AES CORP. v. Steadfast Ins. Co.
283 Va. 609
Va.
2012

Background

  • AES paid Steadfast premiums for CGL policies from 1996–2000 and 2003–2008.
  • In 2008, Kivalina sued AES (and others) in ND Cal for damages from global warming due to fossil-fuel emissions.
  • AES sought defense and coverage from Steadfast; Steadfast provided a defense under a reservation of rights and filed a declaratory judgment action in Virginia.
  • The circuit court granted Steadfast summary judgment, holding the complaint did not allege an 'occurrence' as defined by the policies.
  • The policies define 'occurrence' as an accident, including continuous or repeated exposure to a substantially the same harmful condition.
  • The court analyzed the eight corners of the complaint and the CGL policies to determine if coverage exists.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Does the Kivalina complaint allege an 'occurrence' under the CGL policies? Kivalina alleges intentional emissions; AES argues possible negligence in the alternative. Steadfast contends the alleged injuries are not accidents and therefore not covered. No; the alleged intentional emissions and their natural/probable consequences do not constitute an 'occurrence.'
Is coverage dictated by the eight corners rule in this context? The complaint and policy language should be read to find potential coverage. Eight corners shows no coverage because the acts are intentional and not accidents. Eight corners rule applied; no occurrence due to intentional acts and their asserted consequences.

Key Cases Cited

  • Brenner v. Lawyers Title Ins. Corp., 240 Va. 185 (1990) (establishes eight corners rule in defense obligations)
  • Reisen v. Aetna Life & Cas. Co., 225 Va. 327 (1969) (duty to defend determined by pleadings and policy terms)
  • Travelers Indem. Co. v. Obenshain, 219 Va. 44 (1968) (duty to defend depends on policy coverage within eight corners)
  • Norman v. Ins. Co. of N. Am., 218 Va. 718 (1978) (eight corners framework for insurer's defense obligation)
  • London Guar. & Accident Co. v. C. B. White & Bros., Inc., 188 Va. 195 (1937) (early articulation of insurer's defense duty)
  • Town Crier, Inc. v. Hume, 721 F. Supp. 99 (1989) (commentary on insurer's duty to defend under pleadings)
  • American & Foreign Ins. Co. v. Church Schs. in the Diocese of Virginia, 645 F. Supp. 628 (1986) (federal court interpreting insurance coverage and duty to defend)
  • Copp v. Nationwide Mut. Ins. Co., 279 Va. 675 (2010) (coverage analysis under eight corners framework)
  • America Online, Inc. v. St. Paul Mercury Ins. Co., 207 F. Supp. 2d 459 (2002) (court considers scope of coverage under policy terms)
  • Utica Mut. Ins. Co. v. Travelers Indemnity Co., 223 Va. 145 (1982) (definition of 'occurrence' and accident)
  • Lynchburg Foundry Co. v. Irvin, 178 Va. 265 (1941) (accident meaning not the natural or probable consequence of negligence)
  • Fidelity & Guar. Ins. Underwriters, Inc. v. Allied Realty Co., 238 Va. 458 (1989) (accident and foreseeability in coverage analysis)
  • Parker v. Hartford Fire Ins. Co., 222 Va. 33 (1981) (distinction between intentional acts and duty to defend where negligent torts are alleged)
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