MURPHY-BROWN, LLC v. ACE AM. INS. CO., 2023 NCBC 50

STATE OF NORTH CAROLINA
WAKE COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
19 CVS 02793
MURPHY-BROWN, LLC and
SMITHFIELD FOODS, INC.,
Plaintiffs,
ORDER AND OPINION ON
AMENDED MOTION FOR PARTIAL
SUMMARY JUDGMENT OF
DEFENDANTS XL INSURANCE
AMERICA, INC. AND XL SPECIALTY
INSURANCE COMPANY ON ISSUE
OF NUMBER OF ACCIDENTS
v.
ACE AMERICAN INSURANCE
COMPANY; ACE PROPERTY &
CASUALTY INSURANCE COMPANY;
AMERICAN GUARANTEE &
LIABILITY INSURANCE COMPANY;
GREAT AMERICAN INSURANCE
COMPANY OF NEW YORK; XL
INSURANCE AMERICA, INC.; and XL
SPECIALTY INSURANCE COMPANY,
Defendants.
THIS MATTER comes before the Court on Defendants XL Insurance America,
Inc. and XL Specialty Insurance Company’s (the “XL Defendants”) Amended Motion
for Partial Summary Judgment of Defendants XL Insurance America, Inc. and XL
Specialty Insurance Company on Issue of Number of Accidents (“Motion” or “Motion
for Summary Judgment,” ECF No. 679).
THE COURT, having considered the Motion, briefs, exhibits, affidavits,
depositions, arguments of counsel, and all other appropriate matters of record,
concludes that the Motion for Summary Judgment should be DENIED.
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP, by Michael
W. Mitchell, and Reed Smith, LLP, by Evan T. Knott, John D. Shugrue,
Andrew M. Barrios, David Cummings, and Ashley B. Jordan, for
Plaintiffs Murphy-Brown, LLC and Smithfield Foods, Inc.
Murphy-Brown, LLC v. Ace Am. Ins. Co., 2023 NCBC 50.

Bailey & Dixon, LLP, by John T. Crook and David S. Coats, and Clyde
& Co. US, LLP, by Marianne May, Shane Calendar, Daren McNally,
Luke Barlow, and Thomas Carruthers, for Defendants ACE American
Insurance Company and ACE Property & Casualty Insurance Company.
Maynard Nexsen, PC, by James W. Bryan, Brett Becker, and David S.
Pokela, 	for 	Defendant 	American 	Guarantee 	& 	Liability 	Insurance
Company.
Phelps Dunbar, LLP, by Thomas Contois, Justine Tate, Robert M.
Kennedy, and Christy M. Maple, for Defendants XL Insurance America,
Inc., and XL Specialty Insurance Company.
Cranfill Sumner & Hartzog, LLP, by Theodore B. Smyth, and Clyde &
Co. US, LLP, by Bruce D. Celebrezze and Jason Chorley, for Great
American Insurance Company of New York.
Davis, Judge.
FACTUAL AND PROCEDURAL BACKGROUND
1. 	“The Court does not make findings of fact on motions for summary
judgment; 	rather, 	the 	Court 	summarizes 	material 	facts 	it 	considers 	to 	be
uncontested.” 	Hyosung USA Inc. v. Travelers Prop. Cas. Co. of Am., 2021 NCBC
LEXIS 115, at **3 (N.C. Super. Ct. Dec. 16, 2021) (cleaned up).
2. 	The core set of facts underlying this litigation are not in dispute.
3. 	The Plaintiffs in this lawsuit are Smithfield Foods, Inc. (“Smithfield”)
and Smithfield’s wholly owned subsidiary Murphy-Brown, LLC (“Murphy-Brown”).1
(Sec. Am. Compl. [“SAC”], ECF No. 444.2, ¶¶ 12–13.) “Smithfield is the largest hog
and pork producer in the world.” (SAC ¶ 13.)
1 In this Opinion, Smithfield and Murphy-Brown are often referred to collectively as
“Plaintiffs.”

4. 	In 2013, property owners in eastern North Carolina who lived close to
Smithfield’s farming operations began filing lawsuits against Plaintiffs2—first in
state court in 2013 and later in federal court beginning in 2014.3 	(SAC ¶¶ 28–31.)
Each of these lawsuits consisted of similar allegations—that is, the assertion by the
property owners that Plaintiffs’ hog farming operations had resulted in both physical
invasions of their property and the loss of the use and enjoyment of that property.
(SAC ¶¶ 33–35.) The property owners alleged that Plaintiffs’ hog farming operations
had resulted in nuisance conditions such as odor, dust, noise, insects and pests, and
buzzards. (SAC ¶ 34.) The property owners also asserted that Plaintiffs’ trucks had
caused excessive traffic, odor, noise, dust, and light. (SAC ¶ 35.)
5. 	The United States District Court for the Eastern District of North
Carolina conducted five “bellwether” trials. 	(SAC ¶¶ 40–47.) 	Each of these trials
resulted in verdicts for the property owners against Smithfield and Murphy-Brown.
(SAC ¶¶ 40–47.) 	On appeal from one of the resulting judgments, the United States
Court of Appeals for the Fourth Circuit largely affirmed the judgment entered by the
district court.4 	McKiver v. Murphy-Brown, LLC, 980 F.3d 937 (4th Cir. 2020).
2 Those lawsuits are occasionally referred to herein as the “Underlying Lawsuits.”
3 Shortly before the filing of the federal suits, the property owners’ state court actions were
voluntarily dismissed. (SAC ¶ 30.)
4 The district court’s punitive damages award was vacated due to an evidentiary error, and
the case was remanded for rehearing on that issue. 	But in all other respects the district
court’s judgment was affirmed. McKiver, 980 F.3d at 977.

