Appeal from the Judgment entered December 15, 1982 in the Court of Common Pleas of Lehigh County, Civil Division, No. 81-C-493.
Wayne A. Schiable, Philadelphia, for Manufacturers', appellants (at 169) and for appellees (at 170).
Matthew R. Sorrentino, Bethlehem, for Hartford, appellant (at 170) and for appellee (at 169).
Bruce W. Weida, Allentown, for Vale, appellee.
Cirillo, Beck and Cercone, JJ.
[ 340 Pa. Super. Page 514]
The plaintiff, Vale Chemical Company, Inc. (Vale), brought a declaratory judgment action against two of its former insurers, Manufacturers' Casualty Insurance Company (Manufacturers') and Hartford Accident and Indemnity Company (Hartford), as well as Transamerica Insurance Company as successor in interest to Manufacturers'.*fn1 The action was brought to determine which, if any, of these insurers has a duty to defend and, if necessary, to indemnify Vale in an action brought against Vale by a Sandra Smith in 1980 in the Circuit Court of Cook County, Illinois.*fn2
In order to understand the contentions of each party to this suit, we must examine Sandra Smith's claim against Vale since her lawsuit is the underlying basis for determining the insurers' obligations under their policies. Cadwallader v. New Amsterdam Casualty Co., 396 Pa. 582, 152 A.2d 484 (1959); Wilson v. Maryland Casualty Co., 377 Pa. 588, 105 A.2d 304 (1954). In her lawsuit, Ms. Smith claims damages for personal injuries in the nature of vaginal cancer. She allegedly sustained this injury as a result of her mother's ingestion during her pregnancy with Sandra in 1952-53 of a drug, stilbestrol. The drug was produced and sold by Vale and carried the trade name, diethylstilbestrol or DES (hereinafter DES).*fn3 Ms. Smith alleges that the DES
[ 340 Pa. Super. Page 515]
set in motion a misalignment of vaginal cellular growth during her fetal development and is the causative event of vaginal cancer which became manifest and so diagnosed in 1978 when Ms. Smith was 25 years old. She alleges that Vale's negligence is the proximate cause of her condition. At the time Sandra's mother ingested DES, Vale was insured under a policy with Manufacturers'. At the time Sandra's cancer became manifest and diagnosed, Vale was insured under a policy issued by Hartford. The question posed by Ms. Smith's allegations is how do they relate to the insurers' responsibilities under the policies they issued to Vale to defend and, if necessary, to indemnify Vale in the Sandra Smith case against Vale, the manufacturer of DES.
Vale contends that both insurers are responsible to defend and, if necessary, to indemnify it in the Sandra Smith case, reasoning that any step in the progression of a DES-related disease, from exposure to manifestation, triggers coverage of Vale's liability under each policy. Manufacturers', on the other hand, contends that policy coverage was triggered only when the injury became manifest and diagnosed in 1978 which was the time the Hartford policy was in effect. Manufacturers' also argues, that even if Sandra had suffered bodily injury during her fetal period, it was not the result of an accident as provided by the policy, and thus, outside the policy coverage. Hartford, understandably, contends that the policy coverage was triggered at the time of ingestion of DES by Sandra's mother at which time the Manufacturers' policy was in force and effect.
All the parties filed cross-motions for summary judgment and, after oral argument, the lower court entered summary judgment in favor of Vale, the plaintiff, against both defendants.*fn4
[ 340 Pa. Super. Page 516]
Both insurers have appealed the grant of summary judgment and their appeals have been consolidated.*fn5
The Manufacturers' policy (the policy in force and effect at the time Sandra Smith's mother ingested DES) contains the following language:
Coverage A Bodily Injury Liability.
To pay on behalf of the Insured, within the limits expressed in the declarations, all sums which the insured shall become obligated to pay by reasons of the liability imposed upon the Insured by law, for damages . . . because of bodily injury, sickness or disease, including death at any time resulting therefrom, suffered or alleged to have been suffered by any person or persons while this policy is in force, as a result of any accident occurring by reason of the existence, possession, consumption or use of any product manufactured, sold, handled, delivered or distributed by the Insured during the time of this policy or prior thereto . . . (emphasis added).
The policy further follows:
bodily injury shall be construed to mean also sickness, disability, or mental anguish resulting from the existence, possession, consumption or use of any product, covered by the policy . . .
The two issues to be decided concerning coverage to be provided by the Manufacturers' policy are (1) Did Sandra Smith "suffer" bodily injury within the terms of Manufacturers' policy coverage, and (2) If she did suffer "bodily injury," "sickness" or "disease" while in utero, what ...