A New York appellate panel recently affirmed a lower court’s decision finding that each worker's injuries from exposure to chemicals found in popcorn flavoring resulted from separate occurrences for purposes of applying a “per occurrence” deductible under certain general liability insurance policies. International Flavors & Fragrances, Inc. v. Royal Ins. Co. of America, et al., 2007 NY Slip Op 08122 (App. Div., 1st Dept., Oct. 30, 2007).
The case involved a declaratory judgment action brought by an insured manufacturer against its insurers seeking coverage for a class action filed by thirty current and former employees of a microwave popcorn packaging plant. The underlying claimants alleged that they were exposed to butter flavoring containing hazardous chemicals, which was used in microwave popcorn packaged at the plant and allegedly caused the claimants to suffer respiratory injuries.
The insurers moved for summary judgment, seeking a declaration that each of the workers' claims in the underlying class action constituted a separate occurrence subject to a separate deductible under the terms of the policies. The insured, on the other hand, contended that the claimants’ exposure to the hazardous product constituted a single occurrence, without regard to the number of claimants that were injured. The policies defined “occurrence,” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions” and provided that the deductible applied “[t]o all damages because of bodily injury . . . as the result of any one ‘occurrence,’ regardless of the number of individuals who sustained damages because of that “occurrence.”
The trial court granted the insurers' motion, finding that under New York law the event precipitating coverage under the policies was the occurrence resulting in injury, not the actual injury itself. Therefore, the injury sustained by the underlying claimants did not result from a single occurrence because each claimant was exposed to the hazardous chemicals at different times.
The appellate court affirmed the Supreme Court’s decision, holding that the “occurrence” language in the policies did not “reflect the parties’ intent to aggregate the individual claims for the purpose of subjecting them to a single policy deductible.” Applying the “unfortunate event” test, the court determined that the injuries to the claimants lacked the requisite temporal and spatial proximity to be a single occurrence under the policies' definition, as the plaintiffs could not identify a single incident as the event resulting in injury to all the numerous claimants. Thus, the court found that the exposure of each underlying claimant to the hazardous product constituted a separate occurrence, each subject to a separate deductible.