue, but in most cases an occurrence-triggered policy governed the coverage at issue. Midland involved a claim for coverage under an excess policy for asbestos-related bodily injury asserted against an insurer in liquidation. The excess policy followed form to an umbrella policy that “applie[d] only to occurrences happening anywhere during the policy period.” In re Liquidation of Midland Ins. Co., 623 N.Y.S. 2d 689, 691 (Sup. Ct. N.Y. Cty. 1994). The lower court distinguished cases dealing with injury-triggered policies as inapposite, and denied coverage on the grounds that only asbestos-related bodily injury ' not the exposures that cause those injuries ' could be shown to have occurred during the policy period. Id. at 694. The First Department adopted this reasoning and affirmed. 709 N.Y.S.2d at 32-33. The First Department also suggested the possibility of a similar outcome under an injury-triggered policy, thus signaling some cynicism about the “injury-in-residence” part of the “continuous trigger.”

Exploding this cynicism into full view, in Long Island Lighting Co. v. Allianz Underwriters Ins. Co. , 749 N.Y.S.2d 488, 495 (1st Dep't 2002) (“ LILCO “), the court addressed the trigger of coverage, again under occurrence-triggered policies issued in the 1970s, for the discharge of hazardous wastes at power plants prior to the late 1950s. The policyholder argued that the ongoing leaching and migration of the waste during the 1970s constituted covered occurrences. The LILCO court found it “illogical to deem the continuing migration of the pre-existing contaminants to be both the damage itself and the cause of the damage,” and denied coverage. Id.

In tension with these cases is another line of Appellate Division cases that address the trigger for coverage of residential lead poisoning, apparently under injury-triggered policies. E.g., Greater New York Mut. Ins. Co. v. Royal Ins. Co., 657 N.Y.S.2d 326, (1st Dep't 1997); United States Liability Co. v. Farley , 626 N.Y.S.2d 371, 372 (2nd Dep't 1995). These cases, which generally concern the trigger for insurers' defense rather than indemnity obligations, appear to assume rather than decide the applicability of the injury-in-fact trigger, applying it broadly under the everyday precepts applicable to the defense duty. Likewise, Frontier Insulation Contrs. v. Merchants Mut. Ins. Co. , 91 N.Y.2d 169 (N.Y. 1997), another defense duty case, looks a lot like a continuous trigger, but one must take its explicit cautions seriously.

In the only Court of Appeals case to discuss the trigger for coverage in the asbestos bodily injury context, the court in effect sustained application of an injury-in-fact trigger under an occurrence-triggered policy. In Rapid American, 593 N.Y.S.2d at 971, the insurer conceded the applicability of an injury-in-fact trigger despite clear policy language providing coverage only for injuries arising from occurrences during the policy period. The insurer's only defense to coverage was the policyholder's conduct evincing the adoption of a manifestation-based trigger of coverage. The court rejected that defense, conspicuously noted the failure to “argue for a different test [than injury-in-fact] under New York law,” and held that that the insurer owed a duty to defend the policyholder against asbestos claims. Id.

Continental Casualty demonstrates the importance of policy trigger language. In light of the subsequent Midland and LILCO decisions, the insurer might have prevailed at least in part by arguing that its duty to defend extended only against those claims based on occurrences (exposures to asbestos) taking place during the relevant policy periods. Acquiescence in Stonewall's de facto continuous trigger may be preferable in some situations ' for example, in order to maximize participation by all of a policyholder's insurers. But the Stonewall outcome ' a continuous trigger ' was an answer to a factual question, not a legal question.

Differences in Language or Philosophy?

The holdings in Midland and LILCO may reflect nothing more than a coincidence that the two New York state appellate decisions addressing trigger in the latent disease and pollution contexts happen to have both addressed policies which, unlike the standard CGL form policy language, were triggered by occurrences rather than injury or property damage during the policy period. However, the reasoning of these and other decisions suggests deeper philosophical differences between New York state and federal courts over the real world application of the injury-in-fact trigger now so well established under New York law.

Such differences appear in the numerous New York decisions that disclaimed the authority of AHP and Stonewall. As it carefully sidestepped the trigger issue in Consolidated Edison, the Court of Appeals characterized Stonewall as a statement of what the Second Circuit “perceived to be New York law.” Con Ed, 746 N.Y.S.2d at 626. Even more remarkably, the court ignored Stonewall in the second part of its opinion approving under New York law the pro rata method of allocating losses among policies, even though Stonewall rendered the same holding years earlier.

