Insurance – Auto – Occurrence(s) – Company-Wide Procedures – Hog Farms – Underlying Nuisance Cases

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Although plaintiffs operated 89 separate farms (and the accompanying trucks serving those farms), the multiple injuries suffered by many neighboring property owners stemmed from plaintiffs’ centralized policies and procedures, which governed the operation of their fleet of trucks. Under North Carolina’s “cause” test, there was only a single “occurrence” within the meaning of the policies insuring plaintiffs’ trucks.

The court denies the partial summary judgment motion of defendants XL Insurance America, Inc., and XL Specialty Insurance Co. on the issue of the number of accidents.

In underlying actions, plaintiffs were successfully sued by neighboring property owners for nuisances caused by the operation of plaintiffs’ hog farms, including the operation of their trucks.

Plaintiffs seek coverage pursuant to multiple levels of insurance. Defendants contend that each farm caused injuries, such that the first layer of insurance must pay as to each injury before subsequent layers of insurance became available to plaintiffs. Thus, the central issue with regard to the present motion is whether— assuming a jury ultimately finds that the property owners’ nuisance injuries were, in fact, caused by an “accident” under the terms of the relevant policies—there were multiple “accidents” as opposed to a single one.

The relevant policies state that “[a]ll ‘bodily injury’, ‘property damage’ and ‘covered pollution cost or expense’ resulting from continuous or repeated exposure to substantially the same conditions will be considered as resulting from one ‘accident’.” In interpreting essentially identical policy language, our Supreme Court has held that North Carolina courts should apply a “cause” test to determine whether the subject injury involves one or multiple occurrences. See Gaston Cty. Dyeing Mach. Co. v. Northfield Ins. Co., 351 N.C. 293 (2000).

In the products liability case of Gaston, multiple injuries arose from the rupture of a single machine. The court said, “In determining whether there was a single occurrence or multiple occurrences, we look to the cause of the property damage rather than to the effect.”

The Fourth Circuit interpreted Gaston as standing for the proposition that North Carolina’s “cause” test allows for the utilization of a “proximate cause” theory in cases—like the present one—where there is no single one-time event giving rise to the injuries at issues. This court agrees.

Here, the injuries suffered by the property owners stemmed from central, uniform policies and procedures decided upon and implemented by plaintiffs in operating their farms—including their trucking operations. The injuries suffered by the property owners did not materially vary based on differences in the various farms owned or operated by plaintiffs. To the contrary, these injuries were based on exposure to conditions that were essentially the same in all material respects.

The undisputed evidence before the court reflects a uniform, routinized, and regularized set of practices resulting from the operation of plaintiffs’ farms that occurred at such steady and frequent intervals that they are appropriately treated as a single “accident” for purpose of the insurance policies at issue.

The underlying injuries suffered by the property owners that formed the basis for the underlying lawsuits are properly treated as one—as opposed to multiple—accidents under the insurance policies at issue.

Motion denied.

Murphy-Brown, LLC v. ACE American Insurance Co. (Lawyers Weekly No. 020-050-23, 24 pp.) (Mark Davis, J.) 2023 NCBC 50. Michael Mitchell, Evan Knott, John Shugrue, Andrew Barrios, David Cummings and Ashley Jordan for plaintiffs; John Crook, David Coats, Marianne May, Shane Calendar, Daren McNally, Luke Barlow, Thomas Carruthers, James Bryan, Brett Becker, David Pokela, Thomas Contois, Justine Tate, Robert Kennedy, Christy Maple, Theodore Smyth, Bruce Celebrezze and Jason Chorley for defendants. North Carolina Business Court