I have not seen many decisions lately addressing number of occurrences.  It is usually a frequently litigated issue.  This I know from having followed it, for the past ten years, as part of writing Insurance Key Issues.  And no surprise it is so popular.  The number of occurrences at issue can make a big difference – a really big difference – in the amount of money available to satisfy a claim.  If a policyholder or claimants can turn one occurrence into two or more, they have performed insurance alchemy.

I was happy to see that a number of occurrences decision came up last month, and an interesting one at that.  And it involves kabobs.  I love a good kabob.

At issue in Travelers Casualty Ins. Co. v. Mediterranean Grill & Kabob, Inc., No. 20-40 (W.D. Tex. Nov. 4, 2020) was coverage for nearly 200 cases of food poisoning, from salmonella, allegedly contracted at Pasha Mediterranean Grill in San Antonio.

The food poisoning led to seven lawsuits, all alleging that Pasha was negligent in the manufacture and preparation of food and such negligence was the proximate cause of the food poisoning.

Pasha was insured under a commercial general liability policy issued by Travelers.  The limit of liability was $1 million each occurrence and $2 million.  This is all you need to know that number of occurrences was going to be a big issue.  It’s the difference between there being up to $1 million available for all of the claims or $2 million.

Travelers, treating all of the claims as arising out of a single occurrence, offered to pay $1 million is settlement.  However, this was rejected by Pasha.  It argued that each food poisoning was a separate occurrence.  Therefore, for the remaining 124 claimants, Travelers must pay over $1.5 million.

As Pasha saw it, there were a multitude of causes of the food poisoning.  Pasha pointed to pauses or interruptions in its business operations – opening and closing -- during the poisoning, as well as the preparation of different batches of food.  A report of the San Antonio Health District was inconclusive as to the cause of the outbreak, but pointed to multiple contributing factors, such as the presence of unclean utensils and improper hand washing. 

But despite all this, the court had little trouble concluding that, based on Texas’s “cause test” for determining number of occurrences, there was only one at issue:

“[O]nly one cause gave rise to Pasha’s liability, and that is Pasha’s allegedly contaminated food. Thus, under Texas’s ‘cause’ analysis it appears there was a single, continuous event that both allegedly caused the injuries in the underlying suits, and gave rise to Pasha's liability. Therefore, the food poisonings were a single ‘occurrence’ under the policy. Importantly, this conclusion comports with the language of the policy. Included in the definition of occurrence is ‘continuous or repeated exposure to the same general harmful conditions.’ The allegedly harmful condition here was food that had been contaminated with salmonella bacteria and, therefore increased the risk of illness and possibly death. Individual patrons were continuously exposed to this alleged condition while they ate Pasha’s food, and patrons, as a group, were repeatedly exposed to it. . . . There is no allegation or evidence that Pasha returned to preparing food safely, allowed the food to become contaminated again, and then, because of Pasha’s negligence, exposed more patrons to contaminated food. Thus, Pasha’s purported negligence is alleged to have caused one uninterrupted chain of events, meaning there was but one proximate, uninterrupted and continuing cause of the contamination for which it may be liable.”

It’s an old story: not enough limits?  Find more occurrences.