Ware v. First Specialty Insurance Corporation , 2013 IL App (1st) 113340 ( 2013 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Ware v. First Specialty Insurance Corp., 2013 IL App (1st) 113340
Appellate Court JEAN WARE, as Personal Representative of the Estate of Kelly
Caption McKinnel, Deceased; NATALIE BROUGHAM; REBECCA CHELIN;
JAMES CHIAPPETTA; AMY CHUMLEY; DERRICK CUSICK;
JONATHAN D’AUGUSTA; DAVID DERMENJIAN; ANJALEE
DESAI; BENJAMIN EISENBERG; JEREMY FARMER, as Personal
Representative of the Estate of Sam Farmer, Deceased; MIA
FITZGERALD, as Special Administrator of the Estate of Shea Fitzgerald,
Deceased; GILMORE S. HAYNIE, as Independent Administrator of the
Estate of Margaret G. Haynie, Deceased; SARAH HOFFMAN; DENNIS
E. HULL; ADAM HURDER; JORDAN HURDER; LYNDSIE
JACKSON; ROBERT V. JACKSON, as Special Administrator of the
Estate of John T. Jackson, Deceased; JENNIFER JOHNSON;
MUHAMMAD KARIMUDDIN, as Special Administrator of the Estate
of Muhammed Hameeduddin, Deceased; ALAN J. KLINGER;
KENNETH R. KORANDA, as Executor of the Estate of Robert A.
Koranda, Deceased; PHYLLIS M. KUMPF, as Administrator of the
Estate of Eric F. Kumpf, Deceased; JASON LEV; JENNIFER S. LEVIN;
MEGHAN R. LIMACHER; J. PATRICK LUPTON, as Personal
Representative of the Estate of Eileen Lupton, Deceased; MOLLY
NILAN; THOMAS J. O’CONNELL; SEAN O’DELL; ELIZABETH
PAGEL, as Special Administrator of the Estate of Kelly Pagel, Deceased;
WILLIAM PRIMACK; GEOFFREY C. RAPP; ALIBE ROBERTSON;
MELISSA SHAW; JAMES A. SHERIFF, as Independent Administrator
of the Estate of Katherine E. Sheriff, Deceased; BONNIE SORKIN, as
Special Administrator of the Estate of Julie Sorkin, Deceased; JAY
SORKIN, as Special Administrator of the Estate of Julie Sorkin,
Deceased; CULLAN STEFANIK; ALEXIS TESSLER; WHITNEY
TURNER; and HENRY J. WISCHERATH, SR., as Personal
Representative of the Estate of Henry J. Wischerath, Jr., a/k/a Jay
Wischerath, Deceased; Plaintiffs-Appellants, v. FIRST SPECIALTY
INSURANCE CORPORATION, Defendant-Appellee.
District & No. First District, Fifth Division
Docket No. 1-11-3340
Filed January 11, 2013
Held Defendant insurer was liable to the 42 plaintiffs killed and injured when
(Note: This syllabus a three-story porch system on an apartment building collapsed, but that
constitutes no part of liability was limited to the $1 million per occurrence limit, not the
the opinion of the court aggregate limit of $2 million, since the collapse and the resulting deaths
but has been prepared and injuries constituted a single occurrence pursuant to the language of
by the Reporter of the policy, regardless of the fact that some of the deaths and injuries did
Decisions for the not occur until some time after the collapse.
convenience of the
reader.)
Decision Under Appeal from the Circuit Court of Cook County, No. 2010-CH-10841; the
Review Hon. Franklin U. Valderama, Judge, presiding.
Judgment Affirmed.
Counsel on Leslie J. Rosen, of Leslie J. Rosen Attorney at Law, P.C., of Chicago, for
Appeal appellants.
Robert P. Conlon and James W. Kienzle, both of Walker Wilcox
Matousek LLP, of Chicago, for appellee.
Panel JUSTICE TAYLOR delivered the judgment of the court, with opinion.
Justices Howse and Palmer concurred in the judgment and opinion.
