Addison Insurance Co. v. Fay ( 2007 )

No. 3-06-0085
Filed September 13, 2007.
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2007
ADDISON INSURANCE COMPANY, ) Appeal from the Circuit Court
) of the 12th Judicial Circuit,
Plaintiff-Appellant, ) Will County, Illinois,
)
v. )
)
DONNA FAY, as Independent )
Administrator of the Estate )
of Justice Steven Carr, ) No. 01-MR-717
Deceased, LAURA SHACKELFORD, )
as Special Administrator of )
the Estate of Everett Lee )
Hodgins, Jr., Deceased, and )
DONALD PARRISH, d/b/a PARRISH )
BLACKTOP, INC., ) Honorable
) Herman Haase,
Defendants-Appellees. ) Judge, Presiding.
_________________________________________________________________
PRESIDING JUSTICE LYTTON delivered the opinion of the court:
_________________________________________________________________
Plaintiff, Addison Insurance Company, brought a declaratory
judgment action against Donna Fay, as Special Administrator of the
Estate of Justice Carr, Laura Shackelford, as Special Administrator
of the Estate of Everett Hodgins, and Donald Parrish, d/b/a Parrish
Blacktop, Inc., to determine the extent of insurance coverage
available to Parrish to pay claims brought by Fay and Shackelford
resulting from the deaths of their sons. The trial court declared
that under the terms of the commercial general liability policy
issued to Parrish the boys’ deaths were two separate "occurrences,"
thereby allowing aggregate liability coverage of $2,000,000. We
reverse.
Parrish owned and operated Parrish Blacktop, Inc. The
business was located on several acres of commercial property which
included an excavation pit. Addison Insurance Company issued a
general liability insurance policy to Parrish that provided
coverage limits of $1,000,000 per "occurrence" and $2,000,000
aggregate. The policy defined "occurrence" as "an accident,
including continuous or repeated exposure to substantially the same
general harmful conditions." The policy did not define the term
"accident."
On April 30, 1997, Justice Carr, age 14, and Everett Hodgins,
age 15, left Hodgins’ house at approximately 5 p.m. to go fishing
at the local cooling lakes located on Commonwealth Edison property
near Carr’s house. They did not return home and were reported
missing around 10:30 that evening. A severe storm accompanied by
heavy rain, high winds and rapidly dropping temperatures struck the
area sometime after the boys were last seen. The lowest recorded
temperature on May 1 was 34 degrees Fahrenheit. Investigators
discovered the boys’ bodies on May 3, 1997, on Parrish’s property.
Both boys were trapped in the sandy, clay bottom excavation pit
that had partially filled with standing water. Their bodies were
located in close proximity to each other. Carr was found waist-
deep in water with his feet and legs covered in submerged clay
soil. Hodgins was lying next to Carr with one leg embedded in the
soil.
The parents of both boys sued Parrish separately, alleging
that he negligently caused the deaths of the two boys by failing to
properly secure and control access to his property. Addison
defended the consolidated lawsuit and filed a declaratory judgment
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action against Fay, Shackelford and Parrish to obtain a judicial
declaration that the boys’ deaths resulted from a single
occurrence, rendering the $1 million "per occurrence" limit
applicable.
Through deposition testimony, defendants’ expert, Eugene
Holland, opined that Parrish’s use of his property created a
dangerous condition, which required proper site security and
control. Holland testified that the boys’ deaths would have been
prevented if Parrish had proper security because Carr and Hodgins
would not have been able to access the property.
Officer Gary Knight testified in his deposition that the
officers themselves became entrapped as they tried to remove the
boys. He opined that Carr likely became stuck in the soil and
water when he tried to jump over the water in the bottom of the
excavation. Knight assumed that Hodgins attempted to come to his
friend’s aid. Hodgins appeared to have sat down next to Carr,
tried to pull Carr free, and in the process also became entrapped.
Lieutenant Jerome Nudera, agreed with Knight’s assessment of the
scene.
Dr. Larry Blum, the forensic pathologist who performed
autopsies on both bodies, testified through deposition that Hodgins
died of hypothermia due to entrapment in the sand. Blum determined
that Carr’s death was caused by drowning secondary to hypothermia
due to entrapment. Mary Case, Addison’s expert pathologist, agreed
with Carr’s findings. She concurred that the drowning of Carr was
secondary to, or a result of, the advancement of hypothermia.
