John Crane Inc. v. AIU Insurance Co. ( 2020 )

2020 IL App (1st) 180223FIRST DISTRICT
SIXTH DIVISION
June 12, 2020
No. 1-18-0223
JOHN CRANE INC., ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. )
)
ALLIANZ UNDERWRITERS INSURANCE )
COMPANY; ALLSTATE INSURANCE COMPANY, as )
Successor-in-Interest to Northbrook Insurance Company; )
AIU INSURANCE COMPANY; CENTURY )
INDEMNITY COMPANY, as Successor to CCI Insurance )
Company, as Successor to Insurance Company of North )
America, COLUMBIA CASUALTY COMPANY, )
CONTINENTAL CASUALTY COMPANY, )
CONTINENTAL INSURANCE COMPANY as )
Successor-in-Interest to London Guarantee and Accident )
Company of New York; GRANITE STATE INSURANCE ) No. 04 CH 08266
COMPANY; LEXINGTONINSURANCE COMPANY; )
MUNICH REINSURANCE AMERICA, INC. as )
Successor-in-Interest to American Excess Insurance )
Company; NATIONAL SURETY CORPORATION; )
NATIONAL UNION FIRE INSURANCE COMPANY )
OF PITTSBURGH, PA; TIG INSURANCE COMPANY, )
as Successor-in-Interest to International Insurance )
Company, Solely with Respect to Excess Liability Policy )
Number 5220294939, and WESTCHESTER FIRE )
INSURANCE COMPANY, as Successor-in-Interest to )
International Insurance Company, Solely with Respect to )
Excess Liability Policy Number 5220287136, )
Defendants )
) Honorable
(Century Indemnity Company and Westchester Fire ) Moshe Jacobius,
Insurance Company, Defendants-Appellees). ) Judge Presiding.
JUSTICE HARRIS delivered the judgment of the court, with opinion.
Justice Cunningham concurred in the judgment and opinion.
Presiding Justice Mikva concurred in part and dissented in part, with opinion.
No. 1-18-0223
OPINION
¶1 Plaintiff, John Crane Inc. (JCI), appeals from various pretrial judgments of the circuit court,
as well as its order finding that JCI had not proved exhaustion of its primary insurance policies.
On appeal, JCI contends (1) the trial court erred in determining as a matter of law that the first
primary umbrella policy had a $60 million per occurrence limit instead of a $20 million limit,
(2) the trial court’s finding that JCI did not prove exhaustion was against the manifest weight of
the evidence, and (3) the trial court erred in denying JCI’s motion for a new trial. For the following
reasons, we affirm.
¶2 I. JURISDICTION
¶3 On December 28, 2017, the trial court entered its order after a trial. The court declared its
order final and appealable on January 26, 2018. JCI filed its notice of appeal on January 29, 2018.
Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court Rules 301 (eff. Feb. 1,
1994) and 303 (eff. July 1, 2017), governing appeals from final judgments entered below.
¶4 II. BACKGROUND
¶5 The following facts provide a general background of the case leading up to this appeal. We
elaborate on certain facts in our analysis as they pertain to the issues raised by JCI.
¶6 Prior to 1986, JCI used asbestos fiber in manufacturing gaskets, mechanical sealing, and
packing products. As of February 2017, JCI has been named a defendant in over 325,000 cases
claiming exposure to its asbestos-containing products. JCI obtained primary insurance coverage
from Lumbermens Mutual Insurance Company and American Motorists Insurance Company
(hereinafter referred to collectively by their trade name, Kemper), as well as umbrella and excess
coverage from defendants. In May 2004 JCI filed a claim for declaratory judgment that Kemper’s
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primary coverage was exhausted and also sought a declaration of the obligations of its umbrella
and excess insurance carriers. JCI subsequently entered into a settlement agreement with Kemper,
and from that point, it “[stood] in the shoes of Kemper” regarding any obligations Kemper would
have had under the primary policies.
¶7 An exhaustion trial was held, and the trial court found that JCI did not prove that the
Kemper primary policies had been exhausted by the claims at issue. On appeal, this court
determined, among other things, that (1) JCI must prove that all of Kemper’s primary policy limits
were exhausted before it can seek coverage under its umbrella or excess policies (horizontal
exhaustion); (2) under the supreme court case of Zurich Insurance Co. v. Raymark Industries, Inc.,
118 Ill. 2d 23 (1987), a policy may be triggered upon proof of exposure, sickness, or disease, but
proof of all three triggers is not required; and (3) the equitable continuous trigger did not apply.