OPINION
¶1 At approximately 12:30 a.m. on June 29, 2003, a three-story porch located at the rear of
the property at 713 West Wrightwood in Chicago, Illinois, collapsed during a party, resulting
in the deaths of 12 individuals and injuries to 29 more. Those individuals and their estates
-2-
(collectively plaintiffs) ultimately settled their claims with the building owner and others
(collectively defendants) in the underlying tort action and obtained an assignment of rights
against appellant, First Specialty Insurance Corporation (First Specialty). Plaintiffs then filed
this declaratory action against First Specialty, arguing that because the porch collapse
constituted more than one occurrence, First Specialty was liable to them for the aggregate
limit of the relevant insurance policy, $2 million, rather than the $1 million per occurrence
limit that First Specialty had already paid. The trial court granted summary judgment in favor
of First Specialty and plaintiffs appealed.
¶2 I. BACKGROUND
¶3 The following facts were stipulated to by the parties in a jointly filed “Agreed Statement
of Facts” filed with the trial court on March 30, 2011, and therefore are not in dispute in this
appeal.
¶4 A. The Collapse
¶5 In 2003, Phillip Pappas owned the three-story building located at 713 West Wrightwood
in Chicago, Illinois. The building contained apartment units on each floor. Attached to the
rear of the building was a three-story porch system, with stairways leading from the ground
to the first floor, from the first to the second floor, and from the second to the third floor. On
the evening of June 28, 2003, the residents of the second- and third-floor apartments hosted
a party. At approximately 12:30 a.m. on the morning of June 29, 2003, while all of the
plaintiffs were standing on either the second or third floor, the third floor of the porch
suddenly collapsed onto the second floor of the porch, which immediately collapsed onto the
first floor of the porch. The collapse was not interrupted by any intervening human acts or
other preceding or subsequent events.
¶6 Ultimately, 13 individuals died and 29 more were injured “directly and solely from the
porch collapse.” Many of those injuries did not manifest themselves for days or weeks after
the collapse. The parties agree that “[t]here are no intervening acts or circumstances which
could have or did contribute to and/or cause the deaths, injuries and/or mental conditions”
suffered by the plaintiffs.
¶7 B. The Policy
¶8 At the time of the accident, Pappas’ property was insured by policy No. IRG 49077 (the
policy) issued by defendant First Specialty for the policy period from February 1, 2003, to
February 1, 2004. The other named insureds on the policy were Michael Aufrecht, L.G.
Properties Co., and Restoration Specialists, LLC (the insureds). The policy’s “Coverage A
Bodily Injury and Property Damage Liability” coverage unit had an “Occurrence Limit of
$1,000,000 and a General Aggregate Limit of $2,000,000, subject to a $5,000 per occurrence
deductible.”
¶9 The policy’s “Limits of Insurance” section provided, in pertinent part:
“1. The Limits of Insurance Shown in the Declarations and the rules below fix the
-3-
most we will pay regardless of the number of:
a. Insureds;
b. Claims made or ‘suits’ brought; or
c. Persons or organizations making claims or bringing ‘suits’.
***
5. Subject to 2. or 3. above, whichever applies, the Each Occurrence Limits [sic] is
the most we will pay for the sum of:
a. Damages under Coverage A; and
b. Medical expenses under Coverage C because of all ‘bodily injury’ and ‘property
damage’ arising out of any one ‘occurrence’.”
The policy defines bodily injury as “bodily injury, sickness or disease sustained by a person,
including death resulting from any of these as [sic] any time” and occurrence as “an accident,
including continuous or repeated exposure to substantially the same general harmful
conditions.”
¶ 10 C. The Consolidated Litigation and Settlement
¶ 11 Plaintiffs filed various complaints against the aforementioned insureds, which were later
consolidated for discovery purposes only (hereinafter the Consolidated Litigation). The
general thrust of those complaints was that the insureds’ failure to inspect the porch and
maintain it in a reasonably safe manner was the cause of the plaintiffs’ deaths and injuries.
