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Lamorak Insurance Co. v. Kone, Inc.

Court of Appeals of Illinois, First District, Second Division

May 15, 2018

LAMORAK INSURANCE COMPANY f/k/a Commercial Union Insurance Company, f/k/a Employers Commercial Union Insurance Company, Plaintiff and Counterdefendant-Appellant,
KONE, INC., and LIBERTY MUTUAL INSURANCE COMPANY, Defendants and Counterplaintiffs-Appellees.

          Appeal from the Circuit Court of Cook County. Nos. 12 CH 42887 The Honorable Rodolfo Garcia, Judge Presiding.

          PRESIDING JUSTICE NEVILLE delivered the judgment of the court, with opinion. Justices Pucinski and Mason concurred in the judgment and opinion.



         ¶ 1 When a former employee sued Kone, Inc. (Kone), for injuries suffered due to long-term exposure to asbestos, Kone notified all the insurance companies that sold policies to Kone during the employee's long tenure. One of the insurers, Lamorak Insurance Company (Lamorak), argued that the policies it sold to Kone for the years 1977 to 1985 counted as excess insurance because Kone had agreed to a self-insured retention (SIR) instead of a deductible for those years. Kone filed a counterclaim that included a request for a judgment declaring that Lamorak's policies provided primary coverage. The circuit court granted Kone's motion for summary judgment on that part of its counterclaim. On Lamorak's appeal from the partial summary judgment, we find that Lamorak's policies bear the characteristics of primary insurance. Accordingly, we affirm the circuit court's judgment.

         ¶ 2 BACKGROUND

         ¶ 3 In May 2012, John Nichol filed a complaint charging Kone with negligently exposing Nichol to asbestos and causing him to contract malignant pleural mesothelioma. Nichol alleged that his exposure to asbestos took place between the early 1960s and the late 1980s, when Nichol worked for Kone or Kone's corporate predecessors. Kone provided notice of Nichol's claim to insurers who sold liability policies to Kone and predecessor corporations covering the years from 1961 through 1988. One of the insurers, Lamorak, agreed to defend Kone, subject to a full reservation of rights.

         ¶ 4 In November 2012, Lamorak filed the complaint that initiated the case now before us. Lamorak, in its complaint, asked the court to enter a judgment allocating the liability to Nichol amongst all insurers who sold policies to Kone. Lamorak named Liberty Mutual Insurance Company (Liberty), Kone, and others as defendants. Lamorak admitted that its corporate predecessors sold insurance policies to Kone's predecessors covering the period from June 30, 1971, to June 30, 1985. (We will refer to Kone and its predecessors as Kone and to Lamorak and its predecessors as Lamorak.) Lamorak admitted that the policies for 1971 to 1977 provided primary coverage, subject to a deductible. For the years 1977 to 1985, Lamorak sold Kone both umbrella policies and other policies, subject to SIRs. The parties agree that Lamorak's umbrella policies provided excess coverage that Kone cannot reach until it exhausts underlying coverages. The parties disagree about Lamorak's duties under the other policies, the policies at issue, which the umbrella policies listed as underlying coverage.

         ¶ 5 Lamorak alleged, and Kone admitted, that several persons other than Nichol also filed complaints against Kone, seeking compensation for injury or damage due to asbestos exposure. Lamorak sought a judgment declaring that the policies at issue imposed on Lamorak no duty to defend because Kone had not exhausted all of its primary insurance for the years 1961 through 1988. Lamorak contended that Liberty, as a primary insurer for part of that period, had prior responsibility for providing a defense and indemnity to Kone for Nichol's claim.

         ¶ 6 Kone filed an answer to Lamorak's complaint and a counterclaim. In count I of the counterclaim, Kone sought a judgment declaring that Lamorak had a duty to indemnify Kone for its liability to Nichol and the other persons who sued Kone. As one part of that relief, Kone prayed for a judgment declaring that the policies at issue count as primary insurance.

         ¶ 7 Liberty filed a motion for summary judgment on Kone's counterclaim, contending that the evidence in the record showed that the policies at issue provided primary coverage. The parties filed with the court copies of the policies Lamorak issued to Kone for the years 1971 to 1985. Kone and Liberty also filed other documents, with no affidavits or depositions explaining how they came to possess the documents. Kone alleged that it received two of the documents from Lamorak in response to discovery, and Liberty similarly alleged that it received one of the documents from Lamorak in discovery. Lamorak argued that Kone and Liberty failed to authenticate all of the documents, but Lamorak did not deny the allegations that it had produced the three documents in discovery.

         ¶ 8 The Lamorak policy for 1976 to 1977 (the last with a deductible and not a SIR) provides:

"4. *** In the event of an occurrence, written notice *** shall be given by or for the insured to the company *** as soon as practicable.
6. Other Insurance: The insurance afforded by this policy is primary insurance ***.
When both this insurance and other insurance apply to the loss on the same basis, *** the company shall not be liable under this policy for a greater proportion of the loss than that stated in the applicable contribution provision below:
(a)Contribution by Equal Shares ***.
(b)Contribution by Limits. ***
I. Coverage A-Bodily Injury Liability ***
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of *** bodily injury *** to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury *** even if any of the allegations of the suit are groundless, false or fraudulent[, ] and ...

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