This court remanded the cause for an exhaustion trial consistent with our opinion. A complete
background and analysis of the case can be found in John Crane Inc. v. Admiral Insurance Co.,
2013 IL App (1st) 093240-B.
¶8 Prior to the second exhaustion trial, the trial court considered numerous pretrial motions.
Relevant to this appeal, defendants filed a motion for summary judgment regarding three multiyear
Kemper umbrella policies. The policies each covered approximately a three-year period. On each
policy, the occurrence limit was $20 million, and the aggregate limit was $20 million. Defendants
claimed that the per occurrence limits for the three policies were annualized and thus totaled $180
million. The court granted the motion as to the first umbrella policy only, relying on the statement
in endorsement 3 of the policy that the “limits of the company’s liability shall apply separately to
each such consecutive period.” The other umbrella policies did not contain such language.
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Therefore, the court determined that the per occurrence limit on the first umbrella policy was $60
million for the three-year policy period and that the limit for the other two policies remained at
$20 million for a total of $100 million. The trial court also found that the Kemper umbrella policies
“do not contain ‘other insurance’ provisions.”
¶9 The court conducted a 23-day bench trial on whether the 141 claims JCI had paid in
underlying asbestos personal injury cases exhausted the Kemper primary policies. The parties
stipulated that the Kemper primary policies have a total limit of $41,075,000. JCI presented Ross
Mishkin as an expert in claim analysis and allocation. Mishkin concluded that the primary policies
were exhausted in February 2008 as a result of JCI’s payment on claim number 76 of the 141
claims. Although the court qualified Mishkin as an expert, it ultimately found his method of
allocation problematic. Mishkin did not always follow his own allocation rules, and he improperly
“banked” claims.
¶ 10 The trial court further found that, even if it accepted Mishkin’s allocations, Mishkin
committed error in determining the trigger dates of six claims totaling $16,805,941. Mishkin
testified at trial that, if even one claim were removed from his analysis, his allocation “would no
longer demonstrate that the primary policies were exhausted.” He also stated that, if any of the
claims were misallocated, he would have to redo his allocation. “Therefore, by Mr. Mishkin’s own
admission, the Court’s conclusion that six of the claims were misallocated means his allocation no
longer demonstrates that the primary policies were exhausted.”
¶ 11 The trial court denied JCI’s request for a new trial, and JCI filed this timely appeal. After
filing the appeal, JCI entered into a settlement agreement with the AIG Companies, consisting of
defendants AIU Insurance Company, Granite State Insurance Company, Lexington Insurance
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Company, and National Union Fire Insurance Company of Pittsburgh, PA. As a result, the appeal
was dismissed as to those defendants. Century Indemnity Company and Westchester Fire
Insurance Company remain as defendants and appellees.
¶ 12 III. ANALYSIS
¶ 13 On appeal, JCI first challenges the trial court’s interpretation of the per occurrence limit in
the first Kemper umbrella policy. A court’s primary objective in construing an insurance policy is
to give effect to the parties’ intent as expressed by the language of the policy. Central Illinois Light
Co. v. Home Insurance Co., 213 Ill. 2d 141, 153 (2004). As with any contract, an insurance policy
must be construed as a whole, giving effect to every provision if possible. Id. If the policy’s words
are clear and unambiguous, “they must be given their plain, ordinary, and popular meaning.” Id.However, “[i]f the policy language is susceptible to more than one reasonable meaning, it is
considered ambiguous and will be construed against the insurer.” Gillen v. State Farm Mutual
Automobile Insurance Co., 215 Ill. 2d 381, 393 (2005). We review the trial court’s interpretation
of an insurance policy de novo. Rich v. Principal Life Insurance Co., 226 Ill. 2d 359, 370-71
(2007).
¶ 14 The declarations page of the first Kemper umbrella policy shows a policy period from “12-
1-67” to “12-1-70.” The page also states: “Occurrence Limit: $20,000,000” and “Aggregate Limit:
$20,000,000.” Under the “Limits of Liability” section, the policy provides that:
“the total limit of the company’s liability for any one occurrence shall be the ultimate net
loss resulting therefrom in excess of the underlying limit and then only up to the amount
stated in the declarations as the occurrence limit; provided, however, the company’s
liability is further limited to the amount stated in the declarations as the aggregate limit,
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with respect to all ultimate net loss resulting from one or more occurrences during each
annual period while this policy is in force ***.”
