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Travelers Cas. & Sur. Co. v. Certain Underwriters at Lloyd's of London

Citation: 32 ELR 20262
No. Nos. 123, 124, 760 N.E.2d 319/96 N.Y.2d 583/(N.Y., 10/16/2001)

The court holds that losses from environmental injury claims involving decades of commercial activities at numerous industrial and waste disposal sites may not be aggregated as a single disaster and/or casualty under an insurance policy between an insurer and its reinsurer. The insurer sought payment from the reinsurer after federal, state, and local governments commenced environmental actions directed at more than 150 plants and disposal sites it insured throughout the country, many of which had been in operation for over 60 years. The court holds that the term "disaster and/or casualty" in the reinsurance policy does not cover the entirety of the insurer's claim. Under the "disaster and/or casualty" provision, the reinsurer could aggregate claims if the "accidents, occurrences, and/or causative incidents" have a spatial or temporal relationship to one another and a "common origin." This construction of the policy comports with the policy's definition of "each and every loss," which limits loss to any one disaster and/or casualty. These constructions of the policy demonstrate that the parties did not intend for the reinsurer to simply group together all losses as a single disaster and/or casualty, but sought to allow aggregation only where the losses are linked spatially or temporally and share a common origin. Because none of the underlying complaints contains an allegation that the contaminated sites bear a spatial or temporal relationship to one other, the insurer's single allocation of its settlement with the insured plants and sites does not fall within the ambit of a single disaster and/or casualty under the reinsurance policy. The court, therefore, upholds the grant of summary judgment in favor of the reinsurer.

Counsel for Appellants
Mary Kay Vyskocil
Simpson, Thacher & Bartlett
425 Lexington Ave., New York NY 10017
(212) 455-2000

Counsel for Respondents
Herbert M. Wachtell
Wachtell, Lipton, Rosen & Katz
51 W. 52d St., New York NY 10019
(212) 403-1000

Graffeo, J. Before Kaye, Smith, Levine, Ciparick, Wesley, and Rosenblatt.