American Home Products Corp. v. Liberty Mutual Insurance Co.

565 F. Supp. 1485 (1983)

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American Home Products Corp. v. Liberty Mutual Insurance Co.

United States District Court for the Southern District of New York
565 F. Supp. 1485 (1983)

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Facts

Pharmaceuticals manufacturer American Home Products Corporation (AHP) (plaintiff) had insurance policies with Liberty Mutual Insurance Company (Liberty) (defendant) from 1944 until 1976. AHP’s policies were variations of the comprehensive-general-liability policy (CGL), a standard-form policy drafted in the 1960s to address liability for injuries caused over a period of time rather than in a single incident. Standard CGLs defined covered occurrences as accidents or injurious exposure to conditions resulting in bodily injury during the policy period. AHP’s policies similarly covered occurrences that resulted in injuries, sickness, or disease during a policy’s effective period. In the early 1980s, AHP was a defendant in 54 lawsuits alleging physical harm caused by its pharmaceuticals. Although the medications were ingested during the policy periods, the physical harm did not manifest until after the policies terminated. Liberty refused to defend or indemnify AHP in the lawsuits, stating that the policies covered only injuries that manifested during the policy periods. AHP sued Liberty, seeking a declaratory judgment that Liberty was required to defend AHP in the lawsuits because the exposure leading to the physical injuries occurred during the coverage period.

Rule of Law

Issue

Holding and Reasoning (Sofaer, J.)

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