The policy was subsequently amended by two endorsements relevant to this appeal. Endorsement
1 added two months to extend the policy period to “2-1-71.” Endorsement 3 stated:
“It is agreed that the policy period is comprised of the following three consecutive periods:
From 12-1-67 to 2-1-69;
From 2-1-69 to 2-1-70;
From 2-1-70 to 2-1-71;
***
The limits of the company’s liability shall apply separately to each such consecutive
period.”
¶ 15 JCI acknowledges that the aggregate limit of the first Kemper umbrella policy is $20
million per year, where the limits of liability section refers to the aggregate limit “during each
annual period while this policy is in force.” However, JCI contends that the trial court erred in
finding that the occurrence limit in the policy was also $20 million per year.
¶ 16 JCI argues that the limits of liability section shows an intent to apply only the aggregate
limits annually and that the language in endorsement 3 merely clarifies that point. JCI points to
endorsement 1, which added two months to the policy period. Since the first of the three periods
in endorsement 3 incorporated the extra two months, that period is actually 14 months rather than
one year. Endorsement 3’s statement that the company limits “apply separately to each such
consecutive period” is only meant to clarify that the annualization of the aggregate limits also
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applies to this 14-month period. The per occurrence limit, JCI argues, should be left “as originally
written.” As support, JCI cites CSX Transportation, Inc. v. Commercial Union Insurance Co., 82
F.3d 478 (D.C. Cir. 1996); Greene, Tweed & Co. v. Hartford Accident & Indemnity Co., No. 03-
3637, 2006 WL 1050110 (April 21, 2006); an unreported case from the Eastern District of
Pennsylvania; and Board of Trustees of the University of Illinois v. Insurance Corporation of
Ireland, LTD., 750 F. Supp. 1375 (N.D. Ill. 1990).
¶ 17 These cases do not support JCI’s position. In Board of Trustees, the court determined that
the term “aggregate” in the policy, without more, was unambiguous and signified the application
of aggregate limits over the duration of the policy. Board of Trustees, 750 F. Supp. at 1380. There
was no issue as to the occurrence limits. The other cases interpreted language similar to the limits
of liability provision in the policy here and found that the occurrence limits therein applied over
the entire duration of the multiyear policies. CSX, 82 F.3d at 483; Greene, 2006 WL 1050110, at
*10. However, neither policy included a subsequent endorsement amending the original policy.
¶ 18 In a partial dissent, our colleague agrees with JCI that endorsement 3 was clearly “intended
to explain how that stub period would be treated in terms of the annual aggregate policy limits.”
However, the fact remains that nowhere in endorsement 3 is there a reference to aggregate limits
or any other specific limit. The policy’s original limits of liability provision addressed two types
of limits: occurrence and aggregate. Endorsement 3, which the parties agree amended the original
policy, sets forth three distinct, consecutive periods, consisting of approximately one year each,
and clearly states that the “limits of the company’s liability shall apply separately to each such
consecutive period.” Endorsement 3 makes no distinction between the two types of limits. For this
reason, other courts have construed this same language to mean that “ ‘the limits of the company’s
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liability’ may be applied separately” to each period of coverage and that both aggregate and
occurrence limits are implicated. See Security Insurance Company of Hartford v. Lubrizol Corp.,
No. 1:06-CV-215, 2009 WL 10676776, at *11-12 (E.D. Tex. Aug. 27, 2009).
¶ 19 If endorsement 3’s limits of liability language was intended to apply only to the policy’s
aggregate limits, that intent should have been made clear where the original provision addressed
two different types of limits. Although we find the language of endorsement 3 to be clear and
unambiguous, our colleague’s finding that JCI’s interpretation is a reasonable one only
demonstrates that the statement in endorsement 3 may be susceptible to more than one reasonable
interpretation. “[I]f the terms of the policy are susceptible to more than one meaning, they are
considered ambiguous and will be construed strictly against the insurer who drafted the policy”
(or in this case JCI, who stepped into the shoes of Kemper). American States Insurance Co. v.
Koloms, 177 Ill. 2d 473, 479 (1997). For these reasons, we affirm the trial court’s determination
that the per occurrence limit for the first Kemper umbrella policy is $20 million for each
consecutive period, or $60 million for the entire policy period. 1
¶ 20 JCI next contends that the trial court erred in finding Mishkin’s methodology and
allocations not credible. Since Mishkin’s testimony was necessary to demonstrate exhaustion of
the primary policies, the court found that JCI failed to prove exhaustion. As the trier of fact, the
trial court assesses the credibility of all witnesses, including expert witnesses, and determines the
1
JCI also argues that the trial court erred in finding that the Kemper umbrella policies do not contain
an “other policies” provision. This issue was decided in favor of other defendants who have since settled
with JCI and are no longer parties to this appeal. The parties agree that this issue does not affect remaining
defendants Century Indemnity Company and Westchester Fire Insurance Company. Therefore, the issue on
appeal is moot. See People v. Johnson, 225 Ill. 2d 573, 595 (2007) (Burke, J., dissenting) (“[a]n appeal is
considered moot where it presents no actual controversy or where the issues involved in the trial court no
longer exist because intervening events have rendered it impossible for the reviewing court to grant
effectual relief”).
