The AES Corp. v. Steadfast Insurance Co. Supreme Court of Virginia, September 16, 2011
On Friday, September, 16, 2011, the Virginia Supreme Court ruled in this declaratory judgment action that the insurer, Steadfast Insurance Co., did not owe policyholder, power provider The AES Corp., coverage against claims that the company’s greenhouse gas emissions destroyed the Alaskan village of Kivalina by contributing to global warming.
In a unanimous opinion, the court ruled that the claims were not covered by the policy because the village in the underlying action alleged that the release of the greenhouse gas by the company was intentional and knew or should have known that such intentional release of the gas would damage the village.
The underlying action was started by a federal suit filed in 2008 by Kivalina, a native fishing community. The complaint alleged that AES and other companies of contributing to global warming, the effects of which have ruined its shoreline and made the area uninhabitable. The insurer argued that it was not obligated to provide coverage to the policyholder because the damages sought in the underlying action were barred under its liability policy since they are alleged to be intentional conduct. Meanwhile the policyholder contended that it is entitled to coverage because the complaint alleged both intentional conduct and negligence and argued that the consequences of its emissions were unintended.
This is purportedly the first ruling to determine whether or not insurers are required to provider coverage for claims arising from global warning.
“Even if AES were negligent and did not intend to cause the damage that occurred, the gravamen of Kivalina’s nuisance claim is that the damages it sustained were the natural and probable consequences of AES’ intentional emissions,” Justice Bernard Goodwyn said.
The underlying complaint plainly alleges that the policyholder intentionally emitted carbon monoxide and other greenhouse gases as part of its normal operations. Kivalina also pointed to extensive scientific consensus that the “natural and probable consequence” of the emissions was global warming, which caused the damages it suffered.
The other two justices, Justices Lawrence Koontz and Harry Carrico, concurred, saying the injury the village alleged did not arise from an accident or occurrence as defined under the liability policy.
“Where the harmful consequences of an act are alleged to have been eminently foreseeable, choosing to perform the act deliberately, even if in ignorance of that fact, does not make the resulting injury an ‘accident,’ even when the complaint alleges that such an action was negligent,” they said.
For a copy of the decision see here