One Beacon American Insurance Co. v. Huntsman Polymers Corporation

IN THE UTAH COURT OF APPEALS

‐‐‐‐ooOoo‐‐‐‐

One Beacon American Insurance Co.; ) OPINION
Pennsylvania General Insurance )
Company; and Employers’ Fire ) Case No. 20100327‐CA
Insurance Company, )
)
Plaintiffs and Appellants, ) FILED
) (April 5, 2012 )
v. )
) 2012 UT App 100
Huntsman Polymers Corporation nka )
Huntsman Advanced Materials, LLC, )
)
Defendant and Appellee. )

‐‐‐‐‐

Third District, Salt Lake Department, 090908662
The Honorable Glenn K. Iwasaki

Attorneys: John R. Lund and Julianne P. Blanch, Salt Lake City, for Appellants
Kamie F. Brown and Frederick R. Thaler, Salt Lake City, for Appellee

‐‐‐‐‐

Before Judges Voros, Thorne, and Roth.

ROTH, Judge:

¶1 Plaintiff One Beacon American Insurance Co. (One Beacon) appeals the district
court’s denial of its motion for summary judgment and grant of summary judgment to
Defendant Huntsman Polymers Corporation (Huntsman). We affirm.
 BACKGROUND

¶2 This case involves a dispute between One Beacon and Huntsman over the
amount One Beacon, the insurer, is required to indemnify Huntsman, the insured, for
defense against and settlement of a wrongful death lawsuit. In particular, the parties
contest when liability coverage is triggered under a commercial general liability (CGL)
insurance policy for bodily injury in the form of an asbestos‐related progressive disease.
The issue before us is whether Utah law or Texas law should be applied to interpret the
CGL insurance policy and resolve this contractual dispute.

I. The Wrongful Death Lawsuit

¶3 The wrongful death lawsuit that underlies this dispute arose from the death of
Edward Whetsell. From 1963 to 1975, Whetsell was employed at a petrochemical plant
in Texas that produced products allegedly containing asbestos. This facility was then
owned and operated by El Paso Products Company, a Texas corporation. While
employed at the Texas facility, Whetsell allegedly inhaled asbestos fibers.

¶4 Whetsell was diagnosed with mesothelioma in 2004. He eventually died from
the illness, and his family filed a wrongful death lawsuit in Texas against Huntsman, a
Delaware corporation with its principal place of business in Utah, which had purchased
El Paso Products in 1997. In 2007, Huntsman and Whetsell’s family settled the
wrongful death lawsuit.

II. The Insurance Claim and the Action for Declaratory Judgment

¶5 Following the settlement, Huntsman sought indemnification under a CGL
insurance policy that its predecessor, El Paso Products, had entered into with One
Beacon.1 From 1963 through 1977‐‐almost the exact time period that Whetsell was
employed at the Texas facility‐‐One Beacon, a Massachusetts corporation, insured El
Paso Products. During this time period, One Beacon annually issued a CGL insurance
policy to El Paso Products with each policy covering a period of one year. Under the
policy, One Beacon agreed to “pay on behalf of [El Paso Products] all sums which [El
Paso Products] . . . become[s] legally obligated to pay as damages because of . . . bodily

1. To be precise, El Paso Products contracted for insurance coverage with Commercial
Union Insurance Company, which is One Beacon’s predecessor.

20100327‐CA 2
injury . . . caused by an occurrence.” The policy defined “bodily injury” as “bodily
injury, sickness or disease sustained by any person” and defined an “occurrence” as “an
accident, including injurious exposure to conditions, which results, during the policy
period, in bodily injury.” The policy also provided that “all bodily injury . . . arising out
of continuous or repeated exposure to substantially the same general condition[ is]
considered as arising out of one occurrence.”2 The CGL insurance policy covered the
Texas facility where Whetsell worked, as well as additional facilities located in other
states.3 The policy did not include a choice of law provision.

¶6 El Paso Products was subsequently insured by another company from 1977 to
1993. However, beginning in 1986, that insurer excluded from coverage asbestos‐
related bodily injury. As a result, El Paso Products, and accordingly, Huntsman, have
had no insurance coverage for bodily injury caused by asbestos since 1986.

¶7 As a successor in interest to El Paso Products, Huntsman submitted an insurance
claim to One Beacon, requesting that One Beacon fully indemnify it for the defense and
settlement costs of the wrongful death lawsuit. One Beacon paid only about 61% of the
total amount of the defense and settlement costs. Huntsman requested that One Beacon
pay the remainder, but One Beacon refused. One Beacon later recalculated and decided
that it should only have paid Hunstman about 34% of the total defense and settlement
costs. One Beacon then requested that Huntsman reimburse the difference between the
61% that One Beacon had already paid and the 34% it believed it was obligated to pay.
Huntsman refused and reiterated its demand for full reimbursement.

¶8 In 2009, One Beacon brought this action, seeking a declaratory judgment that it
had overpaid Huntsman and was entitled to recoup the overpayment or, alternatively,

2. As we will explain, see infra ¶ 10, the nature of the injury at issue here is “considered
as arising out of one occurrence” due to “continuous or repeated exposure to
substantially the same general condition[].” Thus, because the covered bodily injury
here constitutes a single occurrence, for ease of explanation we will refer to the injury as
being covered by a single policy.

3. In addition to insuring the Texas facility, the policy included several endorsements
adding coverage for facilities located in New Mexico, Ohio, Wyoming, North Dakota,
Idaho, Tennessee, Oklahoma, and Utah, providing coverage for the “portion of the risk
located in said state.”

20100327‐CA 3
that it had paid in full the entire amount it owed to Huntsman. Huntsman filed a
counterclaim against One Beacon, alleging that One Beacon had underpaid what it
owed to Huntsman and seeking full reimbursement for the defense and settlement
costs.

¶9 In asserting their respective claims, the parties dispute the amount One Beacon
owes Huntsman under the CGL insurance policy for the settlement and defense of the
wrongful death lawsuit. At a more basic level, however, the parties’ dispute raises the
question of when a progressive or cumulative disease, such as the development of
mesothelioma due to the inhalation of asbestos fibers, becomes a bodily injury that
triggers coverage under a CGL insurance policy. This issue has been the subject of
much litigation, and to understand the parties’ respective arguments and aid in the
following legal analysis, it is helpful to review the legal background of this issue as
explained in other jurisdictions.

III. Legal Background

¶10 “[T]here is universal agreement that excessive inhalation of asbestos can and
does result in disease.” Insurance Co. of N. Am. v. Forty‐Eight Insulations, Inc., 633 F.2d
1212, 1214 (6th Cir. 1980). When “asbestos particles become airborne” they can be
“inhaled by persons in the area” and “deposited in the lungs.” Id. If “enough asbestos
particles are inhaled, they can cause a variety of pulmonary diseases.” Id. Diseases that
develop due to inhalation of asbestos fibers‐‐such as mesothelioma, lung cancer, and
asbestosis‐‐are considered progressive diseases because “[i]t ordinarily takes years of
breathing asbestos fibers for [the resulting disease] to occur.” Id. at 1214 & n.1. These
asbestos‐related illnesses are “slowly progressive, insidious disease[s],” where “[a]s
more and more asbestos particles settle in the lungs over years of exposure, the disease
worsens” until it “clearly manifests itself.” Id. at 1216. Although the development and
progression of the disease is variable, generally “[t]he more asbestos fibers . . . inhale[d],
the more quickly” the disease will manifest. Id. at 1214; see also Keene Corp. v. Insurance
Co. of N. Am., 667 F.2d 1034, 1038 n.3 (D.C. Cir. 1981) (explaining briefly the
development of asbestosis, mesothelioma, and lung cancer, which are caused by
“prolonged inhalation of asbestos fibers,” and acknowledging that “[t]he seriousness of
the disease . . . depends on the duration and intensity of inhalation and on individual
idiosyncrasy”).

