THE ATCHISON, TOPEKA & SANTA FE  )
RAILWAY COMPANY,                 )
                                 )
                Plaintiff,       )
                                 )
v.                               )    Case No. 94-CV-1464
                                 )
STONEWALL INSURANCE COMPANY,     )
et al.,                          )
                                 )
                Defendants.      )
_________________________________)

The above captioned case comes before the court on Santa Fe's Motion for Partial Summary Judgment on Trigger of Coverage, pursuant to K.S.A. §60-256. Santa Fe requests the court to declare that the underlying noise induced hearing loss (NIHL) claims occurred progressively and continuously during the entire period of alleged exposure to excessive noise in the absence of the protection provided by a hearing conservation program (HCP). After careful consideration, the court concludes as follows:

1. Plaintiff, The Atchison, Topeka and Santa Fe Railway Company (Santa Fe), as of March 1998, has paid an excess of $28 million in connection with over 3,800 claims and lawsuits that have been filed by its employees.

2. The underlying claimants and their attorneys alleged that they sustained NIHL from the continuous exposure to excessive noise during the course of their employment. ⁽¹⁾

3. Plaintiff purchased millions of dollars of comprehensive general liability insurance policies throughout the years, also maintaining a variable level of Self-Insured Retention (SIR). 

4. The pre-1974 policies ⁽²⁾ contain the following insuring agreements, which, subject to the terms and conditions of the policies, typically require the insurers to indemnify Plaintiff:

for any and all sums which [Plaintiff] shall become liable to pay, and shall pay to any person or persons as compensation for injury or damages to person (whether such injury or damage be fatal or nonfatal) and injury or damage to property (excluding property of the Assured or in its custody or control) arising out of any accident or accidents caused by or growing out of operations in the United States of America and all operations incidental thereto during the period commencing 15th December 1969 Noon and ending 15th December 1970 Noon. . .

5. The post-1974 policies ⁽³⁾ typically provide that the Defendants will indemnify Plaintiff:

for any and all sums which [Plaintiff] shall become legally liable or obligated by contract (subject to Section IV-C2 hereof) to pay to any person or persons as compensation or damages for injury or damage to any person or person (whether such injury or damages be fatal or non-fatal) and for injury or damage to property (excluding property covered under Section I-A hereof) arising out of any occurrence or occurrences caused by or growing out of operations and/or any operations incidental thereto during the term hereof...

6. Noise is an obvious and unavoidable by-product of Plaintiff's normal railroad operations.

7. NIHL is an injury that occurs contemporaneously with unprotected exposure to excessive noise.

8. NIHL injuries continue progressively throughout the course of unprotected exposure until the exposure to excessive noise is interrupted.

9. The NIHL claimants alleged that their work environment involved a network of multiple excessive noise sources that they were exposed to on a daily basis in different ways to noises from a variety of sources. The claimants, whether engineers, carmen, or maintenance-of-way workers, were mobile employees, changing locations and job assignments in the course of their work.

Santa Fe contends that the claims and lawsuits brought by its employees resulted from the company's failure to timely implement an effective HCP. This court already has ruled that these claims all arose from a single occurrence for the purposes of determining the extent of liability of Santa Fe's comprehensive general liability insurance policies. In the motion currently before the court, Santa Fe argues that:

(1) Coverage under each insurance policy issued or subscribed to by Defendants is triggered by "injury to person or persons" during a policy period;

(2) NIHL injury occurs progressively and continuously during the entire period of alleged exposure to excessive noise in the absence of the protection provided by an HCP;

(3) The underlying NIHL claimants' alleged exposure to excessive noise allegedly began with the commencement of each claimant's employment with Santa Fe and allegedly continued throughout the claimant's employment with Santa Fe until implementation of an effective HCP; and

(4) The underlying NIHL claimants' alleged exposure to noise sufficient to cause NIHL and the alleged manifestation of their NIHL trigger all insurance contracts for indemnification purchased by Santa Fe from the commencement of the alleged exposure until Santa Fe's implementation of the HCP.