First Specialty provided representation to the insureds and other defendants in the
Consolidated Litigation, subject to a reservation of rights that the consolidated litigation
“arose out of one accident or ‘occurrence’ and that First Specialty’s liability in connection
with the Consolidated Litigation under no circumstances would exceed the Policy’s
$1,000,000 Each Occurrence Limit.”
¶ 12 On March 11, 2010, the parties to the Consolidated Litigation, as well as Philadelphia
Indemnity Insurance Company (Philadelphia), the insureds’ excess insurance carrier, entered
into a settlement agreement resolving the litigation. Pursuant to the terms of that agreement,
Philadelphia agreed to pay its policy limit of $15 million, the insureds agreed to pay a
confidential amount, and First Specialty agreed to pay the policy’s $1 million occurrence
limit. As part of the agreement, all actions comprising the Consolidated Litigation were
dismissed with prejudice.
¶ 13 That same day, First Specialty executed an assignment of rights with plaintiffs, pursuant
to which plaintiffs had the limited right to attempt to recover the difference between the
policy’s general aggregate limit of $2 million and its occurrence limit of $1 million. The
assignment restricted plaintiffs from asserting any other claim under the policy.
¶ 14 On March 16, 2010, plaintiffs initiated the instant action against First Specialty, seeking
a declaratory judgment stating that First Specialty was obligated to pay out an additional $1
million under the policy because the collapse constituted more than one occurrence. First
Specialty denied these allegations, arguing that plaintiffs’ injuries all stemmed from one
occurrence, the collapse, and therefore it was not required to pay an additional $1 million.
-4-
The parties submitted cross-motions for summary judgment in the spring of 2011, asserting
essentially the same arguments. The trial court denied both motions in a July 15, 2011 order.
First Specialty filed a motion to reconsider that ruling on September 22, 2011.
¶ 15 On November 22, 2011, the trial court entered a written memorandum opinion and order
denying summary judgment for the plaintiffs and granting it in favor of First Specialty. In so
holding, the trial court found:
“[T]here was simply one source of all Plaintiffs’ injuries and resulting deaths. The porch
collapse, and only the porch collapse, was the dangerous condition causing harm to the
Plaintiffs. The parties agree that the porch collapse was not interrupted by any
intervening human acts or other preceding or subsequent events. No intervening acts or
circumstances broke the link between the injury causing event and the resulting injuries
to Plaintiffs. Only where each asserted loss is the result of a ‘separate and intervening
human act,’ whether negligent or intentional, or each act increased the insured’s exposure
to liability, Illinois law will deem each such loss to have arisen from a separate
occurrence.”
Thus, the trial court concluded that because the porch collapse and resulting injuries and
deaths constituted only one occurrence, First Specialty was not obligated to pay plaintiffs the
aggregate limit of $2 million. This appeal followed.
¶ 16 II. ANALYSIS
¶ 17 The sole issue raised on appeal is whether the trial court erred when it found the porch
collapse to be one occurrence and granted summary judgment in favor of First Specialty.
Plaintiffs contend that under Addison Insurance Co. v. Fay, 232 Ill. 2d 446 (2009), because
several individual plaintiffs’ injuries and deaths did not occur until some time after the
collapse, First Specialty could not establish that all of the injuries and deaths constituted one
occurrence under the policy. First Specialty, however, asserts that under the plain language
of the policy and under Illinois law, the trial court properly found that plaintiffs’ injuries
arose out of a single occurrence, because all of those injuries resulted from a single cause,
namely, the collapse of the porch. We agree with First Specialty.
¶ 18 Summary judgment should be granted if all the evidence on file shows that there is no
genuine issue as to any material fact and that the “moving party is entitled to a judgment as
a matter of law.” 735 ILCS 5/2-1005(c) (West 2008). “By filing cross-motions for summary
judgment, the parties agree that no factual issues exist and this case turns solely on legal
issues subject to de novo review.” Gaffney v. Board of Trustees of the Orland Park Fire
Protection District, 2012 IL 110012, ¶ 73.
