Often, construction projects and the alleged resulting damages span multiple commercial general liability (“CGL”) policy periods and even multiple insurers. Courts typically revert to the so-called trigger theories when they cannot pinpoint the date or dates the injury or damage actually took place. The traditional policies that a court considers are:
Exposure Theory – – All CGL policies are triggered if they are in effect during exposure to injurious or harmful conditions. This theory considers bodily injury to begin when a person was first exposed to the harmful agent and continues throughout exposure. Asbestos cases are a perfect example.
Manifestation Theory – – The CGL policy is triggered when the injury or damage is discovered or manifests itself (usually, knew or should have known standard) during the policy period. That the injury or damage may have first occurred prior to discovery is not always considered under this theory.
Injury-in-Fact Theory – – All CGL policies are triggered if they are in effect during the time the injury or damage actually takes place. This is true even if the injury or damage continues over time.
Continuous Trigger Theory – – All CGL policies are triggered if they are in effect during: (1) exposure to harmful conditions; (2) actual injury or damage; OR (3) upon manifestation of the injury or damage.
Recently, in Mann v. Tim Clark Constr., LLC, 2018-0961 (La. App. 4 Cir. 5/22/19), 273 So. 3d 397, 400, the Louisiana Fourth Circuit considered applying either the manifestation theory or the exposure theory in a case where the plaintiff alleged construction defects and various related mental anguish damages.
In Mann, the plaintiff alleged certain property and mental anguish damages as a result of a general contractor’s alleged failure to elevate her home to proper elevation levels. The insurance policy at issue was not in place until two years after substantial completion of the general contractor’s work. The policy at issue was an “occurrence policy” requiring that any alleged bodily injury or property damage occur during the policy period. In addition, the policy included a pre-existing injury endorsement, which excluded from coverage any damage or loss that occurred prior to the policy period.
Plaintiff argued that the exposure theory would apply, which could trigger coverage under the subsequently issued insurance policy. The insurer, instead, demonstrated that the manifestation theory applied, which was supported by the “clear weight of authority in more recent [construction defect] cases . . ..”[1] The court agreed with the insurer.
Next, the court looked at the policy’s pre-existing injury exclusion and found that it was neither ambiguous, inapplicable, nor against public policy. Instead, the court found that the language of the pre-existing injury exclusion provided “no coverage 
for the damages that first occurred or began to occur prior to the policy’s inception.” The court further shot down plaintiff’s argument that the pre-existing injury exclusion was inconsistent with a purported retroactive date on the policy’s declaration page. The court noted that this was impossible because the policy at issue was an “occurrence policy”, providing coverage only for occurrences which happened during the policy period. Agreeing with the insurer on all fronts, the Fourth Circuit dismissed the plaintiff’s claims.[2]
[1] Rando v. Top Notch Properties, L.L.C., 2003-1800 (La. App. 4 Cir. 6/2/04), 879 So. 2d 821, 833.
[2] Plaintiff attempted to argue that its bad faith claims remained. However, the court said that the petition did not include any bad faith claims so it did not have to rule on that assignment of error.