Addison filed a pretrial motion requesting that the circuit
court rule that defendants, as plaintiffs in the underlying suit,
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bore the burden of proving that the deaths of Carr and Hodgins were
caused by separate occurrences. The court denied the motion and
held that as the plaintiff in the declaratory judgment action,
Addison bore the burden of proving that the boys’ deaths resulted
from a single occurrence.
At the conclusion of a bench trial at which the court
considered only the deposition testimony, the court concluded that
there was sufficient evidence to show that the causes and
circumstances of death were different. Consequently, the court
held that the boys’ deaths were two "separate occurrences," and the
$2 million aggregate limit applied.
ANALYSIS
I. Burden of Proof
Initially, Addison argues that as the insurer of the defendant
Parrish in the underlying wrongful death suit, the burden is on
Fay, Shackelford and Parrish in this declaratory judgment action to
prove that the deaths were the result of two separate and distinct
occurrences.
It is well established in Illinois insurance law that the
insured bears the burden of establishing that a claim falls within
the terms of a policy. Waste Management, Inc. v. International
Surplus Lines Insurance Co., 144 Ill. 2d 178 (1991). However, once
there is such proof, the burden is on the insurer to prove that the
loss was limited or excluded by a provision of the contract.
Farmers Automobile Insurance Association v. Susan Gitelson, 344
Ill. App. 3d 888, 896 (2003). The plaintiff in a declaratory
judgment action bears the burden of proof. The Board of Trade of
the City of Chicago v. Dow Jones & Co., 98 Ill. 2d 109 (1983).
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In the underlying lawsuit, Addison agreed to settle the
parents’ claims for the policy limits as a third-party defendant.
Addison then filed a declaratory judgment action, asking the court
to find that the policy’s single occurrence provision limits
coverage to less than the aggregate limits provision. As the
plaintiff, Addison bears the burden of proving that the limitation
applies.
II. Single or Separate "Occurrence"
The case before us concerns construction of the limitations
provision of the Addison Insurance policy. None of the parties
dispute that the horrible event that took the lives of Carr and
Hodgins qualifies as an occurrence for which Addison Insurance must
provide coverage. The question is whether that event constituted
two occurrences under Parrish’s liability policy; if so, the
aggregate coverage limit would apply to the underlying lawsuit.
The interpretation of an insurance contract is a matter of law
subject to de novo review. Illinois Farmers Insurance Co. v.
Marchwiany, 222 Ill. 2d 472 (2006). Insurance policies are
governed by the same rules of construction applicable as other
types of contracts. Nicor, Inc. v. Associated Electric and Gas
Insurance Services Limited, 223 Ill. 2d 407 (2006). A court’s
primary objective is to ascertain and give effect to the intention
of the parties as expressed in the agreement. Crum & Forster
Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (1993).
The words of the policy should be accorded their plain and ordinary
meaning. State Farm Mutual Automobile Insurance Co. v. Villicana,
181 Ill. 2d 436 (1998).
To determine the number of "occurrences" as the term is used
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in most general liability policies, courts around the country have
developed two prevailing approaches: the cause theory and the
effect theory. Nicor, 223 Ill. 2d 407. Following the majority of
jurisdictions, Illinois has adopted the cause approach. Nicor, 223
Ill. 2d at 419-20. Under the cause theory, the number of
occurrences is determined by referring to the underlying cause or
causes of damage.1 See Illinois National Insurance Co. v.
Szczepkowicz, 185 Ill. App. 3d 1091 (1989). In Nicor, Inc. v.
Associated Electric and Gas Insurance Services Limited, the
Illinois Supreme Court approved the following test for determining
the number of occurrences when applying the cause theory:
"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 within the meaning of
liability policies containing [per occurrence] language."
Nicor, 223 Ill. 2d at 432, citing Mason v. Home Insurance Co. of
Illinois, 177 Ill. App. 3d 454, 460 (1988).
Although Illinois has adopted the cause approach to determine
the number of occurrences within the aggregate limits of a policy,
the distinction between cause and effect is not always clear. As
this case illustrates, what appears to be a single accident to the
person who triggered it, may be perceived as multiple accidents or
occurrences to those who sustain the injury. Applying the cause
1
The effect theory determines the number of occurrences
by looking at the effect an event had, i.e., how many individual
claims or injuries resulted from it. Nicor, 223 Ill. 2d at 418.
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theory to these unfortunate and unique facts is difficult, at best.
