CGL policy won’t cover in global warming lawsuit
The Supreme Court in Virginia has ruled that environmental damages allegedly caused from a power producer’s emission of greenhouse gasses were not “occurrences” covered by a Commercial General Liability (CGL) policy.
In 2008, Alaska’s native village of Kivalina and City of Kivalina filed a lawsuit in U.S. District Court, claiming that Virginia-based energy company AES Corp. damaged the village by causing global warming through the emissions of greenhouse gases. Kivalina alleged that AES engaged in energy-generating activities using fossil fuels that emit carbon dioxide and other greenhouse gases, and that the emissions contributed to global warming, causing land-fast sea ice protecting the village’s shoreline to form later or melt earlier in the annual cycle. This allegedly exposed the shoreline to storm surges, resulting in erosion of the shoreline and rendering the village uninhabitable.
AES believed its CGL policy with Steadfast Insurance would pay the claim. Steadfast is an Illinois-based company and indirect subsidiary of Zurich Financial Services. AES paid premiums to Steadfast for CGL policies from 1996 to 2000 and 2003 to 2008.
In the declaratory judgment action, Steadfast claimed that it did not owe AES a defense or indemnity coverage for damage allegedly caused by AES’s contribution to global warming based on three grounds: (1) the Complaint did not allege “property damage” caused by an “occurrence,” which was necessary for there to be coverage under the policies; (2) any alleged injury arose prior to the inception of Steadfast’s coverage; and (3) the claims alleged in the Complaint fell within the scope of the pollution exclusion stated in AES’s policies.
The suit said in each of the CGL policies AES purchased from Steadfast, Steadfast agreed to defend AES against suits claiming damages for bodily injury or property damage, if such damage “is caused by an ‘occurrence.’ “ The policies define “occurrence” as follows: “ ‘Occurrence’ means an accident, including continuous or repeated exposure to substantially the same general harmful condition.” The policies specify that Steadfast has no duty to defend or indemnify AES against damage suits to which the policies do not apply.
“Thus, under the facts of this case, I agree with the majority that the injury to Kivalina alleged in the complaint to have been caused by AES did not arise from an “accident” as covered by the CGL policies issued by Steadfast to AES because the complaint does not allege that AES’s intentional acts were done negligently,” wrote the justice. “The complaint alleges that AES was “negligent” only in the sense that it “knew or should have known” that its actions would cause injury no matter how they were performed.”
“Under the CGL policies, Steadfast would not be liable because AES’s acts as alleged in the complaint were intentional and the consequence of those acts was not merely foreseeable, but inevitable. In other words, where the harmful consequences of an act are alleged to have been eminently foreseeable, choosing to perform the act deliberately, even if in ignorance of that fact, does not make the resulting injury an “accident” even when the complaint alleges that such action was negligent.”
