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AES Corp. v. Steadfast Insurance Co.

ELR Citation: 41 ELR 20293
Nos. 100764, (Va. Ct. App., 09/16/2011)

A Virginia appellate court held that under Virginia law, an insurer has no duty to defend or indemnify an energy company in an underlying lawsuit brought by a native Alaskan village for damages allegedly caused by global warming through the emission of greenhouse gases. The relevant policies only provide coverage against claims for damages for bodily injury or property damage caused by an occurrence or accident. Here, the underlying complaint alleges that the energy company intentionally released tons of carbon dioxide and greenhouse gases into the atmosphere as part of its electricity-generating operations on the West Coast. Whether or not the company's intentional act constitutes negligence, the natural and probable consequence of that intentional act is not an accident under Virginia law. The complaint also asserts that the deleterious results of emitting carbon dioxide and greenhouse gases are something that the company knew or should have known about. Inherent in such an allegation is the assertion that the results were a consequence of the company's intentional actions that a reasonable person would anticipate. When the insured knows or should have known of the consequences of his actions, there is no occurrence and therefore no coverage. And even if the company were actually ignorant of the effect of its actions and/or did not intend for such damages to occur, the village alleges its damages were the natural and probable consequence of the company's intentional actions. Therefore, the underlying complaint does not allege that its property damage was the result of a fortuitous event or accident.