The Carpenter family (Carpenter) sued their former landlord, Kenneth Hooper, alleging that he negligently exposed the Carpenter children to lead paint during the period of their tenancy in the residence owned and leased by Hooper, and that each suffered some degree of permanent brain damage as a result. The parties disputed if Hooper's insurance policies for the premises, issued by United Services Automobile Association (USAA), applied. USAA sought to resolve the dispute and brought a declaratory judgment action against the Carpenters and Hooper, seeking to establish that their maximum exposure in the underlying tort action was $300,000. The appellants alleged that the four consecutive policies for the policy periods involved provided $1,200,000 in limits that applied to the case. The lead paint case was stayed pending the resolution of the insurance case. The trial court granted USAA's motion but declared the policies should indemnify Hooper for up to $600,000 of liability. The court rejected USAA's argument that recovery should be from only one policy. It concluded that the policies were ambiguous as to whether limits could "stack" in cases of a continuous injury spanning more than one policy term. It construed the ambiguity of the policy language against USAA and declared that Hooper was exposed to $600,000 in the underlying tort action.

The appeal and cross appeal questioned if the circuit court erred in granting the summary judgment and the amount of the award. Hooper had purchased four consecutive homeowner's policies from USAA on the property rented to the Carpenters, who lived at the premises during each of the four policy periods. The periods were 07/28/90 to 07/28/91, 07/28/91 to 03/01/92, 03/01/92 to 03/01/93 and 03/01/93 to 03/01/94. The Carpenter family moved into the house in 1989 and left in the fall of 1993. Blood-lead levels are measured in micrograms per deciliter of blood and the first tests were not conducted until the fourth insurance policy period. Additional tests conducted at regular intervals over a subsequent three-year period showed readings on all three children at or above the danger threshold level. The trial court could not establish if the Carpenter children suffered any injury during the terms of the first two policies and decided that two policies were the maximum number of USAA policies that could be implicated.

The appellate court saw the issue otherwise. Lead is a toxin with no "safe" ingestion level. It held that the trial court erred in concluding there was no genuine dispute as to whether the Carpenter children were injured during the first and second policy periods. It found the distinction to be very simple. If an insurance policy was triggered, then some amount of the policy's coverage may be applied to indemnify the insured. Allocation in consecutive, primary policy cases like this one deals with the separate question of how much coverage from each policy applies to indemnify the insured for continuous injuries spanning multiple policy periods. The appellate court felt continuous injury, not solely manifestation, was the appropriate trigger in lead paint poisoning cases. The continuous nature of lead poisoning supported the argument for triggering every policy in effect during the period of ingestion.

The appellate court assumed, as an example, that the Carpenters won a total judgment of $3,000,000 for injuries sustained during the four insurance periods and that each of the four policies was from a different insurer. In such a case, the per-occurrence liability limits would not apply to limit the availability of coverage from the other policies. In such a case, Hooper would have $1,200,000 of coverage to apply to his liability to the Carpenters. Using this example, the language in the policy can be read to mean "total limit under this policy," rather than "total liability under all policies." USAA's interpretation would substantially alter liability allocation in continuous injury cases and the court did not feel that USAA's interpretation of the policy language was what the parties had in mind when they made the contracts. It held that the trial court erroneously concluded that the first two of four consecutive one-year policies were not applicable to the calculation of liability for the lead poisoning. In a lead exposure case, the proper coverage trigger was a continuous-injury theory, not a manifestation-of-injury theory. The continuous nature of lead poisoning supported the argument for triggering every policy in effect during the period of ingestion, which started when the Carpenters moved into the premises and ended when they left. The trial court judgment was reversed and remanded for further proceedings.

Rita Towana Riley et al., Appellants, v. United Services Automobile Association, Appellee. Maryland Court of Special Appeals. No 16. Filed April 4, 2005. Appeal from the Circuit Court, Baltimore City. Reversed and remanded. 2005 CCH Personal and Commercial Liability Cases. Paragraph 1072.