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weight to be given their testimony. In re Estate of Lukas, 155 Ill. App. 3d 512, 521 (1987). “The
value of expert testimony depends upon the facts and reasons which form the basis of the expert’s
opinion.” Iaccino v. Anderson, 406 Ill. App. 3d 397, 402 (2010). Even where the experts are
“eminently qualified,” the trial court need not take their opinions as conclusive on the matter.
Lukas, 155 Ill. App. 3d at 523. We will not disturb the trial court’s findings regarding witness
testimony unless they are against the manifest weight of the evidence. Id. at 521. A finding is
against the manifest weight of the evidence if the opposite conclusion is clearly evident. Id.
¶ 21 The trial court, in its 140-page order, thoroughly addressed Mishkin’s allocation testimony.
First, it found that Mishkin failed to follow his own protocol. Mishkin testified that, if there was a
“toss up” between dates when determining a trigger date for a claim and no distinguishing feature
allowed him to choose one date over the other, he would use the more restrictive or shorter trigger
period. The court pointed to the Bildstein claim, in which Mishkin used a sickness trigger date of
January 1, 1995, based on Bildstein’s testimony that he began experiencing symptoms in the mid-
1990s. However, Bildstein failed to identify any symptoms he was experiencing during that time.
In fact, records showed that Mr. Bildstein’s cancer was detected accidentally, and “unusually
early,” during a routine X-ray for rotator cuff surgery in August 1999. Bildstein also contradicted
himself by stating that, before discovering the cancer, he was “in good health” and had no physical
limitations or restrictions on his activities. Furthermore, a reviewer on Mishkin’s staff noted that
“Mr. Bildstein may be incorrect in his recollection of sickness” because the records showed the
cancer was detected at an unusually early stage in 1999. The trial court found that “Mishkin’s
determination that this claim should not even be identified as a ‘toss up’ in which there are
conflicting sickness dates defies logic.”
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¶ 22 Mishkin also testified that, if a claimant changed jobs, he would create separate exposure
periods and confirm that the claimant was exposed to a JCI asbestos-containing product during
each exposure period. For the Oney claim, Mishkin allocated more than $5 million to Kemper
primary policies based on a continuous exposure period from 1963 to 1994. Oney, however,
changed jobs throughout that period, and from 1990 to 1994, there was no evidence that Oney was
exposed to JCI asbestos-containing product. Oney stated in his affidavit that he worked on the USS
Enterprise from 1990 to 1994 and was “around tradesm[e]n installing and tearing out asbestos
containing products.” The trial court noted that Oney never referenced JCI products or that he
worked directly with asbestos-containing products during that time. The court found Mishkin
should not have allocated the Oney claim to policies in effect from 1990 to 1994.
¶ 23 JCI argues that the trial court erred in declining to give more weight to Bildstein’s
testimony that he experienced symptoms in the mid-1990s. Regarding the Oney claim, JCI argues
that, since Mishkin’s trigger dates are based on reasonable inferences in the record, JCI met the
preponderance of the evidence standard and that the court erred in disallowing the claim. The trial
court is not required to accept an expert’s conclusion if it finds his methodologies are unsound.
Kane v. Motorola, Inc., 335 Ill. App. 3d 214, 222 (2002). The court found Mishkin’s methodology
problematic and, as a result, determined that Mishkin erred in allocating these claims to the primary
policies. We cannot say that the opposite conclusion is clearly evident. Therefore, the trial court’s
determination was not against the manifest weight of the evidence.
¶ 24 JCI also disputes four other claims in which the trial court found Mishkin’s assignment of
a trigger date erroneous. However, since we have upheld the trial court’s determination on the
Bildstein and Oney claims, review of the four claims is not necessary. As the trial court noted,
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Mishkin testified at trial that, if even one claim was removed from his analysis, his allocation
“would no longer demonstrate that the primary policies were exhausted.” He would have to redo
his allocation if any of the claims were misallocated. The trial court’s determinations on the
Bildstein and Oney claims alone would mean, as acknowledged by Mishkin, that he could no
longer demonstrate exhaustion of the primary policies.