Defendants contend, however, that Santa Fe has not provided this court any evidence supporting its employment-to-implementation-of- an-HCP trigger of coverage. Defendants also assert that NIHL is a divisible injury from which NIHL injury can be scientifically apportioned to the policy periods in which it occurred, therefore this court should allow the parties to present evidence concerning the amount of NIHL damage in each year.

Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Dickens v. Snodgrass, Dunlap & Co., 255 Kan. 164, 166, 872 P.2d. 252 (1994).

Generally before summary judgment may be granted, the record before the court must show conclusively that there remains no genuine issue as to material fact and the moving party is entitled to judgment as a matter of law. A mere surmise or belief on the part of the trial court, no matter how reasonable, that a party cannot prevail upon a trial will not warrant a summary judgment if there remains a dispute as to a material fact which is not clearly shown to be sham, frivolous, or so unsubstantial that it would be futile to try the case. The manifest purpose of summary judgment is to obviate delay when there is no real issue of fact. A court should never attempt to determine the factual issues on a motion for summary judgment, but should search the record for the purpose of determining whether factual issues do exist. If there is a reasonable doubt as to their existence, a motion for summary judgment will not lie. A court, in making its determination, must give to the party against whom summary judgment is sought the benefit of all inferences that may be drawn from the facts.

Mechtley v. Price, 217 Kan. 344, 347, 536 P.2d. 1385 (1975). Where genuine issues of fact remain undetermined, the granting of summary judgment is improper. Willard v. City of Kansas City, 235 Kan. 655, Syl. ¶1, 681 P.2d. 1067 (1984).

Testimony in this case by medical experts explaining the development of NIHL is uncontroverted and well-developed. Plaintiff's medical expert, Dr. Artor, described the development of NIHL as an injury that occurs contemporaneously with unprotected exposure to excessive noise, and that the injury continues progressively throughout the course of such exposure. Dr. Artor further explained that the injury continues until the exposure to excessive noise is interrupted, usually by implementation of an HCP. The testimony of Dr. Artor has not been controverted by Defendants' medical experts.

As early as 1949, the Kansas Supreme Court described the development of NIHL in the same manner as Dr. Artor. In Winkelman v. Boeing Airplane Co., 166 Kan. 503, 203 P.2d 171 (1949), the Court found that continued unprotected exposure to excessive noise causes NIHL contemporaneously with the impact of the sound waves on the ear. The Supreme Court explained that each excessive exposure "caused some injury," which ultimately became permanent unless protection from the noise allowed the hearing to regenerate or "come back." Winkelman, 203 P.2d at 174.

In addition, the U.S. Supreme Court has reviewed the medical evidence regarding NIHL and concluded that injury is sustained continuously and "simultaneously with the exposure to excessive noise." Bath Iron Works Corp. v. Office of Workers' Compensation Programs, 113 S.Ct. 692, 699 (1993). The Court found that a:

worker who is exposed to excessive noise suffers the injury of loss of hearing...simultaneously with that exposure....The injury, loss of hearing, occurs simultaneously with the exposure to excessive noise. Moreover, the injury is complete when the exposure ceases.

Id. at 699.

Kansas courts have not yet addressed the trigger issue when there are sequential periods of insurance covering a single but continuous occurrence involving progressive injuries. In Johnson v Studyvin, 828 F.Supp. 877, 882 (D. Kan. 1993), the court analyzed this situation and stated that the "law is not clear concerning the theory to which it adheres."

While Kansas has not addressed the issue, several other state courts have interpreted policies similar to Santa Fe's to determine when trigger occurs. In Illinois, "the insurable event which gives rise to the insurer's obligation to provide coverage is not the exposure to conditions, but the resulting 'bodily injury.'" Zurich Ins. Co. v. Raymark Industries, Inc., 541 N.E. 150, 159 (Ill. 1987). In Owens-Corning Fiberglass Corp. v. American Centennial Ins. Co., 660 N.E.2d 770, 789-790 (Ohio Com. Pl. 1995), the Ohio court held that the policy is triggered "so long as there is some 'personal injury' during the policy period."