¶ 19 This case requires us to interpret relevant provisions of the policy in order to determine
whether the porch collapse and resulting injuries and deaths constituted a single occurrence
under the policy language. In doing so, we are guided by our supreme court’s admonition that
our “primary objective is to ascertain and give effect to the intention of the parties as
expressed in the agreement. [Citation.] In performing that task, the court must construe the
policy as a whole, taking into account the type of insurance purchased, the nature of the risks
involved, and the overall purpose of the contract.” Nicor, Inc. v. Associated Electric & Gas
-5-
Insurance Services, Ltd., 223 Ill. 2d 407, 416 (2006). Where the terms of the policy are
unambiguous, we will give them their plain and ordinary meaning and apply them as written.
Pekin Insurance Co. v. Beu, 376 Ill. App. 3d 294, 296-97 (2007). Moreover, a policy
provision is not rendered ambiguous merely because the parties disagree as to its meaning;
rather, an ambiguity only exists where the policy language is susceptible to more than one
reasonable interpretation. Founders Insurance Co. v. Munoz, 237 Ill. 2d 424, 433 (2010).
However, in determining what constitutes an occurrence under the language of the policy,
we are also mindful that “what seems like a single accident, happening, or event to the
person who triggered the incident giving rise to the loss for which coverage is sought may
be perceived as multiple accidents, happenings or events from the perspective of those who
sustained injury or damage as a result of the insured’s conduct.” Nicor, 223 Ill. 2d at 418.
¶ 20 Here, it appears to us that, under the clear and unambiguous language of the policy, the
injuries in the instant case were all the result of a single occurrence. The policy defines
“occurrence” as “an accident, including continuous or repeated exposure to substantially the
same general harmful conditions.” The policy further provides that “damages because of
‘bodily injury’ include damages claimed by any person or organization for *** death
resulting at any time from the ‘bodily injury.’ ” The term “bodily injury” is defined in the
policy as “injury, sickness or disease sustained by a person, including death resulting from
any of these at any time.” (Emphasis added.)
¶ 21 In light of this language, we can see nothing in the policy which would support plaintiffs’
contention that the collapse constituted multiple occurrences under the policy. According to
the policy, the per-occurrence limit of $1 million applied to all injuries or deaths arising “at
any time” out of an accident. As stated above, the parties agree that “[t]here are no
intervening acts or circumstances which could have or did contribute to and/or cause the
deaths, injuries and/or mental conditions” suffered by the plaintiffs, and all of those injuries
were caused “directly and solely from the porch collapse.” Thus, plaintiffs’ argument that it
is entitled to a finding of multiple occurrences because “First Specialty cannot possibly show
that all of the individuals who died at the scene of the porch collapse, died at or near the
same time” is without merit. Under the language of the policy, which states that an
occurrence encompasses any injuries or deaths at any time, it is immaterial when the
individual plaintiffs’ injuries or deaths occurred, because, as plaintiffs concede, the collapse
was the sole cause of those injuries and deaths. Therefore, because the language of the policy
is unambiguous and indicates that the collapse and resulting injuries and deaths constituted
only one occurrence, we cannot say that the trial court erred in granting summary judgment
in favor of First Specialty. See Pekin Insurance Co., 376 Ill. App. 3d at 296-97 (where terms
of insurance policy are unambiguous, courts will apply them as written).
¶ 22 However, even if we were to accept plaintiffs’ contention that the policy is ambiguous
and look past the clear language of the policy, we would nevertheless reach the same
conclusion and find that the trial court did not err in granting summary judgment in favor of
First Specialty because all of plaintiffs’ injuries were caused by the same negligent act.
¶ 23 Our supreme court has noted that sometimes “the terms of the insurance policy are not
always sufficient, standing alone, to permit a definitive determination as to whether a
particular case involves one occurrence or many.” Nicor, 223 Ill. 2d at 418. In such cases,
-6-
Illinois courts, as well as courts in a majority of other jurisdictions, will apply the “cause
theory” to determine the number of occurrences “by referring to the cause or causes of the
damages.” Nicor, 223 Ill. 2d at 418. Courts favor this approach over the effect theory, which
determines the number of occurrences based on the number of claims or injuries resulting
from an event. The Nicor court distinguished these two theories using the following example:
“The difference between these two approaches is illustrated by the following
hypothetical. Assume that a motorist is traveling down a street lined with parked cars.
