American Motorists Ins. Co. v. E. R. Squibb & Sons, Inc.

• Decision Date: 01 May 1978
• Citation: 406 N.Y.S.2d 658,95 Misc.2d 222
• Court: New York Supreme Court
• Parties: AMERICAN MOTORISTS INSURANCE COMPANY, Plaintiff, v. E. R. SQUIBB & SONS, INC., Defendant.

Page 658

406 N.Y.S.2d 658

95 Misc.2d 222

AMERICAN MOTORISTS INSURANCE COMPANY, Plaintiff, v. E. R. SQUIBB & SONS, INC., Defendant.

Supreme Court, Special Term,New York County, Part I.

May 1, 1978.

Barry, McTiernan, Moore & Siracuse, New York City, for plaintiff.

Lord, Day & Lord, New York City, for defendant.

EDWARD J. GREENFIELD, Justice:

In this action for a declaratory judgment, both sides have moved for summary judgment. The court is required to construe an insurance policy issued by the plaintiff insurance company (AMICO) to determine whether product liability claims asserted against Squibb come within the policy coverage. Both sides agree that there are no issues of fact necessitating a trial, the issue being solely a matter of interpretation of the contract by the court. West Weir & Bartel Inc. v. Mary Carter Paint Co., 25 N.Y.2d 535, 307 N.Y.S.2d 449, 255 N.E.2d 709.

Defendant Squibb, the insured, was the manufacturer of a drug known as Diethylstilbestrol (DES). DES was a synthetic estrogen product prescribed by doctors in the 1950's to pregnant women to prevent spontaneous abortions and to enable those women to carry to term. In February, 1976, Squibb was sued in this court in the case of Boxer, et al. v. E.R. Squibb & Sons, Inc., et al. The complaint in the Boxer case alleges that the three female plaintiffs, who were born in 1952, 1953 and 1961 respectively, developed cervical cancer as a result of the ingestion of DES by their mothers during pregnancy and further alleges that such conditions were discovered in 1970, 1971 and 1975 when the plaintiffs were respectively 17, 19 and 14 years of age.

The insurance policy issued to Squibb by AMICO was in full force and effect from June 1, 1968 to January 1, 1976. The question presented to this court is whether that policy provides coverage for injuries caused by a drug which was ingested well before AMICO came on the risk in 1968 when the effects of the drug and the manifestation of injury allegedly was discovered for the first time subsequent to 1968 when the policy was in effect. AMICO, Squibb's liability insurer, contends that its policy does not cover these injuries and Squibb insists that it does. This case appears to be a matter of first impression since there do not appear to be any prior reported New York cases interpreting the policy terms at issue.

Under the insurance policy in question, AMICO agrees to pay on behalf of the insured all sums which it becomes legally obligated to pay as damages because of (a) bodily injury or property damage caused by an occurrence, (b) employer's malpractice injury, or (c) personal injury caused by an offense committed during the policy period. "Bodily injury" is defined as "bodily injury sickness, disease, mental injury, mental anxiety, shock or disability sustained by any person." "Occurrence" is defined as:

"An accident or injurious exposure to conditions which results, during the policy period, in bodily injury or property damage, neither expected nor intended from the standpoint of the insured."

The "exposure" clearly occurred when the drugs were taken in 1952, 1953 and 1961. The "bodily injury" allegedly did not manifest itself until 1970, 1971 and 1975. The policy language does not limit coverage to incidents of exposure during the policy period, but rather to conditions which result in bodily injury during the policy period. A reading of the policy language would appear to indicate that coverage is predicated not on the act which might give rise to ultimate liability, but upon the result. It would be a strained interpretation to construe the occurrence clause as though it covered "exposure during the policy period which results in bodily injury." It is the result which is keyed to the policy period, and not the accident or exposure.

The language of the occurrence clause covering accident or injurious exposure differs significantly from the coverage for malpractice and for deliberate torts. The malpractice coverage comprehends injury sustained by reason of "malpractice, error or mistake committed during the policy period . . ." "Personal injury" covers such deliberate torts as malicious prosecution, false arrest, trespass or discrimination "caused by an offense committed during the policy period". It does not appear that these differences in wording as to the various coverages is mere happenstance.

Insurance policies are very carefully drafted and every word and phrase employed therein has been weighed and tested with respect to its meaning and impact. Great difficulty was encountered in many situations because of the rather vague definition of the word "accident". Accordingly, the Standard Comprehensive General Liability Policy, which was promulgated in 1966 by the National Bureau of Casualty Underwriters and the Mutual Insurance Rating Bureau,...