Given the diverse contexts in which the meaning of "occurrence" may
arise, we focus narrowly on the circumstances that confront us in
this case. In doing so, we use an analytical method which we find
fruitful. By looking at the relationship of time and space to the
occurrence, we can tread a course that leads us to a resolution of
the cause under the cause theory.
In Doria v. Insurance Co. of North America, 509 A.2d 220 (N.J.
1986), the New Jersey Supreme Court applied the cause theory to
find a single occurrence where two boys were injured in a swimming
pool. The boys entered a neighbor’s property through a broken
fence and were playing near the abandoned pool. One fell in, and
the other boy tried to rescue him. The second boy fell in, and
both were injured. Holding that there was only one "occurrence"
under the insured’s policy, the court examined two factors: (1) the
injuries resulted from a single cause, that is, the insured’s
failure to properly fence the pool; and (2) there was a significant
temporal and spatial connection between the injuries. The court
noted that the boys crawled through the fence together, became
exposed to the pool at the same time, were injured almost
simultaneously and were rescued at the same time. Doria, 509 A.2d
220.
In Illinois National Insurance Co. v. Szczepkowicz, 185 Ill.
App. 3d 1091 (1989), a tractor-trailer stopped in middle of the
roadway and was struck by a vehicle. The driver immediately moved
the truck forward approximately 12 feet and then stopped again. He
did not completely remove the vehicle out of all lanes of traffic.
Five minutes later, another automobile smashed into the side of the
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stopped tractor-trailer. The court stated that a single accident
or occurrence will be found under the cause theory "if cause and
result are so simultaneous or so closely linked in time and space
as to be considered by the average person as one event."
Szczepkowicz, 185 Ill. App. 3d at 1095. The court concluded that,
based on the circumstances, the two collisions were not caused by
a "single force *** or uninterrupted continuum that, once set in
motion caused multiple injuries." Szczepkowicz, 185 Ill. App. 3d
at 1096. Further, the two collisions were not substantially the
same in time or space because the driver had moved the truck
forward and five minutes had elapsed between the two accidents.
Other jurisdictions have also incorporated the time and space
analysis when applying the cause approach. See Pemco Mutual
Insurance Co. v. Utterback, 960 P.2d 453, 456-57 (Wash. 1998)
(pedestrian was first struck by insured attempting to park her car,
car immediately lurched forward and struck pedestrian again; court
held that a single accident occurred because of "the interdependent
nature of the two impacts and their continuity and proximity in
time and location"); Olsen v. Moore, 202 N.W.2d 236, 241 (Wis.
1972) (one "occurrence" for purposes of policy limits where
insured’s vehicle struck two vehicles "almost instantaneously;"
there was virtually no "time or space interval" between the two
impacts, and the driver never regained control over vehicle.)
The above case law suggests that if cause and injury are
simultaneous or "so closely linked in time and space as to be
considered by the average person as one event," courts have found
that liability exists based on a single occurrence. See Doria, 509
A.2d at 224-25; Szczepkowicz, 185 Ill. App. 3d at 1095. If,
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however, enough time has elapsed between the injuries or damage to
property, or if the injuries or damages are sufficiently separated
in physical space, courts have been inclined to conclude that there
were multiple "occurrences." See Nicor, 223 Ill. 2d at 433-34.
Thus, in analyzing these facts, we must consider (1) the negligent
act or condition that caused the injury, and (2) how the temporal
and spatial nature of the incident may have affected any "separate
or intervening acts" or "increased the insured’s exposure to
liability" under Nicor.
First, the losses here arose from a single negligent act or
condition. Parrish failed to properly secure entry into the
excavation pit, a single negligent condition which led to the boys’
injuries. Thus, the boys’ tragic deaths were the result of one
cause.
Second, we conclude that the unfortunate events resulting in
the boys’ deaths are so closely linked in time and space as to be
considered by a reasonable person as one "occurrence." As the
record indicates, the boys entered the property together, they
journeyed across the same path leading into the excavation pit
simultaneously, and they became entrapped in the muddy soil within
moments of each other. Their deaths were both caused, at least in
part, by the freezing temperature of the air and water. Three days
later, their bodies were found lying only inches apart. Based on
these significant temporal and geographical facts, it is difficult
to conclude that the claimed losses resulted from more than one
occurrence.
Because the boys’ deaths resulted from a single cause and were
not sufficiently separated in space or time, we are compelled to
9
conclude that the general liability insurance policy is limited
to the maximum coverage ($1 million) for a single "occurrence."
CONCLUSION
The judgment of the circuit court of Will County is reversed.
