COMMITTEE ON INSURANCE COVERAGE LITIGATION
Section of Litigation
Laura A. Foggan and Mary Craig Calkins, Committee Cochairs
Editor in Chief: Erik A. Christiansen
Published by LexisNexis
Articles
An Insurer’s Duty to Settle when There
3 Are Potential Joint Tortfeasors
by William T. Barker
The duty to settle can pose challenging issues to an insurer in
responding to settlement opportunities. Those issues grow
dramatically more complicated when there is a potential joint
tortfeasor in the picture. In such situations, an insurer should
take account of the guidelines offered by this article.
Trigger of Insurance Coverage for
21 Wrongful Conviction Lawsuits
by Benjamin C. Eggert and Amanda Schwoerke
In the last decade alone, hundreds of people have established in
court that they were wrongfully convicted of crimes that they
did not commit. Exonerees increasingly pursue civil claims for
wrongful conviction against government officials and others.
These lawsuits generate substantial demands against policy-
holders and their liability insurers. Courts uniformly have
ruled that the trigger of coverage for such claims is, at the
latest, the date of conviction and that a continuous trigger
does not apply in the wrongful conviction context.
Insurance 101-Insights for Young
28 Lawyers: What Counts?
by Michael F. Huber
Determining the ‘‘number of occurrences’’ under a liability policy
can be a nettlesome task for courts and coverage counsel. An
analysis of recent cases, however, provides a roadmap: Courts
find multiple occurrences when (1) separate acts or events attribu-
table to the insured are the immediate, as opposed to remote, causes
of harm and/or (2) the acts or events are separated by time or space.
Conversely, there is a single occurrence when (1) a single act or
event can be isolated as the immediate cause of the damage, when
viewed from the insured’s perspective, and/or (2) the acts or events
are continuous in time or space.
A Closer Look at the Rights of an
35 Indemnified Party as Compared to the
Rights of an Additional Insured from an
Insurance Coverage Perspective
by Justin L. Weisberg and Louis J. Gale
Commercial contracts often require one or both contracting
parties to indemnify the other. In many instances the contract
will also require one party to provide insurance specifically
designating the other party as an additional insured under a
commercial general liability policy. While the purpose of
both provisions may be to provide defense and indemnification
in the event of a third party claim relating to bodily injury or
property damage, the rights of an indemnified party to insur-
ance coverage can be significantly different than the rights of
an additional insured.
American Bar Association
Volume 20, Number 1, January/February 2010
Unsettled Law, or What Happens
when Some Carriers Settle and
Others Don’t
by Gerald V. Weigle, Jr.
Over the last three decades courts have faced an array of
complex, multi-party disputes with respect to insurance
coverage for different mass tort claims. These cases have
raised a panoply of issues that did not arise in a simpler
day, because of the large number of insurers often
involved in the cases. Such insurers typically issued poli-
cies over many different years, with different provisions,
possibly in different states, and at different primary or
excess levels. The courts have often fashioned new and
broad contractual remedies in these cases, leading to hold-
ings that numerous insurers must pay for claims that are
alleged to arise cumulatively over a period of years.
Asbestos cases are the archetype of such claims, with
environmental cases and some drug cases coming
closely behind. One bewildering issue that such cases
present is what happens when one or more, but not all,
of the insured’s carriers reach a settlement with the
insured, while the coverage litigation goes on against
other carriers.
The first of the broad ‘‘continuous trigger’’ cases,
Keene v. INA1, was handed down in the context of
asbestos bodily injury claims. The court held that all of
the insurers which wrote policies in effect throughout the
time period from a claimant’s first exposure through
manifestation of disease were jointly and severally
liable for such claims. The court added, though, that,
(Continued on page 11)

Gerald V. Weigle, Jr. is a member of Dinsmore & Shohl
LLP’s Litigation and Insurance Practice Groups, and often repre-
sents insurers in insurance coverage disputes. The views expressed
herein are those of the author and not necessarily those of his Firm or
its clients.
 air s
C h
m the
Fr o
Tucson 2010! By the time you read this edition of Coverage, you should have registered online for our Insurance Coverage Litigation Committee
Annual CLE Meeting, held each year at the Westin La Paloma resort on the first weekend in March. If you have not yet registered or reserved a
room, visit our ICLC Website at www.abanet.org/litigation/committees/insurance and follow the links to the brochure, on-line registration forms
and hotel reservation materials before the early bird discounts expire. Our Meeting Cochairs Ernest Martin and Maria Enriquez and Vice Chairs
Tracy Saxe and Ted Howard are coordinating a series of superb programs to start on Thursday afternoon, March 4, 2010. Plenary sessions will
address insurance issues arising out of the deepening financial crisis and investment scandals, hot coverage issues in construction defect litigation,
business interruption traps, the keys to unlocking excess coverage, and other cutting-edge issues. Our 16 break-out sessions will focus on new
coverage decisions and practical concerns on a variety of insurance-related topics, and our 15 roundtable luncheons on Friday offer a unique
opportunity to get to know other practitioners while discussing current topics of interest.
Thanks to members of ICLC leadership, we are embarking on several new events including a "Bring a Friend" campaign and a Subcommittee
Expo on Thursday afternoon, with Subcommittee Cochairs focusing on ways to expand our contributions. Our 28 Subcommittees are listed on the
webpage at www.abanet.org/litigation/committees/insurance/subcommittees.html. Contact the Subcommittee Cochairs or Ruth Kochenderfer of
our Membership Subcommittee in advance of our Tucson meeting, or attend the Expo and sign up to become actively involved in one or more
substantive areas. You should also plan to attend our Annual Business Meeting during breakfast on Saturday morning, where we will summarize
ICLC activities and plans including those submitted to Section of Litigation Leadership in our Three Year Plan.
In addition to experiencing Tucson’s natural wonders and recreational activities, this year’s Annual Meeting will offer an opportunity to ‘‘give
back.’’ During the conference, we will provide information and opportunities to participate with Angel Charity, Inc., which works with 55 agencies
to address healthcare, education, childcare and other physical, mental and emotional needs to improve the lives of children in Pima County, Arizona.
Contact ICLC Vice Chair Sheri Pastor if you have time to help on the planning stages. We are reprising the Women’s Coffee Klatch and the ever-so-
successful Young Lawyers Cocktail Hour, in addition to new diversity initiatives spearheaded by Diversity Subcommittee Cochair Dana Lumsden.
Remarkably, Tucson 2009 boasted near-record participation with over 270 attendees, and Laura Foggan and I hope we will do even better in 2010.
As past attendees know, there is nothing like Tucson when it comes to substantive content, diverse educational materials, networking and fun.
Tucson 2010 is not the only activity ‘‘in the works.’’ We hope you will attend our luncheon meeting at the Section of Litigation Annual Meeting in
New York on April 21-23, 2010. In addition, our ADR Subcommittee Cochairs Rachel Kronowitz and Greg Schopf, Ethics & Professionalism
Subcommittee Cochair Kali Bracey, and ICLC Vice Chair Ray Wong will present our program, ‘‘Will Insurance Be In Place When You Need to
Settle? Top Ten Hints for Careful ADR Preparation’’ at the ABA Section of Dispute Resolution’s 12th Annual Spring Conference in San
Francisco on April 8-10, 2010. Our ICLC and Subcommittee membership drives also will be in full swing by Spring.
Finally, we repeat our regular call for articles for our award-winning Coverage magazine, now circulated in both hard copy and case-linked
electronic format thanks to our recent negotiations with our sponsor LexisNexis, and short articles for our ICLC Website Hot Topics. Becoming
involved is as easy as hitting a link or reaching out to others. Thanks to our many talented members, the Insurance Coverage Litigation Committee
offers a wealth of substantive information. We look forward to working with even more of you as 2010 unfolds.

Mary Craig Calkins

Co-Chair, Insurance Coverage Litigation Committee
Howrey LLP
550 So. Hope Street, Ste. 1100
Los Angeles, CA 90071
213-892-2600
calkinsm@howrey.com

Managing Editors:
Angela R. Elbert, Esq. Theodore A. Howard, Esq. Michael S. Levine Esq.
Neal Gerber Eisenberg LLP Wiley Rein LLP Hunton & Williams
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Chicago, IL 60602 Washington, DC 20006 McLean, VA 22102
312-269-5995 202-719-7120 703-714-7602
312-578-8369 (fax) 202-719-7049 (fax) 703-918-4050 (fax)
Editor in Chief aelbert@ngelaw.com thoward@wileyrein.com mlevine@hunton.com
Erik A. Christiansen, Esq.
Parsons Behle & Latimer
One Utah Center Céleste D. Elliott, Esq. Georgia Kazakis, Esq. Ellis I. Medoway, Esq.
201 S. Main Street Lugenbuhl, Wheaton, Peck, Covington & Burling Archer & Greiner
Suite 1800 Rankin & Hubbard 1201 Pennsylvania Ave, N.W. One Centennial Square
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echristiansen@parsonsbehle.com 504-310-9195 (fax) gkazakis@cov.com emedoway@archerlaw.com
celliott@lawla.com