¶ 25 Furthermore, the trial court not only found Mishkin’s allocations on those six claims
erroneous, it also found Mishkin’s overall methodology “problematic” for a number of reasons.
First, neither Mishkin nor anyone at his group reviewed all the documents in the claim files.
Mishkin initially received one million documents pertaining to the 141 claims at issue. Later, he
was provided with two million additional documents pertaining to claims 68 through 141. Rather
than review all two million additional documents, Mishkin testified that he fully reviewed the
additional documents for eight of the claims to determine whether the documents would impact
his trigger dates. Mishkin found that the additional documents were duplicative and did not affect
his trigger dates. Therefore, he concluded that a complete review of the two million documents
was unnecessary.
¶ 26 The trial court found that Mishkin’s “fail[ure] to look at approximately two-thirds of the
documents in the case greatly harms the reliability and credibility of [his] allocation.” The court
noted that Mishkin only reviewed 8 of the 74 claims for which additional documents were
provided, which “is an extremely small percentage of the claims to rely upon” in reaching his
conclusion. The court also noted that “each claim is unique” and found Mishkin’s decision to use
a small percentage of claims to make a conclusion as to all 74 claims unjustified. Mishkin’s use of
the “toss up” when there is an unresolvable conflict between trigger dates in the case file “is only
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possible when all the documents are reviewed to determine if a conflict exists.” The trial court
found “the fact that Mr. Mishkin determined it was appropriate to make trigger determinations
without specifically reviewing two-thirds of the documents not only damages the credibility of the
trigger determinations for claims 68 through 141, it also casts doubt on Mr. Mishkin’s judgment
and overall methodology.”
¶ 27 JCI argues that there is no authority to support the trial court’s determination that an
insurance expert must inspect every document. It warns that this rule would place an onerous
burden on policyholders who must pay an expert for review of millions of pages of documents to
evaluate exposure and sickness trigger dates. JCI contends that other courts have allowed statistical
sampling in asbestos claims to establish triggers and coverage, citing federal cases UNR Industries,
Inc. v. Continental Casualty Co., 942 F.2d 1101 (7th Cir. 1991), and Eagle-Picher Industries, Inc.
v. Liberty Mutual Insurance Co., 829 F.2d 227 (1st Cir. 1987).
¶ 28 Although these cases endorsed the use of statistics in analyzing asbestos claims, they also
indicated that a case-by case analysis may be preferable. In UNR, the Seventh Circuit considered
whether the insured must prove the allocation of asbestos claims on a case-by-case basis or whether
use of statistical analysis would suffice. The court noted that, under the federal rules, the
admissibility of statistical evidence would depend “on the qualifications of the person who presents
it” and “whether the basis for the evidence is of a type reasonably relied on by experts in the field.”
UNR, 942 F.2d at 1107. The Seventh Circuit did not conclude that only a case-by-case analysis of
asbestos claims is sufficient to prove allocation. Rather, the policyholder “has the right to present
whatever types of proof it thinks appropriate *** and have that proof evaluated for admissibility
and persuasiveness when presented.” Id. The court cautioned, however, that “statistics may be less
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persuasive than evidence of each individual case.” Id. In relying solely on statistical data, “a party
risks losing a case that it could have won by going to the expense of more specific proof. But that
risk is [the policyholder’s] to take if it finds appropriate.” Id.¶ 29 In Eagle-Picher, the district court endorsed a six-year rollback, in which the date triggering
insurance coverage was deemed to be six years before diagnosis. Eagle-Picher, 829 F.2d at 232.
The district court found this method preferable to an individualized file review, in part, because it
believed that a case-by-case review would impose significant time and financial burdens on the
insured. Id. at 236. Although the First Circuit found no error in using the method, it determined
that the district court did err “in rejecting entirely the concept of an individualized review.” Id. It
reasoned that, “if one can determine with reasonable accuracy when an individual was capable of
diagnosis by scrutinizing his medical records, such a scrutiny is preferable to the use of a statistical
model that is more likely than not to designate the wrong date for that individual.” Id. Sole use of
statistical analysis may be appropriate where there is no detailed information on any claimant. Id.
at 237. However, where detailed medical information exists, a statistical model should be given
“only presumptive impact,” and the insurer may show that the trigger date of a particular case falls
outside the policy period. Id.¶ 30 We agree with UNR and Eagle-Picher that statistical analysis may be used in allocating
asbestos claims. The trial court here, however, did not reject the use of statistical analysis outright.
