Number of occurrence cases can sometimes be very fact intensive.  The Pennsylvania federal court decision in Busby v. Steadfast Insurance Co., No. 19-2225 (E.D. Pa. Oct. 31, 2019) is for sure.  The court even made this point.  Despite this, it is worthy of discussion here.  While the decision involves an auto claim, which I know a lot of CO readers don’t handle and don’t pay attention to, the lesson from the decision could have applicability to general liability claims.

At issue in Busby v. Steadfast Insurance Company, No. 19-2225 (E.D. Pa. Oct. 31, 2019) was the extent of coverage, for a motor vehicle accident, in which a passenger’s vehicle was struck by two other vehicles – one second apart.  One limit or two was the issue.

The court described the stipulated facts as follows: “On October 29, 2016, [Robin] Busby was a passenger in the backseat of a 2013 Nissan Altima driven by Thomas Curtain, who Busby had hired as a driver through Lyft, Inc. Curtain was traveling eastbound on the Schuylkill Expressway in the left-hand lane near mile marker 334.3. The traffic came to a stop in front of Curtain’s vehicle. Curtain drove his vehicle into the rear of the car in front of him which was stopped in traffic.

After Curtain hit the car in front of him, a 2005 Dodge Grand Caravan driven by Gerald Crossley collided with the rear of Curtain’s vehicle. Curtain’s vehicle was equipped with an event data recorder which recorded ‘two separate events.’  The data was retrieved and analyzed by plaintiff’s and defendants’ respective experts. The data established that approximately one second had passed between the two crashes. The data also demonstrated that Curtain had been travelling in the left lane for at least six seconds before Crossley hit the rear of Curtain’s car. Curtain’s car was not moving and had come to a complete stop at the time it was rear-ended by Crossley.”

Busby was clearly seriously injured.  She settled her claims for an amount not shared, but we are told that she was paid the limit of $1,000,000 under a Steadfast policy issued to Lyft for its drivers, $300,000 as the limit of Crossley’s policy and $200,000 from USAA, her own UIM insurer.

Busby filed suit, seeking an additional $1,000,000 in coverage from Steadfast and an additional $200,000 from USAA for what she terms the “second accident involving the Crossley vehicle.”  The insurers responded that the events of October 29, 2016 constituted one accident and, thus, their limits are exhausted.  The court’s task was to determine whether Busby was involved in one or two motor vehicle accidents.

Starting with the policy language, as it should, the court stated that the “Steadfast policy provides an aggregate limit of one million dollars in liability and UIM coverage for each ‘accident.’  It defines accident as ‘continuous or repeated exposure to the same conditions resulting in ‘bodily injury’ or ‘property damage.’”  The USAA policy does not define “accident," so the court turned to how the term is treated under Pennsylvania law: “an unexpected and undesirable event occurring unintentionally.”

The court reviewed Pennsylvania law and concluded that its arithmetic was to be governed by the “cause test.”  This is not a surprise as Pennsylvania number of occurrences law goes.

But even under the “cause test,” the court concluded that there were two accidents.  The key to the court’s decision – here and for purposes of possible further impact of the decision – was its conclusion that one accident was not the proximate cause of the other: “Even if Curtain had stopped the Lyft vehicle prior to striking the back of the vehicle in front of him, Crossley still would have rear-ended Curtain’s vehicle. The crash caused by Curtain was not the proximate cause of the crash caused by Crossley. Nor were the two crashes one continuing and uninterrupted cause. In the words of our Court of Appeals, there simply was not ‘one proximate, uninterrupted, and continuing cause which resulted in all of the injuries and damages.’”

As for the language in the policy that, regardless of the number of vehicles involved in the accident, the most the insurer will pay for all damages is the accident limit, the court concluded that its purpose was “merely [to] make clear that an ‘accident’ may involve multiple vehicles.”  It did not speak to whether there was one or two accidents. 

The court was quick to note that its decision was fact intensive, the situation at issue quite unique and not akin to a chain reaction crash, where one car goes into another which goes into another.  That, even Busby acknowledged, would have been one accident.

It is easy to see why an insurer would treat this as a single accident – the multiple vehicle policy language, Pennsylvania’s “cause test” and a one second gap between the collisions.  But the court resisted all of those invitations and came to a different conclusion.