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Eight Circuit Holds Two Drowning are One Occurrence under CGL Policy

Blogs, Insurance Coverage

The United States Court of Appeals for the Eighth Circuit recently ruled that the near-simultaneous drowning of two boys stemmed from the same acts of negligence and therefore were a single occurrence for purposes of the commercial general liability policy in question. Fellowship of Christian Athletes v. AXIS Ins. Co., No. 13-2776 (8th Cor. 2014).

This coverage dispute stems from the tragic drowning of two boys at a summer camp organized and operated by the Fellowship of Christian Athletes (“FCA”). Autopsy reports concluded that the boys died within two minutes of each other. The families of the two boys filed suit against FCA alleging FCA was negligent in allowing the boys to enter the pool after their parents had signed permission forms indicating that the boys could not swim. 

FCA sought coverage under its three insurance policies. AXIS Insurance Company (“AXIS”) provided the FCA with a commercial general liability policy with limits of $1 million per occurrence and $5 million in the aggregate. FCA also had two layers of umbrella coverage in excess of the AXIS policy: a $10 million first-layer umbrella policy issued by Ironshore Specialty Insurance Company (“Ironshore”) and a $5 million second-layer umbrella policy issued by RSUI Indemnity Company (“RSUI”).

FCA filed suit against the insurance companies, seeking a determination as to whether the deaths were caused by one occurrence or two occurrences under the AXIS policy. AXIS and Ironshore filed cross-motions for summary judgment. The United States District Court for the Western District of Missouri granted AXIS’ motion and held that the underlying incident constituted a single occurrence, thereby limiting AXIS’ exposure to $1 million and triggering the Ironshore policy for all amounts in excess of $1 million. Ironshore appealed.

On appeal, Ironshore argued that there were two occurrences and as such, AXIS’ liability extended to the first $2 million awarded in the underlying suits. In support of its argument, Ironshore maintained that Missouri’s “cause approach” to determining the number of occurrences, looks to the single act from which all claims flow. Under the cause approach, Ironshore argued that the accidents must occur simultaneously or almost simultaneously in order to constitute a single occurrence, and to be considered “almost simultaneous,” the occurrences must happen within a few seconds of each other. Ironshore asserted that the two deaths, which happened within minutes of each other, could not be considered “almost simultaneous,” and thus were legally two separate occurrences.

Relying on Missouri case law, the United States Court of Appeals for the Eighth Circuit rejected Ironshore’s argument. Relying on the Missouri Court of Appeals decision in Kansas Fire & Casualty Co. v. Koelling, 729 S.W.2d 251 (Mo. Ct. App. 1987), the Court held that under Missouri law, multiple occurrences will be found only when an intervening act causes the second claim. In so concluding, the Court concluded that FCA’s allegedly negligent conduct constituted one occurrence under the Axis policy because the underlying lawsuit alleged that the drownings were caused by “exposure to substantially the same general harmful conditions” – i.e. allowing the boys to attend the pool party while knowing the boys could not swim.

To read more about the Fellowship of Christian Athletes v. AXIS Ins. Co. click here.