Rather, it found that, given the wealth of information provided to Mishkin, a case-by-case analysis
using all the documents would produce more accurate determinations. As the courts in UNR and
Eagle-Picher found, a case-by-case analysis for asbestos claims, if feasible, is preferable because
it results in a more accurate determination of a trigger date. Furthermore, the courts in UNR and
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Eagle-Picher accepted the statistical models used therein. The trial court below expressly rejected
Mishkin’s method of fully reviewing the documents of only 8 claims to determine that the
additional two million documents were duplicative for all 74 claims. The court questioned
Mishkin’s reliance upon “an extremely small percentage of the claims” in reaching his conclusion.
If Mishkin had utilized a statistical model that sufficiently incorporated the documents of all 74
claims, the trial court may have accepted that method.
¶ 31 The trial court also found that Mishkin’s allocation was “fundamentally flawed” because
he improperly “banked” claims and used a “general Navy I.D.” to determine exposure dates.
Although he could have allotted some claims to a primary policy or an earlier umbrella policy,
Mishkin chose to reserve, or bank, a portion of or the full claim payment until the primary policies
and earlier umbrella policies were exhausted. Mishkin testified that banking was an appropriate
allocation method, which he had used in other cases. Although he referenced one case where he
used a “similar approach,” the trial court distinguished that case because it used a pro rata
approach to allocation rather than the all-sums approach applicable here. Mishkin acknowledged
that the cases in which he has testified did not address whether banking was an appropriate
allocation method. He also acknowledged that, while he looked for literature on the use of banking
to allocate insurance claims, he found none.
¶ 32 Defendants’ expert witness, Dr. Denise Martin, testified that she had never heard of the
practice of banking claims and she had never banked a claim. She also could not find any literature
on the issue. She knew of no other expert who banked claims and did not believe that the method
Mishkin used comported with standard practices in the insurance field. Dr. Martin was never asked
to allocate claims in any way other than by payment order.
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¶ 33 The court found Dr. Martin’s testimony that the practice of banking does not “comport
with the standards in the insurance allocation field” more credible. In footnote 12 of its brief, JCI
contends that the trial court in a prior ruling actually found the banking method proper. We
disagree. The trial court found it was unclear at the time whether the banking method properly
applied horizontal exhaustion and that a “[q]uestion of fact regarding whether Mishkin’s allocation
methodology is accepted in the industry and produces a fair result remain[s].” At trial, the
testimony on the banking issue became a classic battle of the experts. The trial court, as factfinder,
listened to the conflicting testimony and used its judgment to make a determination. In this
situation, the factfinder is in a better position to assess the credibility of the witnesses and give
weight to each expert’s opinion, as measured by the reasons given for the conclusion along with
the supporting facts. Lukas, 155 Ill. App. 3d at 524. This court will not substitute our judgment for
that of the trial court in determining the credibility of expert witnesses. In re R.G., 2012 IL App
(1st) 120193, ¶ 39.
¶ 34 Regarding the general Navy I.D., Mishkin testified that, if a claimant served in the Navy
or a Navy-related job and worked with gaskets or packing, he used the I.D. to determine that the
claimant was exposed to JCI’s asbestos-containing products. JCI argues that Mishkin used a proper
methodology because “JCI had a national footprint and was a significant supplier to the U.S. Navy,
and its products were used in a widespread manner throughout naval vessel construction,
maintenance, and operation.” The trial court determined, however, that Mishkin’s reliance on the
general Navy I.D. was “misplaced” because he “was aware that JCI was not the Navy’s exclusive
distributor of gaskets and packing.” Since there were “many suppliers who provided the Navy with
the same types of asbestos containing products as JCI,” the court found that “simply knowing that
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an individual worked with gaskets and packing during his or her time in the Navy is insufficient
to conclude that the claimant was exposed to JCI’s asbestos containing products.” As such, there
was no foundation for Mishkin’s determination that everyone who was in the Navy and worked
with gaskets or packing was exposed to JCI’s products. The trial court concluded that “Mishkin’s
use of the general ‘Navy I.D.’ casts doubt on his credibility and judgment.”
¶ 35 For these reasons, the trial court found that:
“Mr. Mishkin’s methodology and allocation is [sic] not credible and cannot be given
weight. *** Due to Mr. Mishkin’s frequent failures to follow his own protocol, decision to
‘bank’ claims, reliance on the general ‘Navy ID,’ and failure to review two-thirds of the
documents concerning the underlying claims, the Court cannot rely on Mr. Mishkin’s
allocation. Since Mr. Mishkin’s allocation was necessary for JCI to demonstrate that it had
exhausted all of the primary policies, JCI has not met its burden of demonstrating that the
Primary Policies are exhausted.”