Coverage–2 Volume 20, Number 1, January/February 2010

An Insurer’s Duty to Settle when There Are
Potential Joint Tortfeasors
By William T. Barker
 William T. Barker is a partner in the
Chicago office of Sonnenschein Nath &
Rosenthal, with a nationwide practice representing
insurers in complex litigation, including matters
relating to coverage, claims handling, sales prac-
tices, risk classification and selection, agent
relationships, and regulatory matters. Mr. Barker
is a member of the Editorial Board of THE NEW
APPLEMAN ON INSURANCE LAW LIBRARY EDITION and
a co-chair of the Ethics & Professionalism
subcommittee of the ABA Litigation Section
Insurance Coverage Litigation Committee. Mr.
Barker is a co-author, with Ronald D. Kent, of
the forthcoming NEW APPLEMAN INSURANCE BAD
FAITH LITIGATION, from which the material in this
article is drawn. Copyright ß 2009 Matthew
Bender & Company, Inc., a member of the Lexis-
Nexis Group; used by permission.
All American jurisdictions impose on liability
insurers a duty to settle claims against their insureds
when that is an appropriate means of protecting the
insured against exposure to liability in excess of the
insurance policy limits for a potentially covered
claim. One aspect of this duty that has received
little attention is the way in which involvement of
putative joint tortfeasors may affect the insurer’s
obligations. This article first examines the policy
reasons why a duty to settle is imposed and then
examines cases considering the effect of a joint tort-
feasor’s involvement.
Why Is There a Duty to Settle?
By far the majority of tort claims are settled. Settle-
ment gives the injured party faster payment, and
avoids the risk of a judgment less favorable than
the settlement. The putative tortfeasor avoids the
risk of a verdict greater than the settlement. Both
parties avoid the cost of trial. The burdens on the
judicial system are greatly eased.
The normal incentives are altered when responsi-
bility for the prospective liability is divided between
(1) a policyholder allegedly liable for the injury and
Volume 20, Number 1, January/February 2010
(2) a liability insurer. The division of ultimate financial
responsibility gives the two parties sharing the expo-
sure different settlement interests than a single party
with all of the exposure. A series of examples will
illustrate this impact.
Consider, first, a claim clearly within the policy
limits. The policyholder has no direct interest in
defeating or minimizing such a claim: the insurer
will pay it all. Unless concerned about reputation,
the policyholder might prefer not to be bothered with
defending. The policyholder might also wish to be
generous, either out of contrition for causing the inju-
ries or because the injured party is a relative, friend, or
customer. If policyholders had the power to settle
claims and require the insurer to pay, these forces
would inflate the amounts paid, increasing costs for
all policyholders. So, liability insurance policies
almost always provide that the policyholder may
settle only at his own expense, effectively removing
the policyholder from settlement decisions in most
cases. It is precisely the fact that the insurance policy
inhibits settlements by the insured that most strongly
justifies imposing a duty on the insurer to make settle-
ments when a reasonable opportunity is presented.
But, because the insurer is liable for whatever
judgment might be entered, it has all the incentives
to settle which would exist for an uninsured (but
financially capable) tortfeasor. The injured party’s
incentives are also the same, so the settlement nego-
tiations proceed as they would without insurance,
with the insurer simply substituted for the tortfeasor.
There is a dramatic change if the potential expo-
sure exceeds the policy limit, but the policyholder
could pay the excess if it were awarded. Because
the maximum judgment is collectible, the injured
party’s incentives are not greatly changed. But the
policyholder now has strong interest in settlement
within limits, if at all possible. Such a settlement is
the only sure way of protecting against a possible
excess judgment. Even if the risk of an excess judg-
ment is not very great, any risk of exposure to
personal liability is worse than the immunity
promised by a within limits settlement.
In contrast, the insurer has less interest in settle-
ment. The insurer faces no risk of having to pay a
judgment for the part of the exposure above limits. As
Coverage–3
the amount demanded approaches the limit, the
insurer has less and less to save by settling. If the
demand is for the limit, the insurer stands to save
nothing (other than defense costs). As the potential
benefits to the insurer of settlement decline, the possi-
bility of a defense verdict or a low damages award
may be the most attractive option. The insurer can
then be tempted to gamble with the policyholder’s
money, for its own benefit, even when it would not
take the same gamble with its own money.
This conflict of interest between policyholder and
insurer over settlement is well known. In theory, it
could be eliminated by calling on each party to
contribute to settlement of its own portion of the
exposure: the policyholder would offer the value of
eliminating the excess exposure and the insurer
would consider only the amount within limits.
Courts have required insurers to assume full
responsibility, in circumstances defined by the
law of the jurisdiction
But that solution has problems. The insurer has
greatly superior ability to evaluate the risks posed
by a particular case, both because it is managing
the day-to-day defense and because it is in the busi-
ness of managing similar suits. By purchasing
insurance, the policyholder sought the benefit of
this ability and expertise, among other resources.
Having to engage in adversarial bargaining with the
insurer is a troubling prospect for the policyholder.
And the policyholder is risk averse, while the insurer
typically is not (having acquired a diverse portfolio
of risks, which are predictable in the aggregate).
Before imposition of a duty to settle, insurers once
used their informational advantages and policyholder
risk aversion to press for contribution even to within-
limits settlements that were clearly reasonable.1
So, instead of dividing the responsibility to fund
within-limits settlements, courts have required insurers
to assume full responsibility, in circumstances defined
by the law of the jurisdiction.2 While these standards
vary, all look to the reasonableness of the settlement
decision in light of the risks posed by the tort claim,
and the dominant standard requires the insurer to
consider settlement opportunities as if it alone would
be obliged to pay any judgment.3
Impact of Potential Joint Tortfeasor Liability
on the Duty to Settle
In Considering Settlement Where There May
Be Multiple Tortfeasors, the Insurer Must
Take Account of the Insured’s Possible
Liability for Indemnity or Contribution—
Representative Cases
Coverage–4
Few cases provide clear guidance on an insurer’s
duty to settle in situations where some party other
than the insured is said to be liable. And even
fewer deal with the complicated rules on allocation
of liability that have been created with the advent of
comparative fault and associated tort reform
statutes.4 But one point that is clear is that the
insurer may (and, indeed, must) take account of the
insured’s exposure to claims for indemnity or contri-
bution after the injured party’s claim has been
resolved. On the other hand, an insurer was not
permitted to utilize the risk of a subrogation claim
to justify its failure to settle where that was not a
factor in its decisionmaking and where that exposure
likely could have been eliminated by negotiation.5
Indeed, exposure to indemnity or contribution
claims does not provide a reason for failing to settle
if the settlement can be structured to eliminate any
such exposure.6
In Byrnes v. Phoenix Assurance Co.,7 Byrnes was a
bankruptcy trustee for Lund, who had suffered a
judgment almost $75,000 over his $10,000 policy
limit. The district court found no bad faith and the
Seventh Circuit affirmed. Lund’s car collided with
one driven by Thorne, whose passenger was Lind.
Lind and Lund were both injured; Lund sued
Thorne, and Lind sued both Lund and Thorne.
Thorne had a policy limit of $15,000 per person;
Thorne also had substantial assets, while Lund did
not. Lund retained counsel to pursue his claim, and
COVERAGE (ISSN 1074-1887) is published bimonthly by Lexis-
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The views expressed in Coverage are those of the authors and do
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Insurance Coverage Litigation Committee, Litigation Section, the Ed-
itorial Board of Coverage, or the LexisNexis Group. The publication
of articles in Coverage does not constitute an endorsement of opin-
ions or legal conclusions which may be expressed. Coverage is pub-
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Readers are invited to submit articles, comments or case notes on
any aspect of insurance litigation. Publication and editing are at the
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proofs are not forwarded to authors.
Copyright © 2010 by the American Bar Association.
Volume 20, Number 1, January/February 2010
Phoenix accepted that lawyer as defense counsel. If
both Lund and Thorne had been held liable, each
would have been responsible for half the judgment
and entitled to contribution for any amount paid in
excess of his share. At trial, Lind offered to settle
with Lund for his $10,000 policy limit, reserving
her claim against Thorne. This would have left
Lund exposed to a contribution claim from
Thorne.8 In light of this and of the fact that, according
to the court, ‘‘it was a matter of first importance to
Lund that he be protected from a judgment for contri-
bution in order to preserve intact any judgment in his
favor against Thorne,’’ it was not bad faith to reject
the settlement demand.9 (The court also held that
Phoenix had enough reason to hope for a defense
verdict and enough reason to think that Thorne
would be held liable, that it could properly have
refused to settle even if Lund would have been
shielded from contribution claims,10 but that is
beside the point in this discussion.)
There is no indication that Lund was consulted
about the decision not to settle, but the court’s
description of his interests is plausible. He was appar-
ently judgment proof, apart from whatever value his
claim against Thorne might have. (He got a judgment
for $11,155.50 against Thorne.) The Lind verdict was
against both Lund and Thorne, but Thorne prevailed
on appeal.) Had Thorne been held liable, he and his
insurer would have had to pay roughly $75,000 of an
$85,000 judgment, creating a contribution claim of
about $32,500, more than enough to wipe out Lund’s
judgment. Viewed as of the time of the settlement
demand, Lund really had nothing to gain from
accepting it.
Truck Insurance Exchange v. Bishara11 is a case
where an insurer may have gone overboard in trying
to avoid contribution liability. Bishara sold the Dotys
a car on which he had installed new tires a year
earlier. Two of the tires failed resulting in one
death, one severe brain injury, and injuries to other
Doty family members. They sued Bishara and
various companies involved in the manufacture and
distribution of the tires. Truck Insurance Exchange
(‘‘Truck’’) insured Bishara and promptly offered its
$300,000 limit in return for a release that would
reduce the Dotys’ claim by Bishara’s share of respon-
sibility (a ‘‘pro rata’’ release). The Dotys offered only
a release that would credit other defendants with the
amount paid by Bishara (a ‘‘pro tanto’’ release),
coupled with an agreement to hold proceeds in trust
and hold Bishara harmless against contribution
claims. (They hoped that the Idaho courts would
treat the payment as a good faith settlement,
protecting Bishara from contribution claims, and
allowing them to recover fully from the more
solvent defendants.) Without consulting Bishara,
Volume 20, Number 1, January/February 2010
Truck insisted on a pro rata release. The jury found
Bishara solely at fault and damages were stipulated to
be $4,000,000.
The trial court in the bad faith action granted Truck
summary judgment, but the Idaho Supreme Court
found factual issues as to the propriety of Truck’s
handling. While Truck had concerns about the relia-
bility of the hold-harmless agreement and, in
particular, about any funds it paid to the Dotys
remaining available to protect Bishara, it was not
clear to the court that this problem could not be
cured. And Truck might have been trying to protect
itself from having to pay defense costs on the contri-
bution claim, rather than purely acting to protect
Bishara. There was no evidence whether Truck ever
consulted the Dotys about which risk they would
prefer to run, or (if it did) what their reaction had
been. Without such evidence, it could not be said,
as a matter of law, that Truck acted in good faith.12
It is prudent for an insurer considering a settle-
ment opportunity that may leave the insured
exposed to claims for indemnity or contribution
to consult with the insured about whether the
insured prefers to accept or reject the settlement
In Steele v. Hartford Fire Insurance Co.,13 the
Seventh Circuit reversed a bad faith judgment based
on an appellate finding that the insurer had actually
sacrificed its own interests to try to protect its insured
from claims by other defendants.14 Bauman had been
mowing Tjardes’ lawn on a riding power mower
manufactured by Arctic. Steele, Bauman’s grandson,
was riding on the mower, fell off, and his foot was
injured when Bauman backed the mower over it.
Bauman had a $25,000 homeowner’s insurance
policy with Hartford, which promptly offered that
amount to Steele (through Steele’s parents and
lawyer), in return for a release. Steele was unwilling
to give a release, because he wanted to sue Tjardes
and Arctic, but offered a covenant not to sue. Hartford
refused, and various later settlement efforts proved
unsuccessful, with the result that Bauman suffered a
judgment of $165,000. The Seventh Circuit reasoned
that, had Hartford agreed to the offered settlement, it
could have saved the cost of defending, although at
some risk of a bad faith case for leaving Bauman
exposed. Instead, it made futile efforts to protect
Bauman from all exposure.15
Similarly, an offer to accept an employee’s policy
limits while keeping the employer in the case and
leaving the employee exposed to an indemnity
