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Associated Aviation Underwriters v. Wood9/29/2004
verage from the policies was in the contemplation of any party to the contracts in this case.... A latent injury, unknown and unknowable to [the insured] at the time it purchased insurance, must, at least, be covered by an insurer on the risk at the time it manifests itself. 667 F.2d at 1044 (footnotes omitted). In short, we cannot adopt the exposure theory here.
In our view, based on the policy language, "selecting one or another of the phases [of disease] as the exclusive trigger of liability" is inappropriate. J.H. France Refractories Co. v. Allstate Ins. Co., 626 A.2d 502, 507 (Pa. 1993). Instead, under the particular facts of this case, we interpret "bodily injury " to include the cellular damage caused by TCE exposure and, even after exposure has ceased, the continuing injurious process initiated thereby. In other words, both exposure and exposure-in-residence occurring during the policy period will trigger insurance coverage. In addition, the policy clearly is also triggered if "disease" manifests itself during the policy period. See Keene, 667 F.2d at 1047.
Sound social policy supports this conclusion as well. Defining "bodily injury " as any stage of the disease process guarantees all possible injured victims will receive compensation and, in cases involving multiple insurance policies, spreads the risk to the largest possible group of policyholders or claimants. See Ohio Cas., 189 Ariz. at 190, 939 Ariz. at 1343. Although at first blush such results might seem to favor insureds, insurers also benefit under the continuous trigger theory. As the court in Montrose noted, the continuous trigger theory is "'the most efficient doctrine [for allocation of liability amongst insurers] for toxic waste cases,'" because "'it encourages all insurers to monitor risks and cha ge appropriate premiums.'" 913 P.2d at 903 n.23, quoting Note, Developments in the Law -- Toxic Waste Litigation, 99 Harv. L. Rev. 1458, 1581 (1986).
The continuous trigger theory also eliminates "arbitrariness, from the carrier's perspective, of telescoping all damage in a continuing injury case into a single policy period." Id. at 903. In other words, elimination of that "arbitrariness" reduces the possibility that insurance providers would ultimately transfer the risk of a trigger theory that renders them wholly liable for injuries occurring during their policy periods to their policyholders through higher premiums. See id. Lastly, "choosing ... trigger theory affording the greatest ultimate redress" gives effect to "the law's solicitousness for victims of mass toxic torts and other environmental contamination." Winding Hills Condo. Ass'n, Inc. v. N. Am. Specialty Ins. Co., 752 A.2d 837, 840 (N.J. Super. Ct. App. Div. 2000); see also Port Auth. v. Affiliated FM Ins. Co., 311 F.3d 226, 233 (3d Cir. 2002); cf. Owens- Illinois , 650 A.2d at 985, quoting Ayers, 525 A.2d at 314 ("' ass-exposure toxic-tort cases involve public interests not present in conventional tort litigation.'").
Accordingly, AAU was required to provide coverage under its accident policies if, during the policy period, Intervenors were either exposed to TCE, had TCE- related diseases developing internally as a result of a previous exposure, or manifested fully developed TCE-related diseases. We therefore affirm the trial court's phase I ruling that AAU's policies provided coverage for the injuries suffered by the fourteen trial intervenors.
III. Reasonableness
A. Background
As noted in 20, supra, in early 2002, the trial court (J. Harrington) held an eight-day evidentiary hearing on whether the Morris agreement between TAA/City and Intervenors was reasonable in fact and amount. Duri
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