The Missouri Court of Appeal determined that the all sums approach would be utilized for property damage occurring through several policy periods. Doe Run Res. Corp. v. Certain Underwriters at Lloyd's London, 2013 Mo. App. LEXIS 468 (Mo. Ct. App. April 16, 2013).
The insured, Doe Run, was a mining, milling and smelting company in operation since the late 1800's. Its operations caused lead-containing wastes called "chat piles" and "tailings ponds" that were deposited on each of six sites. The EPA determined that wind and water erosion caused lead and other minerals in the chat piles and tailings ponds to continually migrate from the mill sites and damage neighboring properties. The EPA required Doe Run to remove or cap impacted soil and stabilize chat piles and tailings ponds to prevent offsite migration.
Lloyds issued Doe Run seven excess policies covering 1952 - 1961. Policies issued in 1952 and 1955 defined "occurrence" as an "unexpected event or happening which results in . . . damage to property during the policy period . . . ." Policies issued for the period 1958 to 1961 defined "occurrence" as "one happening or series of happenings, arising out of, or due to one event taking place during the term of the policy."
When Lloyds did not respond to a tender, Doe Run sued. Before trial, the trial court determined Doe Run's losses would be allocated on a pro rata basis over the entire period during which pollution and migration of contaminants occurred. The jury awarded a verdict of $62 million to Doe Run, but the trial court reduced the award to $5 million based on its pretrial rulings.
On appeal, the appellate court found that the policy language required the adoption of the all sums allocation approach. Lloyds agreed to indemnify "the insured for all sums which the Assured shall be obliged to pay by reason of the liability for damages on account of property damaged, caused by each occurrence happening during the policy period." The definitions of occurrence did not limit the policies' promise to pay all sums of the policy holder's liability solely to damage during the policy period.
Lloyds argued that the property damage at each site resulted from exposure to the same general conditions - the continual migration of waste from Doe Run's active mining and milling operations, chat piles or tailings ponds. Therefore, the policies treated all such damages from a given site as arising out of one occurrence.
The court disagreed. The active contamination, tailings ponds, and chat piles constituted separate causes of contamination that resulted in separate occurrences at each of the existing sites. When determining the number of occurrences, Missouri applied a "cause" approach which examined the causes of the accident or occurrence to determine whether there was a single or multiple occurrence. Consequently, there were three occurrences at each site during the policy period - active operations, chat piles and tailings ponds.
The case was reversed and remanded with instructions to reinstate the jury verdict.
