Nesmith v. Allstate

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In this case, the Court of Appeals interpreted a “noncumulation clause” where members of different families were successively exposed to lead paint in the same apartment. Just as the Court similarly found in Hiraldo v. Allstate Ins. Co., the Court affirmed the Appellate Division’s ruling and held that the insurer’s maximum total liability is only one policy limit, even if the exposure happened to the children of different tenants during different tenancies.

Allstate Insurance Company issued a policy of liability insurance to the landlord of a two-family house in Rochester in September 1991. Within the policy, there was a “noncumulation clause” that stated there would be a limit of $500,000 in total liability, and “[a]ll bodily injury and property damage resulting from one accidental loss or from continuous or repeated exposure to the same general conditions is considered the result of one accidental loss.” This policy was renewed annually in September 1992 and September 1993.

Felicia Young and her children lived in one of the two apartments in the house, and in July 1993, the Department of Health notified the landlord of the two-family house that one of Young’s children had an elevated blood lead level and that several areas in the apartment were in violation of State regulations governing lead paint. In August 1993, the Department notified the landlord that violations were corrected.

A month later, the Young’s moved out and Lorenzo Patterson, Sr. and Qyashitee Davis moved in to the apartment with their children. Once again, a child was found to have an elevated blood lead level and the Department of Health notified the landlord.

Nesmith brought this present action against Allstate for a declaratory judgment, claiming that a separate $500,00 limit applied to each family’s claim and that her grandchildren should receive an additional $350,000. While the New York Supreme Court granted the declaration, the Appellate Division reversed and held that the injury to Young’s children and Nesmith’s grandchildren resulted from “continuous or repeated exposure to the same general conditions,” so there was only one “accidental loss” within the meaning of the policy. This Court affirmed the Appellate Division’s ruling.

Nesmith argued that the injuries to her grandchild and Young’s child were separate losses since they did not result “from continuous or repeated exposure to the same general conditions.” The Court rejected this argument because while the children were not exposed to the exact same conditions, they were subject to the “general conditions.” Also, the record did not show that there were a new conditions since the landlord supposedly fixed the situation after being notified about Young’s child. The Court concluded that the landlord’s efforts were not completely successful, which caused the same general conditions to exist. Since the different children were exposed to the same general conditions, their injuries were part of a single “accidental loss” and only one policy limit is available to the two families.

24 N.Y.3d 520 (N.Y. 2014)

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