Looking away from the roadway to change the station on his car’s radio, the motorist
allows his vehicle to wander. As a result, his car strikes the sides of three of the parked
cars in succession, damaging each of them. The owners of the three damaged vehicles
sue, and the vehicle owner seeks indemnification from his automobile insurance carrier.
Under the effect theory, the fact that three cars were damaged and three claims were filed
would mean that there were three ‘occurrences’ for purposes of determining liability
coverage, absent specific policy language to the contrary. Under the cause theory, on the
other hand, the fact that the damage to all three vehicles resulted from the same
conditions and was inflicted as part of an unbroken and uninterrupted continuum would
yield the conclusion that there was only one occurrence.” Nicor, 223 Ill. 2d at 418-19.
¶ 24 Under the cause theory, the time at which injuries manifest themselves is irrelevant to a
determination of the number of occurrences. Illinois National Insurance Co. v. Szczepkowicz,
185 Ill. App. 3d 1091, 1096 n.2 (1989) (“one occurrence can result in injuries suffered over
a period of time; in such a case, time would be irrelevant to a determination of the number
of occurrences”). The only relevant question is how many separate events or conditions led
to a party’s injuries. Szczepkowicz, 185 Ill. App. 3d at 1096 n.2.
¶ 25 Applying the cause theory to the facts of this case leads to the inescapable conclusion that
the collapse constituted only one occurrence under the policy. There is no dispute that the
collapse was the sole and proximate cause of all plaintiffs’ injuries, nor is there any
allegation that any separate or intervening acts or circumstances contributed to their injuries.
The parties stipulated to this in their agreed statement of facts, and plaintiffs have provided
no evidence which would tend to support the existence of anything which would “deem each
such loss to have arisen from a separate occurrence.” (Internal quotation marks omitted.)
Addison, 232 Ill. 2d at 457. Because the parties are in agreement that the porch collapse was
the single cause of all of plaintiffs’ injuries, there can be no question that, under the cause
theory, the collapse constituted only one occurrence under the policy and, therefore, the trial
court did not err in granting summary judgment in favor of First Specialty.
¶ 26 Plaintiffs, however, contend that our inquiry must go beyond the cause theory and apply
the “time and space test” as articulated in Addison, 232 Ill. 2d at 461, which, they allege,
requires a reversal of summary judgment in favor of First Specialty. For reasons to be
discussed below, we believe the time and space test is inapplicable to the case at bar.
However, even if we were to apply this test to the facts of this case, we would nevertheless
reject plaintiffs’ contention that its application mandates a finding in their favor.
¶ 27 In Addison, the court found that where multiple injuries are sustained over an open-ended
period of time due to an “ongoing negligent omission,” rather than an affirmative act or acts
-7-
of negligence, the cause theory as stated in Nicor may be an insufficient rubric by which to
determine the number of occurrences involved. Addison, 232 Ill. 2d at 457-58. For instance,
if a landowner negligently failed to secure his property, and several people were injured on
the property at various times over the course of several weeks, the Addison court stated that
it would be unreasonable to bundle all of their injuries into a single occurrence, even though
all of their injuries were caused by the landowner’s ongoing negligent failure to secure the
property. Addison, 232 Ill. 2d at 458. The Addison court therefore adopted the time and space
test as a limiting principle in such situations. Addison, 232 Ill. 2d at 461. Under this test, “ ‘if
cause and result are simultaneous or so closely linked in time and space as to be considered
by the average person as one event,’ then the injuries will be deemed the result of one
occurrence.” Addison, 232 Ill. 2d at 460 (quoting Doria v. Insurance Co. of North America,