¶11 The coverage provided for such progressive diseases is determined by
interpreting the applicable insurance policy. “‘An insurance policy,’” such as the one at

20100327‐CA 4
issue here, “‘is merely a contract between the insured and the insurer.’” Equine Assisted
Growth & Learning Ass’n v. Carolina Cas. Ins. Co., 2011 UT 49, ¶ 8, 266 P.3d 733 (quoting
Benjamin v. Amica Mut. Ins. Co., 2006 UT 37, ¶ 14, 140 P.3d 1210). As a result, insurance
policies are interpreted as contracts: “[i]f the language within the four corners of the
contract is unambiguous, the parties’ intentions are determined from the plain meaning
of the contractual language.” Benjamin, 2006 UT 37, ¶ 14 (internal quotation marks
omitted); see also Guaranty Nat’l Ins. Co. v. Azrock Indus. Inc., 211 F.3d 239, 243 (5th Cir.
2000) (“Generally, insurance policies are subject to the same rules of interpretation as
other contracts.”), overruled by OneBeacon Ins. Co. v. Don’s Bldg. Supply, Inc., 553 F.3d 901
(5th Cir. 2008).4 CGL insurance policies,5 such as the one at issue here, typically cover
“bodily injury . . . caused by an occurrence,” defining “bodily injury” as “bodily injury,
sickness or disease sustained by any person,” and “an occurrence” as “an accident,
including injurious exposure to conditions, which results, during the policy period, in
bodily injury.” This uniform policy language has been the subject of much
interpretation in the context of progressive diseases‐‐particularly those that result from
inhalation of asbestos fibers. See, e.g., Keene, 667 F.2d at 1038‐39 (interpreting multiple
CGL insurance policies in a progressive disease case, which policies were “identical in
all relevant respects” and provided “typical” coverage); Forty‐Eight Insulations, 633 F.2d
at 1215‐16 (interpreting several CGL insurance policies in a progressive disease case,

4. In OneBeacon Insurance Co. v. Don’s Building Supply, Inc., 553 F.3d 901 (5th Cir. 2008),
the Fifth Circuit explained that it “overrule[d] . . . the relevant portion of Azrock” based
on a certified question sent to the Texas Supreme Court, which was decided in Don’s
Building Supply, Inc. v. OneBeacon Insurance Co., 267 S.W.3d 20 (Tex. 2008). See
OneBeacon, 553 F.3d at 902‐03 (citing Guaranty Nat’l Ins. Co. v. Azrock Indus. Inc., 211 F.3d
239, 243 (5th Cir. 2000)). As we will discuss when the Azrock decision becomes relevant
to our analysis, see infra ¶¶ 48‐50, the Texas Supreme Court in Don’s Building Supply
made no decision concerning the portion of Azrock that is relevant to this case. Rather,
the Don’s Building Supply decision seems to leave the Azrock decision untouched based
on a distinction between insurance coverage for property damage and bodily injury.
See Don’s Bldg. Supply, 267 S.W.3d at 26 n.23, 28 & nn.29, 32. (Tex. 2008). See also infra
¶¶ 12, 51.

5. To be precise, some of the authority cited herein involves interpretation of
comprehensive general liability insurance policies, while this case involves a
commercial general liability insurance policy. For the purposes of this decision, the
distinction is unimportant, and the relevant policy language is substantially the same.

20100327‐CA 5
explaining that “each of the policies uniformly defined” coverage because “the
insurance industry uses standardized language in its general liability policies”).

¶12 The policy language at issue here has generally been interpreted as “clearly
provid[ing] that an ‘injury,’ and not the ‘occurrence’ that causes the injury, must fall
within a policy period for it to be covered by the [insurance] policy.” Keene, 667 F.2d at
1040. Typically, the distinction between the injury and the occurrence that causes the
injury is not significant because the two usually “transpire[] simultaneously[] or . . . in
close temporal proximity to one another.” Id. In progressive disease cases, however,
particularly those “involving asbestos‐related disease, . . . inhalation [of asbestos]‐‐the
‘occurrence’ that causes the injury‐‐takes place substantially before the manifestation of
the ultimate [disease]‐‐asbestosis, mesothelioma, or lung cancer.” Id. Thus,
“cumulative, progressive disease[s such as these] do[] not fit the disease or accident
situation which [CGL insurance] policies typically cover” because although “[t]here is
usually little dispute as to when an injury occurs when dealing with a common disease
or accident[,] . . . there is considerable dispute as to when an injury from asbestos[]
should be deemed to [have] occur[red].” Forty‐Eight Insulations, 633 F.2d at 1222. It is,
therefore, commonly accepted that “[c]umulative disease cases are different from the
ordinary accident or disease situation” and are “entirely different” from property
damage cases. Id. at 1214, 1216, 1218‐19 (rejecting the argument that progressive
diseases be treated the same as any other disease); see also Azrock, 211 F.3d at 247
(stating that the distinction of cumulative diseases from other bodily injury and
property damage cases “is relevant” because “[c]umulative disease cases are different
from the ordinary accident or disease situation,” and rejecting interpretations of similar
policy language “in entirely different contexts, particularly property damage cases”).
Because “[a]sbestos‐related diseases . . . differ from most injuries[, they] . . . present a
difficult problem of contractual interpretation.” Keene, 667 F.2d at 1040.

¶13 The difficulty in determining when coverage of a progressive disease is triggered
under a CGL insurance policy commonly arises in attempting to interpret the term
“bodily injury.” See generally id. at 1042, 1043‐44 (interpreting a CGL insurance policy to
determine when an injury occurs in the context of a progressive disease so as to trigger
coverage); Forty‐Eight Insulations, 633 F.2d at 1215‐20, 1222‐23 (same). In the context of
progressive diseases, courts have recognized that the term “bodily injury” is susceptible
to several interpretations. First, bodily injury can be interpreted as occurring
“whenever asbestos fibers [ar]e inhaled,” causing “tiny, scar‐like” tissue damage in the
lungs. Forty‐Eight Insulations, 633 F.2d at 1217‐18. Under this interpretation, bodily
injury is not the eventual disease but is, rather, the tissue “damage . . . [that begins]

20100327‐CA 6
shortly after the initial inhalation of asbestos fibers” and “worsens as the victim
breathes in more and more asbestos fibers.” Id. at 1217‐18, 1222. Second, “bodily
injury” can also be interpreted to occur when the disease actually “manifests itself” and
“bec[o]me[s] apparent.” Id. at 1216‐17. In other words, the “‘bodily injury’ does not
occur until [the] cellular damage advances to the point of becoming a recognizable
disease.” Keene, 667 F.2d at 1043. Under this interpretation, the disease can be
considered to have manifested itself at the stage where “the body’s defenses [are]
overwhelmed” or when the disease is diagnosed. Forty‐Eight Insulations, 633 F.2d at
1217‐18. Third, “bodily injury” can be interpreted to be the intermediate development
of the condition between the inhalation of asbestos fibers and the actual manifestation
of the disease‐‐commonly referred to as “exposure in residence.” Keene, 667 F.2d at
1045; see also Azrock, 211 F.3d at 245. Thus, because the policy language‐‐particularly the
term “bodily injury”‐‐is clearly susceptible to more than one reasonable interpretation,
CGL insurance policies have commonly been found to be ambiguous as applied to
progressive diseases. See Keene, 667 F.2d at 1041, 1043 (explaining that “the terms of the
policies [at issue do not] lead [the court] directly to a resolution of the coverage issues
raised” and the “policy language does not direct [the court] unambiguously to” either
of the two interpretations proposed by the parties); Forty‐Eight Insulations, 633 F.2d at
1222 (reasoning that “the contractual terms in issue . . . are inherently ambiguous as
applied to the progressive disease context”); Azrock, 211 F.3d at 243‐44 (explaining that
CGL insurance policies “are susceptible of more than one reasonable interpretation in
the progressive disease context, and are therefore ambiguous as a matter of law”
because “federal and state courts have developed [multiple] interpretations of precisely
the same uniform [CGL] policy language in the context of continuous exposure, latent
disease cases”).