claim did not constitute a within-limits settlement
offer that the insurer was obliged to accept.16 (In
fact, the bad faith claim was made after the employee
Coverage–5
and employer suffered a verdict that the employer
paid, except for the amount of the employee’s
policy limits, with the employer then seeking
indemnity.)
Practice Point: It is prudent for an insurer
considering a settlement opportunity that may
leave the insured exposed to claims for indem-
nity or contribution to consult with the insured
about whether the insured prefers to accept or
reject the settlement. If the insured does not
have personal counsel, the insured should be
advised to consider seeking such counsel. It
may even be worthwhile for the insurer to
offer to pay for such counsel.
If the Insurer Can Preserve Its Rights
Against the Alleged Joint Tortfeasor by
Settling and Seeking Contribution, It May
Be Obliged to Do So—Representative Cases
In Lange v. Fidelity & Casualty Co.,17 Lange was the
receiver for Martin, who had suffered a $29,000 judg-
ment with a policy limit of $25,000. The injured party
was Duffy, a passenger in car driven by Johnson.
Duffy sued only Martin, and Fidelity & Casualty
defended, also asserting a claim against Johnson for
contribution. The original verdict was for $35,000
against Martin, with a 50% contribution award
against Johnson. The verdict was reduced to
$29,000, and Duffy offered to settle for Martin’s
$25,000 policy limit. But Johnson’s insurer was
still resisting any payment. Fidelity & Casualty
reasoned that settling for $25,000 would reduce
Johnson’s contribution obligation without any
consideration from his insurer, so it refused to
settle. Johnson was then awarded a new trial on
appeal, forcing Fidelity & Casualty to pay $25,000
and leaving Martin with a $4,000 judgment. Johnson
obtained appointment of a receiver to sue Fidelity &
Casualty on Martin’s claim for bad faith. The court
held the insurer liable, finding that ‘‘there was no
reasonable tactical or economic consideration justi-
fying [Fidelity & Casualty’s] refusal to accept
Duffy’s offer.’’18 And there was no reason, other
than the effort to bargain strategically with Johnson’s
insurer. Had Fidelity & Casualty accepted the offer it
could still have pursued its contribution claim against
Johnson and his insurer.
An insurer need not overpay to settle a claim.
But where it can reasonably settle the claim in
a way that will permit recovery of whatever
amount a joint tortfeasor ought to have contrib-
uted, that is a settlement that an insurer obliged
to indemnify its insured without limit would
have accepted
Coverage–6
On the other hand, Kohlstedt v. Farm Bureau
Mutual Insurance Co.19 held that an insurer is not
obliged to pay its limit and seek contribution if the
demand exceeds its insured’s apparent net liability.
Kohlstedt suffered a $25,000 judgment with a
$15,000 policy, after his co-defendant was held
immune under the guest statute. The court affirmed
a judgment for the insurer notwithstanding a bad faith
verdict. The plaintiff, Nielsen, was a passenger in
Hutchinson’s car, and Hutchinson also had a
$15,000 limit. Farm Bureau took the position that
Hutchinson was at least as much at fault and, even
taking account of a guest statute defense, should
contribute to any settlement. When his insurer
refused, Farm Bureau refused to settle for its limit,
and the court held that this was not bad faith (in light
of good hopes of a defense verdict for Kohlstedt or
joint liability with Hutchinson).20
Settlement decisions that appear reasonable
based on anticipated payments by putative
joint tortfeasors look less reasonable if the
putative joint tortfeasor is later held not liable
Thus, an insurer need not overpay to settle a claim.
But where it can reasonably settle the claim in a way
that will permit recovery of whatever amount a joint
tortfeasor ought to have contributed, that is a settle-
ment that an insurer obliged to indemnify its insured
without limit would have accepted.
An Insurer Should Be Cautious in Relying on
Payment by Joint Tortfeasors—Representa-
tive Case
Settlement decisions that appear reasonable based on
anticipated payments by putative joint tortfeasors
look less reasonable if the putative joint tortfeasor
is later held not liable.21 At a minimum, they will
be closely scrutinized for adequacy of investigation
and consultation with the insured.
In State Farm Mutual Automobile Insurance Co. v.
White,22 White was involved in a collision with
Savage, injuring Savage’s passenger, Mills. White’s
policy had a $10,000 limit, and Mills sued for
$30,000. Mills offered to settle for $15,000. State
Farm offered to contribute $7,500 if Savage’s
insurer would do likewise. Savage’s insurer was
willing to contribute only $5,000, so no settlement
occurred. Mills reduced his demand to $12,500, and
State Farm again offered to pay half, but the other
insurer stuck to its $5,000 offer. At the start of trial,
Mills offered a joint tortfeasor release to White in
exchange for his $10,000 policy limit. State Farm
would only offer $6,250. The verdict was $17,495,
against both defendants, but Savage prevailed on
appeal, leaving White with an excess judgment of
Volume 20, Number 1, January/February 2010
$7,495.23 A jury found bad faith and the award was
affirmed.
Defense counsel had properly evaluated the Mills
claim as worth between $15,000 and $20,000.
Assuming joint liability, that would have been
within limits. Given the unusual street configuration
and the fact that White had not stopped at a stop sign,
liability involved a novel question of law, and
defense counsel thought White should win that ques-
tion, but perhaps only after an appeal. They were
confident that Savage would be found liable.24 But
the court held that a jury could have found the inves-
tigation inadequate, and the very novelty of the legal
question meant there was significant risk. Moreover,
the jury could have found the insistence on a 50-50
split arbitrary: when the $12,500 offer was made,
State Farm could have combined the $5,000 offered
by Savage’s insurer with the $7,500 it previously had
been willing to offer to effect a settlement. Finally,
State Farm never consulted with White about the
offers.25
Practice Pointer: In joint tortfeasor situations,
an insurer should focus primarily on the desir-
ability of the settlement in terms of the claim
against its insured, as opposed to the fairness of
the cost division with the other tortfeasor(s).
Sometimes there may be unobvious grounds on
which the insured may lose the full benefit of a
joint tortfeasor’s payment or settlement. Suppose
Plaintiff was in a roll-over accident that rendered
him a quadriplegic. He alleges that many defendants
contributed to his injuries. In particular, he claims
that the effects of the rollover were aggravated by
an aftermarket accessory produced by Manufacturer
and sold to him by Retailer. Manufacturer is fully
capable of paying for the damages and Retailer is
entitled to indemnity from Manufacturer for any
defects in the product. If Retailer’s insurer refuses
to settle based on the entitlement to indemnity, it
may develop that Plaintiff also has claims for
improper installation by Retailer that are not
subject to any indemnity right. Even if the responsi-
bility attributable to the alleged defective installation
is small, Plaintiff’s damages may be so large that the
Retailer’s unindemnified exposure exceeds policy
limits, creating possible bad faith liability.
Practice Pointer: While an insurer’s decision
not to settle must be judged on the facts it knew
or should have known at the time the decision
was made, the insurer must take account of the
risk that there may be developments in the case
unfavorable to the insured. Avoiding that risk is
one of the benefits of settlement.
One old case held that it was not bad faith for the
insurer to insist that any further contribution should
Volume 20, Number 1, January/February 2010
come from a co-defendant (then offering only a
smaller share of the settlement).26 That insistence
forced the insured to make up the difference
between the amounts offered and the amount
demanded:
Such insistence that another party jointly sued
for the tort make a given contribution is not,
standing alone, evidence of bad faith. It is too
natural and too human an attitude for an attorney
to take under such circumstances. Counsel for
[the insurer insisting that the other defendant
increase its contribution] then held that [the
other defendant] was just as much subject to
the hazard of a large verdict as was [its
insured]. . . . That opinion was probably open
to question, but. . . . [i]t cannot now be charac-
terized even as unreasonable.27
The court said too little about the facts to permit full
evaluation of its conclusion. But it may have been
relying on lack of subjective culpability, which
would seem irrelevant under the purely objective
standards which are now dominant. 28 The case
should not be read as conferring broad discretion
for an insurer to decline settlement based on what it
perceives as unfair division of the liability involved.
Insurers Should Carefully Evaluate Joint Tort-
feasor Situations in Light of Applicable Law on
Joint Tortfeasor Liability and the Effect of
Settlements on Nonsettling Tortfeasors.
States take different approaches to apportionment of
liability among joint tortfeasors. One can identify
five major approaches:
Joint and several liability;
Several liability;
Several liability with reallocation of amounts
uncollectible due to insolvency;
Joint and several liability unless share of respon-
sibility is below a threshold, in which case
several liability;
Joint and several liability for certain types of
damages (e.g. economic damages) and several
liability for other types of damages.29
When one party is vicariously responsible for the
conduct of another, the vicariously liable party is
usually entitled to indemnity from the actor30 (and
is typically an additional insured under the actor’s
policy).
States also take different approaches to the effect
of settlements on nonsettling tortfeasors, whose
contribution rights are usually wiped out by the
settlement. Some reduce the plaintiff’s claim by the
share of responsibility attributable to the settling tort-
feasor.31 Others give only a credit for the amount
actually paid, at least if the court finds that accep-
tance of that amount is in good faith.32 When one
Coverage–7
party is vicariously liable for the conduct of another, attention by counsel well-versed in the applicable
a settlement by the actor may leave the vicariously allocation system and knowledgeable about the
liable party still exposed, in which case the settling potential liabilities at issue. As always, the insurer
party remains exposed to an indemnification claim.33 ought to consider settlement opportunities as if it
In determining what reduction of an insured’s alone would be responsible for all covered liabilities
potential liability can be expected as a result of of the insured, without regard to liability limits.
payments by co-defendants, an insurer must evaluate
the impact of the rules that will govern in the action Conclusion
against the insured. If liability is several, the insurer
need only focus on the respective responsibilities of The duty to settle can pose challenging issues to an
the various parties (or nonparties) who may be insurer in responding to settlement opportunities.
partially responsible. On the other hand, if a clai- This article, through analysis of illustrative cases
mant’s settlement with some other party could and fact patterns, provides guidance to insurers and
saddle the insured with part of the other party’s their counsel for identification and analysis of these
responsibility, that risk must be taken into account. complex issues.
This can be a complicated analysis, requiring careful
1
Kent D. Syverud, The Duty to Settle, 76 VA. L. REV. 1113, 1153–57 (1990).
2
See, e.g. American Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 848–49 (Tex. 1994), relying on Robert E. Keeton, Liability
Insurance and Responsibility for Settlement, 67 HARV. L. REV. 1136, 1143–48 (1954). Development of this duty is discussed in the
forthcoming WILLIAM T. BARKER & RONALD D. KENT, NEW APPLEMAN INSURANCE BAD FAITH LITIGATION § 1.05 (2009). See also 22 ERIC
MILLS HOLMES, APPLEMAN ON INSURANCE 2D, § 137.3 (2003).
3
See WILLIAM T. BARKER & RONALD D. KENT, NEW APPLEMAN INSURANCE BAD FAITH LITIGATION § 2.03 (2009).
4
See generally RESTATEMENT (THIRD) OF TORTS: APPORTIONMENT OF LIABILITY (2000).
5
Kremen v. State Auto. Ins. Fund, 363 Md. 663, 678–81 (2001).
6
Augustin v. Gen. Acc. Fire & Life Assur. Corp., 283 F.2d 82, 85 (7th Cir. 1960);
Riske v. Truck Ins. Exch., 490 F.2d 1079, 1087 (8th Cir. 1974).
7
Byrnes v. Phoenix Assur. Co., 303 F.2d 649 (7th Cir. 1962) (WI law), superseded by statute on other points, Donovan v. Robbins, 752
F.2d 1170 (7th Cir. 1985).
8
Byrnes, 303 F.2d at 652.
9
Byrnes, 303 F.2d at 653.
10
Byrnes, 303 F.2d at 653.
11
Truck Ins. Exch. v. Bishara, 128 Idaho 550 (1996).
12
Bishara, 128 Idaho at 557–58.
13
Steele v. Hartford Fire Ins. Co., 788 F.2d 441 (7th Cir. 1986) (IL law) (Posner, J.).
14
Contrary findings by the district court were set aside as clearly erroneous. Steele, 788 F.2d at 445.
15
Steele, 788 F.2d at 447.
16
Thompson v. State Farm Mut. Auto. Ins. Co., 161 Mont. 207, 218–19 (1973) (partially overruled pursuant to statute, Watters v.
Guaranty Nat’l Ins. Co., 2000 MT 150, } 64).
See Danner v. Iowa Mut. Ins. Co., 340 F.2d 427, 429 (5th Cir. 1964) (post-judgment offer to settle with insured while leaving insured
exposed to claims from jointly liable railroad failed to provide insured with sufficient protection to require insurer to consider it) (TX law).
17
Lange v. Fidelity & Casualty Co., 290 Minn. 61 (1971).
18
Lange, 290 Minn. at 65.
19
Kohlstedt v. Farm Bur. Mut. Ins. Co., 258 Iowa 337 (1965).
20
Kohlstedt, 258 Iowa at 345–46.
21
See, e.g., cases discussed in IIB., supra. But see Hartford Cas. Co. v. New Hampshire Ins. Co., 417 Mass. 115, 124 (1994) (affirming
defense verdict in part on ground that it was not clear that the jury would absolve a joint tortfeasor).
22
State Farm Mut. Auto. Ins. Co. v. White, 248 Md. 324 (1967).
23
White, 248 Md. at 270–71.
24
White, 248 Md. at 270–71.
25
White, 248 Md. at 333–34.
See also Riske, 490 F.2d at 1086–87 (insured not informed of settlement negotiations); Henke v. Iowa Home Mut. Cas. Co., 250 Iowa
1123, 1140 (1959) (jury could have found that contribution demanded from co-defendant was excessive).
26
Mendota Elec. Co. v. New York Indemn. Co., 175 Minn. 181 (1928).
27
Mendota Elec. Co., 175 Minn. at 183.