An expert’s opinion is only as valuable as the facts and reasons on which it is based. Iaccino, 406
Ill. App. 3d at 402. The trial court’s determination was not against the manifest weight of the
evidence.
¶ 36 JCI’s final contention is that the trial court erred in denying its motion for a new trial. JCI
argues that Mishkin’s exhaustion analysis stopped in February 2008 at claim 76 of the 141 claims.
Without a new trial, JCI has no way “to establish that any of claims 77 through 141 exhausted the
Kemper Primary Policies at a later time than February 2008.” JCI contends that a new trial using
proper allocation methods as set by the trial court would establish exhaustion “once and for all.”
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¶ 37 A new trial is warranted when the trial court’s errors substantially prejudiced a party and
affected the outcome of the trial. Simmons v. Garces, 198 Ill. 2d 541, 566-67 (2002). “This is
especially true where the exclusion of evidence deprives a party of the opportunity to prove its
theory of the case.” Schmidt v. Ameritech Illinois, 329 Ill. App. 3d 1020, 1041 (2002). A reviewing
court will not reverse the trial court’s determination on a motion for a new trial absent an abuse of
discretion. Gersch v. Kelso-Burnett Co., 272 Ill. App. 3d 907, 908 (1995).
¶ 38 Here, we have determined that the trial court did not err in the rulings challenged by JCI.
Therefore, we have no basis on which to order a new trial. Also, JCI does not claim that it was
deprived of the opportunity to analyze claims 77 through 141 in the underlying proceedings.
Rather, Mishkin stopped his analysis at claim 76 because, using his methods of allocation, he
concluded that the primary policies were exhausted as a result of JCI’s payment on that claim. JCI
has already had two lengthy exhaustion trials and now requests a third one to prove exhaustion
“once and for all” with the remaining claims not analyzed by Mishkin. A motion for a new trial
cannot be used by JCI to get a third bite of the apple, to try again with the knowledge of strategies
that did not succeed at trial. The trial court’s denial of JCI’s motion for a new trial was not an
abuse of discretion.
¶ 39 IV. CONCLUSION
¶ 40 For the foregoing reasons, the judgment of the circuit court is affirmed.
¶ 41 Affirmed.
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No. 1-18-0223
¶ 42 PRESIDING JUSTICE MIKVA, concurring in part and dissenting in part:
¶ 43 I agree with the majority that the trial court’s finding that JCI did not prove exhaustion was
not against the manifest weight of the evidence and that the trial court did not abuse its discretion
in denying JCI a new trial. I disagree, however, with the interpretation by the trial court and my
colleagues of the occurrence limits of the first Kemper umbrella policy. Unlike the other two issues
raised in this appeal, our standard of review on this question of insurance policy interpretation is
de novo. Travelers Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278, 292-93 (2001).
¶ 44 We must start with the approach that an insurance policy, like any contract, is to be
construed as a whole, with our primary objective being to ascertain and give effect to the intentions
of the parties. Central Illinois Light Co. v. Home Insurance Co., 213 Ill. 2d 141, 153 (2004). Our
obligation to construe the policy as a whole includes the endorsements, which in this policy
explicitly state that they were “subject to the declarations, conditions, and other terms of the policy
which are not inconsistent herewith.”
¶ 45 In my view, the unambiguous language of the policies, when read in conjunction with the
endorsements, makes clear that the occurrence limits for each of the three Kemper umbrella
policies were $20 million for the life of each policy. This would mean that the total occurrence
limit for the three Kemper umbrella policies that JCI was required to exhaust before accessing the
other policies at issue on this appeal was $60 million, rather than $100 million.
¶ 46 All three of the Kemper umbrella policies had an occurrence limit of $20 million and also
an aggregate limit of $20 million. Each policy made clear how these two limits were to act
together:
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No. 1-18-0223
“the total limit of the company’s liability for any one occurrence shall be the ultimate net
loss resulting therefrom in excess of the underlying limit and then only up to the amount
stated in the declarations as the occurrence limit provided, however, the company’s
liability is further limited to the amount stated in the declarations as the aggregate limit,
with respect to all ultimate net loss resulting from one or more occurrences during each
annual period while this policy is in force.” (Emphases added.)