¶14 Based on these varying interpretations of the term “bodily injury,” several
theories have emerged on how to determine the type of bodily injury that triggers
coverage of progressive diseases under CGL insurance policies. The three most
prominent theories are the manifestation trigger theory, the exposure trigger theory,
and the continuous trigger theory.6 The manifestation trigger theory is not directly
relevant to this case but is nonetheless helpful in understanding the continuous trigger
theory, which is an amalgam of the manifestation and exposure trigger theories. Under
the manifestation trigger theory, the term “bodily injury” is interpreted to mean when
the disease actually “manifests itself,” see Forty‐Eight Insulations, 633 F.2d at 1216, and

6. There are multiple variations of these core trigger theories that we need not address.

20100327‐CA 7
“becom[es] a recognizable disease,” see Keene, 667 F.2d at 1043. Thus, under this theory,
the coverage provided by a CGL insurance policy is triggered “when the condition
‘manifests’” or when the disease “becomes clinically evident, identifiable, or
diagnosable,” Azrock, 211 F.3d at 245 (citing Eagle‐Picher Indus., Inc. v. Liberty Mut. Ins.
Co., 682 F.2d 12, 19‐20, 23 (1st Cir. 1982) (adopting the manifestation trigger theory to
determine when coverage is triggered under a CGL insurance policy in a progressive
disease case)). “The date of ‘manifestation’ is usually equated with the date of
diagnosis . . . or the date a claimant experiences symptoms that impair his sense of well‐
being.” Id.; see also Keene, 667 F.2d at 1042‐43, 1045‐46 (explaining the manifestation
trigger theory and declining “to hold that only the manifestation of disease can trigger
coverage[ because then] the insurance companies would have to bear only a fraction of
. . . total liability for asbestos‐related diseases”); Forty‐Eight Insulations, 633 F.2d at 1216‐
17, 1219‐20 (explaining the manifestation trigger theory and rejecting it because “[n]o
doctor would say that [a disease] occurred when it was discovered”).

¶15 In contrast, under the exposure trigger theory, the term “bodily injury” is
interpreted to be “the subclinical tissue damage that occurs on inhalation of . . . asbestos
[fibers],” which is assumed to occur during the injured person’s “period of employment
in an asbestos‐laden environment.” Azrock, 211 F.3d at 245. Thus, under this theory, the
coverage provided by a CGL insurance policy is triggered only during policy periods in
which the exposure to asbestos occurred. See id.; see also Insurance Co. of N. Am. v. Forty‐
Eight Insulations, Inc., 633 F.2d 1212, 1216‐23 (6th Cir. 1980) (adopting the exposure
trigger theory).

¶16 Finally, the continuous trigger theory is a composite of the manifestation theory
and the exposure theory, and it construes the term “bodily injury” to encompass the
subclinical tissue damage caused by inhalation of asbestos fibers, see Forty‐Eight
Insulations, 633 F.2d at 1217‐18, the intermediate “exposure in residence,” see Keene Corp.
v. Insurance Co. of N. Am., 667 F.2d 1034, 1045 (D.C. Cir. 1981), and the eventual
manifestation of the actual disease, see id. at 1042‐43; Forty‐Eight Insulations, 633 F.2d at
1216‐17, 1222. Thus, coverage is triggered continuously throughout the entire
progression of the disease, from exposure through manifestation. See Keene, 667 F.2d at
1044‐47 (adopting what has become known as the continuous trigger theory); Guaranty
Nat’l Ins. Co. v. Azrock Indus. Inc., 211 F.3d 239, 243 (5th Cir. 2000), overruled by
OneBeacon Ins. Co. v. Don’s Bldg. Supply, Inc., 553 F.3d 901 (5th Cir. 2008).

¶17 Unfortunately, the extensive litigation to determine when insurance coverage is
triggered under CGL insurance policies in the context of progressive diseases “has

20100327‐CA 8
resulted in irreconcilable holdings” arising from interpretations occurring “under
different sets of facts, [and] against the backdrop of the contra proferentem doctrine,”
which requires that if an insurance “policy is [ambiguous and] susceptible of more than
one reasonable interpretation, the court must resolve the uncertainty by adopting the
construction that most favors the insured.” Azrock, 211 F.3d at 243‐44.

¶18 Having addressed the relevant legal background, we now turn to the parties’
arguments that are premised on these legal principles.

IV. The Parties’ Cross‐Motions for Summary Judgment

¶19 In October 2009, One Beacon and Huntsman filed cross‐motions for summary
judgment. Because the insurance contract did not include a choice of law provision, the
parties each proposed application of the law of a different state to determine the trigger
theory that would be applied to interpret the CGL insurance policy.

¶20 In support of its motion for summary judgment, One Beacon argued that Utah
law should be controlling, which One Beacon asserts requires application of the
continuous trigger theory. (Citing Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d
127 (Utah 1997).)7 If the continuous trigger theory were applied here, coverage under
the CGL insurance policy would be triggered for the entire forty‐one‐year time period
from Whetsell’s alleged inhalation of asbestos fibers while employed at the Texas

7. Although One Beacon presents Sharon Steel Corp. v. Aetna Casualty & Surety Co., 931
P.2d 127 (Utah 1997), as “neatly deal[ing] with the issue[]” of “what coverage trigger is
used in a continuous injury case,” it eventually clarifies that “choice of a trigger theory
was not an issue on appeal” in Sharon Steel because “one of the insurers in that case[]
settled the [coverage] issue with the insured using a continuous trigger analysis,” which
the appellant did not contest. See id. at 130‐31. Thus, although Sharon Steel may be
instructive on how to allocate defense and indemnity costs among multiple insurers, it
is not helpful in determining whether Utah law favors application of the continuous
trigger theory or the exposure trigger theory. See id.; see also Ohio Cas. Ins. Co. v. Unigard
Ins. Co., 2012 UT 1, ¶¶ 1‐2, 22 (explaining how to apportion defense costs between
multiple insurers based on the method of calculation announced in Sharon Steel, yet not
deciding how coverage is triggered for progressive bodily injury). It is further notable
that Sharon Steel involved property damage rather than bodily injury in the form of a
progressive disease. See Sharon Steel, 931 P.2d at 130‐31; see also supra ¶ 12.

20100327‐CA 9
facility beginning in 1963 until his diagnosis with mesothelioma in 2004. One Beacon,
however, only insured El Paso Products for a period of fourteen years, from 1963
through 1977, and therefore would only be required to indemnify Huntsman for
damages and costs proportionate to its time on the risk. Depending on whether the
eighteen years from 1986 to 2004 when El Paso Products and Huntsman were not
insured for asbestos‐related bodily injury are included in or excluded from the
calculation, One Beacon would be obligated to indemnify Huntsman for either
approximately 34% or 61% of the defense costs and settlement of the wrongful death
lawsuit.8 Application of the continuous trigger theory therefore supported One
Beacon’s request for declaratory judgment that it had overpaid Huntsman and was
entitled to reimbursement or, in the alternative, that it had paid Huntsman in full.

¶21 In contrast, Huntsman’s cross‐motion for summary judgment urged application
of Texas law, which it argued requires application of the exposure trigger theory.
(Citing Azrock, 211 F.3d at 242‐44.) If the exposure trigger theory were applied, only the
years that Whetsell inhaled asbestos fibers while employed at the Texas facility from
1963 to 1975 would trigger coverage. Because One Beacon was the only insurance
provider for El Paso Products during Whetsell’s period of employment, One Beacon
would be obligated to indemnify Huntsman for 100% of the defense and settlement
costs of the wrongful death lawsuit. Application of the exposure trigger theory

8. In its original response to Huntsman’s insurance claim, One Beacon excluded the
eighteen years from 1986 to 2004 that El Paso Products and Huntsman were not insured
and based its calculation on only the twenty‐three years El Paso Products was insured
from 1963 to 1986. As a result, One Beacon initially concluded that it was obligated to
indemnify Huntsman for approximately 61% of the defense and settlement costs of the
wrongful death lawsuit. However, One Beacon later determined that it was only
obligated to indemnify Huntsman for about 34% of the defense and settlement costs of
the wrongful death lawsuit. It arrived at this lower figure by including the eighteen
years that El Paso Products was not insured, therefore basing its calculation on the
entire forty‐one‐year time period from 1963 to 2004. Under this approach, One Beacon
treats El Paso Products and Huntsman as self‐insured for the eighteen years that the
companies were not insured for asbestos‐related bodily injury. In addition, under
either approach, the other insurance company that provided coverage to El Paso
Products for asbestos‐related bodily injury from 1977 to 1986 would be responsible for
its respective time on the risk.

