Asbestos Claims Constitute Multiple Occurrences Implicating Aggregate Limits

The First District Appellate Court, in an opinion authored by Justice Pucinski, and joined by Justices Mason and Hyman, reversed the trial court’s issuance of summary judgment for the insurers.  The policyholder, Hennessy Industries (“Hennessy”), was the successor-in-interest to Ammco Tools Inc. (“Ammco”), a brake shoes manufacturer which incorporated asbestos.  As a result, Ammco/Hennessy is named in asbestos personal injury suits.  Among Ammco’s historical insurers in the 1960-70’s were Continental Casualty Co. (“CNA”), American Home Assurance Co., and Northbrook Insurance Co., n/k/a Allstate Insurance Co.

Trial Judge, Thomas Allen, had found that the thousands of underlying asbestos personal injury actions against Hennessy constituted a single “occurrence” thus preventing Hennessy from accessing the policies’ aggregate limits.  He found that the “occurrence” was Ammco’s continuous manufacturing of allegedly defective products over several decades.

The appellate court reversed, based on the clear language of the “occurrence” definition in the subject policies, which provides that “[a]ll such exposure to substantially the same general conditions existing at or emanating from each premises location shall be deemed one occurrence.”  The appellate panel reasoned that the policy language did not support a single occurrence outcome because “[i]f all exposures to the same conditions at one location are grouped into a single occurrence, it necessarily follows that exposures to the same conditions at a different location should be grouped into a separate, single occurrence, such that where exposures occur at multiple locations, multiple occurrences will result.”

The appellate panel held “that for each location at which multiple claims arose from substantially the same conditions, there will be a separate occurrence. Here, where multiple suits arose from the use of Ammco products at multiple premises and all allege injuries resulting from exposure to asbestos caused by the use of the Ammco products, the suits arising at each location constitute a separate occurrence per the premises language.”

The insurers argued that prior Supreme Court and appellate case law had utilized a “cause test” that typically resulted in a single occurrence outcome based on the policyholder’s decision to use or manufacture a defective product.  The panel rejected the argument because the policies at issue in those cases did not contain clear language as to how to determine the number of occurrences.  “To employ the cause test in the present case and conclude that Ammco’s continuous manufacture of the allegedly defective products constituted a single occurrence would be to completely ignore the premises language in the policies’ occurrence definitions and render it meaningless.”

The opinion addressed CNA’s claim that Hennessy had previously taken the position with its primary insurer, National Union Fire Ins. Co. (“National Union”), that its claims constituted a single occurrence.  However, the panel stated that CNA had not provided citations to the record as to where the National Union policy language could be found and that it would not search the extensive trial court record to locate it.  Continental Casualty Co. v. Hennessy Industries Inc., 2019 IL App (1st) 180183 (Apr. 23, 2019).