It is agreed by both parties that coverage is triggered under these policies "when each claimant suffered his NIHL." See Ins. S.Ct. Br. at 22. The parties further agree that the trigger ruling in this case must be "premised on a determination of when the underlying claimant sustained the loss." Id. Since there is no dispute among the parties as to what triggers coverage, the primary issue for this court to address is when the NIHL injury occurs, not what triggers coverage.

Discovery has shown that NIHL occurs contemporaneously with unprotected exposure to allegedly excessive noise. See Ator Dep. at 32-33, 59, 76-77; Insurers' Expert Disclosure at 2; Henderson Aff. at ¶9. This court agrees with Judge Bullock's analysis in which he held that "both the exposure to noise(s) causing NIHL and the manifestation of NIHL trigger all CGL contracts for indemnification purchased by Santa Fe prior to implementation of the HCP." ATSF Ry. v. Stonewall Ins. Co., 1995 WL 854763 at 7 (Kan.Dist.Ct. 9/18/95).

As did Judge Bullock, this court relies primarily upon the decision in Keene Corp. v. Ins. Co. of No. America, 667 F.2d 1034 (D.C.Cir. 1981). In the Keene case, the court analyzed the trigger issue in the context of a continuing injury (injuries caused by decades of asbestos exposure). Examining contract language similar to the Santa Fe's, the Keene court concluded that Comprehensive General Liability (CGL) policies were triggered if any "bodily injury" occurred during the policy period. That court also held that the term "injury" was meant to encompass "any part of the single injurious process that asbestos-related diseases entail." Id. at 1047. Because a policy is triggered by "injury," and asbestos injury continues progressively from the initial exposure onward, the court held that every policy period in effect after a claimant's initial exposure was "triggered."

The issue before this court is nearly identical to the Keene case. NIHL injury occurs simultaneously with exposure to excessive noise and an "injury" is what triggers Santa Fe's policies. Therefore, this court concludes that Santa Fe's polices continuously were triggered over the years in question.

This conclusion is consistent with numerous cases in which courts have held that a continuing injury triggers the policy throughout the extended period of that injury. See Pittston Co. v. Allianz Ins. Co., 905 F.Supp. 1279 (D.N.J. 1995), Skinner Corp. v. Fireman's Fund Ins. Co., 1996 WL 376657, *1 (W.D. Wash. Apr. 3, 1996). This decision also parallels the trigger approach adopted in Zurich Ins. Co. v. Raymark Industries, Inc., 514 N.E.2d 150 (Ill. 1987). The Illinois Court concluded "bodily injury" triggered coverage for CGL policies. In Zurich, the court determined that "exposure" triggered coverage due to the fact that the medical testimony regarding asbestos injuries, like the medical testimony in the case regarding NIHL, showed that "injury" occurred immediately following exposure.

Defendants assert that Santa Fe must show that each NIHL claimant was actually exposed to excessive noise, and thereby sustained a triggering injury in each policy period. Defendants argue that Santa Fe should be required to re-try the facts of the underlying NIHL claims in order to determine coverage in this case.

In this case, Santa Fe is not trying to prove that the NIHL claimants were actually exposed to excessive noise. Instead, Santa Fe is only seeking to show that the claimants had believable evidence that they could present if the underlying cases had been tried before a court of law. As a result of this believable evidence, Santa Fe settled with the underlying claimants.

It is not now appropriate to relitigate each underlying claim to determine the extent of injury. Santa Fe had knowledge of all pertinent evidence when it negotiated the underlying settlements (dates of employment, potential NIHL injuries prior to employment with Santa Fe, alleged hearing loss due to age, etc.). One has to assume that Santa Fe used this evidence to negotiate favorable settlements. Therefore, it is inappropriate to relitigate the claims and second guess the settlements made by Santa Fe.