Smithfield and Murphy-Brown subsequently entered into a global settlement with all
of the property owners. (SAC ¶ 47.)
6. 	In the present lawsuit, Plaintiffs have sued various insurers who
provided primary and excess insurance coverage for their operations between 2010
and 2015. Plaintiffs contend that these insurers should be held liable for the amounts
Plaintiffs paid to settle the Underlying Lawsuits as well as the attorneys’ fees and
other costs Plaintiffs expended in defending the actions.
7. 	In order to analyze the present Motion, it is necessary to understand the
layers of insurance coverage that Plaintiffs possessed during the years at issue.
A. Primary Coverage
8. 	Plaintiffs’ first layer of coverage during the relevant policy periods
consisted of commercial general liability policies and business auto policies.5 Each of
the Primary Policies is described below.
9. 	Defendant 	ACE 	American 	Insurance 	Company 	(“ACE”) 	issued 	a
commercial general liability policy (“GL Policy”) and a business auto policy to
Plaintiffs for the policy period of 30 April 2010 through 30 April 2011. 	(“ACE Auto
Policy,” ECF No. 515.1; “ACE GL Policy,” ECF No. 515.2.)
10. 	Old Republic Insurance Company (“ORIC”) issued a GL policy and a
business auto policy to Plaintiffs for four consecutive policy years from 30 April 2011
to 30 April 2015. 	(“ORIC Policies,” ECF Nos. 515.3–10.) 	Although ORIC was
originally named as a defendant in this lawsuit, it ultimately entered into a
5 The policies comprising the primary layer of insurance coverage are on occasion referred to
herein collectively as the “Primary Policies.”

settlement with Plaintiffs, resulting in a dismissal of all claims asserted by Plaintiffs
against it. (ECF No. 508.)
11. 	The ACE GL Policy and the ORIC GL Policies (collectively, the “Primary
GL Policies”) were essentially “fronting policies,” meaning that they constituted a
form of self-insurance in which the insured’s deductible amount equaled the policy
limits of $5 million. (ACE GL Policy; ORIC GL Policies, ECF Nos. 515.7–10.)
12. 	The ACE Auto Policy and the ORIC Auto Policies (collectively, the
“Primary Auto Policies”) each have policy limits of $2 million with a deductible of $1
million, with the exception of one ORIC policy for the period of 30 April 2014 through
30 April 2015, which has a policy limit of $3 million and a deductible of $1 million.
(ACE Auto Policy; ORIC Auto Policies, ECF Nos. 515.3–6.)
B. Excess Coverage
1. 	Zurich First-Layer Excess Policies
13. 	Defendant 	American 	Guarantee 	& 	Liability 	Insurance 	Company
(“Zurich”) issued first-layer excess policies (the “Zurich Policies”) to Plaintiffs for four
consecutive annual policy periods spanning from 30 April 2010 through 30 April 2014.
(“Zurich Policies,” ECF Nos. 515.11–14.) The Zurich Policies have a $25 million policy
limit. (ECF Nos. 151.11–12, at p. 2; ECF Nos. 151.13–14, at p. 5.)
14. 	The Zurich Policies provide excess coverage that follows form to the
underlying Primary Policies “to the extent such terms and conditions are not
inconsistent or do not conflict with the terms and conditions” in the Zurich Policies.

(See, e.g., ECF No. 515.12, at p. 35.)6 	Furthermore, the Zurich Policies contain the
following language:
Notwithstanding anything to the contrary . . . , if underlying insurance
does not apply to damages, for reasons 	other than exhaustion of
applicable limits of insurance by payment of loss, then [the Zurich
Policies] do[ ] not apply to such damages.
(See, e.g., ECF No. 515.12, at p. 35.)
2. 	XL Specialty First-Layer Excess Policy
15. 	Defendant XL Specialty Insurance Company (“XL Specialty”) issued a
first-layer excess policy to Plaintiffs for the policy period 30 April 2014 through 30
April 2015. (“XL Specialty Policy,” ECF No. 515.25.) The XL Specialty Policy has a
$25 million policy limit. (ECF No. 515.25, at p. 11.)7
3. 	Great American Second-Layer Excess Policies
16. 	Defendant Great American Insurance Company of New York (“Great
American”) issued second-layer excess policies to Plaintiffs for five consecutive
annual policy periods spanning from 30 April 2010 through 30 April 2015. 	(“Great
American Excess Policies” or “Second Layer Excess Policies,” ECF Nos. 515.15–19.)
The Second Layer Excess Policies provide excess coverage that follows form to the
6 A “follow-form” excess insurance policy “covers a liability loss that exceeds the underlying
limits [of the underlying policy] only if the loss is covered by the underlying insurance.” 	1
LNPG: N EW APPLEMAN N ORTH CAROLINA I NSURANCE LITIGATION § 10.09[2] (LexisNexis
2022). Unless the policy specifies otherwise, a follow-form policy “is subject to the exact same
provisions of the underlying policy.” Id. at [1].
7 The Zurich Policies and the XL Specialty Policy are collectively referred to as the “First
Layer Excess Policies.”

