The AES Corp. v. Steadfast Insurance Company, (Record No. 100764, April 20, 2012.)
The Virginia Supreme Court reaffirmed that Steadfast Insurance Co. owed no duty to defend AES Corp. under a CGL policy against claims of intentional release of greenhouse gases. The court found that there was no occurrence because this was intentional act. The court also found that even if the acts of AES constituted negligence rather than an intentional act, it would still not be an occurrence under the policy.
In the underlying case, Native Vill. of Kivalina v. ExxonMobil Corp., 663 F.Supp.2d 863 (N.D. Cal. 2009), The Village of Kivalina filed suit against AES and other energy companies alleging that the greenhouse gas emissions released by those companies contributed to global warming which destroyed the Village. The underlying complaint alleged that the companies intentionally released the greenhouse gasses while generating power and that they knew or should have known that the gasses would damage the Village.
AES argued the complaint alleged negligent acts because the complaint stated that AES “should have known” its emissions would cause this damage. AES argued that these acts could be construed as negligent and unintentional and therefore Steadfast should owe a duty to defend because the acts could be considered an accident or occurrence.
The court stated that allegations of negligence or non-intentional acts were not always allegations of an accident or occurrence. In the underlying case, the plaintiff alleged that AES knew that its greenhouse gas emissions would lead to the kind of damage that destroyed the Village. The court stated “Whether or not AES’s intentional act constitutes negligence, the natural or probable consequence of that intentional act is not an accident under Virginia law.”
A concurrence by Justice Mims noted that Virginia case law differs from other states in that it limits insurance coverage of negligence claims, finding that negligence and accident or occurrence are not one in the same. Mims warned that this may surprise people and paint Virginia into a corner.
For a copy of this decision, click here.