"Kansas does not look to the underlying cause of the injury to determine coverage, but to the specific theory of liability alleged." Upland Mutual Ins. Inc. v. Noel, 214 Kan. 145, 150 (1974). In addition, courts applying Kansas law have held that when liability issues have been tried or settled, coverage issues are "controlled" by the settlement in the underlying litigation. The general rule is that "the duty to indemnify is determined by the facts as they are established at trial or as they are finally determined by some other means." United Wats, Inc. v Cincinnati Ins. Co. (971 F.Supp. 1375, 1385 (D. Kan. 1997).

After a settlement, the underlying claimants' liability contentions are accepted as true for purposes of determining whether there is coverage. See Rozenfeld v. Medical Protectove Co., 73 F.3d 154, 158 (7th Cir. 1996). It is clear that the court must "not look to the underlying cause of the injury to determine coverage, but to the specific theory of liability alleged." Catholic Diocese at 495. As a result, the policies in effect during the years the NIHL claimants' were employed by Santa Fe must be triggered continuously.

Defendants state that NIHL claims are subject to techniques capable of identifying and quantifying the portion of the NIHL that occurred during any given period. Because they believe NIHL is a divisible injury, Defendants request that the court deny Plaintiff's motion for summary judgment on trigger of coverage. This court has stated above that every policy period in effect after a claimant's initial exposure is triggered.

Defendants' divisible damage argument does not relate to whether or not the policies were triggered, instead it appears to be an allocation argument. These allocation arguments only serve to admit that NIHL injuries did occur in each and every period of excessive exposure to noise. While the issue of allocation is important to the outcome of this case, it has no impact on trigger of coverage. The issue of allocation is addressed in the court's Memorandum Decision on Santa Fe's Motion for Partial Summary Judgment Regarding Scope of Coverage.

Defendants contend that some of the insurance policies only reimburse settlements paid "during the policy period." Defendants base this argument on a single introductory phrase in the polices that states that the policies apply only "to loss taking place during the policy period." The term "loss" is defined in these policies as "the sums paid as damages in settlement of a claim or in satisfaction of a judgment . . ." Relying on this definition, in conjunction with the introductory phrase, Defendants believe that these polices do not cover Santa Fe's settlements.

Defendants are attempting to construe these policies as "claims-as-paid" policies, perhaps a novel and rather worthless type of claims-made policy which would only cover settlements paid during a policy period. Certainly most incidents causing injury would not occur and result in a settlement being paid during a single policy year. These policies, however, are actually "occurrence-based" policies. The distinction between types of coverage has been well documented. See, e.g., St. Paul Fire and Marine Ins. CO. v. Barry, 438 U.S. 531, 535 (1978). A claims-made policy is entirely different from an occurrence-based policy because claims-made coverage depends upon the policyholder's receipt of notice of claim during a policy period. A claims-made policy will carefully define the word "claim" and will specify in detail the context and timing of a "notice of claim." Unlike claims-made policies, Santa Fe's polices:

(1) Cover loss arising out of an occurrence, not particular claims;

(2) Do not define "claim," "notice of claim," or "receipt of claim;"

(3) Require an occurrence to take place during the policy period, not that a claim be made or a settlement paid "during the policy period;"

(4) Guarantee that "there is no limit to the number of accidents or occurrences for which claims may be made provided such accidents or occurrences take place during the term hereof:" and

(5) Require notice only of an occurrence that is likely to result in loss exceeding the lower limit, and do not require notice of a claim as it is received.

Santa Fe's policies bear no resemblance to claims-made policies. In fact, Defendants do not describe these as claims-made polices, stating on several occasions that "each policy at issue is an 'accident' or 'occurrence' based policy." Ins. Mem. at 2.

Insurance provided by an occurrence-based policy remains in force for as long as claims may arise out of an occurrence that triggered the policy period. Occurrence-based policies were specifically designed to remain in force and to continue to give protection after the accident took place. See St. Paul Ins. v. Barry, 438 U.S. 531 (1978).

Defendant, Fireman's Fund Insurance Company and National Surety Corporation, argues that the coverage they provided only applies to those claims of bodily injury that first manifest during the periods during which their contracts were in effect. Defendant cites to several cases in support of its argument. These cases are distinguishable from the present case and are, therefore, inconsequential to the outcome of this case.

