Travelers required to provide coverage despite missing policies in pollution case

An Illinois appellate court (1^st Dist.), applying Illinois law, upheld the circuit court’s ruling that an insured proved by a preponderance of evidence the material terms and conditions of several years of missing comprehensive general liability (“CGL”) and auto policies.

Rogers Cartage Company (“Rogers”), a trucking company that hauls bulk liquid chemicals to end-users, was sued in environmental contamination lawsuits.  Rogers tendered the defense of the environmental lawsuits to its insurer, The Travelers Indemnity Company and Travelers Property Casualty Company of America (collectively “Travelers”).  Travelers ultimately paid all of Rogers’s defense costs under a reservation of rights.  Rogers eventually settled the lawsuits for a total of $9 million and sought indemnification from Travelers.  Travelers then filed a declaratory judgment action seeking a declaration of the parties’ rights regarding the existence, terms, and conditions of various missing CGL and auto policies allegedly issued by Travelers to Rogers in the 1960s and 1970s. Under Illinois law, the insured seeking coverage has the burden of establishing by a preponderance of the evidence that the policies existed and the material terms and conditions of the policies. Rogers introduced secondary evidence consisting of various records produced by Travelers during discovery. The circuit court granted summary judgment in favor of Rogers and denied summary judgment to Travelers, finding that (1) Rogers proved the existence of the CGL policies by a preponderance of the evidence, (2) these CGL policies had the same material terms and conditions as those set forth in the 1960-61 and 1965-66 policies issued by Travelers to Rogers, and (3) Rogers proved the terms and conditions of the missing auto policies.

On appeal, Travelers argued that Rogers did not prove by a preponderance of the evidence the existence of the disputed CGL policies from 1961-62, 1962-63, and 1963-64.  The secondary evidence in the record consisted of a letter from a Travelers claims adjuster which indicated that Travelers had located secondary evidence that Travelers may have issued policies that were in effect from May 1, 1961 to April 1, 1967.  At deposition, the claims adjustor stated that the secondary evidence he referred to was “[r]enewal policy numbers on the front page of insurance policies, commercial account registers, and commercial account claim records.” The evidence in the record also consisted of a 1962 “Certificate of Insurance.”  The appellate court found that the claim adjuster’s letter, the 1962 “Certificate of Insurance,” and the existence of the undisputed bookend policies (the policies on either side of the missing years) collectively proved by a preponderance of the evidence that Travelers issued CGL policies to Rogers for the missing policy periods.

Travelers also argued that Rogers did not prove by a preponderance of the evidence the material terms and conditions of the CGL policies.  According to Travelers, there must be an “evidentiary link” between the bookend policies, specimen policies, and the missing policies before a party can use such evidence to prove the terms of a missing policy.  The appellate court disagreed with Travelers and held that Rogers proved the material terms of the CGL policies by presenting evidence based on the bookend policies and specimen policies used by Travelers from 1961-65. Notwithstanding the fact that Travelers argued that the bookend policies had different payment, coverage, and premiums endorsements, and that the 1960-61 policy had no contractual liability endorsement and no contractual liability schedule while the 1965 policy includes such a schedule, the appellate court found that Travelers had “not offered any affirmative evidence to rebut, undercut, or discount Rogers’s evidence that the CGL policies contained the same coverage and endorsements as the bookend policies and specimen policies.”  The appellate court also upheld the trial court’s ruling that Rogers proved that the terms and conditions of the auto policies were the same terms and conditions for the known auto policy year of 1960-61. Travelers Indem. Co. v. Rogers Cartage Co., 2017 IL App (1st) 160780 (Dec. 29, 2017).