¶ 47 The trial court found—and it seems, to me, to be beyond dispute—that this policy language
provided for a total occurrence limit of $20 million for the life of the policy that was further limited
by three separate aggregate limits of $20 million per year. However, the trial court also found, and
my colleagues agree, that this was not true for the first Kemper umbrella policy because of the
endorsements. The trial court and my colleagues rely on endorsement 3, which they contend
changed the policy such that an ambiguity existed. Based on this alleged ambiguity, the trial court
and my colleagues believe that the first Kemper umbrella policy provided for three separate
occurrence limits of $20 million each for a total occurrence limit of $60 million for the life of the
policy. In my view, this interpretation takes one word in endorsement 3 out of context and
completely ignores the clear intended impact of the policy and the endorsement.
¶ 48 On March 19, 1969—about 16 months into the initial 3-year policy period—Kemper and
JCI added two relevant endorsements to the first Kemper umbrella policy. Endorsement 1, in
relevant part, states that “in consideration of an additional premium of $1,190.00, Item 2 of the
Declarations Policy Period Expiration is amended to read 2-1-71.” Id. Endorsement 1 thus altered
the policy period from an exact, 3-year period to a 38-month period that could not be divided into
three equal annual periods.
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No. 1-18-0223
¶ 49 Endorsement 3—which is the endorsement that the trial court and my colleagues believe
expanded the total occurrence limit by threefold—then broke down the 38 months of the policy
into three periods—one 14-month period and two 12-month periods—to take the place of the
annual periods that had been in the policy before endorsement 1 added the 2 additional months.
Endorsement 3 stated that these three periods would run from “12-1-67 to 2-1-69,” from “2-1-69
to 2-1-70,” and from “2-1-70 to 2-1-71” and included this language, which the trial court and my
colleagues rely on: “The limits of the company’s liability shall apply separately to each such
consecutive period.” (Emphasis added.) The majority concludes that because the word “limits” is
plural, it is possible that the parties intended to have both the aggregate and the occurrence $20-
million limits apply to each consecutive period.
¶ 50 But when these endorsements are read together with the language of the policy itself, it is
clear to me that the plural use of “limits” in endorsement 3 refers to the interrelated “limits” on
aggregate liability and occurrence liability. Thus, while the occurrence liability limit was impacted
by endorsement 3 to the extent that the policy was now in place for 38, rather than 36, months and
the aggregate limit, which operated to further limit the occurrence limit, now ran for a slightly
different time period, the occurrence limit for the policy was not tripled by this endorsement.
Nothing in this endorsement suggests that it was intended to have such a dramatic impact on the
policy limits. And the fact that endorsement 1 specifically states that the additional two months
that were added came with a price tag of less than $2000 confirms that these endorsements were
intended to make a minor change rather than to triple the occurrence limit of the policy. Looking
at the plain language of the endorsements, it is obvious that endorsement 1 was intended to add a
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No. 1-18-0223
two month “stub period” to the policy and that endorsement 3 was intended to explain how that
stub period would be treated in terms of the annual aggregate policy limits.
¶ 51 My colleagues recognize that this is a “reasonable” reading of the endorsements. They
nonetheless contend that the use of the plural “limits” in endorsement 3 makes that endorsement
ambiguous and that therefore the court must construe the policy against the drafter in a manner
that triples the policy occurrence limit. However, construing an ambiguous policy against the
drafter does not mean finding an ambiguity where none exists. Rather, our supreme court has
repeatedly emphasized that “an insurance policy must be considered as a whole; all of the
provisions, rather than an isolated part, should be examined to determine whether an ambiguity
exists.” Founders Insurance Co. v. Munoz, 237 Ill. 2d 424, 433 (2010). When this policy, with
these endorsements, is considered together, it is clear to me that no ambiguity exists and there was
no basis for the trial court’s construction of the policy as including an occurrence limit of $60
million. On that issue, therefore, I respectfully dissent.
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No. 1-18-0223
No. 1-18-0223
Cite as: John Crane Inc. v. AIU Insurance Co., 2020 IL App (1st)
180223Decision Under Review: Appeal from the Circuit Court of Cook County, No. 04-CH-
08266; the Hon. Moshe Jacobius, Judge, presiding.
Attorneys Stephanie A. Scharf, Deirdre A. Fox, and George D. Sax, of
for Scharf Banks Marmor LLC, of Chicago, and William G.
Appellant: Passannante, Cort T. Malone, and Dennis J. Nolan, of Anderson
Kill P.C., of New York, New York, for appellant.
Attorneys Michael R. Orlando, of Cohn Baughman & Martin, of Chicago,
for for appellees.
Appellee:
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