Global Warming & Climate Change Update: Virginia Supreme Court Grants Rehearing In Only Pending Coverage Action
CM's Global Warming & Climate Change Team takes this opportunity to advise you of a significant recent development in the Steadfast v. AES coverage case on which we have previously reported. On January 17, 2012, the Virginia Supreme Court granted the policyholder's petition for rehearing.
Recall that AES is a defendant in Native Village of Kivalina v. ExxonMobil Corp., a lawsuit alleging that certain oil, coal and other petrochemical producer companies' emissions of carbon dioxide are responsible for global warming, which has melted arctic sea ice resulting in disastrous erosion of the plaintiffs' tiny fishing community in the remote reaches of Alaska. AES tendered the claim to Steadfast, which accepted the defense and then filed a declaratory judgment action in Virginia seeking a declaration of no duty to defend or indemnify on several grounds, including no occurrence and its pollution exclusion. AES lost on summary judgment on whether there was an occurrence and then lost its appeal before the Virginia Supreme Court in September 2011, when the Virginia Supreme Court held, inter alia, that "When the insured knows or should have known [as the Kivalina plaintiffs alleged] of the consequences of his actions, there is no occurrence and therefore no coverage."
AES subsequently filed a petition for rehearing, contending that the Court "radically redefined 'accident' to exclude coverage in virtually all negligence cases."
AES argued in its petition that the authorities relied on by the Virginia Supreme Court require that the insured should have known the consequences of its actions to a substantial probability or a substantial certainty. However, AES asserts that the Kivalina plaintiffs made no such allegations, and therefore the chain of causation was attenuated and cannot support the Court's decision.
Oral argument on the petition is scheduled to take place late February, and we will provide you with a report on the proceedings. Nevertheless, based on our unofficial poll of cases in which the Virginia Supreme Court granted rehearing over the past 10 years, the Court revised its opinion in 100% of them. Obviously, this case bears watching to see if, or how much, the Court refines its prior "no occurrence" opinion.