509 A.2d 220, 224 (N.J. Super. Ct. App. Div. 1986)).
¶ 28 The Addison court then applied the time and space test to the facts of that case. In
Addison, two boys left their homes to go fishing and never returned. Their bodies were found
several days later in an excavation pit. Addison, 232 Ill. 2d at 448-49. The boys’ times of
death could not be determined, nor could the amount of time that elapsed between their
deaths. Addison, 232 Ill. 2d at 450. The issue on appeal was whether the boys’ deaths
constituted one or two occurrences under the relevant insurance policy. Addison, 232 Ill. 2d
at 450. Applying the time and space test, our supreme court found that there was insufficient
evidence to determine whether the boys’ injuries “were so closely linked in time and space
to be considered one event.” Addison, 232 Ill. 2d at 462. Because the insurer bore the burden
of proof on that issue, the court found against the insurer and held that the boys’ deaths
constituted separate occurrences. Addison, 232 Ill. 2d at 462.
¶ 29 Plaintiffs rely primarily on Addison in support of their contention that summary judgment
in their favor is warranted under the time and space test. However, the present case, unlike
Addison, is not a case in which multiple injuries were sustained over time due to an ongoing
negligent omission. Plaintiffs have conceded that all of their injuries were caused “directly
and solely” by a single incident–the porch collapse–instead of multiple incidents occurring
over an open-ended period of time. Consequently, the time and space test is inapplicable
here. Rather, the cause theory as described in Nicor is controlling.
¶ 30 In this regard, the case of Travelers Property Casualty Co. of America v. RSUI Indemnity
Co., 844 F. Supp. 2d 933 (N.D. Ill. 2012), is instructive. RSUI involved two claims against
a meat product manufacturer that produced a batch of ground beef that was tainted by E. coli.
RSUI, 844 F. Supp. 2d at 934. The first claimant became ill after eating some of the tainted
meat on April 11, 2009; he subsequently transmitted the infection to his granddaughter, the
second claimant, who became ill on May 9, 2009. RSUI, 844 F. Supp. 2d at 934. The RSUI
court held that these two claims involved a single occurrence, and, in doing so, it rejected the
contention that the time and space test would apply. RSUI, 844 F. Supp. 2d at 936. The court
explained:
“The time and space test is used only when the negligence alleged is the result of an
‘ongoing omission,’ such as the failure by the land owner in Addison to secure his
property. [Citation.]
-8-
As Travelers correctly argues, the negligence asserted against Valley Meats is a
discreet act–the production of a single batch of tainted meat. There were no intervening
acts of negligence by Valley Meats that occurred between the time [the first claimant]
and [the second claimant] became ill. Because the damages for which coverage is sought
result from the manufacture and sale of a defective product, ‘the loss emanates from a
single cause and there is but one occurrence.’ ” RSUI, 844 F. Supp. 2d at 936 (quoting
Nicor, 223 Ill. 2d at 432).
Likewise, in the present case, it is undisputed that the injuries suffered by plaintiffs all arose
from a discrete incident: the collapse of the porch. Because the plaintiffs’ losses all emanate
from that single cause, under Nicor, there is but one occurrence. See Nicor, 223 Ill. 2d at 432.
¶ 31 Moreover, even if we were to apply the time and space test to the case at bar, we would
still reach the same result. Unlike in Addison, the trial court in this case was presented with
more than sufficient evidence to conclude that the cause of plaintiffs’ injuries was so closely
linked in time and space as to be considered by the average person as one event. As stated
above, there is no dispute regarding the causes or circumstances surrounding plaintiffs’
injuries and deaths. As the trial court correctly noted, “much was unknown as to the cause
of the boys’ deaths [in Addison]. That mystery, however, is not present in this case. All of
the Plaintiffs’ deaths and injuries can be directly traced to one cause: the porch collapse.” In
light of the evidence in the record and the facts stipulated to by the parties, we find no error
in this conclusion. Consequently, even if we were to apply the time and space test to this
case, we would nevertheless conclude that summary judgment in favor of First Specialty was
proper.
¶ 32 III. CONCLUSION
¶ 33 For the foregoing reasons, we affirm the decision of the trial court.
¶ 34 Affirmed.
-9-