Coverage–8 Volume 20, Number 1, January/February 2010

 28
But see Hartford Cas. Co., 417 Mass. at 123 (stating that it is conceivable that an insurer could act in subjective bad faith, even
though its conduct was objectively reasonable, and that this might require a bad faith instruction, even though the governing standard was
negligence).
29
RESTATEMENT (THIRD) OF TORTS: APPORTIONMENT OF LIABILITY § 17 & cmt. a (2000).
30
RESTATEMENT (THIRD) OF TORTS: APPORTIONMENT OF LIABILITY § 13 (2000).
31
RESTATEMENT (THIRD) OF TORTS: APPORTIONMENT OF LIABILITY § 16 & cmt. c (2000) (recommending that rule).
32
RESTATEMENT (THIRD) OF TORTS: APPORTIONMENT OF LIABILITY § 16 cmt. c (2000).
33
E.g., Cartel Capital Corp. v. Fireco of N.J., 81 N.J. 548 (N.J. 1980). See forthcoming WILLIAM T. BARKER & RONALD D. KENT, NEW
APPLEMAN INSURANCE BAD FAITH LITIGATION § 3.03[2][g] [i] (discussing implications of this fact).

Volume 20, Number 1, January/February 2010 Coverage–9

 Editor’s Notes
I wanted to remind everyone to attend the annual CLE
meeting in Tucson, Arizona on March 4-7, 2009. If you’re
reading this issue of Coverage, you probably realize that
this is one of the best issues of Coverage in which to
publish. Although it might be a bit hectic to put together
and submit an article between Thanksgiving and the first of
December, this issue of Coverage is typically the issue that
is available at the Tucson CLE event. As a result, new
attendees to and speakers at the Tucson event, and many
non-members of the Insurance Coverage Litigation
Committee, get exposed to Coverage for the first time.
This issue’s Managing Editor, Ted Howard, has done a
great job of putting together five excellent articles, and
in maintaining the high standards for Coverage. If you
missed your chance to get published in advance of the
Tucson event this year, you should also realize that
many of our best articles come out of the excellent presen-
tations and programs at Tucson. If you’re a speaker or
presenter, please consider taking your hard-earned work
product from Tucson, and turning it into an article for
Coverage. We publish six times per year, and are always
looking for new content.
—Erik A. Christiansen
Editor in Chief
Coverage–10
Managing Editor’s Profile
Ted Howard is a partner in the Insurance and Litigation
Practice Groups of Wiley Rein LLP in Washington, D.C.
Since 1986, the principal focus of Ted’s practice has
involved the counseling of large domestic and interna-
tional property/casualty insurers and reinsurers in regard
to complex insurance coverage claims and disputes and the
representation of those companies in related litigation in
the state and federal courts and alternative dispute resolu-
tion proceedings. Ted frequently writes and lectures on
complex insurance coverage litigation topics. In addition
to serving as one of the Managing Editors of Coverage,
Ted is also a Vice Chair of the Planning Committee for the
Insurance Coverage Litigation Committee’s annual
conference in Tucson, AZ in March 2010. He has been
recognized by Chambers USA as one of ‘‘America’s
Leading Lawyers for Business’’ and has been designated
as a ‘‘Washington, D.C. Superlawyer’’ by Law & Politics
Publications in the insurance practice area. Ted is a grad-
uate of the University of Notre Dame and Harvard Law
School.
Volume 20, Number 1, January/February 2010
Unsettled Law, or What Happens when Some
Carriers Settle and Others Don’t
(continued from page 1)
‘‘[t]his does not mean that a single insurer will be
saddled with full liability for any injury. When
more than one policy applies to a loss, the ‘other
insurance’ provisions of each policy provide a
scheme by which the insurers’ liability is to be appor-
tioned.’’2 The Keene court did not have to figure out
the details of how this general observation would
play out, though, when different carriers are involved
at different time periods and different levels of
coverage, and when not all policies apply to the
same claims. It also did not have to explain how
this notion would be implemented in cases where
some carriers settled and others went to an adverse
judgment in coverage litigation.
There are two theses of this article. The first is
that when one or more but fewer than all of a
policyholder’s carriers settle with their insured,
if the non-settling insurer(s) litigate to the end
and are found liable, the measure of their
responsibility, to the extent possible given the
coverage rules that the court must apply,
should be what they would have owed had the
settling carriers not settled. The second is that
settling carriers should be entitled to the peace
and closure that they undoubtedly hoped to
obtain through settling
There are two theses of this article. The first is that
when one or more but fewer than all of a policyhol-
der’s carriers settle with their insured, if the non-
settling insurer(s) litigate to the end and are found
liable, the measure of their responsibility, to the
extent possible given the coverage rules that the
court must apply, should be what they would have
owed had the settling carriers not settled. The second
is that settling carriers should be entitled to the peace
and closure that they undoubtedly hoped to obtain
through settling. There are decisions that express
these principles, but not as often or as clearly as
one might expect, and some courts seem to miss
these points altogether.
How these general notions will work in practice
depends critically upon the legal principles that the
coverage court has to apply, both with respect to the
trigger of coverage and the allocation scheme that is
to be used. Statutes in some states can also affect the
analysis.3 Sometimes the issues arise defensively,
when non-settling insurers claim that they are
Volume 20, Number 1, January/February 2010
entitled to a ‘‘settlement credit’’ for amounts paid
by settling insurers. Sometimes they arise when
non-settlers invoke the ‘‘other insurance’’ provisions
in their policies. Then again, sometimes they arise
offensively, when non-settling carriers are found
liable and then seek contribution from settling
carriers that they contend did not pay their fair
portion of the shared coverage liability. The issues
arose first in connection with the relatively straigh-
forward interplay between primary and excess
policies, but they now come up in a host of more
complex and varied circumstances. These include
cases where different types of policies are at issue
(for example, third-party liability and first-party
property policies), or where different settled or
non-settled policies apply to different claims (such
as when they have different pollution exclusions, for
instance). With all of the permutations that can arise
regarding the number and types of underlying claims
and the policies alleged to be responsible for them, it
is not surprising that the courts have sometimes had
more difficulty determining the dollars and cents
application of their coverage holdings than they
had in deciding whether or not coverage is owed
in the first place.
The Good Old Days
Decades ago, when life was simpler (at least with
respect to insurance coverage disputes), and alloca-
tion of coverage across years of policies was not an
issue, courts nonetheless had occasion to consider
how much a non-settling excess insurer owed when
an underlying primary carrier settled for less than its
policy limits. Courts held in that situation that the
primary policy is thereby exhausted for purposes of
making claims on excess insurance. Indeed, 81 years
ago the Second Circuit took only one page to hold, in
Zeig v. Massachusetts Bonding and Ins. Co.,4 that
the insured need not collect the full amount of a
primary policy in settlement in order to exhaust the
primary insurer’s obligations, because ‘‘[t]o require
an absolute collection of the primary insurance to its
full limit would in many, if not most, cases involve
delay, promote litigation, and prevent an adjustment
of disputes which is both convenient and commend-
able.’’5
Because an excess insurer, which contractually
agreed only to be liable in an amount in excess of
the limits of the primary policy, cannot be compelled
to cover any resulting gap in coverage, ‘‘the [excess
insurer has] no rational interest in whether the insured
collected the full amount of the primary policies, so
long as it was only called upon to pay such portion
of the loss as was in excess of the limits of those
policies.’’6
Coverage–11
 In such situations, courts have ‘‘allowed the
insured to become effectively self-insured for the
gap he created between primary and excess insurance
as a result of his release of the primary insurer for less
than the policy limits.’’7 Thus, many courts have
enforced such settlement agreements and permitted
actions by the insured against an excess insurer to
recover only the amount of the insured’s loss in
excess of the primary limits.
Although they involve many years of applicable
coverage, a large number of claims, and many
different layers of insurance, courts in more recent
cases facing the issue of how to factor in prior settle-
ments by other carriers have often had little guidance
except for that provided by these older, and consider-
ably simpler cases. In the Gencorp decision discussed
in more detail below, for instance, the court had to
deal with coverage settlements in the context of
multimillion dollar environmental claims arising
from numerous sites. Applicable Ohio law provided
the court with no guidance except for older cases
holding that a settlement between the insured and
the primary carrier functionally exhausts the
primary policy. In one case which the Gencorp
court cited, for instance, Triplett v. Rosen, 8 the
court held that a settlement agreement between an
insured, his primary carrier and the plaintiffs in the
underlying action exhausted the limits of the primary
policy, thus triggering the duties and obligations of
the excess carrier.9 In that case, the parties to the
settlement agreed that, although the settlement was
for an amount less than the primary policy limits, the
excess carrier would be liable only for any loss that
exceeded the primary policy limits.10 The court noted
that ‘‘[s]ince [the excess insurer] contractually agreed
to be liable only for amounts in excess of the under-
lying insurance company’s policy limits, [the excess
insurer’s] position is not affected by any settlement
between the plaintiffs and the primary insurance
carrier’’ and thus, the excess insurer ‘‘was in no
worse position because of the settlement agree-
ment.’’11 Basing its decision primarily on the strong
public policy of promoting settlements, the court
found that the settlement agreement was enforceable:
When the parties agree to settle cases, litigation
is avoided, costs of litigation are contained, and
the legal system is relieved of the burden of
resolving the dispute. . . . When the amount of
settlement is less than the policy limits, the
unpaid amount may represent a significant cost
savings since litigation was avoided or
curtailed.12
Similarly, in Fulmer v. Insura Prop. & Cas. Co., a
case not involving an excess defendant-primary
settlement fact pattern, the court held that an
insured satisfied the exhaustion requirement in the
Coverage–12
underinsured motorist provision of her insurance
policy when she received any amount in settlement
with the injured party, retaining the right to proceed
against her underinsured motorist carrier only for
those amounts in excess of the tortfeasor’s available
policy limits. 13 The court acknowledged and
followed its holding in an earlier case which:
permits an injured insured to take into account
all of the factors important to her in determining
how much she is willing to accept to settle her
claim against the tortfeasor, and at the same time
protects her underinsurer from paying more than
it bargained for by giving it credit for the full
amount of the tortfeasor’s available policy
limit.14
There are many such decisions throughout the
country, but they provide only limited direction for
how the courts should deal with these allocation and
set-off issues in the context of contemporary multi-
party, multi-claim, multi-layer, and even multi-
policy types of coverage disputes.
Koppers, Squibb, and the More Recent Cases
The analysis in the older and more straightforward
cases noted above is consistent with the approach
adopted by the Third Circuit in the oft-cited 1996
decision in Koppers Co., Inc. v. Aetna Cas. and
Sur. Co,.15 although the Koppers court gave the tradi-
tional analysis a new twist. Koppers concerned
allocation of coverage for environmental sites,
against the backdrop of the Pennsylvania Supreme
Court’s continuous trigger ruling in the J.H. France
case, which dealt with asbestos claims.16 Koppers
involved environmental contamination claims at
some 150 plant sites and disposal sites. Koppers,
the insured, sued numerous of its insurers, and was
awarded $70 million in damages.
Finding that the insurers’ responsibility was joint
and several, the trial court denied a motion by the
excess insurers to reduce the judgment to account
for Koppers’ prior settlements with certain of its
carriers. The Third Circuit agreed with the trial
court that if faced with the question, the Pennsylvania
Supreme Court would apply its J.H. France decision
and find all of the insurers jointly and severally liable
for the claims at issue. It disagreed, however, with the
trial court’s analysis as to how the settlements of
some of Koppers’ insurers factored into determining
the coverage obligations of the non-settling carriers.
Because we cannot permit a double recovery,
and because several insurers have already paid
money to Koppers in complete settlement of
Koppers’ claims against them, we must either
(1) reduce the judgment to account for the
settling insurers’ apportioned shares of liability,
Volume 20, Number 1, January/February 2010
 or (2) permit the non-settling insurers to seek
contribution from the settling insurers and, in
turn, permit the settling insurers to seek reim-
bursement from Koppers. We predict that the
Pennsylvania Supreme Court would choose the
former rule: reducing the judgment to account
for the settling insurers’ apportioned shares of
liability. That is, we predict that the supreme
court would adopt the ‘‘apportioned share set-
off rule.’’17
The Third Circuit relied heavily upon an inter-
mediate Pennsylvania appellate court ruling in
Gould v. Continental Cas. Co.,18 in the absence of
any controlling Pennsylvania Supreme Court
authority on how J. H. France should apply to the
allocation issue where some insurers have settled and
some have not.
In applying these principles to the situation
presented where excess insurers are the non-settling
parties, the court took the approach of the traditional
cases and ruled that the non-settling excess insurers’
policies did not have to pay until the properly deter-
mined liability of the underlying and settled primary
policies was apportioned to those policies.
[I]f the underlying primary insurer is solvent but
the policyholder settles its claim against that
primary insurer for less than policy limits, we
predict the Pennsylvania Supreme Court would
adopt the widely-followed rule that the policy-
holder may recover on the excess policy for a
proven loss to the extent it exceeds the primary
policy’s limits. [Citations omitted.] That is,
settlement with the primary insurer functionally
‘‘exhausts’’ primary coverage and therefore trig-
gers the excess policy—though by settling the
policyholder loses any right to coverage of the
difference between the settlement amount and
the primary policy’s limits. . . . Courts have
adopted this rule because it encourages settle-
ment and allows the insured to obtain the benefit
of its bargain with the excess insurer, while at
the same time preventing the insured from
obtaining a double recovery.19
A 2001 case cited frequently by both insurers
and insureds, although for conflicting reasons,
is E.R. Squibb & Sons, Inc. v. Lloyd’s &
Companies20, a case involving insurance
coverage for DES claims
Almost a decade later a state trial court in Massa-
chusetts, on the other hand, refused to follow
Koppers. Massachusetts Electric Co. v. Commercial
Union21 involved liability coverage for environ-
mental contamination at three sites. The insured
Volume 20, Number 1, January/February 2010
had settled with some of its carriers, and both the
insured and the non-settling insurers moved for
partial summary judgment on allocation and settle-
ment credit issues. The court rejected the insurers’
argument for a time on the risk proration of their
obligation, and accepted the insureds’ argument for
an ‘‘all sums’’ (or joint and several) allocation rule.
The court, however, also rejected the Koppers court’s
‘‘apportioned share set-off’’ rule with respect to the
settlement credit to which the non-settling insurers
were entitled as inconsistent with Massachusetts law.
In Massachusetts, a non-settling tortfeasor is
entitled to only a pro tanto credit in the
amount of the actual settlement received by
the injured party. See G.L.c. 231 B. § 4. Simi-