Reversed.
CARTER, J., concurs.
JUSTICE WRIGHT, dissenting:
The majority correctly cites to Nicor, Inc. v. Associated
Electric & Gas Insurance Services Ltd., 223 Ill. 2d 407, 419-20
(2006), wherein our supreme court established that Illinois would
follow the cause approach to define an occurrence for purposes of
general insurance liability policies. However, I respectfully
dissent from the majority’s employment of a “time and space” test
to determine that these two tragic accidents constitute one
“occurrence.” Based on Nicor, I reach the opposite conclusion
In Nicor, our supreme court explained the cause approach:
“[W]here 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 within the meaning
of liability policies containing [per occurrence]
language.” Nicor, 223 Ill. 2d at 431-32.
Under Nicor, the inquiry should be whether each accident resulted
from a separate and “intervening” human act, not whether the
accidents were closely related in space and time. The focus should
be on the specific event or events that triggered liability. Here,
liability was not incurred when the boys entered the property. Nor
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did liability arise from the owner’s negligence in failing to
secure or warn of a dangerous condition. Rather, liability attached
only when the first boy entered the pit. The separate and
“intervening” human act, as found by the trial court and undisputed
by the parties, was the second boy’s decision to enter the pit in
an heroic, yet failed, rescue attempt.
We must keep in mind, the boys did not die because of their
decision to enter the property. Each boy lost his life as a result
of his individual, separate decision to enter the pit for a
different purpose. Consequently, I believe the proper focus is not
on how the boys entered the property, but how each boy entered the
water and subsequently perished.
This approach was adopted in Mason v. Home Insurance Co. of
Illinois, 177 Ill. App. 3d 454 (1988), and cited by our supreme
court with approval. In Mason, separate bouts of botulism could
have been called the same occurrence arising from the same pool of
contaminated food. However, the court viewed each act of serving
the tainted food as an occurrence. Here, one hazard, deadly sand,
consumed the strength of each boy in different ways and at
different times.
The majority relies upon the guidance of Illinois National
Insurance Co. v. Szczepkowicz, 185 Ill. App. 3d 1091, 1095 (1989),
decided prior to Nicor, which stated that a single accident or
occurrence will be found under the cause theory “ ‘[i]f cause and
result are so simultaneous or so closely linked in time and space
as to be considered by the average person as one event
[citation].’ ” The supreme court in Nicor did not adopt a “time and
space” inquiry as part of its cause theory analysis. Here, as
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horrific as it is to imagine, even under the “time and space”
inquiry, the autopsies corroborate what the physical evidence at
the scene revealed. The events that resulted in each boy’s death
did not occur simultaneously.
The majority recognizes Addison bears the burden of proving
the single occurrence limitation applies, but then relieves Addison
of this burden. There is a distinct lack of direct evidence
regarding the circumstances of these occurrences. The evidence is
lacking because the boys remained undiscovered for days. The
difficulty of this case invites conjecture, but the reality is
there were no eyewitnesses to the boys’ entry into the hazardous
water. Addison has no direct evidence that the best friends entered
either the property or the pit together and such conclusion is
speculative. Consequently, Addison cannot establish either death
resulted from the same occurrence.
The police rescue and investigation concluded the boys entered
the excavation separately, under two different circumstances, at
different times. One boy was found facing the bank with both feet
and legs embedded in the sand, while the other boy was found facing
the opposite direction with only one leg embedded in the sand. Two
officers testified it was likely Justice’s feet and legs were
entrapped in the sand when he attempted to jump over some water,
and Everett later entered the area and one of his legs became
entrapped as he attempted to rescue his friend. We do not know
whether Everett acted immediately, or contemplated entering the pit
for minutes or hours before he chose to enter the water. Sadly, the
autopsy revealed one boy perished from drowning and the other
succumbed to the cold, but the pathologist made no determination
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regarding the separation of time between each death.
Applying Nicor to the scenario advanced by Addison, one boy
became entrapped by accident, and the other boy deliberately
entered the pit, heroically aware of the hazard. These were
separate entries, separate intentions, separate acts, and should be
viewed as separate occurrences. The occasion of friendship should
not negate the separateness of each tragedy. If each boy had been
a stranger to the other, fishing at the same spot, the outcome
should be the same and support a finding of separate accidents.
I respectfully dissent from the majority and would find, based
on Nicor, the trial judge correctly found that the boys’ deaths
resulted from separate occurrences.
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