Document b3p8NBJv1mpKypDBQyZapq06

PLAINTIFF'S EXHIBIT ST 070614 I Court finds that asbestos causes property damage By MCHAEL SCHACHNER Both policyholder and insurer and I think all new cases will fall attorneys call the May 20 decision in line--that asbestos contamina SPRINGFIELD, I1L--An Illinois a landmark ruling. tion is physical damage to property Supreme Court ruling that n- Policyholder attorneys laud the as defined under a CGL policy." ^estps .in_ bullcjingi constitutes decision, saying it confines what Mr. Skinner said. property, damage andlhal an"'is- many triai end intermediate courts Insurer attorneys agree that bestos installer facing litigation have already ruled: Asbestos in courts nationwide will be in from building owners is entitled to buildings constitutes property fluenced by the Illinois Supreme defcase-fromits liability insurers damage as defined by the compre Court's ruling on insurers' duty to will influence courts nationwide, hensive general liability insurance defend. attorneys say. policy. However, they add that the scope in unanimously affirming an ap "This is a very significant ruling of the ruling is limited because it pellate court decision, Illinois' because you have the first high did not address several other major S3 highest court becomes the first court in any state ruling on the issues at the center of hundreds of state supreme court to rule that as issue of whether asbestos in build asbestos property damage eases. bestos fibers in buildings consti ings constitutes property damage Those issues include whether in tutes physical damage to tangible caused by an occurrence," noted surers must indemnify policyhold property under comprehensive attorney William Skinner of Co ers for court awards to building general liability insurance policies. vington it Burling in Washington, owners to cover the cost of identi As a resultrthe court ruled, an D.C., which represoits Armstrong fying and removing asbestos and, if installer that purchased CGL cov World Industries Inc. in asbestos so, which liability policies must re erage over a 21-year period is enti lawsuits. spond. tled to a defense. "The trend is dearly emerging-- CdKtmued As a result of the ruling, WlUdn Insulation Co. of Mount Prospect, HI., which installed spray-on fire proofing materials containing as bestos in hundreds of-public build ings in Illinois end Iodiena between 1956 end 1970, is entitled to a defense in nine pending as bestos-related lawsuits filed by schools and public entities. The five insurers wrote a total ol IB million of primary CGL limits lor the installer from 1964 through 1994. Wilkin could trace its CGL policies only as far back as 1964, explained Wilkin co-counsel Craig Mielke of Murphy Hupp Foote Mielke 6c Klnnally in Aurora, ZU. Hie duty-to-defead litigation ensued when Baltimore-based United States Fidelity A Guaranty Co. in 1964 refused to defend Wit- kin in the nine underlying lew- suits. USFIcG claimed asbestos fibers only constitute a health haz ard to humans and are not destruc tive to property. The Insurer, whieh wrote 1500,000 of primary CGL limits for Wilkin from Jan. 1, 1984, to Jan. 1, 1985, filed e lawsuit seeking a summary judgment on the issue of whether It had to defend the in staller. Wilkin then filed suit against USF&G as well as its other CGL insurers between 1964 and 1983 seeking a summery Judgment re quiring the insurers to pay defense costs. The other liability insurers, though, have provided the installer a defense under e reservation of righta. The other insurers are: Argonaut Insurance Co. of Menlo Park, Calif. Wilkin pur chased 1900,000 in primary CGL limits annually from ArgoaaotSDd aoe of Argonaut's subaidjirins.be- tween April.1, 1984, and April 1, 1973. ___ Commercial Union Insurance Co. of Boston. From April 1, 1973, through April 1, 1977, Wilkin pur chased $500,000 in primary limits annually from Commercial Union and one of Its units. e Aetna Casualty A Surety Co. of Hartford, Conn. Wilkin pur chased $500,000 of limits annually from Aetna between April 1, 1977, through Jan. 1,1962. 9 A Zurich Insurance Co. unit. Wilkin purchased $500,000 ol CGL limits from Zurich between Jan. 1, 1982, through Jan. 1,1984. Defense costs are not included within Wilkin's CGL limits, said Wilkin co-counsel Stephan C. Haul of Kirkland 6c EUis In Chicago, who represented Wilkin before the appellate and Supreme Court. Wilkin also purchased exeem lia bility coverage each year from var ious insurers, with limits ranging from fl million to' $5 million ex cess of primary limits, Mr. Mielke said. A trial court granted summary judgment for the insurers in Au gust 1987. But, Wilkin appealed, and an ap pellate court reverted the decision in December 1969, finding that the nine undertying complaints "suffi ciently alleged property damage caused by an occurrence to bring the cases within coverage by plain tiff's insurance policies," court papers say. Because no determination had been about Wilkin's liability in the underlying cases, any deter mination of the Insurers' duty to indemnify WUkin would be prema ture, the appellate court ruled. The Illinois Supreme Court, in an opinion written by Justice Michael Bilandic, e former Chicago mayor, affirmed the appellate court's de cision. The insurers had argued thet there was no "event or accident" resulting in property damage. However, the court ruled that an occurrence, defined as "an acci dent including continuous or re peated exposure to conditions that result in property damage, neither expected nor intended by the in sured," is covered by a CGL pot- icy. "By virtue of the continuous or repeated exposure to the condition of asbestos fiber release, the build ings end contents became conta minated. It is the continuous expo sure. . .that constitutes the accident," Justice Bilandic wrote. "The underlying complaints" against Wilkin "allege that the buildings and the contents therein were contaminated by toxic as bestos fibers. Therefore, the under lying complaints allege physical injury to tangible property. Thus, we find that the underlying com plaints allege potentially covered property damage," Justice Bilandic wrote. The court also rejected insurers' argument that they should not have to provide a defense to Wilkin because there were several cover age exclusions in the policies writ ten for Wilkin. The Supreme Court ruled that a pollution exclusion, a sistership exclusion, a business risk exclu sion and miscellaneous exclusions in the policies were all inapplica ble. In addition, any ambiguity about a policyholder's right to a defense must be construed in favor of the policyholder, the court found. As a result of the ruling. Wilkin Is entitled to unlimited defense costs. Wilkin has accumulated at least $200,000 In defense costs to date, primarily from It-