larly, providing the excess insurers with a pro
tanto credit for any settlement amounts received
by the plaintiffs attributable to a particular site is
sufficient to prevent a double recovery.22
The court did not explain why it felt that a statute
relating to tortfeasor liability was applicable to the
allocation issues arising from the contract questions
involved in the coverage case.
A 2001 case cited frequently by both insurers and
insureds, although for conflicting reasons, is E.R.
Squibb & Sons, Inc. v. Lloyd’s & Companies,23 a
case involving insurance coverage for DES claims.
In Squibb, the insured had years of primary and
excess policies which were triggered to some
degree by the underlying DES claims. The insured
reached settlements with its primary insurers. The
Second Circuit affirmed the district court’s conclu-
sion that the non-settling excess insurers’ obligations
should be determined as if no settlements had taken
place. To the extent that amounts of the insured’s
liabilities were subject to coverage under the excess
policies, based upon calculating the insurers’ obliga-
tions as though no settlements had taken place, those
amounts would be owed by the excess carriers. If
there was a shortfall because the insured did not
collect ‘‘enough’’ from its primary carriers with
respect to the claims at issue, the risk of that shortfall
would be upon the insured.24 ‘‘The result was that, as
regards the Excess Insurers, their obligations were
exactly the same as if there had been no settle-
ments.’’25 As the court saw it, under this approach
‘‘the settling parties are the ones who took the risk of
the settlement, and the non-settling parties are left
precisely as they would have been had no settlement
occurred. That hardly seems unfair.’’26
Because the Second Circuit’s discussion of this
issue is relatively brief, it is necessary to consider
the district court’s opinion27 to understand the
context in which the allocation issues arose, and
why the outcome has been the subject of differing
interpretations. Squibb involved insurance coverage
Coverage–13
for thousands of DES claims, some of which were not
even resolved when the coverage dispute was liti-
gated. When some of the underlying insurers settled
with Squibb, they did so based upon a stated trigger
of coverage that would define how, and to which
claims, the settled policies would apply. The district
court’s allocation decision, however, was governed
by earlier decisions that the court had made in other
insurance coverage cases requiring that the policies
apply on a pro-rata basis.28 That is, the district court,
had the issue been in its hands, would not necessarily
have allocated responsibility for the different claims
in the same manner that the insured and the settling
carriers did in their settlements.
Squibb, the insured, proposed allocating coverage
obligations to the non-settling insurers in accordance
with the trigger of coverage established at trial in an
earlier phase of the case. The non-settling insurers
objected to this approach, contending that due to
the fact that Squibb’s earlier settlements with other
insurers were based upon alternative trigger princi-
ples, requiring the non-settling insurers to pay on the
basis of the court-ordered trigger would result in
Squibb being indemnified more than once for
certain identifiable underlying DES claims.
The district court rejected the non-settling
insurers’ arguments. It held that ‘‘other insurance’’
provisions in their policies did not help the non-
settling insurers because ‘‘the settlement agreements
are not contracts of insurance. The only amounts
properly allocated to the settling insurers as ‘valid
and collectible’ insurance are those that the law
applicable to those policies, including the triggers
of coverage which have been established in this
case, would obligate those insurers to pay.’’29
The district court was equally unpersuaded by the
non-settling insurers’ arguments that Squibb might
obtain a windfall, for two reasons. First, given the
large number of cases, many of which remained unre-
solved, the court was not sure exactly how Squibb’s
ultimate recovery from its insurers would match up to
the extent of Squibb’s ultimate liabilities to under-
lying claimants asserting covered claims. Second, the
court thought that even if there were to be a windfall,
it more fairly should go to Squibb rather than the non-
settling insurers.
Squibb, in settling with the other insurers, took
something less than it might have recovered had
it litigated to the end against the settling insurers
and ran the risk that the amount it received in
those settlements would be less than it was ulti-
mately obligated to pay. To adopt the
defendants’ position would discourage assureds,
such as Squibb, from settling because they could
lose a substantial part from the benefits they
hoped to receive at the time of settlement.
Coverage–14
The non-settling insurers asked the Court to
reward them for not settling the case and give
them the benefit of monies paid by the settling
defendants. A rule allocating such a windfall to
non-settling insurers would encourage insurers
to refuse to settle and force the case to trial,
knowing that they will never be required to
pay more than what they are legally obligated
to pay and hoping that they can reap a windfall if
settlements by other insurers prove to be in
excess of their legal obligation. The courts
should not encourage that type of ‘‘dog in the
manger’’ approach to litigation.30
The Third Circuit visited the settlement credit
question again in 1999 in Chemical Leaman v.
Aetna,31 although ironically the opinion does not
mention that court’s decision three years earlier in
Koppers, even though the same judge, Judge
Stapleton, wrote both opinions. The case dealt with
coverage for the insured’s liability for environmental
liabilities at several sites, and the court applied New
Jersey law to reach a decision that contains elements
from both Koppers and Squibb.
The coverage litigation began with the insured,
Chemical Leaman, suing Aetna, its primary insurer,
and excess carriers for coverage for liabilities it faced
in connection with an environmental site named
Bridgeport. During the protracted litigation regarding
that site, Aetna filed its own coverage action against
Chemical Leaman and the excess insurers regarding
several other sites as to which claims and coverage
issues had arisen. Then Chemical Leaman reached a
settlement with Aetna that related not only to the
Bridgeport site but to those other sites as well. The
settlement called for Aetna to pay $11,500,000 alto-
gether, of which the settlement agreement allocated
$5,226,750 to the Bridgeport site. Of the $11,500,000
amount, $11,055,000 was potentially applicable to
the Bridgeport site given the Aetna policy years at
issue, using the continuous trigger coverage approach
called for under New Jersey law. One of the
numerous questions that the Third Circuit considered
was to what extent the excess carriers were entitled to
a credit as a result of Chemical Leaman’s settlement
with Aetna.
The excess insurers argued that they were entitled
to a credit for the entire $11,055,000 of potentially
applicable Aetna coverage that Chemical Leaman
had received through its settlement. Chemical
Leaman, on the other hand, argued that they were
entitled to a credit only for the $5,226,750 amount
that was allocated to the Bridgeport site in its settle-
ment agreement with Aetna. The court agreed with
the excess carriers, and found, as the court had in
Squibb, that the settlement by the insured with one
of its carriers was not determinative of the liabilities
Volume 20, Number 1, January/February 2010
of other carriers. Instead, the court held that the
excess insurers were entitled to a credit for the full
$11,055,000. Finding that New Jersey law favored ‘‘a
pragmatic approach to issues of this kind,’’ the court
. . . believe[d] the simplest and most straightfor-
ward approach is to extend the full credit
amount to the excess insurers initially, rather
than accepting Chemical Leaman’s subjective
allocation of this amount to the various contam-
ination sites. If we were to hold that the excess
insurers were only entitled to a credit amount of
$5,226,750, the District Court would have to
allocate this amount among the various policy
years. Allocation of this amount in proportion to
the amount of insurance purchased from Aetna
in each policy year, while feasible, is unneces-
sarily complicating. It is much simpler to allow
the excess insurers the full credit at Bridgeport
rather than requiring allocation at each contam-
ination site. Moreover, this solution eliminates
the need for any court to pass on the fairness of
Chemical Leaman’s subjective allocation
among the various contamination sites.32
In Gencorp, Inc. v. AIU Ins. Co.33, a federal district
court applying Ohio law in regard to insurance
coverage disputes involving numerous environ-
mental claims reached a result similar to that in
Squibb. The trigger rule applicable to environmental
claims was unsettled in Ohio at the time the original
coverage litigation was taking place, and several
insurers reached settlements with the policyholder.
The Ohio Supreme Court thereafter held that a
continuous trigger approach to coverage similar to
that announced in Keene should be used, whereupon
the policyholder sued several excess carriers for
amounts these insurers were obligated to pay under
that continuous trigger approach. Those carriers filed
contribution claims against the insurers which had
previously settled. The settling insurers moved for
summary judgment arguing that their settlements
exhausted their policies, and that the obligation of
the excess insurers should be computed based on
whatever legal principles applied to their coverage,
without reference to the earlier settlements.
The district court agreed with the settling insurers.
It found Ohio law unclear on whether settling carriers
were ‘‘other responsible insurers’’ for contribution
purposes, but concluded that the fairest approach
would be to allow settling carriers to settle and
thereby resolve their obligations both to the insured
and to its other insurers. The court cited other Ohio
state court cases for the principle:
. . . that an insured may settle a claim for less
than the amounts maximally obtainable from the
responsible party, but the insurer’s obligation to
Volume 20, Number 1, January/February 2010
pay the insured is the same as though the insured
had received the maximally obtainable amount.
Applying this principle to the instant case,
Gencorp’s settlement with its primary insurers
extinguished all claims related to the issues in
dispute in [the original litigation with those
insurers] that Gencorp had against its primary
insurers. That settlement also exhausted
Gencorp’s primary insurance for purposes of
making claims under its excess insurance.
Gencorp’s excess insurers have the same obliga-
tion to pay Gencorp’s environmental-related
liabilities as they would have had if Gencorp’s
primary insurers had paid Gencorp the
maximum amount covered by Gencorp’s
primary insurance policies.34
The approach taken in Gencorp was followed by
another Ohio federal court judge in Bondex Interna-
tional v. Hartford, a 2006 case involving asbestos
claims.35 There a number of insurers filed third-
party complaints seeking contribution against an
insurer which had settled with the policyholder
subject to the understanding that its policies were
thereby exhausted. The court granted the settling
insurer’s motion for summary judgment on the
third-party complaint, finding that the settlement
agreement was unambiguous. The court noted the
dearth of authority, at least in Ohio, regarding the
legal effect of the settlement on the non-settling
carriers, but found the rationale in Gencorp and
Koppers persuasive in that ‘‘[a]llowing contribution
actions by [non-settling insurers] undermines the
finality of the settlement between’’ the settling
insurer and its insured.36 The court also found that
the non-settling parties were still protected in that
they ‘‘are also able to assert that the settlement
from [the settling insurer] should reduce whatever
award is made against them, to ensure that the risk
of settling too low remains where it should-on [the
settling policyholders].’’37 The court therefore held
that the contribution actions of the non-settlers were
barred.
By contrast, the Ninth Circuit recently reached the
opposite result in a case grounded upon an Oregon
statute. Fireman’s Fund v. Oregon Auto Ins. Co.38
concerned a contribution claim by an insurer
against another insurer which had previously settled
with their common policyholder. The district court
held that the non-settling insurer’s contribution claim
was barred by the settlement, interpreting an Oregon
statute that provided that, ‘‘an insurer that has paid an
environmental claim may seek contribution from any
other insurer that is liable or potentially liable.’’ In
the district court’s view, the statute meant only an
insurer currently liable to the insured, which the
settling insurer was not as a result of its settlement.
Coverage–15
 In an odd twist, the Ninth Circuit disagreed, and
allowed the contribution claim to continue notwith-
standing the first insurer’s settlement. The court
observed that if one insurer paid the full amount of
an insured’s loss, the insured had no further rights
against other insurers that might have covered the
same risk, since it had no right to a double recovery.
Thus, those non-paying insurers were not currently
liable to the insured, so that under the district court’s
interpretation of the statute, ‘‘an insurer that promptly
pays the full amount of an insured’s loss is barred
from seeking contribution from other insurers that
covered the same risk.’’39 The Ninth Circuit did not
believe that result would reflect the Oregon Legisla-
ture’s intentions, and that it would undermine the
goal of expediting the payment of insurance proceeds
to the insured. The Ninth Circuit did not have occa-
sion to describe how the non-settling insurers’ right
to contribution should be determined, but only that its
contribution claim should not have been dismissed.
This result does not seem to be strictly mandated by
the language of the Oregon statute, and it has the
unfortunate effect, which was of concern to several
of the courts ruling against allowing such contribu-
tion claims, of undermining an insurer’s incentives to
settle its dispute with the insured in the hope of
avoiding the risk and expense of further litigation.
An interesting variation on the situation presented
in Squibb appeared in a federal court case from Texas
in 2009. RSR Corp. v. International Ins. Co.40 RSR
involved coverage for more than 20 environmental
sites throughout the country and the interplay
between CGL and EIL policies. The insured sued
numerous CGL insurers in state court. It entered
into 36 different settlements with those insurers,
yielding a total amount of $76 million.
Some of the CGL insurers filed a contribution
cross-claim against International, which had issued
an EIL policy to RSR. International then filed a
declaratory judgment action against RSR seeking a
declaration that it had no obligations under its EIL
policies. RSR filed a counterclaim seeking a contrary
declaration, and a trial was had with respect to
coverage for one site, Harbor Island, which resulted
in a judgment for RSR. After that ruling was
affirmed, RSR moved to re-open the litigation in
order to seek further relief, whereupon International
sought summary judgment that as a result of RSR’s
settlements with its CGL insurers, it was not entitled
to any recovery against International for the sites in
dispute. RSR cross-moved, and the court granted
International’s motion.
RSR’s settlements with its CGL insurers did not
allocate particular coverage amounts to individual
sites. The court characterized the parties’ dispute as
‘‘whether International is entitled to a credit or offset
Coverage–16
of its liability for the settlement funds received by
RSR from its CGL insurers in the Harrison County
Action.’’41 The court considered the effect of RSR’s
earlier settlements from several perspectives. The
court noted that it was well established under the
applicable Texas law that RSR should not be entitled
to more than one recovery for its loss, although how
that principle would apply in the situation presented
was by no means clear. The court first addressed the
circumstances under which a non-settling insurer
might be entitled to a credit in the first place. Inter-
national relied upon the ‘‘other insurance’’ provisions
of its EIL policies, and RSR relied upon Squibb to
contend that amounts received in settlement were not
‘‘other insurance’’ such that those provisions should
not apply. The Texas district court disagreed with
Squibb and ruled that the amounts collected in settle-
ment ‘‘are patently at least some part of the total
‘amounts collectible under such other insurance.’ ’’42
The court then reviewed the different holdings in
the Texas cases with respect to when the the one-
