Facts
- EnergyNorth Natural Gas, Inc. is the successor to companies that operated manufactured gas plants at sites in Laconia and Nashua, New Hampshire, from before 1900 until operations ceased in 1952.
- Hazardous contaminants allegedly leaked and spilled at the sites before 1952 and later migrated through soil and groundwater, causing continuous property damage over time.
- In approximately 1996, state environmental authorities notified EnergyNorth of pollution at the sites and required investigation and remediation, resulting in substantial costs.
- EnergyNorth sought indemnity for remediation costs under comprehensive general liability policies issued by multiple insurers for policy periods spanning 1958–1983.
- The dispute concerned which “trigger-of-coverage” rule determines when an “accident” or “occurrence” causing “property damage” took place under (1) occurrence-based provisions and (2) accident-based provisions, given pre-policy releases but alleged continuing migration and injury during the policy periods.
Issues
- For occurrence-based CGL provisions that distinguish between an accident/continuous exposure and resulting “property damage,” what trigger applies when property damage is alleged to continue through multiple policy periods?
- For accident-based CGL provisions limited to “accidents occurring during the policy period,” what trigger applies where contamination migration and exposure are alleged to continue through multiple policy periods?
- Must discovery or governmental cleanup demands (e.g., in 1996) control the trigger date for long-tail environmental contamination claims?
Decision
- The court answered the certified question by adopting different trigger rules depending on the policy language.
- For occurrence-based provisions, the court held coverage is triggered by injury-in-fact: property damage must occur during the policy period, even if the initial releases occurred earlier.
- For accident-based provisions, the court held coverage is triggered by exposure: the accident must occur during the policy period, and “accident” can include continuing exposures tied to ongoing contaminant migration.
- The court rejected a trigger keyed solely to discovery/manifestation or to a single pre-policy release event where the pleadings allege continuing migration and damage during the covered years.
Legal Principles
- Insurance contract interpretation turns on the plain meaning of the policy language; ambiguity is construed in favor of coverage, but unambiguous trigger language is enforced as written.
- Occurrence-based provisions that require “property damage” during the policy period implement an injury-in-fact trigger: coverage attaches in each policy period in which actual property damage occurs.
- In continuous contamination cases, alleged ongoing migration through soil and groundwater may constitute continuing injuries-in-fact, potentially triggering multiple occurrence-based policy years.
- Accident-based provisions limited to “accidents occurring during the policy period” implement an exposure trigger: coverage attaches in each policy period in which an accident, understood to include continuing exposure or a series of happenings, occurs.
- Under accident-based wording, resulting damage need not be confined to the same policy period as the accident, unless the policy expressly so requires.
Conclusion
The court held that continuous environmental contamination can trigger multiple policy periods, applying an injury-in-fact trigger to occurrence-based CGL provisions (focusing on when property damage occurs) and an exposure trigger to accident-based provisions (focusing on accidents/exposures occurring during the policy period), rather than limiting coverage to manifestation or to the initial pre-policy releases.