This disрute between two insurance companies, plaintiff Travelers Property Casualty Company of America (“Travelers”) and defendant RSUI Indemnity Company (“RSUI”), arises out of a settlement on behalf of their mutual insured, Valley Meats, Inc. (‘Valley Meats”) with John Strike and his granddaughter Abigail Fenstermaker. Strike became sick after eating ground beef manufactured by Valley Meats that was tainted with E. coli bacteria. Fenstermаker also became sick, apparently contracting an E. coli infection from Strike, and ultimately died. Travelers had issued a primary general liability policy to Valley Meats with limits of $1 million per occurrence and $2 million in the aggregate. RSUI had issued an excess policy to Valley Meats, with limits of $10 million per occurrence and in the aggregate. To protect Valley Meat’s interests, when the оpportunity arose to settle Strike’s claim for $500,000 and Fenstermaker’s claim for $2.5 million Travelers agreed to pay an additional $500,000 above its per occurrence limit, subject to its right to recoup thаt amount from RSUI if the court determines that the Strike and Fenstermaker claims involved a single occurrence.
Travelers has sued RSUI seeking a declaration that the two claims involved a single occurrеnce as that term is defined in the two insurance policies, and that RSUI owes it reimbursement of the amount Travelers paid in excess of its single occurrence limit. RSUI has answered and counterclaimed, seeking a declaration that the claims involved two separate occurrences and that it owes no reimbursement to Travelers. The parties have filed cross-motions for summary judgment. For the reаsons discussed below, the court grants Travelers’ motion and denies RSUI’s motion.
FACTS
Valley Meats is a manufacturer of beef and pork products including hamburgers, that are distributed to restaurants and other institutional foоd service outlets. In early May 2009, the Ohio Department of Health (“ODH”) identified a cluster of E. coli infections as strain no. 0157:H7, and concluded that the infections were all linked to ground beef produced by Vallеy Meats. The ODH identified three primary cases (i.e., cases were the infections were contracted by eating Valley Meats’ ground beef); and one secondary infection (where the E. coli infection was transmitted by one infected person to another person).
Strike was identified as one of the primary cases. He became ill after eating Valley Meats’ ground beef for lunch at a VFW hall on April 11, 2009. He was admitted to the hospital on April 18, 2009, testing positive for E. coli strain 0157. He remained in the hospital until May 1, 2009, when he was admitted to a nursing home. On June 5, 2009, he was discharged from the nursing home to live with his daughter, Fenstermaker’s mother.
Fenstermaker was identified by the ODH as the secondary case. She became ill on May 9, 2009, and was admitted to the hospital on May 11, testing positive for the same E. coli strain. She was subsequently diagnosed with hemolytic uremic syndrome (“HUS”), which is acute renal failure caused by E. coli. She suffered a stroke and died on May 17, 2009.
Both Travelers and RSUI had issued policies to Valley Meats for the period April 4, 2009 through Aрril 10, 2010. The Travelers’ policy limits were $1 million per occurrence and $2 million in the aggregate. The RSUI policy was in excess of the Travelers’ policy with a single limit of $10
DISCUSSION
As noted, the policy defines an occurrence as “an accident, including continuous or rеpeated exposure to substantially the same general harmful conditions.” The policy does not, however, indicate when an injury will be treated as a separate occurrence. Thus, the court “must construe the policy by applying the facts of the case.” Addison Ins. Co. v. Fay,
The parties agree that in Nicor, the Illinois Supreme Court adopted the “cause theory” to determine the number of occurrences under an insurance policy. Nicor,
Where each asserted loss is a result of a separate and intervening human act, whether negligent or intentional, or each increased the insured’s exposure to liability, Illinois law will deem each such loss to have arisen from a separate occurrеnce. By contrast, where the damages for which coverage is sought resulted from the manufacture and sale of defective products or a fraudulent sale’s scheme, the loss will be found to have emanated from a single cause and there will be but one occurrence for purposes of the applicable policies.
Application of Nicor’s standard to the instant case, аt least according to Travelers, leads to the inescapable conclusion that there is but one cause of the claimants’ injuries, and thus one occurrence under the policies. According to Travelers, the damages for which coverage is sought (Strike’s and Fenstermaker’s injuries), resulted from the manufacture and sale of the contaminated meat. Thus, the loss “emanated from a single cаuse” and there was but one occurrence.
Not surprisingly, RSUI sees it differently, arguing that the “time and space” test used in Addison is applicable. Under that test if the court determines that “cause and result are simultaneous or so closely linked in time and space as to be considered by the average person as one event,” then the injuries will be deemed to be the result of one occurrence. Addison,
In Addison, two young boys went fishing at a nearby lake. When they did not return the police were called and conducted a search, but were unable to locate them. The boys’ bodies were found three days later in an excavation pit on land near one of the boy’s home. The landowner was insured by Addison Insurance Company (“Addison”). The pit in which the boys wеre found was partially filled with water and the surrounding sand and clay were saturated, creating a “quick condition.” The boys were found at the edge .of the pool of water, trapped in the clay and sand. Investigators concluded that the boys became trapped while returning home to get out of a storm that had swept in. The boys used the property as a short cut. One tried to jump across the water, became trapped, then the other boy became trapped in an attempt to help the first.
The families sued the landowner and Addison agreed to settle the claims for an amount equal to the policy limits. The parties disputed which limit applied, the $1 million limit for each occurrence or the $2 million aggregate limit. Addison,
The Addison court first noted that its decision in Nicor involved “affirmative acts of negligence rather than an ongoing negligent omission” that was involved in Addison. Id. at 457,
Nonetheless, the Addison court concluded that applying Nicor would lead to an unreasonable interpretation of the policy. “Focusing on the sole negligent omission of failing to secure the property would allow two injuries, days or even weeks apart, to be considered one occurrence.” Id. Therefore, the court concluded that “in situations where a сontinuous negligent omission results in [separate] insurable injuries, some limiting principle must be applied.” Id. The limiting principle that the court decided upon was a “time and space” test. “Where negligence is the result of an ongoing omission rather than separate affirmative acts, a time and space test effectively limits what would otherwise potentially be a limitless bundling of injuries into a single occurrence.” Id. at 461,
As is evident from the above discussion, RSUI’s assertion that Addison “added a time and space element to the cause test” in every case is inaccurate. The time and space test is used only when the negligence alleged is the result of an “ongoing omission,” such as the failure by the land owner in Addison to secure his property. Id.
As Travelers correctly argues, the negligence asserted against Valley Meats is a discreet act—the production of a single batch of tainted meat. There were no intervening acts of negligence by Valley Meats that occurred between the time Strike and Fenstermaker became ill. Becausе the damages for which coverage is sought result from the manufacture and sale of a defective product, “the loss emanates from a single cause and there is but one occurrence.” Nicor,
For the reasons described above, plaintiff Travelers’ motion for summary judgment is granted. Defendant-counter-plaintiff RSUI’s cross motion for summary judgment is denied.