2018 IL App (1st) 163398
Ill. App. Ct.2018Background
- John Nichol sued Kone for mesothelioma based on asbestos exposure from the 1960s–1980s; Kone notified insurers for policies covering 1961–1988.
- Lamorak (through predecessors) issued Kone policies for 1971–1985; 1971–77 policies were primary with deductibles, while 1977–85 policies included umbrella (undisputedly excess) and other policies with self‑insured retentions (SIRs).
- Lamorak sued for a judicial allocation and contended it owed no duty to defend/indemnify until Kone exhausted primary insurance; Kone counterclaimed seeking a declaration that Lamorak’s 1977–85 policies were primary.
- The trial court granted summary judgment declaring Lamorak’s 1977–85 non‑umbrella policies to be primary insurance; Lamorak appealed.
- On appeal the court considered horizontal exhaustion (Kajima) and analyzed characteristics distinguishing primary from excess coverage (notice, duty to defend, premium size), plus contemporaneous documents produced in discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lamorak’s 1977–85 non‑umbrella policies are primary or excess | Kone: policies are primary (despite SIR language) because they require immediate notice, impose a duty to defend when liability likely exceeds the SIR, and carry substantial premiums; contemporaneous documents label them primary | Lamorak: policy language and SIR endorsements make the policies excess (SIR functions like underlying primary that must be exhausted) | Held: Policies are primary. Court relied on contract language, duty/notice features, premium levels, and contemporaneous documents showing parties treated them as primary. |
| Whether documents submitted in support of summary judgment were admissible/authenticated | Kone/Liberty: produced contemporaneous documents showing parties treated policies as primary; Lamorak produced some of those in discovery | Lamorak: many exhibits lacked formal authentication and should be ignored | Held: Court ignored unauthenticated documents but accepted three documents Lamorak did not dispute producing in discovery as sufficiently authenticated. |
| Whether Missouri Pacific requires that any policy referring to an SIR be treated as excess | Lamorak: interprets Missouri Pacific to mean SIR references always make a policy excess | Kone: Missouri Pacific was narrower and does not automatically convert all SIR‑referencing policies to excess; policy features control | Held: Missouri Pacific not read so broadly; presence of SIR alone does not determine primary vs excess. |
| Whether appellate court has jurisdiction over partial declaratory judgment | Lamorak: appeal argued nonfinality | Kone/Trial Ct: Rule 304(a) finding enabled appeal because declaration resolved a separable claim with immediate effect | Held: Appellate court has jurisdiction under Rule 304(a); the declaratory ruling finally resolved a separable claim. |
Key Cases Cited
- Kajima Constr. Servs., Inc. v. St. Paul Fire & Marine Ins. Co., 227 Ill. 2d 102 (2007) (horizontal exhaustion requires primary limits be exhausted before excess attaches)
- Missouri Pac. R.R. Co. v. Int’l Ins. Co., 288 Ill. App. 3d 69 (1997) (SIRs characterized as primary coverage in that case)
- Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90 (1992) (summary judgment review is de novo)
- American States Ins. Co. v. Nat’l Cycle, Inc., 260 Ill. App. 3d 299 (1994) (distinguishing features of excess policies: delayed notice, discretionary involvement)
- Krusinski Constr. Co. v. Northbrook Prop. & Cas. Ins. Co., 326 Ill. App. 3d 210 (2001) (primary policies impose immediate liability and an independent duty to defend)
- Architectural Iron Workers Local No. 63 Welfare Fund v. United Contractors, Inc., 46 F. Supp. 2d 769 (N.D. Ill. 1999) (documents produced in discovery may be self‑authenticating for summary judgment)