North Carolina trigger

In Gaston County Dying Mach. Co. v. Northfield Ins. Co., No. 10PA99 (N.C. Feb. 4, 2000), Gaston manufactured a pressure vessel which it sold to Rosenmund who in turn sold it to Sterling who incorporated the vessel into its dye production process.  On June 21, 1992, Sterling modified its dye production process which increased the pressure in the vessel.  On August 31, 1992, Sterling discovered that a chemical had leaked into the vessel, contaminating the dye.   Sterling and its property insurer sued Gaston, Rosemund, and their CGL insurers for damages alleging defective design and construction of the vessel.  The insurers subsequently settled the claim and then litigated allocation between policies that terminated and incepted on July 1, 1992.  The court states that it was undisputed that the pressure vessel ruptured and began leaking on June 21, 1992, and continued leaking until it was discovered on August 31, 1992.  The court held that there was one “occurrence” – the sudden and unexpected leakage from the pressure vessel which began on June 21, 1992.   The court rejected a manifestation trigger in favor of a non-continuous injury-in-fact trigger, holding that only those policies in effect on June 21, 1992 were triggered.  “Where the date of injury-in-fact can be known with certainty, the insurance policy or policies on the risk on that date are triggered.”  Here, where it is undisputed that the contamination of the third-party’s property as a result of a rupture of the insured’s product commenced on one date and continued until it was discovered several weeks later, there is one “occurrence” that took place on the date the contamination began.  Only those policies in effect on the date of the injury causing event are triggered, even if the resulting property damage continues into subsequent policy periods.