The opinion of the court was delivered by: Michael A. Telesca United States District Judge
Plaintiff Bausch & Lomb Incorporated, ("Bausch & Lomb" or "B & L") brings this action against defendant Lexington Insurance Company ("Lexington") seeking a declaration that Lexington is obligated to provide insurance coverage to Bausch & Lomb with respect to claims made against B & L by consumers for alleged injuries arising out of the use of Bausch & Lomb contact lens solutions. Bausch & Lomb claims that it purchased umbrella liability insurance policies ("the Lexington policies") from the defendant for yearly periods from January 1, 2004 through January 1, 2007, and that during this time, thousands of claims have been made against the company for alleged injuries arising from consumers' use of certain ReNu brand contact lens solutions. B & L contends that it has sought liability coverage from Lexington for these claims pursuant to the Lexington policies, as well as coverage for defense costs associated with these claims, but that Lexington has denied coverage for all but a portion of the claims.
According to B & L, Lexington has denied coverage because it has deemed each alleged injury sustained by users of B & L solutions as separate "occurrences" under the terms of the policy, and as a result, has agreed to provide coverage only when specified limits of liability have been met for each occurrence. Bausch and Lomb contends that Lexington has improperly characterized the injuries as arising from multiple occurrences, and in doing so, has ignored the portions of the Lexington Policies which, according to B & L, specifically provide for grouping of claims such as the claims brought against it. According to B & L, the grouping provisions of the Lexington policies require Lexington to treat the several injuries allegedly suffered by B & L's consumers as arising from a single occurrence. for determination by the court are the parties' competing motions for summary judgment. The parties contend that there are no material issues of fact in dispute, and that the claims brought by B & L can be resolved as a matter of law based upon the interpretation of policy language disputed by the parties. Specifically, Lexington contends that the Lexington policies should be construed so as to provide that each alleged injury sustained by users of B & L's contact lens solutions be treated as a separate occurrence. According to Lexington, pursuant to such an interpretation, it would only be obligated to provide insurance coverage once certain liability thresholds (as stated in the policies) have been met in each individual case. Lexington further contends that because those thresholds have not been reached, and are not likely to be reached, it is not obligated to provide a defense for every claim, and is not obligated to insure liability losses that do not reach the policy thresholds.
Bausch and Lomb contends that the policies should be construed so as to provide that all claims resulting from alleged injuries sustained as a result of using ReNu brand contact lens solutions constitute a single occurrence. B & L argues that if the claims are considered to be the result of a single occurrence, then B & L has met its liability thresholds, and Lexington is obligated to provide liability coverage and a legal defense against the claims.
For the reasons set forth below, I find that the claims brought by users of B & L's contact lens solutions for alleged injuries sustained as a result of the use of those solutions constitute separate occurrences under the terms of the Lexington policies, and as a result, Lexington is not obligated to insure B & L for losses arising from those claims, or defense costs arising from those claims, absent a showing that B & L has met the liability limits set forth in the policies.
Plaintiff Bausch & Lomb is a manufacturer of eye care products including several different brands and varieties of contacts lens solutions. Among the contact lens solutions manufactured and sold by B & L are three solutions known as ReNu MoistureLoc, ReNu Multiplus Multi-Purpose Solution, and ReNu Multi Purpose Solution. These three solutions are the subject of several products liability claims ("the ReNU claims") brought by consumers who were allegedly injured as a result of using the products. In general, the claimants contend that they were subjected to bacterial or fungal infections in their eyes because the solutions either fostered or failed to prevent such infections. According to the defendants, over 2000 claims have been made against the company, with the vast majority of claims involving use of the ReNu MoistureLoc solution.
As a result of the claims made against the company, Bausch & Lomb sought insurance coverage from Lexington pursuant to three insurance policies that B&L had purchased from Lexington. Bausch & Lomb held three Commercial Umbrella Policies issued by Lexington, for the periods January 1, 2004 to January 1, 2005, (the "2004 policy") January 1, 2005 to January 1, 2006, (the "2005 policy") and January 1, 2006 to January 1, 2007, (the "2006 policy"). Each of the policies provides a limit of $25 million of insurance coverage for each occurrence and in the aggregate, and sits in excess of retained limits specified in each of the policies. The retained limits for the 2004 and 2006 policies were $2 million per occurrence, with a $4 million aggregate retained limit. The 2005 policy contained a retained limit of $2 million per occurrence, and a $2 million aggregate retained limit. The 2004 and 2005 policies also contained maintenance retention obligations of $100,000 per occurrence once the aggregate retained limits had been reached. The 2006 policy contained a maintenance retention obligation of $250,000 per occurrence. The policies also include, subject to limitations and conditions, a duty to defend Bausch & Lomb against claims for damages.
Upon Bausch & Lomb's submission to Lexington of a claim for coverage with respect to the ReNu claims, Lexington acknowledged coverage for the claims, but advised B & L that Lexington considered each individual claim against B & L to have arisen out of separate "occurrence" (as that term is defined in the policies) and therefore, Lexington would only be obligated to pay on behalf of B & L judgments or settlements in excess of the $4 million aggregate retained limits, subject to the maintenance retentions of $100,000 or $250,000 as applicable. Bausch & Lomb objected to Lexington's determination that the claims against it resulted from multiple occurrences, and asserts that the ReNu claims result from a single occurrence. Bausch & Lomb thus contends that Lexington is obligated to provide liability coverage and defense costs for each year in which the $2 million "per occurrence" limit is reached. After Lexington refused to provide such coverage, Bausch & Lomb brought the instant action seeking, inter alia, a declaration that it is entitled to the coverage it seeks.
I. The Parties' Motions for Summary Judgment
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law."
When considering a motion for summary judgment, all genuinely disputed facts must be resolved in favor of the party against whom summary judgment is sought. Scott v. Harris, 550 U.S. 372, 380 (2007). If, after considering the evidence in the light most favorable to the nonmoving party, the court finds that no rational jury could find in favor of that party, a grant of summary judgment is appropriate. Scott, 550 U.S. at 380 (citing Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-587 (1986).
Lexington moves for summary judgment on grounds that there are no material facts in dispute, and that as a matter of law, it is entitled to judgment in its favor. In support of its motion, Lexington contends that because the alleged injuries suffered by users of plaintiff's contact solutions are the result of several occurrences, and not one single occurrence, it is not obligated to provide a defense to Bausch & Lomb against claims for injuries from those users, or to pay ...