Illinois Tool Works Inc. v. Travelers Casualty and Surety Company
26 N.E.3d 421
Ill. App. Ct.2015Background
- Illinois Tool Works (Illinois Tool) acquired welding-related businesses beginning in 1993; it had insurance policies issued by Travelers and Century for periods between 1971 and 1987.
- Multiple toxic-tort suits allege injury from exposure to asbestos, benzene, manganese, and welding products; Illinois Tool is variously named individually, as successor-in-interest, or both.
- The insurers’ last policy expired in 1987; Illinois Tool entered the welding market in 1993—insurers argue no duty to defend for post-1987 exposure.
- Illinois Tool sought a declaratory judgment that insurers owe a defense for the underlying suits; cross-motions for summary judgment were filed and the trial court held insurers must defend.
- The appellate court reviewed whether, under Illinois law, the insurers have a duty to defend based on the face of the underlying complaints and the policy language (duty-to-defend broader than duty-to-indemnify).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurers have a duty to defend when underlying complaints allege Illinois Tool caused injury during a policy period | Illinois Tool: complaints alleging direct liability during policy periods trigger insurers’ duty to defend | Insurers: last policy ended 1987 and Illinois Tool didn’t enter welding business until 1993, so no coverage | Held: Duty to defend exists where bare allegations, if true, could render Illinois Tool individually liable during policy period |
| Whether vague or unstated exposure/injury dates in complaints preclude duty to defend | Illinois Tool: ambiguities should be resolved for insured, so duty arises until ambiguity resolved | Insurers: absence of dates may mean exposure occurred after 1987 when Illinois Tool self‑insured, so no duty or allocation needed | Held: Ambiguous/unstated dates give rise to duty to defend (factual uncertainty); duty continues until ambiguity is resolved; insurers jointly and severally liable for defense costs |
| Whether insurers must defend pure successor‑in‑interest claims (alleging liability only as successor to after‑acquired companies) | Illinois Tool: generally did not seek defense for purely successor claims | Insurers: successor-only claims fall outside policy periods and thus no duty | Held: No duty to defend where allegations seek only successor liability for after-acquired companies |
| Whether insurers must defend suits that combine direct liability and successor claims | Illinois Tool: where direct claims potentially covered, insurers must defend whole suit | Insurers: should not have to defend successor portions if outside coverage | Held: If any direct claim triggers duty to defend, insurers must defend entire suit (including successor claims) — duty is joint and several |
Key Cases Cited
- Zurich Ins. Co. v. Raymark Indus., 118 Ill. 2d 23 (Ill. 1987) (once an "all sums" policy is triggered, insurer may be jointly and severally liable for defense costs)
- Maryland Cas. Co. v. Peppers, 64 Ill. 2d 187 (Ill. 1976) (insurer with duty to defend must defend all claims in the action even if some claims are not covered)
- Hugo Boss Fashions, Inc. v. Fed. Ins. Co., 252 F.3d 608 (2d Cir. 2001) (factual uncertainties in underlying complaints can give rise to a duty to defend until resolved)
- Perdue Farms, Inc. v. Travelers Cas. & Surety Co. of Am., 448 F.3d 252 (4th Cir. 2006) (describing duty to defend as "litigation insurance")
- Continental Cas. Co. v. Donald T. Bertucci, Ltd., 399 Ill. App. 3d 775 (Ill. App. Ct.) (low threshold for triggering duty to defend; complaints should be liberally construed in favor of coverage)