A panel of the Pennsylvania Commonwealth Court issued its opinion in Pa. Manufacturers’ Ass’n Ins. Co. v. Johnson Matthey, 2017 Pa. Commw. LEXIS 115 (Pa. Commw. April 21, 2017) adopting the multiple trigger of J.H. France to claims of property damage caused by continuing pollution. The Commonwealth Court is one of Pennsylvania’s two mid-level appellate courts and is primarily responsible for matters involving state and local governments and regulatory agencies. It also acts as a trial court when lawsuits are filed by or against the Commonwealth. It does not have significant experience with insurance coverage cases. This case was brought before the Commonwealth Court by Pa. Manufacturers’ on a petition for review in its original jurisdiction seeking a declaration that it had no obligation to defend or indemnify JMI with respect to a suit filed by the Pennsylvania Department of Environmental Protection (DEP) in U.S. District Court for the costs of cleaning up contamination at a facility used to manufacture and process metal alloy tubes and associated equipment from 1969 to 1974. DEP was joined as a necessary party as required under Pennsylvania’s declaratory judgment statute.
DEP’s complaint alleged that as a result of those operations, hazardous substances including trichloroethylene, were disposed in the environment and that subsurface migration of contaminated groundwater from the site contaminated an aquifer beneath the site and offsite properties. At issue were two commercial general liability policies Pa Manufacturers’ issued in 1969 and 1970 (the policies covering the period from April 1, 1971 to April 1, 1979 were exhausted). Based upon the Pennsylvania Supreme Court’s Pa. Nat’l Mut. Cas. Ins. Co. v. St. John decision, Pa. Manufacturers’ argued that only those policies in effect when the contamination, i.e. property damage, manifested would be triggered. Pa. Manufacturers’ sought summary relief.
The Court rejected Pa. Manufacturers’ argument that St. John required rejection of the multiple trigger. Rather, the panel distinguished St. John as addressing the question of whether coverage continued to be covered under policies in effect after the property damage was known to have occurred, and not whether coverage was triggered in the period between the insured’s tortious act and the first manifestation of harm. The issue before Commonwealth Court was whether there is coverage under policies in effect while environmental contamination was in progress and before manifestation. The panel rejected a reading of St. John as limiting J.H. France to asbestos or bodily injury claims. Rather, the panel viewed St. John as affirming justification of applying the multiple trigger to claims with a long latency, which the panel found to include claims of gradual pollution occurring at indefinite points in time. The panel also found the language of the policy providing coverage for “property damage” taking place during the period of the policy to support its decision as long as contamination occurred within the policy period.
The Commonwealth Court also found that the manifestation rule did not correspond well to the time property damage occurs in cases of environmental contamination, which the panel believed might merely be the result of when testing is conducted. Finally, the panel tossed in the “public policy” argument of a manifestation rule allowing insurers to limit or terminate coverage in anticipation of future claims that have not yet materialized, pointing to the pollution exclusions added to policies in the 1970s.
Note that because the case was before Commonwealth Court in its original jurisdiction, an appeal to the Pennsylvania Supreme Court is a matter of right, not discretion.