INSURANCE: The loss of power following Hurricane Katrina created great hardship throughout the region. Shortly before landfall, the Touro infirmary in New Orleans secured an Aggreko “backup generator” that failed within hours of being put into service.  The litigation in Thebault v. American Home Assurance Company, et al, 15-0800 (La. App. 4 Cir. 4/20/16), _____ So. 3d ______, 2016 WL 3353974 involved a claim that an infant was injured through exposure to excess heat at Touro.

The Thebault suit was only one of forty-one suits filed related to the Touro power outage. In Thebault, Aggreko’s insurer, American Home alleged that a $50,000 “per occurrence” deductible applied separately to each plaintiff’s claim.  American Home cited to a 1973 Louisiana Supreme Court decision and its progeny holding that, in exposure cases, the number of occurrences under a liability insurance policy is determined by the “effect” of the exposure rather than the “cause” of the individual plaintiff’s damages.  In other words, each plaintiff damaged by the exposure counts as a separate occurrence, rather than a single occurrence that injured multiple plaintiffs.  The trial court agreed and ruled for American Home on this issue.

The Court of Appeal reversed, noting that the exposure line of cases involved damages caused by a series of events over a significant period of time, rather than the single, uninterrupted loss of power at Touro.  The Court also distinguished the exposure line of cases on the ground that they interpreted “occurrence” policy language found in “limits of liability” clauses, rather than the American Home deductible endorsement which did not specify a separate deductible for each claim. The Thebault Court also noted that American Home’s argument, if accepted, would cause Aggreko’s “deductible responsibility” for the forty-one separate plaintiffs to be higher than the $2 million aggregate liability limit of the policy.  According to the Court, such a result “would be an absurd and unintended result.”