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M.H. Detrick Co. v. Century Indemnity Co.

September 25, 1998

M.H. DETRICK COMPANY, PLAINTIFF-APPELLANT,
v.
CENTURY INDEMNITY COMPANY, AS SUCCESSOR TO INSURANCE COMPANY OF NORTH AMERICA; CIGNA FIRE UNDERWRITERS INSURANCE COMPANY, AS SUCCESSOR TO AETNA FIRE UNDERWRITERS INSURANCE COMPANY; AND TIG INSURANCE COMPANY, AS SUCCESSOR TO TRANSAMERICA INSURANCE COMPANY, DEFENDANTS-APPELLEES.



The opinion of the court was delivered by: Justice Quinn

Appeal from the Circuit Court of Cook County

No. 96 CH 2988

Honorable Albert Green, Judge Presiding.

This declaratory judgment action involves a dispute over the scope of insurance coverage provided by defendants to plaintiff. On October 16, 1996, the circuit court granted summary judgment in favor of the defendants pursuant to section 2-1005 of the Illinois Code of Civil Procedure. 735 ILCS 5/2-1005 (West 1996). On appeal, plaintiff maintains that: (1) the circuit court erred in finding that a subsequent agreement between the parties superseded and extinguished plaintiff's rights under insurance policies issued by defendants; and (2) the circuit court erred in relying upon evidence of plaintiff's postagreement conduct in granting summary judgment.

For the following reasons, we affirm.

The facts relevant to this appeal are as follows. Plaintiff, M.H. Detrick Company (Detrick), manufacturer and distributor of asbestos-containing products, was sued by a number of parties in the 1980s who alleged injury due to exposure to plaintiff's products. In 1984, plaintiff turned to defendants, Century Indemnity Company, as Successor to Insurance Company of North America; Cigna Fire Underwriters Insurance Company, as Successor to Aetna Fire Underwriters Insurance Company, and TIG Insurance Company, as Successor to Transamerica Insurance Company for coverage under its insurance policies. In 1988, plaintiff and defendants entered into an agreement that covered all pending and future asbestos-related claims against plaintiff (1988 Agreement). Payment by defendants under the agreement was subject to the total available aggregate limits set forth in the insurance policies. Once that limit was exhausted, the defendant that provided the policy was excused from further contribution to plaintiff's damages and defense costs. On October 10, 1990, counsel for plaintiff informed plaintiff's excess insurers that plaintiff's primary coverage under the policies provided by defendants was exhausted and that the claims against plaintiff would thereafter be transferred to the excess insurers. The claims were then shifted to the excess carriers, which began payment, and defendants closed their primary policy files.

Defendants, with the exception of Century Indemnity Company, received no further communication from plaintiff regarding primary coverage until 1995 when counsel for plaintiff contacted defendants and maintained that plaintiff had not exhausted its coverage under the insurance policies. Specifically, counsel for plaintiff maintained that the policies' limits were not exhausted because suits involving injuries that occurred during plaintiff's installation of asbestos-containing products were erroneously included in calculating the aggregate limits under the policies. The reasoning behind this position was that the aggregate limits in the policies applied only to claims that would fall under the "products" hazard category of coverage, and any claim alleging injury occurred before plaintiff relinquished its product, i.e., during installation, would be a general liability claim and not a products hazard claim. Hence, plaintiff alleged that any payments made for installation injuries should not have been included in calculating the aggregate limits under the policies. Defendants rejected this claim, and plaintiff filed the present suit in the circuit court on March 26, 1996. On October 16, 1996, the circuit court granted defendants' motion for summary judgment pursuant to section 2-1005 of the Illinois Code of Civil Procedure. 735 ILCS 5/2-1005 (West 1994). This timely appeal followed.

Plaintiff's first argument on appeal is that the circuit court erred in finding that the 1988 Agreement superseded and extinguished plaintiff's rights under the policies issued by defendants.

In granting defendants' motion for summary judgment, the circuit court made the following finding:

"The defense and indemnity agreement supersedes [sic] the insurance policies and resolved fully Detrick's claim for coverage under its primary policies for all asbestos-related cases; that is, all cases against Detrick alleging body [sic] injury on account of exposure to Detrick's asbestos containing product [sic].

The agreement does not mirror the insurance policies. It applies to and sets forth the agreed to maximum indemnity limits that each insurer would be required to pay for; [sic] all asbestos claims against Detrick that allege exposure to Detrick's product without any regard to whether the claimant's injury occurred before, during, or after relinquishment of Detrick's asbestos-containing product.

Accordingly, the product hazard definition in the policies is irrelevant because the language in the defense and indemnity agreement is different from and broader than the language in the moving insurers' policies.

All the asbestos claims against Detrick are encompassed in the plain terms of the parties' agreement which should be ...


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