June 05, 2014 Articles

John Crane Explodes the Pro Rata Myth

The holding is applicable to any pollution or toxic-tort case involving a continuous trigger of coverage over a period of years.

By Kenneth Anspach – June 5, 2014

This commentator has previously noted that, for continuously triggered occurrences, the notion that pro rata is the accepted method of allocation of liability for defense and indemnity costs at the primary level in Illinois is a myth. Kenneth Anspach, “The Illinois Pro Rata Myth,”Coverage, Sept./Oct. 2009. Pro rata allocations have been applied in Illinois only in limited situations involving the doctrine of horizontal exhaustion or where unique policy language limits the “all sums” language of the typical comprehensive general liability policy and where multiple occurrences are the subject of the claim for coverage. Otherwise, the Illinois courts have uniformly applied the holding of the Illinois Supreme Court in Zurich Insurance Co. v. Raymark Industries, Inc., 118 Ill. 2d 23, 49–51, 514 N.E.2d 150 (1987), that “all sums” does not allow for proration and that, where coverage is horizontally triggered over a number of years, insurers whose policies are triggered are each jointly and severally liable for defense and indemnity. Yet, despite the holding in Zurich, insurance carriers have resisted an “all sums” approach to coverage. However, if there was any remaining doubt regarding the continuing viability of “all sums,” it was entirely dispelled by the recent holding in John Crane v. Admiral Insurance Co., 2013 IL App (1st) 093240-B, 991 N.E.2d 474, 2013 Ill. App. LEXIS 358 (1st Dist. 2013). In echoing the decisions of courts in a number of jurisdictions, John Crane held that “where coverage for asbestos-related injury claims is triggered by bodily injury or sickness or disease, all triggered policies are jointly and severally liable.” See, e.g.,Teck Metals, Ltd. v. Certain Underwriters at Lloyd’s, 735 F. Supp. 2d 1231, 1245, 2010 U.S. Dist. LEXIS 80659 (E.D. Wash. 2010)Chem. Leaman Tank Lines, Inc. v. Aetna Cas. & Sur. Co., 817 F. Supp. 1136, 1153 (D.N.J. 1993)Md. Cas. Co. v. Hanson, 169 Md. App. 484, 521, 902 A.2d 152, 2006 Md. App. LEXIS 104 (Md. Ct. Spec. App. 2006)Hercules, Inc. v. AIU Ins. Co., 784 A.2d 481, 491, 2001 Del. LEXIS 357 (Del. 2001)Cal. Union Ins. Co. v. Landmark Ins. Co., 145 Cal. App. 3d 462, 476-78, 193 Cal. Rptr. 461, 469–71 (1983). [Login required.]John Crane thereby places Illinois in accord with the majority rule forbidding insurers from limiting their liability to a pro rata share unless the policy expressly allows it. Goodyear Tire & Rubber Co. v. Aetna Cas. & Sur. Co., 95 Ohio St. 3d 512, 2002-Ohio-2842, 769 N.E.2d 835, 841 (Ohio 2002). [Login required.] The holding is applicable to any pollution or toxic-tort case involving a continuous trigger of coverage over a period of years.

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