First Layer Excess Policies and cover losses up to $25 million in excess of the First
Layer Excess Policies’ limits. (See, e.g., ECF No. 515.15, at p. 14.)
4. 	ACE P&C Third-Layer Excess Policies
17. 	Defendant ACE Property & Casualty Insurance Company (“ACE P&C”)
issued third-layer excess policies to Plaintiffs for five consecutive annual policy
periods spanning from 30 April 2010 through 30 April 2015. 	(“ACE P&C Excess
Policies” or “Third Layer Excess Policies,” ECF Nos. 515.20–24.) 	The Third Layer
Excess Policies provide excess coverage that follows form to the First Layer Excess
Policies and cover losses up to $25 million in excess of the Second Layer Excess
Policies. (See, e.g., ECF No. 515.20, at p. 5.)
5. 	XL Insurance Fourth-Layer Excess Policies
18. 	Defendant XL Insurance America, Inc. (“XL”) issued fourth-layer excess
policies to Plaintiffs for four consecutive annual policy periods spanning from 30 April
2010 through 30 April 2014. (“XL Excess Policies” or “Fourth Layer Excess Policies,”
ECF Nos. 515.26–29.) The Fourth Layer Excess Policies provide excess coverage that
follows form to the First Layer Excess Policies and cover losses up to $25 million in
excess of the Third Layer Excess Policies. (See, e.g., ECF No. 515.29, at p. 14.)
C. Lawsuit
19. 	Plaintiffs filed an initial Complaint in this action on 5 March 2019.
(ECF No. 4.) 	On the following day, this lawsuit was designated as a mandatory
complex business case. (ECF No. 3.)

20. 	Plaintiffs filed an Amended Complaint on 19 March 2019. (ECF No. 9.)
On 12 January 2021, the Court granted leave for Plaintiffs to file a Second Amended
Complaint, which is currently the operative pleading in this matter. (ECF No. 453.)
21. 	The SAC contains seven claims: (1) a breach of contract claim against
ACE for breach of its duty to defend the Underlying Lawsuits under the ACE Auto
Policy; (2) a breach of contract claim against ORIC for breach of its duty to defend the
Underlying Lawsuits under the ORIC Auto Policies; (3) a claim seeking a declaratory
judgment 	that 	ACE 	and 	ORIC 	are 	“obligated 	to 	defend 	and/or 	reimburse
the . . . defense costs incurred by [Plaintiffs]” from the Underlying Lawsuits; (4) a
claim seeking a declaratory judgment that “ACE is estopped from asserting any
coverage defenses” under the ACE Auto Policy; (5) a claim seeking a declaratory
judgment that “ORIC is estopped from asserting any coverage defenses” under the
ORIC Auto Policies; (6) a breach of contract claim against all Defendants for breach
of their duty to indemnify Plaintiffs “under their respective Policies in connection
with the settlement made by [Plaintiffs] with the [Underlying] Claimants”; and (7) a
breach of contract claim against all Defendants with respect to their duty to
indemnify for “fail[ing] and refus[ing] to make the full limits of their respective
policies available so as to enable [Plaintiffs] to settle the [Underlying Lawsuits].”
(SAC ¶¶ 73–121.)
22. 	On 22 December 2020, this Court entered partial summary judgment
for Plaintiffs on their first and second claims, ruling that ORIC and ACE’s “failure to
provide 	a 	defense 	[in 	the 	Underlying 	Lawsuits] 	constitutes 	a 	breach 	of 	their

respective duties to defend.” Murphy-Brown, LLC v. ACE Am. Ins. Co., 2020 NCBC
LEXIS 154, at **4–25 (N.C. Super. Ct. Dec. 22, 2020). The Court concluded “that a
duty to defend exists under Defendants’ Primary Auto Polices[.]” Id. at **54.
23. 	On 5 August 2022, the Court entered an Order and Opinion that
addressed various motions for summary judgment filed by the parties on a variety of
issues in this case. 	(ECF No. 646.) 	In its Order and Opinion, the Court made the
following rulings: (1) the Court granted Plaintiffs’ motion requesting a ruling that
ACE8 was estopped from asserting coverage defenses based on its breach of the duty
to defend; (2) the Court denied Defendants’ Motion for Partial Summary Judgment
requesting a ruling that coverage under any policy was barred by the lack of an
“accident” based on the Court’s determination that a genuine issue of material fact
existed on that issue; (3) the Court granted, in part, and denied, in part, Plaintiffs’
and Defendants’ Motions for Partial Summary Judgment based on the “Pollution
Exclusion” contained in Defendants’ various insurance policies; and (4) the Court
granted, in part, and denied, in part, XL Specialty’s Motion for Partial Summary
Judgment based on the “Known Injury” provision contained within its policy. (ECF
No. 646, at pp. 60–61.)
24. 	On 3 January 2023, the Court entered an Order denying Plaintiffs’ Rule
54(b) Motion for Reconsideration/Clarification and Rule 59(e) Motion to Amend
Regarding Summary Judgment Ruling. (ECF No. 669.)
8 By this time, ORIC was no longer a party to this litigation by virtue of its settlement with
Plaintiffs.