satisfaction rule might apply in a contract case.
Some Texas cases held that the rule allows a settle-
ment credit in a contract case only if the obligors
were jointly and severally liable for the same under-
taking, which is not the case when separate insurance
policies are involved insuring against different risks
at different times. The court thought that the best rule
was stated in a Texas appellate decision holding that
the settlement credit is available in contract cases ‘‘if
the plaintiff has suffered only one injury, even if
based on overlapping and varied theories of liability,
[because] the plaintiff may only recover once.’’43
The court found that RSR had suffered only one
injury and that as a matter of law a settlement
credit could appropriately be allowed if the circum-
stances warranted.
A critical issue, in light of the number of environ-
mental sites involved and the non-specific nature of
the settlements with the CGL carriers, was which side
had the burden of proving (or disproving) Internatio-
nal’s entitlement to a credit for the previous
settlements. The court concluded that RSR failed to
provide evidence to allocate its settlement proceeds
to specific liabilities other than the Harbor Island site,
so that International, the non-settling party, was
entitled to a full credit. The court read the Texas
cases as imposing ‘‘the burden to allocate settlement
proceeds on the settling party because requiring a
non-settling party to prove the settlement’s allocation
before receiving a settlement credit ‘not only unfairly
penalizes the nonsettling party but also allows
settling parties to abrogate the one satisfaction rule’
merely by ‘refusing to allocate.’ ’’44 This analysis is
at odds with the reasoning adopted in Squibb,
wherein the courts felt that the non-settling insurer
Volume 20, Number 1, January/February 2010
should have the burden of proving a double recovery
if it is to be allowed a credit for an insured’s prior
settlements with other carriers.45
Themes from several of the cases discussed above
rose again in the long running saga of environmental
coverage actions between United Technologies and
its carriers. That litigation spanned several lawsuits
against dozens of insurers and concerned over 100
different locations. Federal court litigation against
one of UTC’s insurers, American Home, resulted in
two decisions by the U.S. District Court in Connec-
ticut, the second of which was rendered upon
reconsideration of the first and significantly reversed
the course which the court originally thought appro-
priate. Read in conjunction with one another, the two
decisions provide an interesting view of the difficul-
ties which the courts have encountered in sorting
through the problems which arise in the cases
requiring allocation of coverage liabilities under
circumstances in which some insurers settle and
some do not.
Originally UTC brought suit against all of its
carriers. After a number of procedural challenges
the litigation ended up being split into several
different lawsuits, in which UTC eventually settled
with its liability carriers for $110 million. Then UTC
commenced an action in federal court against Amer-
ican Home, which had issued it first-party property
coverage, leading to an award against American
Home with respect to the Windsor Locks site for
$14.1 million.
American Home argued that by suing both its liabi-
lity insurers and its property insurer, UTC effectively
took the position that both categories of carriers were
equally liable for the environmental cases. American
Home therefore sought a settlement credit for 50
percent of the judgment awarded against it in connec-
tion with the Windsor Locks site. In its initial
opinion, the district court discussed the Koppers
case in detail, pointing out that there the insurers
involved were all jointly and severally responsible
for the liabilities at issue. In UTC, on the other
hand, some of the liability insurers had been absolved
of any coverage obligations in the earlier litigation,
based upon pollution exclusions and other considera-
tions. The court was aware that it should not allow a
double recovery to UTC, but it struggled to assess
how that notion should apply given the many vari-
ables and sites in play in connection with UTC’s
underlying liabilities and the different coverage
issues presented by different defendants in connec-
tion with the cases.
These complexities led the court to engage in a
complicated series of calculations regarding the
number of sites at issue, the jury’s awards with
respect to those sites, the times at which settlements
Volume 20, Number 1, January/February 2010
were reached as compared to the time when Windsor
Locks was dropped from the earlier litigation, and the
costs which UTC claimed it spent in remediating
Windsor Locks in comparison with other sites.
Based upon this analytical exercise the court deter-
mined that it should reduce the verdict against
American Home for the Windsor Locks site by
$931,000.
The court acknowledged a certain lack of exacti-
tude in its numerous calculations:
This formulation is by no means of model of
slide rule precision, given the dearth of informa-
tion before the Court and the very general
language of the settlement agreements reviewed
in camera. While plaintiff would have the Court
hold this shortfall to defendant’s account, the
fact remains that UTC is the one party with
access to the evidence necessary for the Court
to accurately calculate or deny an appropriate
set off, and it was also the party that could
have drafted the settlement agreements in such
a way to ensure that settlement payments were
allocable to particular claims or sites . . .46
The Court will tolerate a fair amount of approx-
imation in deciding the appropriate reduction to
be taken. In a different context, the Second
Circuit has directed district courts to consider
notions of fairness and ‘‘rough justice’’ in
traversing the ‘‘Serbonian bog’’ of proximate
cause . . . The Court views the calculations
arrived at above as an appropriate and adequate
formula for rough justice, and the quagmire
created by the various settlements and different
policy provisions in this case could just as surely
swallow an army, as the Serbonian bog was
reported to have done by Herodotus.47
After the court invested all of this effort and crea-
tivity, both UTC and American Home moved for
reconsideration. The court granted reconsideration
and, to a substantial degree, then undid what it had
wrought in its earlier analysis.
First, relying upon the then-recent Washington
Supreme Court decision in Weyerhaeuser Co. v.
Commercial Union discussed below, the court
concluded that it had incorrectly penalized the
insured for not making its settlement agreements
more specific as to which claims were being paid
under which policies. The court thought that Weyer-
haeuser and Squibb suggested that American Home
should bear the burden of establishing the existence
of a double recovery if its own obligations were to be
lessened, and that it had inappropriately ‘‘held short-
falls in the proof to the plaintiff’s account, in that it
faulted the plaintiff for failing to draft the settlement
agreements in such a way that clearly allocated the
Coverage–17
settlement funds.’’48 Second, the court felt that it had
erred in trying to analyze what American Home’s
obligations might be before completion of the trials
on all of the remaining environmental sites were
completed. Upon further reflection the court believed
that its initial effort to obtain ‘‘rough justice’’ resulted
in justice that was too rough.
The Court concludes that reserving decision on
defendant’s motion to reduce the jury verdict until
the trial on all sites has been concluded will
enable the court to arrive at a mode of analysis
based on a global determination of coverage and
supported by such evidentiary record as can be
established, i.e., ‘‘refined’’ justice.49
In the Weyerhaeuser v. Commercial Union50 deci-
sion upon which the UTC court relied in reversing
course on how to approach the settlement credit
issue, the insured sued 34 of its insurers to recover
costs to clean up some 130 hazardous waste sites.
Weyerhaeuser, the insured, eventually settled with
all of its insurers except one. Two phases of trial
were held, in which the jury found coverage for a
number of the sites at issue, after which the litigation
in the trial court concluded when the insured
accepted the insurer’s offer of judgment for the
remaining sites. One of the issues on appeal was
whether the trial court had properly refused to
allow the non-settling insurer a set-off for the settle-
ments received by Weyerhaeuser. The Washington
Supreme Court affirmed that ruling.
Although the cases reach different results, often
using different analyses, one common thread
seems to be that the courts are more inclined
to give the benefit of the doubt, and the benefit
of prior settlements, to the insured rather than to
insurers that were found liable to some extent
after failing to reach a settlement—although
the RSR decision discussed above shows that
there are exceptions to that generalization, as
there are to most others
The Supreme Court approached the settlement set-
off issue principally from the standpoint of allocation
of the burden of proof. The court held that the non-
settling insurer should bear that burden, because
‘‘[w]ere we to hold the insured bears the burden of
proving it has not received a double recovery, such a
rule would encourage litigation and reward the
nonsettling insurer for refusing to settle.’’51
The court agreed with the lower court that based on
the facts presented, the non-settling insurer could not
carry its burden, because
Coverage–18
[t]he insurers that chose to settle in this case
received far more than a simple release of liabi-
lity at specific sites. Rather these companies also
purchased certainty by avoiding the risks of an
adverse trial outcome—not to mention fore-
going the expenses associated with a lengthy
trial and appeal. As the insurers ‘‘paid Weyer-
haeuser for a release from an unquantifiable
basket of risks and considerations,’’ [quoting
the insured’s brief], we cannot say the settle-
ment simply constituted payment for
Weyerhaeuser’s clean-up costs.52
***
We affirm the trial court on this point and hold
CU failed to carry its burden to demonstrate
Weyerhaeuser has been fully compensated for
its liabilities. Accordingly, we conclude the
trial court properly denied CU’s request to
offset settlements received from other
insurers.53
The Squibb and Weyerhaeuser decisions make
interesting bookends in a way, because they reach
similar results coming from opposite directions. In
Squibb, the non-settling insurers were not entitled
to a setoff based on the settlements the policyholder
had reached with other insurers, because those settle-
ments triggered policies in a way that was different
from how they would be triggered under the court’s
allocation of responsibility. In Weyerhaeuser, on the
other hand, the settling insurers simply paid money
without any explicit indication of the basis, or any
statements or assumptions regarding which policies
were to apply to which particular underlying claims.
Based upon that circumstance, the court concluded
that that the non-settling insurer could not carry its
burden of proving that the insured had already been
made whole. Although the cases reach different
results, often using different analyses, one common
thread seems to be that the courts are more inclined to
give the benefit of the doubt, and the benefit of prior
settlements, to the insured rather than to insurers that
were found liable to some extent after failing to reach
a settlement—although the RSR decision discussed
above shows that there are exceptions to that general-
ization, as there are to most others.
Conclusion
Although the complexity of coverage litigation has
increased enormously over the years, some of the
decisions from decades ago dealing with how to
account for a settlement by one insurer in deter-
mining another insurer’s coverage liability for
claims as to which both have responsibility still
seem to hit the right note. That is, the non-settling
Volume 20, Number 1, January/February 2010
insurer’s responsibility should be gauged based upon approach could be beneficial to the non-settlers and
the amount for which it would be liable had there disadvantageous to the policyholder. On the other
been no settlements. Although the amounts paid in hand, if the court is obliged to apply an ‘‘all sums’’
settlement by settling carriers may be a fixed sum, approach to allocation, the result will inevitably be
however, how the settling insurers and the insured disadvantageous to the non-settling insurers since
articulated their settlement, in terms of what they will be liable subject to their policy limits for
amounts they state should apply to what claims, the insured’s entire liability, subject only to the possi-
should not be controlling, for the reasons explained bility—by hypothesis foreclosed by the
by the district court in Squibb. What should control is settlements—of seeking contribution from other
the ultimate legal liability that each of the responsible responsible carriers.
insurers would have had had there been no settle- These principles are likely far more easily stated
ments. Although some cases are to the contrary, a than they are employed in practical application. In
carrier that has settled should not be subject to cases involving numerous underlining claims, as
being sued a second time by non-settling insurers in happens in drug and asbestos cases, determining
search of contribution to offset their own liabilities. which claims fall into which insurer’s bucket can
The implementation of this approach will be involve enormous accounting efforts, when the
subject to the constraints of whatever coverage cases number in the hundreds or thousands and go
regime the court is required to apply under the back for years or decades. As we see in several of the
controlling law. If, as was the case in Squibb, the decisions discussed above, even some of the environ-
court is obliged to apply a pro-rata allocation, it mental cases involved dozens of sites and pollution
will assign shares in accordance with that method problems spanning many years. Although the deci-
to both settling and non-settling carriers, as though sions do not discuss these practical intricacies by and
there had been no settlements. In Squibb, this turned large, they are inherent in any effort to allocate
out to disadvantageous to the non-settling insurers responsibility among carriers in these complex
because of the manner in which the settlement allo- types of coverage situations, so efforts to avoid
cation differed in result from the results that would such complexity should generally not be a major
have been realized by all of the insurers if there had consideration in how the courts approach these allo-
not been any settlements. In other situations the cation and settlement credit issues.
1
Keene Corporation v. Ins. Co. of North America, 667 F.2d 1034 (D.C. Cir. 1981), cert. denied, 455 U.S. 1007 (1982).
2
Keene, 667 F.2d at 1050.
3
See, e.g., the Fireman’s Fund v. Oregon Auto. Insurance case discussed below, where the result turned upon the interpretation of an
Oregon statute.
4
23 F.2d 665 (2d Cir. 1928).
5
Zeig, 23 F.2d at 666.
6
Zeig, 23 F.2d at 666.
7
Ostrager & Newman, Handbook on Insurance Coverage Disputes, § 13.04, at 881 (12th ed. 2004).
8
Triplett v. Rosen, Nos. 92AP-816, 92AP-817 1992 Ohio App. LEXIS 6787 (Ohio Dec. 29 2002).
9
Triplett, 1992 Ohio App. LEXIS 6787, at *5.
10
Triplett, 1992 Ohio App. LEXIS 6787, at *5. Although the third party claimant was a party to the settlement in Triplett, this fact does
not undercut the import of the decision here because that party’s agreement to the principle that the excess insurers would be liable only
pursuant to the terms of their policies merely acknowledged the result that the decisions reach in any event.
11
Triplett, 1992 Ohio App. LEXIS 6787, at *7.
12
Triplett, 1992 Ohio App. LEXIS 6787, at *18.
13
Fulmer v. Insura Prop. & Cas. Co., 760 N.E.2d 392 (Ohio 2002) (Paragraph two of the syllabus) (clarifying and following Bogan v.
Progressive Cas. Ins. Co., 521 N.E.2d 477 (1988)).
14
Fulmer, 760 N.E.2d 392 at 401.
15
Koppers Co., Inc. v. Aetna Cas. and Sur. Co., 98 F.3d 1440, 1454 (3d Cir. 1996).
16
J.H. France Refractories Co. v. Allstate Ins. Co., 534 Pa. 29, 626 A.2d 502 (Pa. 1993).
17
Koppers, 98 F.3d at 1452.
18
Gould v. Continental Cas. Co., 585 A.2d 16 (Pa. Super. 1991).
19
Koppers, 98 F.3d at 1454.
20
E.R. Squibb & Sons, Inc. v. Lloyd’s & Companies, 241 F.3d 154 (2d Cir. 2001).
21
Massachusetts Electric Co. v. Commercial Union, 20 Mass. L. Rep. 193, 2005 Mass. Super. LEXIS 548 (Mass. Super. 2005).
22
Massachusetts Electric Co., 2005 Mass Super. LEXIS 548 at *6. ‘‘Pro tanto’’ is defined as ‘‘to that extent; for so much; as far as it
goes.’’ Black’s Law Dictionary, 8th Edition (2004). It basically implies a dollar for dollar credit. See McDermott, Inc. v. Amclyde and

