Axis Insurance Company v. Great American Insurance Company of New York

Background

Twin Hill Acquisition Company manufactured uniforms for American Airlines employees. Employees later filed lawsuits alleging that the uniforms caused skin, respiratory, and other health problems. The underlying claims involved more than 20 chemicals, 14 fabric mills, and 12 factories in multiple countries.

AXIS issued five commercial general liability policies to Twin Hill covering annual periods from May 1, 2015, through May 1, 2020. Those policies generally provided a $1 million limit per occurrence and a $2 million aggregate limit. Great American issued three umbrella policies covering May 1, 2015, through May 1, 2018, each with a $25 million limit per occurrence and in the aggregate.

AXIS paid $1 million to settle claims involving some claimants in July and August 2022. AXIS then tendered the defense of the uniform lawsuits to Great American, stating that its policies were exhausted. Great American refused to accept the tender or fund Twin Hill’s defense.

The parties’ motions

AXIS sought summary judgment—a ruling without a trial when no genuine dispute about a material fact exists—arguing that all uniform-related injuries resulted from one “occurrence” under its policies. AXIS relied on California decisions holding that multiple injuries can constitute one occurrence when they result from a single underlying cause.

Great American filed a separate motion for summary judgment on its counterclaim for a declaration that the uniform claims resulted from multiple occurrences. It argued that the policy language and the facts were similar to a California case involving asbestos exposure, in which the court treated exposure episodes as the relevant occurrences.

Court’s analysis

The court applied California law to interpret the insurance policies. It explained that the number of occurrences depends on the events causing the injuries and that a single common, uninterrupted cause may constitute one occurrence, while separate or autonomous causes may constitute multiple occurrences.

The court denied AXIS’s motion because AXIS had not presented evidence identifying the defect or defects that caused the numerous injuries. Although the uniforms were produced under one contract, the claims involved different chemicals, fabric mills, factories, and production periods. The court said it was possible that uniforms made at different factories, during different months, or with different materials had different defects. The court therefore could not determine whether the injuries had different proximate causes.

The court also rejected Great American’s request for summary judgment. It found that the policy’s definition of “occurrence” described continuous or repeated exposure as an example of an accident, unlike the policy language considered in the asbestos case relied on by Great American. The uniform manufacturing was tied to one contract over six months, and Great American had not shown that any defect resulted from an intentional business decision rather than an accident in manufacturing or distribution.

The court concluded that AXIS had not shown one proximate, uninterrupted, continuing cause of all the injuries, while Great American had not shown that the injuries arose from multiple causes. The court also could not determine whether the injuries constituted one occurrence or multiple occurrences, or whether bodily injury from an occurrence took place during the 2015–16 policy period. Those unresolved questions prevented summary judgment for either party.

Disposition

The court denied both AXIS’s motion for summary judgment and Great American’s cross-motion for summary judgment. It also denied as premature Great American’s administrative motion to file a second summary-judgment motion. The court stated that further proceedings and motion practice would be discussed at a future case-management conference.