Va. Supreme Court rules for insurer in AES climate change coverage dispute

RICHMOND, Va.—The Virginia Supreme Court has upheld a lower court ruling that Steadfast Insurance Co. has no obligation to defend and indemnify Arlington, Va.-based energy corporation AES Corp. in a climate change suit.

The state's high court Thursday upheld a summary judgment issued by an Arlington County, Va., Circuit Court judge that held that a civil complaint filed against AES did not constitute an occurrence under the Steadfast commercial general liability policy the insurer had written for AES.

The underlying 2008 suit, Native Village of Kivalina et al. vs. ExxonMobil Corp. et al., was brought by the native community of an Alaskan barrier island, alleging AES and other companies damaged the village by causing global warming. The AES-Steadfast case was considered by many to be the first insurance coverage case involving climate change litigation.

In the high court’s opinion, Justice S. Bernard Goodwyn noted that the Steadfast CGL policies definition of occurrence was “an accident, including continuous or repeated exposure to substantially the same general harmful condition.”

The Kivalina community had alleged that AES intentionally released carbon dioxide and greenhouse gases into the atmosphere in the course of generating electricity.

“Kivalina alleges its damages were the natural and probable consequences of AES’s intentional actions,” the justice wrote. “Therefore, Kivalina does not allege that its property damage was the result of a fortuitous event or accident, and such loss is not covered under the relevant CGL policies.”