Defendant cites to Berry v. Boeing Military Airplanes, 20 Kan.App.2d 220 (1994). Berry dealt with insurance policies containing "last day of work" and "cessation from work" triggering clauses. These clauses are absent from Santa Fe's policies and no language in the policies could be construed to support such a clause.

As a general rule, courts have not adopted a "first manifestation" trigger because occurrence-based policies focus on the injury as the trigger, not the mere manifestation of the injury. The trigger decisions discussed above are so extensive and controlling that this court will not further elaborate why the narrow "first manifestation" trigger theory does not apply to the present case.

For the foregoing reasons, the court grants the Santa Fe's motion for Partial Summary Judgment on Trigger of Coverage. The court holds that the NIHL claims occurred progressively and continuously during the entire period of alleged exposure to excessive noise in the absence of the protection provided by a HCP. The court further holds that coverage under each policy issued or subscribed to by Defendants is triggered by "injury to person or persons" during the policy period and that all insurance contracts for indemnification purchased by Santa Fe from the commencement of the alleged exposure until Santa Fe's implementation of the HCP are triggered.

This Memorandum Decision and Order shall serve as Order of the Court, no further journal entry being required.

IT IS SO ORDERED.

Dated this 24th day of July , 2000.

___________________________
Nancy Parrish
Judge, Third Judicial District
Division Fourteen

I hereby certify that a copy of the above and foregoing MEMORANDUM DECISION AND ORDER was mailed this 24th day of July , 2000, to the following:

 
Weston W. Marsh
David V. Goodsir
Freeborn & Peters
311 S. Wacker Drive
Suite 3000
Chicago, Illinois 60606

 
Steve R. Fabert
Fisher, Patterson, Sayler & Smith
3550 SW 5th Street
Topeka, Kansas 66601

 
Thomas M. Ryan
Bollinger, Ruberry & Garvey
Citicorp Center
500 West Madison Street
Suite 2300
Chicago, Illinois 60661

 
Arthur A. Glassman
Michael E. Francis
Sloan, Listrom, Eisenbarth, Sloan & Glassman
714 Capitol Federal Building
Topeka, Kansas 66603

 
Corliss S. Worford
Richard M. Watson
Lord, Bissell & Brook
One Atlantic Center
1201 West Peachtree Street
Suite 3700
Atlanta, Georgia 30309

 
Daniel E. Murphy, II
Gilberg & Kiernan
1250 Eye Street, N.W.
Suite 600
Washington, DC 20005

 
Steven W. Cavanaugh
Fisher, Cavanaugh & Smith
534 Kansas Avenue
Suite 1035
Topeka, Kansas 66603

 
Eric C. Young
Dunham Boman & Leskera
103 East B Street
Belleville, Illinois 62220

 
Paul E. Escobar
German, Gallagher & Murtagh
The Bellevue
Fifth Floor
200 South Broad Street
Philadelphia, PA 19102

 
Richard W. Bryan
Jackson & Campbell
South Tower
One Lafayette Center
1120-20th Street, NW
Washington, DC 20036

 
Richard V. Eckert
5601 SW Barrington Court South
Topeka, Kansas 66614

 
Stacy S. Freel
Brand & Novak
135 South LaSalle Street
Suite 3700
Chicago, Illinois 60603

 
__________________________
Norma J. Dunnaway
Administrative Assistant

1. Certain defendants controverted statement 2 because they argued that it was inadmissible evidence. However, this court's decision on the motion to strike affidavits, the court held that affidavits of attorneys do not constitute inadmissible hearsay.

2. Wording from the pre-1974 policy language is quoted from the first-layer Lloyd's policy period December 15, 1969 to December 15, 1970. This wording is generally representative of the pre-1974 policies.

3. Wording from the post-1974 policies is quoted from the first-layer Lloyd's policy for the policy period February 15, 1974 to February 15, 1975. This wording is representative of the higher coverage layer policies in that period and all subsequent Plaintiff policies issued or subscribed to by the London Market defendants. In addition, most post-1974 policies "follow the form" of this policy or policies with very similar wording.