The Appellate Division, 4th Department recently held that the building’s insurer was only required to pay up to its limit on a single policy in a case where two successive tenants brought suit based on injuries allegedly suffered due to lead paint exposure in their apartment.
In November of 1991, Allstate issued to Tony Wilson an insurance policy with a per-occurrence policy limit of $500,000 that covered Wilson’s apartment building. Wilson renewed the policy the next two years. The policy contained a noncumulative clause that stated “[r]egardless of the number of insured persons, injured persons, claims, claimants or policies involved, our total liability…will not exceed the limit shown on the declarations page. All bodily injury…resulting from one accidental loss or from continuous or repeated exposure to the same general conditions is considered the result of one accidental loss.”
In 1993, two children were allegedly injured as a result of lead paint exposure while living in one of Wilson’s apartments. After they moved out, Wilson attempted to remedy the condition. However, in 1994, two children of the subsequent tenant suffered the same alleged exposure. Both tenants filed suit. During the pendency of the lawsuit, the first tenants settled their case for $350,000. Allstate then settled the second tenants’ case for $150,000, with the caveat that the second tenants would recover $500,000 if a court declared that Allstate was required to pay the full policy limit to the second tenants. The second tenants then brought a declaratory judgment action entitled Nesmith v. Allstate seeking the appropriate declaration. Allstate eventually moved for summary judgment, but the lower court denied its application.
On appeal, the Appellate Division noted that the issue was whether the policy required Allstate to pay a second full policy limit under these circumstances or whether the plaintiffs’ losses were encompassed by the $500,000 per occurrence policy limit. The Appellate Division viewed the noncumulative clause as an unambiguous provision that Allstate had correctly interpreted. Furthermore, the Court cited to several prior court opinions on Allstate’s noncumulative clause where those courts had foreclosed on the plaintiff’s ability to collect on consecutive policies. Finally, the court likened this situation to that of asbestos exposure noting that the record established that the exposure to lead paint had to have originated from the same hazard.
Special thanks to Michael Nunley for his contribution to this post. For more information, please contact Nicole Brown at firstname.lastname@example.org.