{"id":51,"date":"2012-03-09T12:00:43","date_gmt":"2012-03-09T16:00:43","guid":{"rendered":"http:\/\/blogs.duanemorris.com\/insurancelaw\/?p=51"},"modified":"2014-09-05T12:04:05","modified_gmt":"2014-09-05T16:04:05","slug":"does-the-wallace-gale-decision-contradict-typical-cgl-insurance-policy-wording","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/insurancelaw\/2012\/03\/09\/does-the-wallace-gale-decision-contradict-typical-cgl-insurance-policy-wording\/","title":{"rendered":"Does The Wallace & Gale Decision Contradict Typical CGL Insurance Policy Wording?"},"content":{"rendered":"

In its decision In re Wallace & Gale Co.<\/em>, 385 F.3d 820 (4th Cir. 2004), the Fourth Circuit held that the completed operations aggregate in post operations policies applies where (a) initial exposure occurred after the operations were completed, or (b) initial exposure was during operations but injury continues after operations were completed. Policyholder counsel sometimes attempt to dismiss Wallace & Gale<\/em> as conflicting with the contract wording. But the Fourth Circuit\u2019s completed operations analysis is based on a straightforward application of the insurance contract language.<\/p>\n

<\/p>\n

The Hartford policy in Wallace & Gale<\/em> contained the following wording:<\/p>\n

Subject to the above provision respecting \u201ceach occurrence,\u201d the total liability of [Hartford] for all damages because of (1) all bodily injury included within the completed operations hazard and (2) all bodily injury included within the products hazard shall not exceed the limit of bodily injury liability stated in the schedule as \u201caggregate.\u201d<\/p>\n

\u201cCompleted operations hazard\u201d includes bodily injury and property damage arising out of operations or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs after such operations have been completed or abandoned and occurs away from premises owned by or rented to the named insured.<\/p>\n

\u201cBodily Injury\u201d means bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom. Id. at 834.<\/p>\n

The Fourth Circuit looked at this contract wording and held that the \u201cliteral terms of the policy\u201d were \u201centirely in accord with the decision of the district court,\u201d and affirmed the lower court ruling. Id. In \u201cparsing\u201d the \u201ccompleted operations hazard\u201d definition, the District Court had concluded it was \u201cclear that three elements are involved. There must be bodily injury during the policy period that (1) arises out of Wallace & Gale\u2019s operations; (2) occurs away from premises owned by or rented to Wallace & Gale; and (3) occurs after these operations have been completed.\u201d In Re Wallace & Gale Co.<\/em>, 275 B.R. 223, 237 (2002). The Court noted that the parties agreed that prongs (1) and (2) were met and the \u201csole inquiry, insofar as this issue is concerned, is whether the bodily injury occurred after Wallace & Gale\u2019s installation operations were completed.\u201d Id.<\/em> The district court then concluded that the definition of \u201cbodily injury\u201d in the policy in conjunction with the \u201ccompleted operations hazard\u201d definition entirely resolved the issue:<\/p>\n

Because the scope of coverage afforded by each policy is limited to bodily injury that occurs during the respective policy period, the bodily injury referred to in the \u201ccompleted operations hazard\u201d definition is necessarily the specific bodily injury that occurred during the policy period. Thus, if the bodily injury that occurs within the policy period \u201coccurs after [the insurer\u2019s] operations have been completed…,\u201d that bodily injury is within the completed operations hazard. … [A]pplication of the completed operations hazard depends exclusively on the timing of the injury in relation to the completion of the insured\u2019s operations. Id. at 238.<\/p>\n

Thus, under Wallace & Gale<\/em>, if the bodily injury during the policy period occurs after the operations are completed, it falls within the completed operations hazard and the aggregate limit for that hazard applies. For insurers who issued policies incepting long after the insured completed its asbestos installation work and who long ago exhausted their completed operations aggregate limits, the Wallace & Gale<\/em> analysis effectively provides a complete defense.<\/p>\n

For example, assume claimant Brown was exposed to asbestos during a six month period in 1965 when Insured installed insulation at a steam plant where he worked. After 1965, Brown\u2019s injury continued including through Insurer\u2019s one year policy period 1981-82. Thus, there is bodily injury which occurred during the policy period. The second question is whether the operations were completed when the 1981 injury occurred. In order to determine when an operation is \u201ccomplete,\u201d the policy defines three scenarios that constitute a completed operation. Policyholders typically focus on the third scenario: \u201cWhen the portion of the work out of which the injury or damage arises has been put to its intended use.\u201d In the Brown example, the bodily injury arose out of Insured\u2019s installation of asbestos products in 1965. By 1981, when Mr. Brown\u2019s \u201ctriggering\u201d bodily injury occurred, Insured\u2019s 1965 installation had been put to its intended use and thus the 1981 injury occurred after the operations at issue were \u201ccomplete,\u201d rendering Brown\u2019s claim subject to the completed operations aggregate limit.<\/p>\n

Policyholders argue that \u201conce an operations claim, always an operations claim,\u201d contending that if Brown\u2019s injury is caused by operations in 1965, it remains an operations exposure through all subsequently triggered policies. The defect in this analysis is that it focuses only on the claimant\u2019s first exposure, rather than on the bodily injury in the subsequently triggered policy\u2019s period. But the \u201ccompleted operations hazard\u201d does not apply to any<\/em> bodily injury, only to bodily injury that occurs during the policy period<\/em>. Again, whether a claim falls within the completed operations hazard turns on when \u201cbodily injury\u201d under the policy occurred and whether it occurred after the operations were complete. And again, the policy defines \u201cbodily injury\u201d to refer only to injury \u201cwhich occurs during the policy period.\u201d That is the heart of the completed operations analysis in the Wallace & Gale<\/em> decision and it is based on the plain (and only) meaning of the contract terms. As of the date of this note, no published decision has ever rejected that analysis.<\/p>\n","protected":false},"excerpt":{"rendered":"

In its decision In re Wallace & Gale Co., 385 F.3d 820 (4th Cir. 2004), the Fourth Circuit held that the completed operations aggregate in post operations policies applies where (a) initial exposure occurred after the operations were completed, or (b) initial exposure was during operations but injury continues after operations were completed. Policyholder counsel … <\/p>\n

Continue reading “Does The Wallace & Gale Decision Contradict Typical CGL Insurance Policy Wording?”<\/span><\/a><\/p>\n","protected":false},"author":37,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[32,30,34,12,33,31],"ppma_author":[411],"class_list":["post-51","post","type-post","status-publish","format-standard","hentry","category-general","tag-aggregate","tag-asbestos","tag-completed-operations","tag-insurance","tag-paul-killion","tag-wallace-gale"],"authors":[{"term_id":411,"user_id":37,"is_guest":0,"slug":"pjkillion","display_name":"Paul J. Killion","avatar_url":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-content\/uploads\/sites\/12\/2014\/08\/killionpaul-125x150.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/51","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/users\/37"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/comments?post=51"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/51\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/media?parent=51"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/categories?post=51"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/tags?post=51"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/ppma_author?post=51"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}