ILLINOIS TRIAL COURT RULES THAT INSURED FAILS TO PROVE EXHAUSTION OR IMPAIRMENT OF $41 MILLION IN PRIMARY COVERAGE RELATED TO UNDERLYING ASBESTOS BODILY INJURY SUITS

On March 10, 2009, the Circuit Court of Cook County issued a judgment in favor of the Defendant umbrella excess insurers that the insured, John Crane Inc., failed to meet its burden in establishing the impairment or exhaustion of its primary insurance.  John Crane Inc. v. Admiral Insurance, et al., Circuit Court of Cook County, Illinois, Case No. 04-CH-8266 (J. Kinnaird, Mar. 10, 2009).  In the lawsuit, John Crane sought insurance coverage with respect to the hundreds of thousands of underlying asbestos bodily injury suits it faces arising from asbestos-containing products manufactured and sold through the 1980s.  At issue, with respect to the question of exhaustion of the primary insurance issued to John Crane, was the allocation of judgments entered in 66 underlying claims against the insured.  Those judgments, totaling some $51 million, represented judgments paid by or on behalf of the insured through September 2006.  John Crane attempted to meet its burden in allocating the judgments among the 42 years of primary insurance coverage by employing an allocation expert to present his opinions on the status of impairment or exhaustion of the coverage. 

The Court declined to adopt the opinions of the insured’s expert, finding those opinions unreasonable and unreliable, given the universe of information reviewed in forming the opinions.  In rejecting the expert’s opinion, the Court concluded that the insured failed to come forward with sufficient evidence to establish either the impairment or exhaustion of any of the primary insurance in effect from 1946-2001. 

Based on this, the Court entered judgment in favor of the umbrella and excess insurers.  In addition to ruling on the question of exhaustion, the court also issued rulings holding that the umbrella and excess insurers will only be required to pay a pro rata, time on the risk portion of any indemnity obligation owed under the insurance contracts and that the excess insurers had no duty to defend or obligation to indemnify for defense costs with respect to the legal fees and expenses incurred in defense of the underlying asbestos actions.  John Crane filed its notice of appeal on March 12, 2009.  John LaBarbera, co-chair of the Insurance and Reinsurance Practice at Clark Hill PLC, was lead trial counsel for Defendant, TIG Insurance Company, an excess insurer in the litigation.