25. 	On 3 March 2023, the XL Defendants filed the Motion for Summary
Judgment that is currently before the Court. (ECF No. 679.)
26. 	The Motion came before the Court for a hearing on 18 July 2023. 	The
Motion is now ripe for decision.
LEGAL STANDARD
I. 	Summary Judgment
27. 	It 	is 	well 	established 	that 	“[s]ummary 	judgment is 	proper 	‘if 	the
pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to any material fact
and that any party is entitled to a judgment as a matter of law.’ ” Morrell v. Hardin
Creek, Inc., 371 N.C. 672, 680 (2018) (quoting N.C. R. Civ. P. 56(c)). 	“[A] genuine
issue is one which can be maintained by substantial evidence.” 	Kessing v. Nat’l
Mortg. Corp., 278 N.C. 523, 534 (1971). 	“Substantial evidence is such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion and
means more than a scintilla or a permissible inference.” 	Daughtridge v. Tanager
Land, LLC, 373 N.C. 182, 187 (2019) (citation and internal quotation marks omitted).
28. 	On a motion for summary judgment, “[t]he evidence must be considered
‘in a light most favorable to the non-moving party.’ ” McCutchen v. McCutchen, 360
N.C. 280, 286 (2006) (quoting Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 470
(2004)). 	“[T]he party moving for summary judgment ultimately has the burden of
establishing the lack of any triable issue of fact.” 	Pembee Mfg. Corp. v. Cape Fear
Constr. Co., 313 N.C. 488, 491 (1985).

29. 	The party moving for summary judgment may satisfy its burden by
proving that “an essential element of the opposing party’s claim does not exist, cannot
be proven at trial, or would be barred by an affirmative defense, or by showing
through discovery that the opposing party cannot produce evidence to support an
essential element of [the] claim[.]” Dobson v. Harris, 352 N.C. 77, 83 (2000) (citations
omitted). “If the moving party satisfies its burden of proof, then the burden shifts to
the non-moving party to ‘set forth specific facts showing that there is a genuine issue
for trial.’ ” Lowe v. Bradford, 305 N.C. 366, 369–70 (1982) (quoting N.C. R. Civ. P.
56(e)). If the nonmoving party does not satisfy its burden, then “summary judgment,
if appropriate, shall be entered against [the nonmovant].” United Cmty. Bank (Ga.)
v. Wolfe, 369 N.C. 555, 558 (2017) (quoting N.C. R. Civ. P. 56(e)).
II. 	Rules of Construction — Contracts of Insurance
30. 	“An insurance policy is a contract[,] and its provisions govern the rights
and duties of the parties thereto.” 	C. D. Spangler Constr. Co. v. Indus. Crankshaft
and Eng’g Co., 326 N.C. 133, 142 (1990) (citing Fidelity Bankers Life Ins. Co. v.
Dortch, 318 N.C. 378, 380 (1986)). Thus, general contract interpretation rules apply
when interpreting an insurance policy. 	Accardi v. Hartford Underwriters Ins. Co.,
373 N.C. 292, 295 (2020). “In North Carolina, determining the meaning of language
in an insurance policy presents a question of law for the Court.” Id.
31. 	“[I]t is well settled in North Carolina that insurance policies are
construed strictly against insurance companies and in favor of the insured.” 	State
Cap. Ins. Co. v. Nationwide Mut. Ins. Co., 318 N.C. 534, 546 (1986) (citations omitted).

Accordingly, “a contract of insurance should be given that construction which a
reasonable person in the position of the insured would have understood it to mean[.]”
Grant v. Emmco Ins. Co., 295 N.C. 39, 43 (1978). In addition,
[t]hose provisions in an insurance policy which extend coverage to the
insured must be construed liberally so as to afford coverage whenever
possible by reasonable construction. However, the converse is true when
interpreting 	the 	exclusionary 	provisions 	of 	a 	policy; 	exclusionary
provisions are not favored and, if ambiguous, will be construed against
the insurer and in favor of the insured.
N.C. Farm Bureau Mut. Ins. Co. v. Stox, 330 N.C. 697, 702–03 (1992) (citation
omitted).
32. 	An ambiguity exists when “in the opinion of the court, the language of
the policy is fairly and reasonably susceptible to either of the constructions for which
the parties contend.” Wachovia Bank & Tr. Co. v. Westchester Fire Ins. Co., 276 N.C.
348, 354 (1970). In those circumstances, our Supreme Court has instructed that “any
ambiguity or uncertainty as to the words used in the policy should be construed
against the insurance company and in favor of the policyholder or beneficiary.”
Accardi, 373 N.C. at 295; see also Woods v. Nationwide Mut. Ins. Co., 295 N.C. 500,
506 (1978). 	Further, when otherwise unambiguous policy language “become[s]
ambiguous as applied to the various causes of loss set forth in the policy, the
ambiguity will be construed against the insurer.” 	Pleasant v. Motors Ins. Co., 280
N.C. 100, 102 (1971).
33. 	Nevertheless, “[i]f a court finds that no ambiguity exists, . . . the court
must construe the document according to its terms.” 	Accardi, 373 N.C. at 295; see
also Woods, 295 N.C. at 506 (“[I]f the meaning of the policy is clear and only one

