8 N.Y.3d 162 (2007)
Under New York law, when determining whether multiple claims constitute a single ‘occurrence’ under a liability insurance policy, courts apply the ‘unfortunate-event’ test, focusing on the temporal and spatial proximity of the incidents and whether they form a continuous, unbroken chain, rather than solely on a common underlying cause.
Summary
General Electric (GE) sought a declaratory judgment to group numerous asbestos-related personal injury claims as a single ‘occurrence’ under its primary insurance policies with Electric Mutual Liability Insurance Company (EMLICO) to trigger excess insurance coverage. The claims stemmed from asbestos exposure linked to GE turbines across various work sites nationwide. GE argued that its failure to warn of asbestos dangers was the single cause. The New York Court of Appeals held that each claimant’s exposure constituted a separate occurrence because the exposures lacked sufficient temporal and spatial proximity, affirming the lower courts’ decisions that GE’s excess insurers were not obligated to provide coverage until the $5 million per-occurrence limit was met for each individual claim.
Facts
Between 1966 and 1986, individuals were exposed to asbestos-containing insulation in GE steam turbines at over 22,000 sites across the United States.
GE designed, manufactured, and sometimes installed these turbines, using asbestos-containing products made by others.
Plaintiffs sued GE, alleging GE knew the dangers but failed to warn workers.
GE typically was one of many defendants, and its share of settlements/verdicts averaged $1,500 per claim.
Increasing asbestos claims led GE to dispute with excess insurers over policy interpretation.
Procedural History
Allstate Insurance Company initially sued GE, EMLICO, and excess insurers, seeking a declaration regarding asbestos claims.
Appalachian Insurance Company replaced Allstate as lead plaintiff after a settlement.
Appalachian moved for summary judgment, arguing each asbestos claim was a separate occurrence.
GE cross-moved, contending all turbine-related claims constituted a single occurrence.
Supreme Court granted the excess insurers’ motion, denying GE’s cross-motion.
The Appellate Division affirmed. The Court of Appeals granted GE leave to appeal.
Issue(s)
1. Whether, under the terms of GE’s primary insurance policies, numerous asbestos-related personal injury claims arising from exposure at different sites over several years can be grouped as a single ‘occurrence’ to exceed policy limits and access excess insurance coverage.
Holding
1. No, because each individual’s exposure to asbestos constitutes a separate “occurrence” under the policy terms, as these exposures lacked sufficient temporal and spatial proximity to be considered a single event.
Court’s Reasoning
The Court applied the ‘unfortunate-event’ test established in Arthur A. Johnson Corp. v. Indemnity Ins. Co. of N. Am., focusing on the nature of the incident giving rise to damages, not merely the originating cause.
Relevant factors included the temporal and spatial relationship between incidents and whether they formed a continuous, unbroken chain.
The Court distinguished between the cause of the injuries (GE’s alleged failure to warn) and the incident giving rise to liability (each individual’s exposure).
The Court emphasized that the EMLICO policy defined an occurrence as “an accident, event, happening or continuous or repeated exposure to conditions which unintentionally results in injury or damage during the policy period.” The relevant “incident” was each plaintiff’s “continuous or repeated exposure” to asbestos.
The Court found insufficient commonalities among the claims, citing differences in exposure timing, location, duration, and the GE turbine sites involved.
The Court distinguished its holding from a ‘one-occurrence-per-injured-party’ approach, acknowledging that some mass tort scenarios could allow claim grouping if incidents share close temporal and spatial relationships.
The Court noted that GE and EMLICO, as sophisticated parties, could have drafted the insurance policy to allow for claim grouping, but they did not.
The Court cited Hartford Acc. & Indem. Co. v Wesolowski, stating “the continuum between the two impacts was unbroken, with no intervening agent or operative factor” (33 NY2d at 174).
The Court referenced Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 648 [1993]) stating that “[t]he insurance industry changed to occurrence-based coverage in 1966 to make clear that gradually occurring losses would be covered so long as they were not intentional.”