20100327‐CA 10
therefore supported Huntsman’s cross‐claim that it was entitled to indemnification in
full for the defense and settlement costs of the wrongful death lawsuit.9

¶22 In order to resolve the parties’ competing motions for summary judgment, the
district court had to decide whether Texas law or Utah law controlls the parties’
contractual dispute. To determine which state’s law is controlling, the district court
applied section 188 of the Restatement (Second) of Conflict of Laws, which has been
adopted under Utah law and is referred to as the most significant relationship analysis.
See generally American Nat’l Fire Ins. Co. v. Farmers Ins. Exch., 927 P.2d 186, 190 (Utah
1996) (holding “that the most significant relationship test . . . is the appropriate rule for
Utah courts to apply to a conflict of laws question in a contract dispute” (citing
Restatement (Second) of Conflict of Laws § 188 (1971))). The district court concluded
that “Texas has the most significant relationship” to the insurance contract and,
therefore, “Texas law should apply.” The court further concluded that under Texas
law, the exposure trigger theory applied, reasoning that “no Texas court has specifically
adopted the continuous trigger theory . . . and only the exposure theory has been
adopted with respect to . . . bodily injury claims.” The court therefore denied One
Beacon’s motion for summary judgment and granted Huntsman’s cross‐motion for
summary judgment, awarding Huntsman the unpaid balance between what it had
expended in defense and settlement costs of the wrongful death lawsuit and what One
Beacon had previously paid. One Beacon appeals.

9. It is interesting that in this case the insured, Huntsman, seeks application of a trigger
theory that generally minimizes the period of potential coverage, while the insurer, One
Beacon, proposes application of a trigger theory that generally maximizes the period of
potential coverage. Indeed, the continuous trigger theory advocated here by One
Beacon is typically viewed as favoring the insured because it most broadly defines the
concept of injury under the terms of an insurance policy and maximizes the period of
coverage. See Azrock, 211 F.3d at 248 (“The obvious advantage of the [continuous
trigger] theory to an insured is that it maximizes coverages and requires little or no
individual proof of injury.”). In this case, however, application of the continuous
trigger theory is disadvantageous to the insured because of the extensive time period
during which El Paso Products and Huntsman had no insurance coverage for asbestos‐
related bodily injury. Nevertheless, this unusual alignment of legal theory and self‐
interest is little more than an idiosyncracy that, in the end, does not impact our analysis.

20100327‐CA 11
 ISSUES AND STANDARDS OF REVIEW

¶23 One Beacon challenges the district court’s denial of its motion for summary
judgment and the grant of summary judgment to Huntsman. Whether the district court
appropriately granted or denied summary judgment is a question of law, reviewed for
correctness. See American Nat’l, 927 P.2d at 188.

¶24 One Beacon challenges the district court’s basis for its grant of summary
judgment, namely, its determination that under the most significant relationship
analysis, articulated in section 188 of the Restatement (Second) of Conflict of Laws,
Texas law controls this contractual dispute. Proper application of the most significant
relationship analysis is a question of law, which we review for correctness. See id.
(explaining that in conducting its choice of law analysis, the court “examine[d] only
issues of law,” which are reviewed for correctness). One Beacon also challenges the
district court’s conclusion that Texas law requires application of the exposure trigger
theory to bodily injury claims. “[W]hen reviewing an application or interpretation of
law we use a correction of error standard,” giving no deference to the lower court’s
decision. See Avis v. Board of Review of Indus. Comm’n, 837 P.2d 584, 586 (Utah Ct. App.
1992) (alteration in original) (internal quotation marks omitted).

ANALYSIS

I. Summary Judgment

¶25 “[S]ummary judgment is proper when there are no disputed issues of material
fact and the moving party is entitled to judgment as a matter of law.” American Nat’l,
927 P.2d at 188 (citing Utah R. Civ. P. 56(c)). “Since the facts are [generally] undisputed
here, we examine only [the legal] issues” raised by One Beacon. See id.

¶26 One Beacon argues that the district court erred in denying its motion for
summary judgment and granting summary judgment to Huntsman. Specifically, One
Beacon asserts that the district court erroneously determined that Texas law governs
this dispute, arguing that Utah is the state with the most significant relationship to this
dispute. One Beacon further argues that Utah law requires application of the
continuous trigger theory rather than the exposure trigger theory that the district court
applied. In the alternative, One Beacon argues that even if the district court correctly
determined that Texas has the most significant relationship to this dispute, the exposure

20100327‐CA 12
trigger theory would not be applied under Texas law. We conclude that the district
court correctly determined that Texas has the most significant relationship to this
dispute, and we therefore do not address which trigger theory would be applied under
Utah law. We further conclude that the district court correctly determined that Texas
law requires application of the exposure trigger theory in this case.

A. Choice of Law10

¶27 The parties agree that this case involves a contractual dispute requiring
interpretation of an insurance contract. See generally Waddoups v. Amalgamated Sugar Co.,
2002 UT 69, ¶ 15, 54 P.3d 1054 (explaining that at the outset of a conflicts of law
analysis, the court must “characterize the nature of the claim” to determine whether the
issue presented is based in tort, contract, property, or another area of law, and
identifying this determination as “essential” because the analysis varies according to the
type of action brought). Because the insurance contract at issue does not include a
choice of law provision, this court must determine whether Texas or Utah law applies.

10. Typically, a choice of law analysis is preceded by a determination of whether there
is a true conflict between the laws of those states that are interested in the dispute. See,
e.g., American Nat’l Fire Ins. Co. v. Farmers Ins. Exch., 927 P.2d 186, 188 (Utah 1996)
(acknowledging that a choice of law problem only arises if there is a conflict between
the laws of the competing states with a substantial relationship to the underlying issue
(citing Restatement (Second) of Conflict of Laws § 205 cmt. a (1971))). Although the
parties’ summary judgment and appellate arguments are inherently premised on the
position that there is a conflict between Utah and Texas law, the parties also present
alternative arguments asserting differing interpretations of Utah and Texas law that are
more favorable to their respective positions. Whether there is a true conflict between
Texas and Utah law is not an issue that is easily answered because neither Texas law
nor Utah law is settled on this particular legal issue. It is notable, however, that there is
more Texas authority on the subject. Compare supra ¶ 20 n.7, with infra ¶¶ 48‐50; see also
Restatement (Second) of Conflict of Laws § 6(2)(g) (1971) (specifying as a “factor[]
relevant to the choice of the applicable rule of law” the “ease in the determination and
application of the law to be applied”). We will therefore undertake our analysis
presuming that a conflict exists because the parties’ arguments are based on the
existence of a conflict. Further, because we ultimately conclude that Texas has the most
significant relationship to this dispute, see infra ¶¶ 45‐46, we presume a conflict exists so
as to avoid unnecessary interpretation of Utah law.

20100327‐CA 13
See generally Restatement (Second) of Conflict of Laws § 188(2) (1971) (providing that a
choice of law analysis is required “[i]n the absence of an effective choice of law by
[contracting] parties”). One Beacon and Huntsman further agree that the law of the
forum state‐‐in this case, Utah‐‐governs a choice of law analysis. See American Nat’l Fire
Ins. Co., 927 P.2d 186, 188‐90 (Utah 1996). Thus, we apply the most significant
relationship analysis, as adopted under Utah law. See id. at 190.

¶28 Section 188 of the Restatement (Second) of Conflict of Laws generally controls the
most significant relationship analysis as applied to contractual disputes, providing that
“[i]n the absence of an effective choice of law by [contracting] parties,” the “rights and
duties of the parties with respect to an issue in contract are determined by the local law
of the state which, with respect to that issue, has the most significant relationship to the
transaction and the parties.” Restatement (Second) of Conflict of Laws § 188(1)‐(2). To
determine which state has the most significant relationship to the transaction and the
parties in a contractual dispute, section 188 requires consideration of several contacts a
contract may have to the states involved in the matter:
(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance,
(d) the location of the subject matter of the contract, and
(e) the . . . place of incorporation and place of business of the
parties.
Id. § 188(2).