Volume 20, Number 1, January/February 2010 Coverage–19

River Dawn Castings, Ltd., 511 U.S. 202 (1994), for a general discussion of the differences between various types of pro tanto and pro rata
allocations, although not in the context of insurance coverage.
23
241 F.3d 154 (2d Cir. 2001).
24
Squibb, 241 F.3d at 173.
25
Squibb, 241 F.3d at 172.
26
Squibb, 241 F.3d at 173.
27
No. 82 Civ. 7327 (JSM), 1997 U.S. Dist. LEXIS 6674 (S.D.N.Y. May 13, 1997).
28
Maryland Casualty Co. v. W.R. Grace & Co., No. 88 Civ. 2613 (JSM), 1996 U.S. Dist. LEXIS 2963 (S.D.N.Y. Mar. 12, 1996); and
Stonewall Ins. Co. v. National Gypsum Co., No. 86 Civ. 9671 (JSM), 1992 U.S. Dist. LEXIS 2377 (S.D.N.Y. Mar. 4, 1992).
29
Squibb, 1997 U.S. Dist. LEXIS 6674, at *3.
30
Squibb, 1997 U.S. Dist. LEXIS 6674, at *6–7.
31
Chemical Leaman Tank Lines, Inc. v. The Aetna Ca. & Sur. Co., 177 F.3d 210 (3d Cir. 1999).
32
Chemical Leaman, 177 F.3d at 228.
33
No. 1:02CV1770, 2003 U.S. Dist. LEXIS 27132 (N.D. Ohio July 23, 2003), aff’d, 205 U.S. App. LEXIS 13669) (6th Cir. 2005).
34
Gencorp, 2003 U.S. Dist. LEXIS 27132 at *15.
35
No. 1:03-CV-01322, 2006 U.S. Dist. LEXIS 11606 (N.D. Ohio Mar. 20, 2006).
36
Bondex, 2006 U.S. Dist. LEXIS 11606 at *12.
37
Bondex, 2006 U.S. Dist. LEXIS 11606 at *13.
38
Fireman’s Fund v. Oregon Auto Ins. Co., No. CV 08-565-JSL(E), 2008 U.S. App. LEXIS 23023 (9th Cir. Mar. 13, 2008).
39
Fireman’s Fund, 2008 U.S. App. LEXIS 23023 at *4.
40
RSR Corp. v. International Ins. Co., No. 3:00-CV-0250-P, 2009 U.S. Dist. LEXIS 27745 (N.D. Tex. Mar. 23, 2009).
41
RSR, 2009 U.S. Dist. LEXIS 27745, at *18.
42
RSR, 2009 U.S. Dist. LEXIS 27745, at *21. The court actually said that Squibb was distinguishable and that RSR’s argument took
the holding in Squibb out of context. Either way, it seems clear that the court reached a different result than the trial and appeal courts in
Squibb believed to be in order.
43
RSR, 2009 U.S. Dist. LEXIS 27745, at *40, quoting Galle, Inc. v. Poole, 262 S.W.3d 564, 573 (Tex. App. Austin 2008, pet. filed), in
turn quoting Osborne v. Jauregui, 252 S.W.3d 70, 75 (Tex. App. Austin 2008, pet. denied).
44
RSR, 2009 U.S. Dist. LEXIS 27745, at *48, citing Mobile Oil Corp. v. Ellender, 9689 S.W.2d 917, 927–28 (Tex. 1998). The court
also considered a Washington line of authorities to consider whether International had met its burden of establishing that there would be a
double recovery if RSR’s claims were allowed.
45
The court also found that under the approach taken by the Washington Supreme Court in Weyerhauser, discussed below, under a
detailed analysis of the settlements and liabilities International satisfied its burden of showing a double recovery even if it had such a
burden.
46
The court’s focus on this issue is inconsistent with the district court’s approach in Squibb, where the court found that how the parties
assigned claims to policies in their settlement was not determinative of the allocation the court should make pursuant to whatever
coverage rules it needed to apply.
47
United Technologies Corp. v. American Home Assurance Co., 118 F. Supp. 2d 190, 199–200 (D. Conn. 2000).
48
United Technologies Corp. v. American Home Assurance Co., 237 F. Supp. 2d 168, 173 (D. Conn. 2001).
49
United Technologies, 237 F. Supp. 2d at 174–75.
50
Weyerhaeuser Company v. Commercial Union Ins. Co., 15 P.3d 115 (Wash. 2000).
51
Weyerhaeuser, 15 P.3d at 126.
52
Weyerhaeuser, 15 P.3d at 126.
53
Weyerhaeuser, 15 P.3d at 127.

Coverage–20 Volume 20, Number 1, January/February 2010

 Trigger of Insurance Coverage for
Wrongful Conviction Lawsuits
by Benjamin C. Eggert and Amanda Schwoerke
 Benjamin C. Eggert is a Partner at Wiley
Rein LLP. He specializes in complex insurance
litigation matters and provides strategic advice
to clients on a broad range of insurance coverage
issues, including professional liability, general
liability and bad faith matters. He litigates in
federal and state trial and appellate courts in
jurisdictions nationwide.
Amanda Schwoerke is an Associate at Wiley
Rein LLP. She specializes in all aspects of
coverage litigation under general liability and
professional liability policies.
Since DNA evidence first was used to exonerate an
innocent person in 1989,1 hundreds of people have
established in court that they were wrongfully
convicted of crimes they did not commit, and the
rate of exonerations has increased dramatically this
decade.2 Responding to the influx of wrongful
convictions, the United States Supreme Court ruled
on or heard argument in four cases related to exon-
erations in 2009 alone.3 Policymakers also have
confronted the issue. For example, President Bush
signed the Innocence Protection Act in 2004, which
addressed DNA testing and contained provisions
dealing with the rights of the wrongfully convicted.4
Recognizing these legal and public policy devel-
opments, wrongful conviction has captivated the
news and popular media. ‘‘[T]he proliferation of
magazine-format television programs and the
advent of around the clock news programming on
cable television’’ has created ‘‘a seemingly insatiable
appetite for material. As a consequence, hardly a
week goes by when there is not a television expose
of a possible wrongful conviction.’’ 5 The Duke
University lacrosse scandal involving sexual assault
allegations that later proved to be unfounded and
fabricated in part by the prosecutor is one example
of the media’s fascination with actual or potential
wrongful conviction, an aspect of the criminal
justice system that barely existed 20 years ago.6
Volume 20, Number 1, January/February 2010
As part of this emerging area of criminal and
civil rights law, courts only recently have begun
to confront the liability insurance implications
of wrongful conviction lawsuits, particularly
the question of which policy or policies may
be triggered by such claims
Much less appreciated is that the increasing
number of exonerations have given rise to a wave
of civil rights lawsuits seeking compensation from
state and local governments and public officials,
sometimes resulting in large, multimillion dollar
jury verdicts and settlements. For example, the
United States Court of Appeals for the First Circuit
recently upheld a bench trial award of over $100
million dollars to four men who were wrongfully
convicted.7 As part of this emerging area of criminal
and civil rights law, courts only recently have begun
to confront the liability insurance implications of
wrongful conviction lawsuits, particularly the ques-
tion of which policy or policies may be triggered by
such claims.
Few areas of insurance law have been litigated as
widely and thoroughly as trigger of coverage for
bodily injury and property damage claims. Wrongful
conviction lawsuits, however, generally involve
alleged violations of a person’s civil rights, not
bodily injury. Consequently, these lawsuits typically
involve coverage for ‘‘personal and advertising
injury’’ under CGL policies or a more tailored
version of such coverage issued as public official or
law enforcement liability policies.
Compared to the thousands of court decisions
addressing trigger of coverage in the context of
bodily injury and property damage claims, judicial
guidance as to trigger for personal and advertising
injury claims is surprisingly scarce. Approximately
a dozen cases have addressed trigger of coverage for
wrongful conviction claims, but this number likely
will grow given the proliferation of exonerations
and resulting wrongful conviction actions.
Coverage–21