reasonable interpretation exists, the courts must enforce the contract as written; they
may not, under the guise of construing an ambiguous term, rewrite the contract or
impose liabilities on the parties not bargained for and found therein.”); Cowell v.
Gaston Cty., 190 N.C. App. 743, 746 (2008) (stating that “the language used in the
policy is the polar star that must guide the courts”) (quoting McDowell Motor Co. v.
New York Underwriters Ins. Co., 233 N.C. 251, 253–54 (1951)).
ANALYSIS
34. 	As noted above, in its 5 August 2022 Order and Opinion the Court
denied Defendants’ Motion for Partial Summary Judgment seeking a ruling that no
coverage exists under any of the policies at issue on the theory that the injuries giving
rise to the Underlying Lawsuits did not arise from an “accident” pursuant to the
definition of that term in the policies. Specifically, Defendants contended that all of
the injuries suffered by the property owners were either—from the standpoint of
Plaintiffs—intentional or substantially certain to occur such that they could not
properly be characterized as “accidents”. The Court determined that a genuine issue
of material fact existed on that issue that must be decided by a jury. (ECF No. 646,
at p. 27.)
35. 	The central issue with regard to the present Motion is whether—
assuming a jury ultimately finds that the property owners’ nuisance injuries were, in
fact, caused by an “accident” under the terms of the relevant policies—there were
multiple “accidents” as opposed to a single one.

36. 	As the XL Defendants explain in their briefs, this issue is significant
because in the event the Court rules that the Underlying Lawsuits were based on
multiple accidents, then “the primary auto policies’ deductibles would have to be paid,
and their per accident limits exhausted, for each such accident, before the excess
insurers could possibly owe any payment.” (ECF No. 680, at p. 3.)9
37. 	The XL Defendants argue that the record unambiguously discloses that
the Underlying Lawsuits stemmed from 89 separate accidents.10 	They base this
argument on their assertion that the underlying nuisance injuries arose due to the
operation of 89 separate farms (and the accompanying trucks serving those farms),
each of which created nuisance conditions. As a result, the XL Defendants contend,
“the nuisance conditions created by the trucks that served each of the hog farms at
issue must be considered to be separate ‘accidents’ within the meaning of the relevant
policy language.” (ECF No. 680, at p. 1.)
38. 	Conversely, both Plaintiffs and ACE contend that on these facts there
was only one “accident” pursuant to the language of the policies—that is, Plaintiffs’
centralized policies and procedures regarding the operation of their farms, including
their trucking operations.
9 Although a ruling in the XL Defendants’ favor on this issue would therefore benefit the
other excess insurers in this case, none of them have joined the XL Defendants’ Motion.
10 Despite making this argument, the XL Defendants have expressly reserved their right to
argue at trial that the Underlying Lawsuits did not, in fact, arise from any accidents at all
based on their contention that the nuisance injuries were either intentional or substantially
certain to occur from the standpoint of Plaintiffs. 	ACE has likewise preserved its right to
make this same argument at trial.

39. 	As a threshold matter, the parties disagree as to whether this issue is
appropriate for summary judgment. 	The XL Defendants argue that there are no
disputes of material fact underlying this issue and that a ruling at the present time
is appropriate. 	Plaintiffs disagree, contending that such an issue is better resolved
after the finder of fact determines whether there has, in fact, been an accident under
the policies to trigger coverage.
40. 	The Court is satisfied that no genuine issue of material fact exists
regarding this issue and that it is instead purely a question of law. The Court, in its
discretion, concludes that a ruling on the issue presented at this time is appropriate.
Duke Energy Carolinas, LLC v. AG Ins. SA/NV, 2020 NCBC LEXIS 70, at **13 (N.C.
Super. Ct. Jun. 5, 2020) (“In the circumstances of this case, the Court concludes that
addressing [the Motion for Partial Summary Judgment] at this time will not result
in an advisory opinion and is instead a prudent use of the Court’s time and
resources.”).
41. 	The Court begins its analysis by examining the relevant language of the
insurance policies at issue.
42. 	The ACE and ORIC Auto Policies provide that the insurers “will pay all
sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or property
damage’ to which this insurance applies, caused by an ‘accident’ and resulting from
the ownership, maintenance or use of a covered ‘auto’. ” 	(See, e.g., ECF No. 515.1, at
p. 16; ECF No. 515.3, at p. 40 (emphasis added).)

