In Hollis v. Lexington Insurance Company, a Pennsylvania federal court was faced with determining how many “occurrences” were triggered under an insurance policy, which can dramatically impact the amount of available coverage.

Plaintiff Kathleen Hollis and her two children were injured during a fireworks show when a mortar unexpectedly was launched into the crowd.  Plaintiffs alleged that the fireworks company, its president, and another employee committed 19 breaches of duty resulting in the injuries. Those breaches included negligently selecting and purchasing the fireworks, violating laws and regulations in the import of the fireworks, failing to test the fireworks before deployment, disregarding indications that the location for the fireworks show was unsafe, failing to set the crowd back at a safe distance from the launch area, negligently training employees, and other similar allegations.

In the declaratory judgment action against Lexington Insurance Company, the Court was tasked with determining whether the allegations constituted a single occurrence, or as the claimants alleged, 19 separate occurrences under the fireworks company’s insurance policy to correspond with the number of duties that fireworks company allegedly breached.

The insurance policy had a $1 million limit per occurrence and a $2 million aggregate limit.
The insurer moved for summary judgment, saying that there was a single occurrence, and the injured claimants cross-moved. The trial court found in favor of the insurer, and the claimants appealed.

On appeal, the Fourth Circuit found that Pennsylvania law applies a cause approach to defining what constitutes an “occurrence.” Under the cause approach, there is a single occurrence if there was one proximate, uninterrupted, and continuing cause which resulted in all of the injuries and damage. The Fourth Circuit noted that, regardless of the number of alleged negligent acts or victims, all the injuries had a single proximate cause — the misfired firework. Since all the injuries only had one cause, the Court affirmed the trial court’s decision and held that only one occurrence took place.

Thanks to Jorgelina Foglietta for her contribution to this post and please write to Mike Bono for more information.