Crane v. Admiral Insurance Co.
991 N.E.2d 474
Ill. App. Ct.2013Background
- Crane manufactures asbestos-containing gaskets; Kemper provided primary insurance with total limits of $41,075,000 through 2001.
- Crane also carried umbrella/excess policies from CNA, Allianz, TIG and others; ACC retroactively amended Kemper post-1986 policies to include defense costs in limits and created a SEP policy.
- Crane and Kemper entered the ACC January 7, 2002; 2006 settlement released Kemper from remaining obligations while Crane assumed some duties under the policies.
- Exhaustion and trigger issues were bifurcated: an Exhaustion Trial determined whether primary limits were exhausted; the court adopted horizontal exhaustion.
- Zurich triple-trigger framework (exposure, sickness, disease) governs exhaustion; exposure triggers bodily injury, sickness and disease trigger later events; continuous trigger arguments were contested.
- A 2007 exhaustion trial found Jones’ allocation method flawed; however, Mayer claim partially satisfied and analysis centered on whether Kemper’s pre-ACC limits were exhausted before umbrella/excess liability engaged.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can ACC be used to prove Kemper exhaustion? | Crane: ACC amendments control exhaustion limits; post-ACC limits may exhaust primary. | CNA: ACC invalid; cannot alter original exhaustion for purposes of triggering. | Remanded; horizontal exhaustion applies and ACC validity governs exhaustion proof. |
| Allocation: pro rata vs all-sums among excess/umbrella policies | Crane seeks all-sums allocation under Zurich framework. | Appellees support pro rata allocation among excess/umbrella. | Court adopts pro rata allocation for excess/umbrella; all-sums not required. |
| Zurich triggers: must prove all three triggers for exhaustion? | Crane contends all three triggers must be proven to exhaust primary policies. | CNA argues only one trigger evidence required; continuous trigger theory contested. | Zurich does not require proving all three triggers; coverage triggered by exposure, sickness, or disease; exhaustion occurs when all triggered primaries are exhausted. |
| Bodily injury timing and equitable continuous trigger | Crane relies on exposure as bodily injury per Zurich; seeks to avoid continuous trigger. | CNA requests reconsideration of exposure timing and equitable continuous trigger. | Court follows Zurich; rejects equitable continuous trigger; exposure triggers bodily injury; no change to continuous theory. |
| Standing of excess carriers to object to ACC terms | Excess carriers have standing to challenge ACC since it alters their rights between primary and excess layers. | Excess carriers lack contractual standing to challenge ACC terms. | Court finds excess carriers have standing to object; ACC terms affect their interests. |
Key Cases Cited
- Zurich Ins. Co. v. Raymark Indus., Inc., 118 Ill. 2d 23 (1987) (tripartite triggers: bodily injury, sickness, disease; bodily injury from exposure; supports non-all-sums approach)
- Outboard Marine Corp. v. Liberty Mutual Ins. Co., 283 Ill. App. 3d 630 (1996) (time-on-the-risk pro rata allocation for excess where continuous trigger)
- U.S. Gypsum Co. v. Admiral Ins. Co., 268 Ill. App. 3d 598 (1994) (horizontal exhaustion; all triggered primary policies must be exhausted before excess policies respond)
- Kajima Construction Services, Inc. v. St. Paul Fire & Marine Ins. Co., 227 Ill. 2d 102 (2007) (Kajima II; clarifies horizontal exhaustion; continued reliance on primary exhaustion before excess carriers contribute)
- Kajima Construction Servs., Inc. v. St. Paul Fire & Marine Ins. Co. (Kajima I), 368 Ill. App. 3d 665 (2006) (initial recognition of horizontal exhaustion; subsequent Kajima II refinement)
- Missouri Pacific R.R. Co. v. International Ins. Co., 288 Ill. App. 3d 69 (1997) (pro rata time-on-the-risk approach certified for NIHL/continuous claims)
- AAA Disposal Systems, Inc. v. Aetna Casualty & Surety Co., 355 Ill. App. 3d 275 (2005) (pro rata time-on-the-risk approach in excess insurance context)