43. 	The ACE Auto Policy and the ORIC Auto Policies in effect from 30 April
2010 to 30 April 2014 have a $2 million limit per “accident” with a $1 million
deductible per “accident,” with no aggregate limit, and the ORIC Auto Policy in effect
from 30 April 2014 to 30 April 2015 has a limit of $3 million per “accident” with a $1
million deductible per “accident” and no aggregate limit. (See, e.g, ECF No. 515.1, at
pp. 2, 46; see also 2014–2015 ORIC Auto Policy, ECF No. 515.6, at p. 7.) As described
above, various insurers provided layers of excess coverage that are triggered when
the coverage limits under a primary policy are exhausted. (E.g., ECF No. 515.25, at
p. 21.)
44. 	The relevant policies state that “[a]ll ‘bodily injury’, ‘property damage’
and ‘covered pollution 	cost 	or expense’ 	resulting 	from 	continuous 	or repeated
exposure to substantially the same conditions will be considered as resulting from
one ‘accident’.” 	(E.g., ECF No. 515.1, at p. 19; ECF No. 515.3, at p. 43.) 	(emphasis
added).)
45. 	In interpreting essentially identical policy language, our Supreme Court
has held that North Carolina courts should apply a “cause” test to determine whether
the subject injury involves one or multiple occurrences. See Gaston Cty. Dyeing Mach.
Co. v. Northfield Ins. Co., 351 N.C. 293, 303 (2000).
46. 	Gaston involved an insurance coverage dispute arising from a products
liability action seeking damages related to the rupture of a pressure vessel used in
the manufacture of certain types of dyes utilized in diagnostic medical imaging. 	As
a result of the rupture, the leakage of a chemical used in the heating process

contaminated over sixty tons of dye. Id. at 295, 302. In analyzing the issue of whether
the damage had resulted from one occurrence or multiple ones, the Supreme Court
ruled that “[i]n determining whether there was a single occurrence or multiple
occurrences, we look to the cause of the property damage rather than to the effect.”
Id. at 303. 	Applying this principle, the Supreme Court concluded that although a
rupture of the pressure vessel contaminated “multiple dye lots” and the damage
“extend[ed] over two policy periods[,]” there was only one occurrence under the
policy—the injury-causing rupture of the machinery. Id. at 303–04.
47. 	Although Gaston is the most relevant case from our Supreme Court on
this issue, it is factually dissimilar to the present case. 	Here, conversely, property
owners suffered repeated exposure to conditions over multiple policy periods without
a sudden and one-time triggering event akin to the sudden rupture of machinery.
48. 	However, the Fourth Circuit has interpreted Gaston as standing for the
proposition 	that 	North 	Carolina’s 	“cause” 	test 	allows 	for 	the 	utilization 	of 	a
“proximate cause” theory in cases—like the present one—where there is no single
one-time event giving rise to the injuries at issues.
North Carolina courts have adopted a cause test to determine how many
occurrences an event encompassed. See Gaston Cnty., 524 S.E.2d at 565.
Under this type of test, the number of occurrences “is determined by the
cause or causes of the resulting injury.” Appalachian Ins. Co. v. Liberty
Mut. Ins. Co., 676 F.2d 56, 61 (3d Cir. 1982). 	The cause test stands in
opposition to the effect test, which treats each injury as a separate
occurrence.
. . .
Courts have adopted various formulations of the cause test. Under the
“proximate cause theory,” courts consider an event to constitute one
occurrence when “there was but one proximate, uninterrupted, and

continuing cause which resulted in all of the injuries and damage.” Id.
at 	1496 	(quoting 	Appalachian 	Ins. 	Co., 676 F.2d at 61) (internal
quotation marks omitted). 	In contrast, courts employing the “liability
event theory” look to the immediate event or events that gave rise to
liability to determine the number of occurrences.
. . .
Duke argues extensively that Gaston County Dyeing Machine Co. v.
Northfield Insurance Co. supports its argument that the Supreme Court
of North Carolina determines the number of occurrences by pinpointing
the most immediate cause or causes of the harm. In Gaston County, the
Supreme Court of North Carolina considered whether the rupture of a
pressure vessel and the resulting contamination of multiple lots of
medical 	imaging 	dye 	qualified 	as 	a 	single 	occurrence 	or 	multiple
occurrences. 	. . . Duke 	contends 	that 	Gaston 	County 	supports 	its
position that the Supreme Court of North Carolina looks to the most
immediate cause of the injury to determine the number of occurrences
because the court considered the valve rupture—not more remote
causes, such as the vessel’s defective design or manufacturing—to be the
accident.
. . .
Duke overlooks the Gaston County court’s conclusion that the incident
involved a single occurrence because, when “all subsequent damages
flow from the single event, there is but a single occurrence.” Id. at 565.
This statement evokes the proximate cause theory.
. . .
[W]e believe the Supreme Court of North Carolina would find that this
case involves one occurrence . . . . First, there is no reason to suspect
that the Supreme Court of North Carolina would not apply the test that
it enunciated in Gaston County to determine the number of occurrences
in contexts other than trigger of coverage. Numerous other courts have
applied a similar test to determine the number of occurrences in cases
analogous to this one, including the United States District Court for the
Eastern District of North Carolina in a case interpreting North Carolina
law. 	See W. World Ins. Co. v. Wilkie, No. 5:06–CV–64–H, 2007 WL
3256947, at *4–5 (E.D.N.C. Nov. 2, 2007); see also, e.g., Fireman’s Fund
Ins. Co. v. Scottsdale Ins. Co., 968 F. Supp. 444, 448 (E.D. Ark. 1997)
(concluding that preparation of contaminated food was one occurrence
despite multiple sales of that food); Doria v. Ins. Co. of N. Am., 210 N.J.
Super. 67, 509 A.2d 220, 224–25 (N.J. Super. Ct. App. Div. 1986)
(holding that insureds’ failure to properly fence their pool was one
occurrence regardless of the number of resulting injuries). 	Second,