¶29 One Beacon argues that Utah has the most significant relationship to this dispute
because the insurance contract’s place of performance and the parties’ principal place of
business favor application of Utah law. According to One Beacon, because Utah is
Huntsman’s principal place of business, One Beacon performed its obligation under the
CGL insurance policy in Utah by paying the insurance claim to Huntsman in Utah.
Huntsman responds that the place of performance and principal place of business favor
application of Texas law, arguing that, although actual performance occurred in Utah
when One Beacon paid the insurance claim to Huntsman, the intended place of
performance at the time of contracting was Texas because the original contracting
parties would have expected that any insurance claims would have been paid to El Paso
Products, a Texas corporation, in Texas. Huntsman further argues that the location of
the subject matter of the contract‐‐or the location of the insured risk‐‐favors application
of Texas law because the bodily injury covered by the CGL insurance policy occurred at

20100327‐CA 14
a facility located in Texas. According to Huntsman, Texas therefore has the most
significant relationship to this dispute.

¶30 Ultimately, we agree with Huntsman that Texas has the most significant
relationship to this dispute as the intended place of performance at the time of
contracting and as the location of the insured risk. We begin our analysis by briefly
addressing the contacts we consider to be inconclusive‐‐namely, the place of negotiation
and the place of contracting. We then consider the parties’ arguments concerning the
place of performance and the principal place of business. We finally address the
location of the subject matter of the contract, also described as the location of the
insured risk.

1. Place of Negotiation and Place of Contracting

¶31 With regard to the place of negotiation, the district court reasoned that “there is
little to no evidence about how the contract was negotiated, who negotiated the
contract, or where it was signed.” One Beacon agrees, explaining that “[t]he [p]lace of
[n]egotiation is [i]ndeterminate” because “[t]here is no evidence in the record regarding
where [the parties] may have met or corresponded,” nor is there “evidence that [the
parties] met anywhere to bargain over particular terms of the insurance policies and
reach agreement.” Huntsman also generally concedes that “there is no direct evidence
of where One[ ]Beacon and El Paso [Products] discussed the terms of the [insurance]
policies.” We agree with the parties that this contact is inconclusive and do not
consider it further.

¶32 As to the place of contracting, “a contract between parties in different states is
made where the last act necessary to make the contract valid and binding occurs.”
Surety Underwriters v. E&C Trucking, Inc., 2000 UT 71, ¶ 26, 10 P.3d 338; see also
Restatement (Second) of Conflict of Laws § 188 cmt. e (1971) (“[T]he place of contracting
is the place where occurred the last act necessary under the forum’s rules of offer and
acceptance, to give the contract binding effect.”). Both parties agree with this general
proposition but disagree on what action constitutes the last act necessary to make
effective a contract for insurance coverage. As a result of their differing arguments, the
parties dispute whether the place of contracting is Texas or Massachusetts; they agree,
however, that it was not Utah. Because neither party ultimately argues that
Massachusetts has the most significant relationship to this dispute, further efforts to
determine the precise place where this insurance contract became effective are, in the
end, unlikely to advance our analysis. Given the relevant contacts that remain to be

20100327‐CA 15
considered and the relative unimportance of this contact to the most significant
relationship analysis in general, see Restatement (Second) of Conflict of Laws § 188
cmt. e (“Standing alone, the place of contracting is a relatively insignificant contact.”),
we simply conclude, as the parties concede, that the place of contracting was not Utah
and attribute no importance to the possibility that the place of contracting may have
been Texas.

2. Place of Performance and Principal Place of Business

¶33 We next consider together the place of performance and the parties’ place of
incorporation or principal place of business. The place of performance under an
insurance contract tends to be the “place of the insurer’s payment of claims [to the
insured] under the policy,” and typically the insurer makes payment of claims in the
state where the insured is located. Ace Rent‐A‐Car, Inc. v. Empire Fire & Marine Ins. Co.,
580 F. Supp. 2d 678, 688 (N.D. Ill. 2008) (internal quotation marks omitted) (citing 2
Couch on Insurance 2d § 16:11, at 497 (rev. 1984)). One Beacon argues that “it partially
performed its contractual obligations” under the insurance contract by “issuing the
check for . . . the defense and indemnity costs . . . to Huntsman in Utah.”11 Stated
differently, One Beacon argues that because Huntsman’s principal place of business is
in Utah and because the payment of a claim under the insurance contract was made to
Huntsman in Utah, performance therefore occurred in Utah. Thus, according to One
Beacon, these contacts favor application of Utah law. One Beacon further asserts the
importance of these linked contacts because “[t]he fact that one of the parties . . . does
business in a particular state assumes greater importance when combined with other
contacts, such as . . . the place . . . of performance.” Restatement (Second) of Conflict of
Laws § 188 cmt. e (1971) (explaining further that the “significance [of the parties’ place
of incorporation and principal place of business] depends largely upon the issue
involved and upon the extent to which they are grouped with other contacts, . . .
assum[ing] greater importance when combined with other contacts”). One Beacon thus

11. One Beacon acknowledges that the parties dispute whether it fully performed
under the insurance contract. One Beacon asserts, however, that it is uncontested that it
partially performed by paying a portion of the insurance claim to Huntsman. One
Beacon therefore construes the place of performance based on its performance thus far
under the insurance contract, whether that performance is ultimately deemed to be
partial or in full.

20100327‐CA 16
argues that because these combined contacts favor application of Utah law, Utah
therefore has the most significant relationship to this contractual dispute.

¶34 Huntsman generally does not dispute that its principal place of business and the
place of actual performance is Utah; rather, Huntsman attempts to minimize the
importance of these combined contacts to Utah and, instead, argues that the principles
underlying these contacts favor application of Texas law. Huntsman emphasizes that it
is a successor in interest to the original party that contracted with One Beacon for
insurance coverage, El Paso Products, a Texas corporation.12 Huntsman thus argues
that “at the time of contracting,” the original contracting “parties could not have
anticipated that insurance payments for claims arising at a Texas facility, [then] owned
by a Texas corporation, . . . might be sent to Utah some 40 years later.” As a result,
argues Huntsman, the actual place of performance and “the current residence of the
parties does not add much meaningful consideration to the choice of law analysis”
because it “is a mere fortuity” that One Beacon eventually fulfilled its contractual
obligations to “a Delaware company that happens to have its principal place of business
in Utah.”13 Huntsman further asserts that the place of performance contact is less
concerned with the place where actual performance ultimately occurs but is more
appropriately focused “on the intended place of performance at the time of
contracting.” See id. (providing that greater weight is given to the place of performance
when it is known “at the time of contracting”); Ace Rent‐A‐Car, 580 F. Supp. 2d at 688
(“Where there is no express agreement as to the place of performance, it may be
determined according to the intent of the parties, namely, the intended place of the insurer’s
payment of claims under the policy.” (emphases added) (internal quotation marks omitted)
(citing 2 Couch on Insurance 2d § 16:11, at 497 (rev. 1984))). According to Huntsman, at
the time of contracting, the original parties would have expected performance to occur
in Texas because they would have anticipated that payment of any claim under the
insurance policy would have been to El Paso Products at its place of business in Texas.

12. As previously explained, see supra ¶ 5 n.1, One Beacon is also a successor in interest
to the original contracting insurer. However, One Beacon makes no argument
concerning any comparable effect of its predecessor being the original contracting party.

13. Huntsman also argues that the parties’ place of incorporation and principal place of
business do not cluster in Utah as exclusively as One Beacon portrays because
Huntsman is a Delaware corporation and One Beacon is a Massachusetts corporation.

