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Case Bulletin – Pennsylvania Supreme Court Rejects Multiple Trigger Theory of Liability Insurance Coverage

On December 15, 2014, the Pennsylvania Supreme Court issued its ruling in Pennsylvania National Mutual Casualty Insurance Company v. St. John and declined to apply the multiple trigger theory of liability insurance coverage, which would have applied coverage from all four of Pennsylvania National’s policies to the St. Johns’ claims. In this case, the St. Johns were co-owners of a dairy farm who elected to expand their farm in 2002.  As part of their expansion efforts, the St. Johns hired LPH Plumbing to install a new plumbing system for the expanded farm.   In July of 2003, the new plumbing system and expanded farm were completed.  However, the new plumbing system was defective and allowed wastewater to enter the freshwater drinking supply used by the dairy cows, thereby causing various health and reproductive problems.  These problems first appeared in April of 2004, but it was not until March of 2006 that the St. Johns discovered that the plumbing defects were the source of their cows’ health and reproductive problems.


The St. Johns brought suit against LPH Plumbing which was defended by its liability insurer, Pennsylvania National.  Coverage was provided to LPH through four polices of insurance that were in effect from January 1, 2003 to July 1, 2006.  At trial, a jury verdict was returned in favor of the St. Johns in an amount in excess of $3.5 million.  Subsequently, LPH appealed the jury’s award and the matter was settled between LPH and the St. Johns for $1.2 million, the limits under one of the four applicable policies.  The St. Johns retained the right to seek the remainder of the $3.5 million verdict from Pennsylvania National.


Meanwhile, Pennsylvania National filed a declaratory judgment action to determine which of the policies were triggered by LPH’s negligence.  Pennsylvania National argued that only the 2003-2004 policy was in effect as this is when the plumbing problems first manifested.  The St. Johns filed a counterclaim arguing that each of the four policies should be applied pursuant to a multiple trigger theory of liability insurance coverage.   The trial court in the declaratory judgment action held that only the 2003-2004 policy applied as the events constituted a single occurrence that first manifested in April 2004.


Before the Supreme Court, the St. Johns argued that they suffered progressive property damage as a result of LPH’s negligence, and, therefore, all of the applicable insurance policies were triggered.  The Court rejected this argument, holding that under Pennsylvania jurisprudence, the first manifestation rule governs which insurance policies containing general commercial liability language, are triggered for coverage.  The Supreme Court specifically declined to apply the multiple trigger theory of liability.