Koikos v. Travelers Insurance Co., 849 So.2d 263 (Fla. 2003)—the
primary case that Duke relies on to support its contention than an
occurrence is the “most immediate cause of the injury”—has been
discredited by other courts. 	See Wilkie, 2007 WL 3256947, at *3–4
(declining to apply Koikos in part because it was inconsistent with
Gaston County); Donegal Mut. Ins. Co. v. Baumhammers, 595 Pa. 147,
938 A.2d 286, 295 (2007). There is no indication that the Supreme Court
of North Carolina would adopt the rule that the Florida Supreme Court
developed in Koikos rather than turning to the standard it enunciated
in Gaston County.
Mitsui Sumitomo Ins. Co. of Am. v. Duke Univ. Health Sys., Inc., 509 F. App’x 233,
238–40 (4th Cir. 2013).
49. 	The Court agrees that the Fourth Circuit’s analysis in Mitsui is fully
consistent with the Supreme Court’s analysis in Gaston. 	The Court likewise finds
instructive a number of cases decided by courts in other jurisdictions applying this
test to facts that are analogous (albeit not identical) to those present here in which a
company’s policies gave rise to multiple injuries over a period of time.
50. 	For example, in Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676 F.2d
56 (3rd Cir. 1982), the insured company engaged in acts of discrimination against
multiple claimants. The Third Circuit examined whether the company’s employment
policies had resulted in one or multiple occurrences for purposes of an applicable
insurance policy. 	Id. at 61. 	The Third Circuit held that under a proximate cause
analysis, “there was but one occurrence for purposes of policy coverage.” 	Id. 	This
was so because “the injuries for which [the insured] was liable all resulted from a
common source: [the insured’s] discriminatory employment policies.” 	Id. 	The court
declined to undertake any analysis of whether those policies were implemented by
different company officials or whether there were any individualized circumstances

in the specific incidents of discrimination at issue. See id. 	Instead, the court found
the common identifying cause that set the events giving rise to liability in motion and
determined that such an event was one occurrence. See id.
51. 	In so holding, the Third Circuit stated:
The fact that there were multiple injuries and that they were of different
magnitudes and that injuries extended over a period of time does not
alter our conclusion that there was a single occurrence. 	As long as the
injuries 	stem 	from 	one 	proximate 	cause 	there 	is 	a 	single
occurrence. Champion Int’l. Corp. v. Continental Casualty Co., 546 F.2d
502, 505-506 (2d Cir. 1976), cert. denied, 434 U.S. 819, 98 S. Ct. 59, 54
L. Ed. 2d 75 (1977). Indeed, the definition of the term “occurrence” in
the Appalachian policy contemplates that one occurrence may have
multiple and disparate impacts on individuals and that injuries may
extend over a period of time.
Id.
52. 	The Third Circuit has also rejected the notion that a different analysis
is appropriate when the applicable injuries occur in “different geographic regions” if
they otherwise arose from a single proximate cause. See Sunoco, Inc. v. Illinois Nat.
Ins. Co., 226 F. App’x 104, 108 (3rd Cir. 2007). In that case, Sunoco sued its insurer
after 	Sunoco 	was 	named 	as 	a 	defendant 	in 	77 	lawsuits 	“based 	on 	Sunoco’s
manufacture and distribution of gasoline containing MtBE[.]” 	Id. at 105. 	In
analyzing whether the insured’s conduct constituted a single occurrence under the
proximate cause theory, the Third Circuit stated as follows:
The underlying seventy-seven cases before us are not identical. 	They
allege contamination in different geographic regions, they resulted from
a variety of sources including gas tank leaks and accidental spills from
pipelines, and the plaintiffs vary from individuals to governmental
entities. However, despite these differences, all of the injuries alleged,
save one, arose from a single occurrence. 	Each of the plaintiffs in the
cases presented in the record allege the same cause of action: injuries
resulting from the hazardous manufacture of gasoline containing MtBE