20100327‐CA 17
¶35 It is not irrelevant that Utah, as Huntsman’s principal place of business, is the
actual place of performance because Utah, as the place where the contract was actually
performed, “has an obvious interest in the nature of the performance.” See Restatement
(Second) of Conflict of Laws § 188 cmt. e. And we are mindful of One Beacon’s position
that we should construe these contacts by considering “where performance occurred in
reality, as opposed to” making a “guess that the original parties to the insurance
contracts . . . would have expected performance to occur in Texas.” However, as
Huntsman points out, at the time of contracting, neither of the contracting parties could
have reasonably foreseen that performance would someday occur in Utah. See id.
(“[T]he place of performance can bear little weight in the choice of applicable law when
. . . at the time of contracting it is . . . uncertain or unknown . . . .”). Rather, Texas would
naturally have been the expected place of performance. And the expected place of
performance only changed decades later, long after the CGL policies had been issued
and had expired. Under the circumstances, to construe the related principal place of
business and place of performance contacts as favoring application of Utah law would
be to ignore the parties’ intent at the time of contracting and would further contravene
an important principle underlying any choice of law analysis arising in the context of a
contractual dispute‐‐to protect the justified expectations of the contracting parties. See
id. § 6(2)(d) (explaining that one of seven overarching choice of law principles is “the
protection of justified expectations”); see also Equine Assisted Growth & Learning Ass’n v.
Carolina Cas. Ins. Co., 2011 UT 49, ¶ 13, 266 P.3d 733 (“The primary purpose of contract
interpretation is to ascertain the intentions of the parties at the time of contracting.”
(internal quotations marks omitted)). Thus, although there is a discrepancy between the
intended place of performance at the time of contracting and the actual place of
performance, we ultimately conclude that, on balance, these contacts tend to favor
application of Texas law because at the time of contracting the parties would have
expected claims under the policy to be paid to El Paso Products in Texas.

3. Location of the Contract’s Subject Matter or the Location of the Insured Risk

¶36 Finally, we consider the location of the subject matter of the contract. “When the
contract deals with a specific physical thing . . . or affords protection against a localized
risk, . . . the location of the thing or of the risk is significant” and the “state where the
thing or the risk is located will have a natural interest in transactions affecting it.”
Restatement (Second) of Conflict of Laws § 188 cmt. e (1971). “Indeed, when the thing
or the risk is the principal subject of the contract, it can often be assumed that the parties
. . . would expect that the local law of the state where the thing or risk was located
would be applied to determine many of the issues arising under the contract.” Id.

20100327‐CA 18
¶37 With regard to contracts for casualty insurance, however, section 188 refers to
section 193, which specifically addresses disputes arising out of insurance contracts,
such as the CGL insurance policy at issue here. See id. Section 193 provides that
[t]he validity of a contract of . . . casualty insurance and the
rights created thereby are determined by the local law of the
state which the parties understood was to be the principal
location of the insured risk during the term of the policy,
unless . . . some other state has a more significant
relationship . . . to the transaction and the parties.
Id. § 193. Comment b to section 193 goes on to explain that “[a]n insured risk, namely
the object or activity which is the subject matter of the insurance, has its principal
location . . . in the state where it will be during at least the major portion of the
insurance period.” Id. § 193 cmt. b.

¶38 Comment b further elaborates on the weight that should be afforded this contact,
providing that “[t]he location of the insured risk will be given greater weight than any
other single contact in determining the state of the applicable law.” Id.; see also American
Nat’l Fire Ins. Co. v. Farmers Ins. Exch., 927 P.2d 186, 190 (Utah 1996) (acknowledging that
section 193 provides that the “location of the insured risk applies to contracts of . . .
casualty insurance” and makes “the risk’s principal location . . . the most important
contact to be considered in the choice of applicable law”). Comment b, however, also
explains that the location of the insured risk should be accorded such significance only
in circumstances where “the risk can be located, at least principally, in a single state.”
Restatement (Second) of Conflict of Laws § 193 cmt. b. In this regard, comment b
acknowledges that there are “[s]ituations where [a single or principal location of the
insured risk] cannot be [identified], and where the location of the risk has less
significance, includ[ing] . . . where the policy covers a group of risks that are scattered
throughout two or more states.” Id. Nonetheless, comment f to section 193 recognizes
the “special problem [that] is presented by multiple risk policies which insure against
risks located in several states” and recommends “treat[ing] such a case . . . as if it
involved [several] policies, each insuring an individual risk.” Id. § 193 cmt. f; see also id.
§ 193 cmt. a (providing that comment f controls multiple risk policies by stating, “As to
multiple risk policies, see [c]omment f”).14

14. For example, under comment f to section 193, if “[a] single policy . . . insure[s
multiple risks] located in states X, Y, and Z” and a covered risk occurs in state X, then
(continued...)

20100327‐CA 19
¶39 One Beacon does not engage in any meaningful analysis of section 193 but
simply dismisses it as having no significance to the present analysis based on a very
narrow reading of comment b’s statement that the location of the insured risk “has less
significance . . . where the policy covers a group of risks that are scattered throughout
two or more states.” Id. § 193 cmt. b. One Beacon thus argues that because it insured
“risks [for El Paso Products] throughout the world . . . [t]he fact[] that the alleged
exposure [to asbestos] in the underlying lawsuit took place in Texas and that [the
wrongful death lawsuit was] filed in Texas are fortuities and are therefore irrelevant.”
In making this argument, One Beacon ignores other pertinent language in comment b,
as well as comments a and f, which together require a much more nuanced approach to
the location of the risk contact in the context of multiple risk policies, such as the one
before us. See generally id. § 193 cmt. a (providing that comment f controls multiple risk
policies); id. § 193 cmt. f (explaining how to identify the location of the insured risk in
the context of multiple risk policies).

¶40 Generally, under section 193, the location of the insured risk is determinative in
identifying the law that controls a dispute over a contract for casualty insurance. See id.
§ 193 (explaining that the law controlling a dispute over a contract for casualty
insurance is “determined” by the location of the insured risk); see also id. § 193 cmt. b
(“The location of the insured risk will be given greater weight than any other single
contact in determining the state of the applicable law . . . .”). However, according to
comment b, the weight this contact merits will increase or decrease to the extent “that
the risk can be located, at least principally, in a single state.” Id. § 193 cmt. b. In a
situation such as this where an insurance “policy covers a group of risks that are
scattered throughout two or more states,” the location of the insured risk can be of “less
significance,” but only to the extent that the particular risk in question cannot be located
in a single state. Id. Comment f provides a simple method by which an insured risk can
be located in a single state in the context of a multiple risk policy by treating the
multiple risk policy “as if it involved [several] policies, each insuring an individual
risk.” See id. § 193 cmt. f. This approach is consistent with the overall goal of section
188 to identify the state with the most significant relationship to a contractual dispute
because the “state where . . . the risk is located will have a natural interest in

14. (...continued)
“the rights and obligations of the parties under the policy” could be determined “in
accordance with the local law of [state] X.” Restatement (Second) of Conflict of Laws
§ 193 cmt. f (1971).

20100327‐CA 20
transactions affecting it,” and it is reasonably “assumed that the parties . . . would
expect the local law of the state where the . . . risk was located would . . . determine
many of the issues arising under the contract.” See id. § 188 cmt. e.

¶41 Under the circumstances of this case, the location of the insured risk, alone, is not
determinative of the state with the most significant relationship to this contractual
dispute because the CGL insurance policy at issue covers multiple risks located in
several states. However, this contact is nonetheless an important component of the
most significant relationship analysis to the extent that the insured risk can be located in
a single state, particularly if there is no other state with a more significant relationship
to the contractual dispute. In applying comment f here, it is apparent that the location
of the insured risk can “be located, at least principally, in a single state.” See
Restatement (Second) of Conflict of Laws § 193 cmt. b (1971); cf. Ace Rent‐A‐Car, Inc. v.
Empire Fire & Marine Ins. Co., 580 F. Supp. 2d 678, 686‐87 (N.D. Ill. 2008) (concluding
that the location of the insured risk was not readily identifiable under the particular
facts of the case based on the approach suggested by section 193 of the Restatement of
Conflict of Laws because, unlike other cases involving a single act that occurred in a
single place, the insured risk at issue was liability arising from “commercial advertising
. . . [that was] not limited to one instance in one location”).

¶42 The CGL insurance policy at issue here obligated One Beacon to indemnify El
Paso Products for “all sums which [El Paso Products] . . . become[s] legally obligated to
pay as damages because of . . . bodily injury . . . caused by an occurrence.” Although
not the only risk or location covered, the parties contracted to cover a risk of “bodily
injury . . . caused by an occurrence” at El Paso Product’s facility located in Texas. The
insured risk of bodily injury that the parties anticipated might occur at the Texas facility
did, in fact, occur when Whetsell allegedly inhaled asbestos fibers during his twelve‐
year employment at the Texas facility. It is this risk of bodily injury that was
contemplated by the insurance contract that is the heart of this dispute between the
contracting parties. Thus, in accordance with comment f to section 193, we treat the
CGL insurance policy as if “insuring an individual risk” in Texas. We therefore
conclude that, under the facts of this case, the location of the insured risk is Texas.

