VIRGINIA SUPREME COURT HOLDS GLOBAL WARMS CLAIMS DO NOT CONSTITUTE AN "OCCURRENCE"

AES Corp. v. Steadfast Ins. Co., (September 16, 2011) AES Corp. was sued by the Native Village of Kivalina for environmental damage which rendered the village uninhabitable. Kivalina is a native Alaskan community located on a barrier island. It alleges that energy-generating activities using fossil fuels that emit carbon dioxide and other greenhouse gases caused global warming, which in turn caused the sea ice protecting the village's shoreline to melt. As a result, the village was unprotected from storm surges and erosion. In the underlying suit, it was alleged that the village is on the verge of sinking into the sea and is uninhabitable. The complaint against AES alleges that it "intentionally emits millions of tons of carbon dioxide" into the atmosphere annually and that it knew or should have known about the impact on the environment. The complaint alleges a civil conspiracy by power and coal companies to mislead the public into thinking there is a debate about the existence of global warming in spite of the overwhelming scientific consensus that greenhouse gases are changing the Earth's climate. The three causes of action in the complaint are based on nuisance and concert of action. Applying the Virginia rule that only the allegations in a complaint and the policy of insurance are to be considered in determining whether there was a duty to defend (the "eight corners rule"), the Supreme Court held that the allegations in the complaint did not allege an "occurrence." "If a result is the natural and probable consequence of an insured's intentional act, it is not an accident." Id.(citations omitted). The court also noted that unintentional consequences of intentional acts may be covered, with the focus on the inquiry being whether the unintended consequence was reasonably foreseeable. AES argued that the complaint alleged negligent acts and that the consequences of its intentional omissions of greenhouse gases were unintentional. The court disagreed, noting that the policy provides coverage for damages arising from an "accident." Since the release of greenhouse gases was intentional, and scientific evidence demonstrated that global warming was a likely consequence of that release, there was no accident under Virginia law. For a copy of the decision clickhere Sarah Delaney andDan Gerber

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