and failure to warn. . . . [E]ach plaintiff suing Sunoco was exposed to
the same general harmful condition—gasoline containing MtBE—which
resulted in contaminated ground water. Treesdale, 418 F.3d at 336. It
is irrelevant how each plaintiff came into contact with the MtBE as the
same alleged negligent act of using MtBE was the proximate cause of
the harm. Union Carbide, 399 F. Supp. at 21.
Id. at 108.
53. 	This approach has also been followed by other courts applying a
proximate cause test. 	See, e.g., Bd. Of Cty. Cmm’rs v. Marcas L.L.C., 415 Md. 676,
695 (2010) (holding that a company’s “numerous negligent acts” in a private nuisance
and trespass action “were so uniform, routinized, and regularized, and occurred at
such steady and frequent intervals, that they merged into one continuous ‘same
occurrence.’ ”); Certain Underwriters at Lloyd’s v. S. Nat. Gas. Co., 142 So. 3d 436,
457 (Ala. 2013) (affirming a trial court finding that there was a single occurrence
when a “routine operation” of a gas pipeline system caused injuries across multiple
time periods to multiple persons).
54. 	Similarly, the evidence here is clear that the injuries suffered by the
property owners stemmed from central, uniform policies and procedures decided upon
and implemented by Plaintiffs in operating their farms—including their trucking
operations. 	The injuries suffered by the property owners did not materially vary
based on differences in the various farms owned or operated by Plaintiffs. 	To the
contrary, these injuries were based on exposure to conditions that were essentially
the same in all material respects. 	(See ECF No. 646, at p. 5 (“The Underlying
Claimants 	all 	alleged, 	inter 	alia, 	that 	Murphy-Brown’s 	[Concentrated 	Animal
Feeding Operations] and associated trucking operations had resulted in noxious

odors, hog waste, pests (flies, vermin, and buzzards), dust, truck traffic, noise and
lights—denying the use and enjoyment of their properties.”).)
55. 	The 	proposition 	that 	the 	primary 	causal 	factor 	leading 	to 	the
homeowners’ injuries was the set of policies and procedures implemented by Plaintiffs
is consistent with the analysis in McKiver. 	The Fourth Circuit stated there that
Plaintiffs were “solely responsible for [their contract growers’] trucking schedule and
for the decision of where to site the facility’s entrance road that passed near [the
claimants’] properties.” McKiver, 980 F.3d at 970.
56. 	Indeed, the record in this case shows the existence of a centralized
trucking operation coordinated by Plaintiffs. Plaintiffs conducted extensive training
for each of their truck drivers in southeastern North Carolina based on standardized
policies and procedures for transporting animals and feed as detailed in a Commercial
Driver License (“CDL”) Handbook. (CDL Handbook, ECF No. 728.5; Murphy-Brown
Training Lesson Plan, ECF No. 728.6.)
57. 	Moreover, “between 2002 and 2014, the scheduling and dispatching of
[Plaintiffs’] drivers and trucks – whether for hauling live animals, hog feed, or
mortalities – was 	coordinated 	from 	one 	of 	Murphy-Brown’s 	centralized
transportation offices located in Warsaw, Rose Hill, Kenansville, and/or Clinton,
North Carolina.” 	(Searles Decl., ECF No. 728.4, ¶ 6.) 	This means that individual
farms had little to no control over the individual traffic patterns of Plaintiffs’ trucks.
Plaintiffs also used the same types of trucks—which did not differ in any material

way—for hauling animals and feed and routinely purchased similar replacement
vehicles. (Searles Dep., ECF No. 728.2, at 267:1–268:20; Searles Decl. ¶ 18.)
58. 	In sum, the undisputed evidence before the Court reflects a “uniform,
routinized, and regularized” set of practices resulting from the operation of Plaintiffs’
farms 	that 	“occurred 	at 	such 	steady 	and 	frequent 	intervals” 	that 	they 	are
appropriately treated as a single “accident” for purpose of the insurance policies at
issue. Marcas, 415 Md. at 695.
59. 	Moreover, the Court’s ruling is fully consistent with the relevant policy
language as the injuries suffered by the property owners in the Underlying Lawsuits
clearly resulted from “continuous or repeated exposure to substantially the same
conditions[.]” (E.g., ECF No. 515.1, at p. 19; ECF No. 515.3, at p. 43.)
60. 	The Court has carefully considered the competing arguments offered by
the XL Defendants and finds them to be without merit. 	The Court also finds the
cases from other jurisdictions relied upon by the XL Defendants to be unpersuasive.
61. 	The Court therefore DENIES the XL Defendants’ Motion for Summary
Judgment and rules as a matter of law that the underlying injuries suffered by the
property owners that formed the basis for the Underlying Lawsuits are properly
treated as one—as opposed to multiple—accidents under the insurance policies at
issue.

CONCLUSION
THEREFORE, the Amended Motion for Partial Summary Judgment of
Defendants XL Insurance America, Inc. and XL Specialty Insurance Company on
Issue of Number of Accidents is DENIED.
SO ORDERED, this the 7th day of August, 2023.
/s/ Mark A. Davis
Mark A. Davis
Special Superior Court Judge for
Complex Business Cases