When There are Two Damage Causing Events The Aggregate Limit Applies
Post 5078

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In February 2024, in the matter of Ciara Kilburn, et al. v. Bill Simmon, et al., 20-CV-461, a jury returned a plaintiffs’ verdict against Defendant The Media Factory f/k/a Vermont Community Access Media, Inc. (“VCAM”) and one of its employees.

VCAM’s liability insurer, plaintiff Hanover Insurance Company (“Hanover”) sued VCAM and the plaintiffs in the underlying suit, seeking a declaration as to the scope of its coverage obligations with respect to that verdict.

In The Hanover Insurance Company v. The Media Factory f/k/a Vermont Community Access Media, Inc. et al, 2025 Vt Super 051401, No. 24-CV-03700, Superior Court of Vermont, Civil Division, Chittenden Unit (May 14, 2025) decided how many occurrences impinged on the Hanover policy.

BACKGROUND

In the underlying action, Ciara Kilburn and Brona Kilburn alleged that in 2012 Bill Simmon, then an employee of VCAM, used a hidden camera to record them changing in and out of costumes in a utility room and then posted those videos on the internet. The women subsequently sued Simmon and VCAM. The jury found that Simmon invaded Ciara and Brona’s privacy and that VCAM negligently supervised Simmon. It awarded Ciara and Brona $1.75 million each from Simmon in compensatory damages, another $1.75 million each from VCAM in compensatory damages, and another $2 million each from Simmon in punitive damages.

THE INSURANCE

Hanover Commercial Line Policy No. ZHV 8849689 07 (“the Policy”) insured VCAM. The CGL Coverage Form describes the two coverages at issue here: Coverage A insures against “Bodily Injury and Property Damage Liability,” while Coverage B insures against “Personal and Advertising Injury Liability.”

Hanover issued no reservation of rights with respect to its obligations under the Policy. Rather it engaged counsel to represent VCAM and subsequently controlled that defense.

DISCUSSION

Hanover seeks a declaration that there can be no recovery under “Coverage B,” that there was only a single “occurrence” under Coverage A, and that VCAM’s coverage under the Policy is therefore limited to the $1 million per-occurrence limit.

There is no dispute that the most Hanover can owe under the Policy, whether under Coverage A, Coverage B, or any combination of the two, is the Policy’s aggregate limit of $2,000,000. A decision either that there were multiple occurrences or that Coverage B applies will leave the full aggregate limit exposed.

Because it did not reserve rights Hanover is now estopped from making the argument it should have reserved long ago.

The court concluded that Hanover’s aggregate limit, rather than the single occurrence limit, applies.

Focusing on the immediate cause-that is, the act that causes the damage-rather than the underlying tort-that is, the insured’s negligence-is consistent with the interpretation of other forms of insurance policies. An occurrence takes place at the time the party is actually damaged, rather than at some other moment when an allegedly wrongful act sets in motion the chain of events that eventually leads to the injury.

The Court found that sexual abuse does not fit neatly into the policies’ definition of continuous or repeated exposure to conditions. The jury verdict form further reflects that there were two “occurrences”: The jury found that Mr. Simmon invaded the Kilburns’ privacy by “taking the photos/videos” and also by “posting the photos/videos online/sharing them with a stranger.” The court rejected Hanover’s self-serving interpretation of the verdict form and instead concluded that there were two “occurrences” under the Policy.

The court denied Hanover’s motion and granted VCAM’s motion in part. The court declared that Hanover owes VCAM a duty of indemnification under Coverage A of the CGL coverage part of the Policy, up to its aggregate CGL coverage limit of $2,000,000, against the verdict obtained by the Kilburns in the underlying suit.

The determination that Hanover owes this duty under Coverage A moots any consideration of obligations owed under Coverage B.

VCAM and the Kilburns are entitled to judgment as a matter of law on Hanover’s Complaint.

ZALMA OPINION

When an insurer fails to advise its insured that it intends to reserve its right to limit coverage to a single limit of liability it essentially waives the right to make that claim. In this case, since there were obviously, at least, two separate actions causing damage to the underlying case’s plaintiffs which were two “occurrences” as defined in the policy and impinged two separate policy limits and requires Hanover to pay its full aggregate limit.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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