The Appellate Division has not missed the implicit significance of these Court of Appeals decisions. The lead paint trigger cases that assume an injury-in-fact trigger of coverage do not cite AHP or Stonewall as authority. The Midland court, though aware of Stonewall, did not even mention the case in its trigger discussion, and cited AHP merely as proof that “New York does not follow the multiple trigger theory.” 709 N.Y.S.2d at 32.

Ignoring these federal decisions, the Midland court began to lay the groundwork for jury application of an exposure-based trigger under New York law and its “non-rule” pertaining to injury in fact. The court cited Continental Casualty for the proposition that “under New York law, coverage is implicated upon any exposure during the policy period.” Id. at 59. The Midland court then proceeded to address an issue it arguably did not need to reach ' the “dilemma as to what constitutes an 'injury' within the policy period.” Id. at 61. The court found that the injuries of persons exposed to asbestos “first occurred when the individual was actually exposed to asbestos fibers upon inhalation.” Id. at 62.

And then there is Consorti. Consorti v. Owens Corning Fiberglas Corp., 634 N.Y.S.2d 18 (N.Y. 1995) ' an asbestos personal injury case that has nothing to do with insurance claims ' demonstrates one basis on which the Court of Appeals might even go further than merely to permit juries to decide trigger, and rejects a continuous trigger outright.

In Consorti, the plaintiff's decedent was exposed to the defendant's asbestos during the 1960s, married the plaintiff in 1976 after his exposure had ceased, and then developed mesothelioma in 1996. The jury awarded the plaintiff damages for loss of consortium, but New York allows such damages only for tortious injury occurring after marriage.

The Second Circuit certified to the Court of Appeals the question of “whether a cause of action lies for loss of consortium where, prior to the marriage, the plaintiff's spouse was exposed to, and ingested, a substance that remained in his body and eventually caused illness, but the illness did not occur until after the marriage.” Consorti, 634 N.Y.S.2d at 18 (quoting Consorti v. Owens-Corning Fiberglas Corp., 45 F.3d 48, 49 (2nd Cir. 1995). Despite the implicit assertion in the certified question that the injury occurred after marriage, the Court of Appeals answered in the negative.

In response to the plaintiff's argument that the date of her decedent's injury was a factual question decided in her favor by the jury, the court utterly rejected such a “fact based date of medical injury test.” Id. at 19. The Consorti court held that “as a matter of law, the tortious injury is deemed to have occurred upon the introduction of the toxic substance into the body.” Id. This “bright line, readily verifiable rule” is necessary to “provide manufacturers, employers, and other economic actors who are potential defendants with a degree of certainty of predictability in assessing the risk of liability.” Id. The court stressed its unwillingness to change this rule of New York tort law espoused “through succeeding generations of Judges composing this court, over some 60 years.” Id. at 20. The court's unanimous opinion expresses an almost ontological commitment to the concept that toxic injury occurs only during exposure to toxins and ceases when that exposure ceases.

While Consorti is not a coverage case, it is hard to imagine it existing within the same jurisprudential universe as AHP, which was already decided and widely disseminated when Consorti was published. (Interestingly, Consorti was published after Stonewall was fully submitted and argued to the Second Circuit, but just before Stonewall was published.) In 1983, the District Court in AHP distinguished the line of cases on which Consorti relied, all of which concerned the triggering of the statute of limitations for personal injury claims. 565 F. Supp. at 1494. However, the 1995 Consorti case expands the principle equating injury with exposure beyond the limitations context. Lower courts have expanded it yet further. E.g., Besser v. E. R. Squibb & Sons, Inc., 539 N.Y.S.2d 734 (1st Dep't 1989), aff'd , 552 N.Y.S.2d 923 (N.Y. 1990) (claim of New York resident who suffered injury in New York due to her mother's use of DES during pregnancy in Philadelphia was governed by Pennsylvania law).

The AHP court also rejected the policy rationale underlying the Consorti line of cases, finding that the need to afford certainty to potential defendants in civil litigation had “no bearing on the construction of insurance contracts.” 565 F. Supp at 1494. Indeed, as we noted at the outset, that very uncertainty is the core rationale for a doctrine as vague as “injury in fact.” In contrast, the Midland court ' without citing Consorti ' adopted a similar rationale in reasoning that “[t]o the extent equity is a concern, it favors Midland, which did not insure [the policyholder] at the time of actual exposure.” 709 N.Y.S.2d at 32.

The tug of war between a predictable or certain trigger somewhere on the traditional spectrum, and the “give it to the jury” philosophy of the “injury in fact” non-rule, will certainly continue. Although rumor has it that New York law has settled into a comfortable, continuous trigger, pro rata coverage architecture, we think the better view would anticipate the discomforts of discontinuous triggers, uneven allocations, and jury trials.