¶43 One Beacon, however, takes issue with this approach, emphasizing that this
dispute has been appropriately characterized as one of contract, see supra ¶ 27, and
argues that considering the location of the risk, as we have done here, impermissibly
allows the state with the most significant relationship to a contractual dispute to be
determined based on contacts that are relevant only to a dispute sounding in tort,

20100327‐CA 21
namely the location of the underlying bodily injury or tort. See Waddoups v.
Amalgamated Sugar Co., 2002 UT 69, ¶ 15, 54 P.3d 1054 (explaining that characterizing
the nature of the underlying dispute to determine whether the issue sounds in tort or
contract is an important preliminary step in resolving a conflict of laws question
because the resulting analysis varies depending upon the type of action involved).
Compare Restatement (Second) of Conflict of Laws § 145(1)‐(2) (providing that in
disputes sounding in tort, “the place where the injury occurred” and “the place where
the conduct causing the injury occurred” are contacts that should be considered to
determine the state with the most significant relationship to the dispute), with id.
§ 188(2) (listing several contacts‐‐not including the location of the underlying bodily
injury or tort‐‐that should be considered to determine the state with the most significant
relationship to a contractual dispute).

¶44 In making this argument, however, One Beacon misperceives the nature of the
location of the insured risk contact. A CGL insurance policy insures against the risk of
liability for bodily injury, and the injuries that trigger such coverage are typically the
result of the conduct of the insured or its employees or representatives. Naturally,
those injuries occur at locations identified in the policy that are covered by the
insurance contract. That an anticipated location of an insured risk coincides with the
place where an injury actually occurs is incidental; and the location of the insured risk
contact does not transform into a location of the underlying tort contact by virtue of
those two contacts being associated with the same place.15 Further, it is expected that

15. It may be worth noting that, even as applied to contractual disputes, the location of
the underlying tort or bodily injury is not a contact that is wholly irrelevant to the most
significant relationship analysis; but when taken into consideration, it is not
determinative and is of negligible weight. See generally American Nat’l Fire Ins. v.
Farmers Ins. Exch., 927 P.2d 186, 190 (Utah 1996) (holding that “[u]nder the most
significant relationship test [as applied in contractual disputes], the location of the accident
is not sufficient to outweigh numerous other contacts” (emphasis added)); id. at 189‐90
(recognizing that “[o]ther jurisdictions have . . . rejected the site of the accident as the
determining factor in choice of law questions,” and collecting cases for the proposition
“that the mere fact that an accident occurred in one state does not give that state the
most significant relationship in an insurance contract dispute” because “the location of
the accident, standing alone, is not sufficient to outweigh the location of the vehicle, the place of
contracting, and the residency of the parties” (emphases added)).
(continued...)

20100327‐CA 22
Texas “will have a natural interest in transactions affecting” a risk that was located and
that actually occurred within its boundaries, and it is also reasonable to “assume[] that
the parties . . . would expect that” Texas law “would be applied to determine many of
the issues arising under the contract” that concern such an injury. See id. § 188 cmt. e;
see also id. § 6(2)(c)‐(d) (listing other factors relevant to a choice of law analysis, such as
“the relevant policies of other interested states and the relative interests of those states
in the determination of the particular issue” as well as “the protection of justified
expectations”). One Beacon’s arguments on this matter are therefore unpersuasive.

4. Summary of Most Significant Relationship Analysis

¶45 Having considered the pertinent contacts under section 188, we conclude that
Texas is the state with the most significant relationship to this contractual dispute.
Because this case involves a multiple risk policy, the location of the insured risk is not
wholly determinative here. Nonetheless, the location of the insured risk has
considerable weight in the choice of law analysis because the insured risk “can be
located, at least principally, in a single state,” see Restatement (Second) of Conflict of
Laws § 193 cmt. b (1971). That weight is enhanced because this is not a case where
“some other state has a more significant relationship . . . to the [contract] and the
parties” than Texas, see id. § 193. In particular, One Beacon has not persuaded us that
Utah has a more significant relationship to this contractual dispute than Texas. Indeed,
any relationship Utah has to this dispute as Huntsman’s principal place of business and
the actual place of performance is, in the end, fortuitous because those contacts only

15. (...continued)
In addition, although here the cost of defending against the wrongful death
lawsuit is also covered by the CGL insurance policy, the location of the underlying
lawsuit is of negligible importance in identifying the location of the insured risk because
the insured risk is better identified by the occurrence that triggers coverage under the
insurance contract rather than the place where litigation arising from that occurrence
may subsequently be filed. Ace Rent‐A‐Car, Inc. v. Empire Fire & Marine Ins. Co., 580 F.
Supp. 2d 678, 686 (N.D. Ill. 2008) (explaining that the location of the insured risk is not
equated with the location of the underlying action or lawsuit but, rather, the location of
the insured risk has been identified by the location of the accident or injury out of which
the lawsuit arose). Nevertheless, the location of the underlying lawsuit may be
considered in the most significant relationship analysis, although it is a contact of
minimal significance. See id. at 686‐87.

20100327‐CA 23
arise from the purchase of El Paso Products by Huntsman decades after the CGL
insurance policy was issued and after the active relationship between the contracting
parties had dissipated. Those contacts to Utah therefore carry much less weight in the
overall most significant relationship analysis.

¶46 In the end, we conclude that the place of negotiation and place of contracting
contacts are indeterminative; the place of performance and principal place of business
contacts indicate ties to both Texas and Utah but, ultimately, weigh in favor of Texas;
and the location of the insured risk weighs in favor of Texas. We therefore conclude
that the district court was correct in deciding that Texas has a more significant
relationship to this dispute than Utah and, therefore, correctly applied Texas law to
interpret the insurance contract.

¶47 We now turn to the question of whether the district court was correct in deciding
that Texas law requires application of the exposure trigger theory under the
circumstances of this case.

B. Application of the Exposure Trigger Theory Under Texas Law

¶48 One Beacon argues that, even if we conclude that the district court correctly
applied Texas law to this dispute, the district court nevertheless erred in concluding
that Texas law requires application of the exposure trigger theory to determine when
coverage of a progressive disease is triggered under a CGL insurance policy. In support
of its position, One Beacon cites Don’s Building Supply, Inc. v. OneBeacon Insurance Co.,
267 S.W.3d 20 (Tex. 2008), where the Texas Supreme Court concluded that the CGL
insurance policy at issue “does not support adoption of an exposure rule, at least not
where . . . physical injury to tangible property [h]as [been] alleged.” Id. at 29 (internal
quotation marks omitted). The Texas Supreme Court thus “decline[d] to recognize a[n]
. . . exposure rule for the property damage claims alleged under th[e] policy.” Id. As
these quoted portions of the decision suggest, however, the decision in Don’s Building
Supply was expressly limited to claims for property damage. See id. at 22‐23, 29. The
court, in fact, clearly stated multiple times that it “express[ed] no opinion on whether
the coverage rule for determining if a claim occurs during the term of [a CGL insurance]
policy is the same for bodily injury and property damage claims.” Id. at 28 n.32; see also
id. at 28 (“A related if not overlapping body of law, which we do not explore today,
addresses when coverage is triggered on bodily injury claims under CGL and other
policies.”); id. at 28 n.29 (“[W]e express no view on whether the rule for determining the
triggering of coverage is the same for bodily injury and property damage claims.”); id.

20100327‐CA 24
at 26 n.23 (“[W]e express no view on whether the rule for determining the triggering of
coverage is the same for bodily injury and property damage claims.”).

