Climate Change

Marten Law on AES Corp. v. Steadfast Insurance Co. – Virginia Supreme Court Holds That Climate Change Allegations Do Not Trigger Insurer's Duty to Defend

Steven Jones   By Steven Jones, Partner, Marten Law PLLC

"In a case being closely watched by both insurers and insureds, the Virginia Supreme Court has held that an insurer's duty to defend is not triggered by allegations of damages flowing from intentional actions that the plaintiffs claim resulted in climate change," writes Steve Jones. "The opinion holds that the insurance policies at issue 'only require [the insurer] to defend ... against claims for damages of bodily injury or property damage caused by an occurrence or accident' and that the allegations in the underlying complaint do not constitute such an occurrence or accident: 'Whether or not [the insured's] intentional act constitutes negligence, the natural and probable consequence of that intentional act is not an accident under Virginia law.' The case, AES Corp. v. Steadfast Insurance Co. (AES), is one of first impression and was previously covered in an emerging issues analysis when it was initially accepted for review."

"AES Corporation, an energy company, is a defendant in a highly publicized climate change nuisance case: Native Vill. of Kivalina v. ExxonMobil Corp. (Kivalina). After being sued by Kivalina, AES tendered the claim to its insurer, Steadfast Insurance Company (Steadfast)," explains the author. "Steadfast denied the claim, and subsequently filed an action for declaratory judgment in Virginia, where the company is headquartered."

"The term 'occurrence' is defined under the Steadfast policies as 'an accident, including continuous or repeated exposure to substantially the same general harm condition.' In its briefing before the Virginia Supreme Court, Steadfast claimed that its policies 'did not apply to the Kivalina Plaintiffs' claims' because those plaintiffs 'did not base their claims against AES on any ... accident' but instead on AES's recognition in its 2002 Annual Report that it was one of the largest emitters of CO2 in the world and that [AES] therefore must continue to strive to economically stabilize greenhouse gas concentrations.' AES's claim that the Kivalina allegations constitute an 'occurrence' triggering Steadfast's duty to defend rested on two contentions", reports Jones. "(1) that allegations of 'negligent' conduct on the part of AES were sufficient to constitute an 'accident' under the policies; and (2) that the harm arising from the alleged climate change caused by AES' emission of GHGs was an unplanned harm constituting an 'accident,' irrespective of whether the emissions were intentional or not. In its opinion, the Virginia Supreme Court framed the issue as whether a civil complaint filed against the AES Corporation did not allege an 'occurrence' as that term is defined in AES's contracts of insurance with Steadfast Insurance Company." subscribers can access the complete commentary, Marten Law on AES Corp. v. Steadfast Insurance Co. - Virginia Supreme Court Holds That Climate Change Allegations Do Not Trigger Insurer's Duty to Defend. Additional fees may be incurred. (approx. 10 pages)

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Read the earlier EIA by Steve Jones: Marten Law: Virginia Supreme Court to Decide Insurance Coverage for Climate Change Suits--AES Corp. v. Steadfast Insurance Co.

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Case Law Resources - subscribers can access the Lexis enhanced version of AES Corp. v. Steadfast Ins. Co., 2011 Va. LEXIS 185 (Va. Sept. 16, 2011) with core terms, case law links, and Shepard's. subscribers can access the Lexis enhanced version of the trial court decision in Steadfast Ins. Co. v. AES Corp., 2010 Va. Cir. LEXIS 35 (Va. Cir. Ct. Feb. 5, 2010) with core terms, case law links, summary judgment motion briefs, and Shepard's. subscribers can access the Lexis enhanced version of Native Village of Kivalina v. Exxon Mobil Corp., 663 F. Supp. 2d 863 (N.D. Cal. 2009) with summary, headnotes, and Shepard's.

Also available to subscribers -

Climate Change Litigation, 3-17C Environmental Law Practice Guide 17C.10 (Matthew Bender).

Climate Change and Global Warming-Climate Change Litigation, 2-1A Treatise on Environmental Law 1A.13 (Matthew Bender).

Beginning Official Recognition of the Phenomenon of Global Warming, 2-1A Treatise on Environmental Law § 1A.02 (Matthew Bender).

Insurance Coverage for Environmental Claims (Matthew Bender):

General Liability Insurance - Occurrence

General Liability Insurance - Pollution Exclusion

Special Climate Change Alert: Insurance Law for Climate Related Claims

Climate Change and Insurance: Climate-Related Insurance Claims

More Full Text Emerging Issues Analysis Related to Environmental Law.

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Marten Law: Republican Lawmakers Join Obama Administration in Urging Supreme Court to Overrule GHG Nuisance Case.

Marten Law: Proposed Legislation Seeking to Block EPA Greenhouse Gas Regulation Picks Up Speed.

Marten Law: Solicitor General Sides With Utilities, Asking Supreme Court to Block Common Law Climate Change Lawsuit.

Marten Law Group: Second Circuit Allows Federal Nuisance Claims for Global Warming to Proceed.

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