Panel: Asbestos exposure over 30-plus years at multiple factories isn't just one insurable occurence

By Scott Holland | Apr 25, 2019

Illinois First District Appellate Court  

CHICAGO — A state appeals court has determined an insurer can’t treat thousands of claims related to asbestos against one business as a single occurrence for the purposes of policy coverage, a decision that significantly expands the amount of money potentially available to plaintiffs in a Cook County lawsuit.

The root issue is the insurance coverage available to Hennessy Industries, Inc., which is a corporate successor of Ammco Tools, Inc., as a result of workers’ exposure to asbestos while making automobile brakes from the 1950s through the 1980s. Thousands of workers from across the company sued Hennessy seeking compensation, which prompted the insurers to go to court for a declaration of their liability. 

Cook County Judge Thomas Allen granted summary judgment in favor of Continental Casualty Company and Columbia Casualty Company, prompting an appeal to the First District Appellate Court.

Justice Aurelia Pucinski wrote the opinion issued April 23. Justices Mary Anne Mason and Michael Hyman concurred. The panel clarified it wasn’t wading into Hennessy’s liability in the underlying suits from former workers or whether Ammco’s products were actually defective.

Illinois Appellate Justice Aurelia Pucinski

On appeal, Hennessy said it was appropriate to group claims based on factory location, not simply the manufacturing process over parts of four decades. The panel reviewed language in policies from Continental and other insurers involved over the span of the exposure — including Allstate Insurance Company, as successor to Northbrook Excess and Surplus Insurance Company — and found clear “language that claims arising from similar conditions at the same location should be treated as one occurrence,” Pucinski wrote, not that “all claims arising from the exposure to the same conditions, even if they occurred at multiple, different locations, give rise to only one occurrence.”

Continental pushed the panel to apply the “cause test,” which Illinois courts use to help determine the number of occurrences under one insurance policy, but Pucinski wrote that test is only applicable in situations that lack clear policy language, which isn’t the case with this dispute.

The panel further rejected the argument that Hennessy’s position results in an application of the “effects test,” which comes up with a number of occurrences based on the number of individual claims or injuries that resulted.

“We think it is readily apparent that our interpretation is not the result of applying the effects test,” Pucinski wrote. “First, like the cause test, the effects test has no application in this case because there is no need for an interpretative aid where the policy language is clear on if or how claims should be bundled for the purpose of determining the number of occurrences. Second, if the effects test were to be applied in the present case, it would not result in the conclusion that the claims should be grouped by location; instead, it would result in the conclusion that each claim was a separate occurrence.”

The panel reversed Allen’s ruling and remanded the issue for further litigation. It further agreed with a different company, American Home Assurance Company, which said that if Allen’s ruling was reversed, the issue of aggregate annual limits also should be remanded.

Allen hadn’t weighed on the limits question because he determined there was only one occurrence. Hennessy said the panel should decide on the limits because American Home didn’t present the matter to the county court. The appeals panel, however, said American Home didn’t lose its right to litigate the merits because it only offered a procedural argument.

According to Cook County court records, Continental has been represented by the firm of Clyde & Co, of Chicago.

Hennessy has been represented by the firm of Neal Gerber & Eisenberg, of Chicago. 

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Organizations in this Story

Circuit Court of Cook County Clyde & Co LLP Continental Casualty Hennessy Industries Illinois First District Appellate Court Neal, Gerber & Eisenber Llp

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