¶49 In explaining that its decision did not “explore . . . when coverage is triggered on
bodily injury claims under CGL and other policies,” the court in Don’s Building Supply
cited without criticism Guaranty National Insurance Co. v. Azrock Industries Inc., 211 F.3d
239, 243 (5th Cir. 2000) overruled by OneBeacon Insurance Co. v. Don’s Building Supply, Inc.,
553 F.3d 901 (5th Cir. 2008), as an example of the application of the exposure trigger
theory to bodily injury coverage. See Don’s Bldg. Supply, 267 S.W.3d at 28 & n.32. In
Azrock, the Fifth Circuit recognized that “Texas courts ha[d] not squarely addressed the
issue of the trigger of coverage in progressive disease cases” and endeavored to “make
an Erie guess on this aspect of Texas law.” Id. at 246. After reviewing applicable Texas
law, the court in Azrock “decline[d] to adopt the continuous trigger theory as the best
Erie guess of what the highest Texas court would do if squarely faced with this issue”
because at that time “no Texas court ha[d] ever adopted or implicitly endorsed the
continuous trigger theory.” Id. at 249 (“[A]dequate support [has not been presented] . . .
to convince us that if a Texas court were faced squarely with the issue of the trigger of
coverage in the progressive disease context, it would adopt the continuous trigger
theory[ and w]e therefore decline to do so for Texas.”). The court in Azrock then
concluded that its “best Erie guess as to what Texas would choose as the event that
triggers” coverage “under a uniform CGL [insurance] policy” for bodily injury in the
form of a progressive disease “is the exposure theory.” Id. at 251‐52.

¶50 The Don’s Building Supply court also cited Pilgrim Enterprises, Inc. v. Maryland
Casualty Co., 24 S.W.3d 488 (Tex. App. 2000), called into question by Don’s Building Supply,
Inc. v. OneBeacon Insurance Co., 267 S.W.3d 20 (Tex. 2008), in recognition that, there, the
exposure trigger theory had been applied under Texas law to determine when coverage
of “personal injury or property damage [is triggered] during the policy period.” Don’s
Bldg. Supply, 267 S.W.3d at 27‐28 & n.27. In Pilgrim, the Texas Court of Appeals agreed
with the Azrock decision that under “[CGL] policies covering continuous or repeated
exposure to conditions, [the] injury . . . occur[s] as the exposure takes place.” Pilgrim, 24
S.W.3d at 497‐98 (emphasis omitted). The Pilgrim decision extended that reasoning to
property damage, determining that the exposure trigger theory was applicable to “both
physical injury and property damage” under a CGL insurance policy.16 See id. To the

16. The court in Pilgrim did this despite the court in Azrock explaining that, under Texas
law, the manifestation trigger theory had typically been applied to property damage
(continued...)

20100327‐CA 25
extent that the Pilgrim decision applied the exposure trigger theory to property damage
claims, it is likely overturned by the Don’s Building Supply decision. See Don’s Bldg.
Supply, 267 S.W.3d at 29 (declining to recognize the exposure trigger theory for property
damage claims under the particular insurance policy at issue). But as we have
discussed, the court in Don’s Building Supply explicitly declined to express any opinion
on the coverage provided for bodily injury under similar policy language. See id. at 26
n.23, 28 & n.32, 28 n.29. Thus, to the extent that the Azrock and Pilgrim decisions apply
the exposure trigger theory to bodily injury cases, those decisions likely remain
unaffected by Don’s Building Supply. Because the Don’s Building Supply decision rejected
the exposure trigger theory only in cases involving property damage claims, it has not
overruled precedent applying the exposure trigger theory to progressive disease bodily
injury cases under Texas law.

¶51 There is good reason for the Texas Supreme Court to emphasize that its decision
in Don’s Building Supply did not reach the issue of which trigger theory it would apply
in bodily injury cases. In addition to the general distinction between property damage
and bodily injury cases, progressive disease cases are recognized as being further
distinguishable from ordinary bodily injury cases. See supra ¶ 12; see also Azrock, 211
F.3d at 247 (stating that distinguishing cumulative diseases from other kinds of bodily
injury and property damage cases “is relevant” because “[c]umulative disease cases are
different from the ordinary accident or disease situation,” and treating cases where
other trigger theories have been applied “in entirely different contexts, particularly
property damage cases” as inapposite (emphasis added)); Insurance Co. of N. Am. v. Forty‐
Eight Insulations, Inc., 633 F.2d 1212, 1214, 1216, 1218‐19 (6th Cir. 1980) (rejecting the
argument that progressive diseases be treated the same way as any other disease
because “[c]umulative disease cases are different from the ordinary accident or disease
situation” (emphasis omitted)). It therefore seems reasonable that the Texas Supreme
Court was aware of the unique challenges presented by progressive disease cases and
made a conscious and deliberate decision to commensurately limit the reach of its
decision in Don’s Building Supply.

¶52 Ultimately, we agree with the district court that “no Texas court has specifically
adopted the continuous trigger theory . . . and only the exposure theory has been
adopted with respect to . . . bodily injury claims.” Although the issue has not been

16. (...continued)
cases. See generally Matthews Heating & Air Conditioning LLC v. Liberty Mut. Fire Ins. Co.,
384 F. Supp. 2d 988, 993‐94 (N.D. Tex. 2004) (explaining the Pilgrim decision).

20100327‐CA 26
finally resolved by Texas’s highest court, we see no reason to apply a different trigger
theory than courts applying Texas law have previously applied in circumstances similar
to the case before us. Accordingly, we conclude that the district court correctly
determined that Texas law requires application of the exposure trigger theory when
interpreting a CGL insurance policy to determine when coverage is triggered for bodily
injury in the form of a progressive disease.17

17. Our decision here is also consistent with the widely‐recognized contra proferentem
doctrine, which provides that if an insurance policy “is susceptible of more than one
reasonable interpretation, . . . the uncertainty [must be resolved] by adopting the
construction that most favors the insured.” Guaranty Nat’l Ins. Co. v. Azrock Indus. Inc.,
211 F.3d 239, 243, 250 (citing Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 667 (Tex.
1987)); see also Keene Corp. v. Insurance Co. of N. Am., 667 F.2d 1034, 1041‐42 (D.C. Cir.
1981) (“We are aided in our analysis of th[is as‐applied ambiguous policy language] by
the well‐accepted rule that ambiguity in an insurance contract must be construed in
favor of the insured.”); id. at 1046 (rejecting interpretations that “would deprive [the
insured] of the protection it purchased when it entered into the insurance contracts”);
Insurance Co. of N. Am. v. Forty‐Eight Insulations, Inc., 633 F.2d 1212, 1221 (6th Cir. 1980)
(stating that “insurance policies must be strictly construed in favor of the injured and to
promote coverages”); Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23
(Tex. 2008) (“If . . . a[n insurance] contract is susceptible to more than one reasonable
interpretation, we will resolve any ambiguity in favor of coverage.”).
One Beacon and Huntsman dispute which trigger theory applies because of the
resulting difference in coverage: if the continuous trigger theory is applied, One Beacon
is only obligated to cover either 61% of 34% of the total defense costs and settlement;
but if the exposure trigger theory is applied, One Beacon is obligated to cover 100% of
the total defense costs and settlement. Inasmuch as the exposure trigger theory favors
coverage in this case, such an interpretation of the ambiguous policy language is the
preferable result under the contra proferentum doctrine. We emphasize, however, that
because application of this doctrine has a distinct tendency to lead to result‐oriented
conclusions, its use is one of the reasons for the inconsistencies that plague this area of
the law. For this reason, we do not rely on the contra proferentum doctrine as a basis
for our decision but simply acknowledge that its application is consistent with the
decision we have already reached.

20100327‐CA 27
 CONCLUSION

¶53 As the intended place of performance at the time of contracting and the location
of the insured risk, Texas has the most significant relationship to this dispute. As the
state with the most significant relationship to this dispute, Texas law applies and
requires application of the exposure trigger theory to determine the bodily injury that
triggers the coverage provided by the CGL insurance policy in the context of a
progressive disease. Because the exposure trigger theory applies here, One Beacon is
required to fully indemnify Huntsman for 100% of the defense costs and settlement of
the wrongful death lawsuit. We therefore conclude that the district court correctly
granted Huntsman’s motion for summary judgment.

¶54 Accordingly, we affirm.

____________________________________
Stephen L. Roth, Judge

‐‐‐‐‐

¶55 WE CONCUR:

____________________________________
J. Frederic Voros Jr.,
Associate Presiding Judge

____________________________________
William A. Thorne Jr., Judge

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