These courts have recognized that there is no
logical or legal basis under the relevant policy
language or case law to link wrongful convic-
tion to the types of latent bodily injury claims
that gave rise to the judicial formulation of the
continuous trigger of coverage concept
In light of the financial stakes, insureds have
attempted to analogize wrongful conviction to
latent bodily injury to persuade courts to apply a
continuous trigger, potentially implicating every
policy in effect while the claimant was imprisoned.
However, courts have uniformly—and correctly—
rejected the application of a continuous trigger to
wrongful conviction lawsuits. These courts have
recognized that there is no logical or legal basis
under the relevant policy language or case law to
link wrongful conviction to the types of latent
bodily injury claims that gave rise to the judicial
formulation of the continuous trigger of coverage
concept.
Personal and Advertising Injury Coverage
Given the relative novelty of the underlying facts,
legal claims and coverage issues implicated by
wrongful conviction lawsuits, it is important to
keep in mind that the specific policy provisions rele-
vant to these claims generally differ from those at
issue in bodily injury or property damage cases.
CGL policies contain three coverage parts. Coverage
A relates to bodily injury and property damage;
Coverage B relates to personal and advertising
injury; and Coverage C relates to medical payments.
A typical Coverage B insuring agreement states:
We will pay those sums that the insured
becomes legally obligated to pay as damages
because of ‘‘personal and advertising injury’’
to which this insurance applies. . . . This insur-
ance applies to ‘‘personal and advertising
injury’’ caused by an offense arising out of
your business but only if the offense was
committed in the ‘‘coverage territory’’ during
the policy period.8
Although the terminology in the Coverage B
provision is analogous to the more familiar
Coverage A, Coverage B is typically activated by
an ‘‘offense’’—rather than an ‘‘occurrence’’ and
resulting injury or damage—that is first committed
during the policy period. In analyzing potential
coverage for personal and advertising injury, the
defined policy term ‘‘occurrence’’ generally has
nothing to do with whether coverage is triggered.
As a result, the concepts of ‘‘accident,’’ ‘‘expected’’
and ‘‘intended,’’ which sometimes drive the coverage
Coverage–22
analysis for bodily injury and property damage, are
largely, if not entirely, inapplicable to Coverage B,
which does not contain these terms.
Indeed, the conduct giving rise to personal and
advertising injury is seldom accidental and may
even be intentional (i.e., ‘‘expected’’ and
‘‘intended’’). Coverage B addresses torts that fall
outside of Coverage A insofar as the conduct at
issue often is deliberate and results in some form of
injury or damage other than bodily injury or property
damage. In contrast to Coverage A, which generally
provides coverage for defined injury or damage
resulting from an accident, Coverage B takes a
‘‘named peril’’ approach to coverage for personal
and advertising injury and covers only specified
offenses. ‘‘Personal and advertising injury’’ typically
is defined to mean:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry
into, or invasion of the right of private occu-
pancy of a room, dwelling or premises that a
person occupies committed by or on behalf of
its owner, landlord or lessor;
d. Oral or written publication, in any manner, of
material that slanders or libels a person or orga-
nization or disparages a person’s or
organization’s goods, products or services;
e. Oral or written publication, in any manner, of
material that violates a person’s right of privacy;
f. The use of another’s advertising idea in your
‘advertisement’’; or
g. Infringing upon another’s copyright, trade dress
or slogan in your ‘‘advertisement’’.9
In addition, the definition of personal or advertising
injury in public official or law enforcement liability
policies often includes the violation of federal or state
civil rights laws.10 Unlike Coverage A, Coverage B is
limited to specifically listed offenses or acts of an
insured. In other words, an act that somehow violates
or infringes on a specified right of another, referred to
as an ‘‘offense,’’ is the subject of the coverage
afforded under Coverage B. Determining whether
an insured’s offense activates Coverage B thus
requires reference to the rights being protected and
what constitutes alleged infringement of those rights.
Wrongful Conviction Cases
Against this coverage framework, it is useful to
understand a typical wrongful conviction case and
the legal claims involved. The lawsuit often involves
a person convicted of murder or a sexual crime for
which he has spent years in prison. The criminal
Volume 20, Number 1, January/February 2010
conviction is set aside, usually through a declaration
of actual innocence or a vacated criminal conviction.
DNA evidence often leads to exoneration, although
a conviction may be set aside for other reasons,
such as the discovery of official misconduct in fabri-
cating inculpatory or suppressing exculpatory
evidence.
In bringing a civil suit for wrongful conviction,
claimants commonly assert several causes of action
under 42 U.S.C. § 1983 for violation of their civil
rights, which focus on official acts or omissions
‘‘under color of law’’ during the investigation,
arrest and prosecution. For example, most wrongful
conviction lawsuits include counts under Section
1983 for false arrest or false imprisonment, or both.
Following recent U.S. Supreme Court jurisprudence,
these causes of action have a very narrow scope.
In Wallace v. Kato, the Supreme Court held that
false arrest and false imprisonment essentially are the
same and should be treated as a single tort claim
encompassing wrongful detention without legal
process.11 According to Wallace, false imprisonment
ends upon the issuance of legal process, such as
an indictment, a formal criminal complaint or a
court decision instituting prosecution.12 In other
words, the conduct and damages relevant to false
imprisonment are limited to the period of detention
before criminal process ensues—that is, the time
between arrest and the filing of a criminal complaint
by the prosecution or an indictment issued by a grand
jury.13
Once one of those events takes place, ‘‘any
damages recoverable must be based on a malicious
prosecution claim and on the wrongful use of judicial
process rather than detention itself.’’14 Malicious
prosecution requires the plaintiff to prove that the
police officer or prosecutor:15 (1) initiated a criminal
prosecution, (2) without probable cause, and (3) with
malice; and (4) that the prosecution later terminated
in the plaintiffs’ favor.16 The plaintiff must also
prove that, as a result, (5) he suffered ‘‘a deprivation
of a federally-protected right.’’17 Thus, the focus of
the malicious prosecution claim is on the insureds’
conduct and alleged violations of rights between the
time of the initiation of criminal process and the
conviction.
In addition to general causes of action for false
imprisonment and malicious prosecution, wrongful
conviction lawsuits often also assert Section 1983
causes of action that focus on specific official
misconduct that allegedly led to the conviction.
Most commonly, plaintiffs contend that exculpatory
evidence was not disclosed by police officials to
prosecutors. Plaintiffs also increasingly argue that
fabrication of evidence,18 suggestive identification
Volume 20, Number 1, January/February 2010
procedures19 and coercive interrogations, among
other misconduct, led to a wrongful conviction.20
Trigger of Coverage Generally
Because the vast majority of cases addressing
whether a CGL policy is triggered arise under
Coverage A, it is worth reviewing briefly how
trigger of coverage usually is analyzed by courts
under this coverage part. To determine whether an
occurrence giving rise to potentially covered bodily
injury or property damage took place during a parti-
cular policy period, courts have developed four main
approaches to trigger of coverage: injury-in-fact,
manifestation, exposure, and continuous (sometimes
referred to as multiple- or triple-trigger).
 The injury-in-fact theory provides that a policy
is triggered when the injury or damage in ques-
tion initially takes place, irrespective of the time
of exposure or discovery of the injury or damage
and even if the damages ultimately extend
beyond the policy period.21
 The application of a manifestation theory of
trigger means that a policy is activated when
the injury or damage is first discovered.22
 The exposure theory of trigger provides that a
policy is triggered whenever the claimant or the
claimant’s property is ‘‘exposed’’ to an injury-
causing agent, even if the injury-causing act
precedes the policy period and the injury is
first discovery later.23
 The application of a continuous theory of trigger
means that a policy is activated whenever any of
the above take place—that is, when the injury first
takes place, when the injury manifests or when
the claimant is exposed to a harmful condition.24
Courts generally apply exposure and continuous
trigger theories only in cases of latent and progressive
injury or damage. An exposure theory sometimes is
applied in asbestosis and long-latency disease cases
where the ‘‘lengthy latency period . . . renders efforts
to pinpoint the date on which the disease was contracted
virtually impossible, medically and legally.’’25
Similarly, courts have applied the continuous
trigger theory where injury occurs over time. For
example, in Owens-Illinois, the court justified the
application of a continuous trigger to asbestos
claims because asbestos fibers cause progressive
harm to the body from the time they are inhaled
through the time of diagnosis of asbestosis.26 The
breadth of the continuous trigger theory means that
cases applying this trigger frequently implicate
coverage under numerous successive policies.
Coverage–23
Trigger of Coverage in Wrongful Conviction
Cases
In contrast to the many cases addressing trigger of
coverage under Coverage A, there are very few
trigger cases in the context of personal and adver-
tising injury, including wrongful conviction. That
said, the handful of courts that have considered
trigger in wrongful conviction cases generally are
in consensus on two important issues.
In wrongful conviction cases, the asserted
offenses and violations of rights take place no
later than the time of conviction. Imprison-
ment during the policy period is insufficient
to trigger coverage
First, courts hold that the trigger of coverage is, at
the latest, when the exonerated person was
convicted.27 In light of the policy language, the
rights at issue and the causes of action asserted in
connection with most wrongful conviction claims,
the trigger of coverage naturally centers on the crim-
inal process that gave rise to the litigation. As noted
above, Coverage B requires a focus on the specific
offenses committed and rights allegedly violated by
the insured. In other words, unless the offenses that
led to the wrongful conviction take place during the
effective period of the policy at issue, coverage
should not be triggered. In wrongful conviction
cases, the asserted offenses and violations of rights
take place no later than the time of conviction. Impri-
sonment during the policy period is insufficient to
trigger coverage.
The second uniformly accepted principle is that a
continuous trigger does not apply in a wrongful
conviction case.28 This conclusion is the logical
corollary to the fact that an offense taking place no
later than the conviction triggers coverage for liabil-
ities arising from wrongful conviction. An additional
and equally important consideration, however, is that
wrongful conviction matters do not implicate the
same sorts of concerns that underlie the application
of continuous trigger in latent bodily injury and prop-
erty damage cases. Such cases typically involve
either the situation where it is impossible to pinpoint
exactly when injury or damage first began or where
injury or damage slowly developed over a long
period of time.29 In contrast, in wrongful conviction
cases, assessing the offense and the related protected
rights is straightforward—the offenses that may
have taken place have fully accrued by the time of
conviction.
Several court decisions reflect these common sense
principles. For example, in Sarsfield v. Great
Coverage–24
American Insurance Company of New York, the
United States Court of Appeals for the First Circuit
considered coverage for claims that exemplify the
typical wrongful conviction lawsuit.30 Sarsfield, the
claimant, was wrongfully convicted and imprisoned,
serving ten years in prison for a rape that he did not
commit.31 He asserted claims against the city of
Marlborough, Massachusetts based upon federal
and state civil rights violations related to a suggestive
identification process used by police, the failure to
disclose exculpatory evidence and a falsified police
report.32 After Sarsfield entered into a stipulated
judgment with the city, he received an assignment
of rights under a series of general liability policies
containing law enforcement liability coverage parts,
which were issued to the city during the time in
which Sarsfield was incarcerated, but after the date
of his conviction. Sarsfield then brought suit against
the city’s insurers. The district court ruled in favor of
the insurers and Sarsfield appealed.33
Focusing on the alleged violation of rights, the
First Circuit held there was no wrongful act or
personal injury under the policies in effect during
imprisonment because the alleged misconduct—that
is, the police officers’ concealment of evidence from
the prosecutor, suggestive identification and fabrica-
tion of evidence—all took place prior to conviction.34
Specifically, the First Circuit affirmed the district
court’s finding that the misconduct took place
‘‘before the policy period because these claims
were presented as the officers’ concealment from
the prosecutor, and therefore the wrongful acts
ended before Sarsfield was incarcerated and the
policy period began.’’35 The Sarsfield court further
held that an alleged continuing cover up of this
misconduct during incarceration did not trigger
coverage under the policies.36
While the First Circuit’s ruling is important in that
it confirms that trigger takes place, at the latest, by the
time of conviction and that concealment of earlier
misconduct does not itself constitute a trigger of
coverage, the Sarsfield district court opinion is
perhaps more significant. The district court held that
even if Sarsfield incurred damages during the policy
periods based on the officers’ alleged violation of an
assumed continuing duty to disclose their miscon-
duct, such alleged damages did not trigger coverage
because the damages were not ‘‘distinct from the inju-
ries he incurred when he was convicted and
imprisoned.’’37 Thus, the court treated all potential
violations of rights from the wrongful conviction as
stemming from a single event—the initial conviction.
The Sarsfield district court also rejected the argu-
ment that a continuous trigger should apply.38 The
court reasoned that a continuous trigger theory could
be implicated only in latent injury cases where injury
Volume 20, Number 1, January/February 2010
was gradual and unknown for a long period of time.
The court noted that a continuous trigger was devel-
oped in response to concerns that if manifestation of
injury was the trigger of coverage, insurance compa-
nies would cease providing coverage for asbestos
injuries, largely eliminating coverage for asbestos-
related claims.39
The Sarsfield district court held that ‘‘[t]he ratio-
nale underlying application of the ‘continuous
trigger’ theory in the insurance coverage context
makes clear that it is not well-suited to a situation,
where, as here, any injury was evident from the outset
and first occurred prior to the inception of insurance
coverage.’’ 40 Focusing on claims for malicious
prosecution, the court held that the personal injury
was evident when the criminal charges were filed,
and no insured would expect to obtain coverage for
claims arising out of criminal charges prior to the
inception of the policy.41
Other courts have reached similar results. The
Iowa Supreme Court in Idaho Counties Risk Manage-
ment Program Underwriters v. Northland Insurance
Companies, likewise treated all violations of rights
from the wrongful conviction as results of the convic-
tion, and the court rejected the application of a
continuous trigger under similar facts. In Idaho
Counties, a municipal risk management program
sought coverage for the defense and settlement
costs it incurred in connection with claims brought
by a person who was wrongfully convicted and
imprisoned for nearly 20 years.42 The underlying
wrongful conviction suit asserted causes of action
for violations of civil rights, malicious prosecution,
false arrest and similar claims, and the risk manage-
ment program contended that such claims were
covered under policies in effect while the claimant
was incarcerated.43
The risk management program argued that,
because the underlying civil rights claims constituted
‘‘continuing torts,’’ coverage was triggered during
the 15 years that the program had obtained the poli-
cies at issue.44 The court rejected this argument,
holding that continuous torts are considered a single
occurrence. Reviewing each cause of action in the
complaint, the court held that the arrest, prosecution
and conviction did not trigger coverage because they
predated the policies.45 Like Sarsfield, the Idaho
Counties court held that concealment of evidence
and false statements during imprisonment, while
the policies were in effect, did not trigger coverage
because such acts were a continuation of pre-policy
actions during the arrest, prosecution and conviction
of the claimant.46
The United States Court of Appeals for the Third
Circuit confronted analogous circumstances in City
of Erie v. Guaranty National Insurance Co. There,
Volume 20, Number 1, January/February 2010
the insured sought defense and indemnity coverage
related to claims for civil rights violations, false
arrest and imprisonment, malicious prosecution and
other claims.47 The insured asserted that such claims
were covered under policies that insured the city
while the claimant was prosecuted and incarcerated,
but which came into effect after he was arrested and
charged with criminal offenses.48 Treating all of the
underlying civil rights claims as causes of action for
malicious prosecution, the City of Erie court held that
the trigger of coverage was when the injurious effects
of the malicious prosecution manifested themsel-
ves—that is, at the time criminal charges were
filed.49
Sarsfield, Idaho Counties and City of Erie
reflect the clear consensus of federal and
state appellate courts that the trigger of
coverage for wrongful conviction lawsuits
takes place, at the latest, at the time of convic-
tion and that a continuous trigger should not
apply to wrongful convictions
The Third Circuit further held that a continuous
trigger would not apply to wrongful conviction
cases.50 The appellate court reasoned that courts
adopted a continuous trigger in latent disease cases
because the injuries involved were not discoverable
until long after exposure. Fearing that insurance
companies would terminate coverage for companies
facing liability for asbestos claims, courts adopted
the continuous trigger to prevent ‘‘insurance compa-
nies facing countless future claims [from]
terminat[ing] coverage during [the diseases]’ long
latency period.’’51 Otherwise, ‘‘the entire burden of
compensation’’ for hundreds of thousands of claims
‘‘would [have] shift[ed] to the manufacturers even
though the exposure causing injury occurred during
the periods of insurance coverage.’’52 However, the
court found this concern absent in wrongful convic-
tion cases because ‘‘there is no interval between
arrest and injury.’’53 Rather, in a wrongful conviction
case, all injury flowing from the violation of the clai-
mant’s rights fully accrues ‘‘as soon as charges are
filed.’’54
Sarsfield, Idaho Counties and City of Erie reflect
the clear consensus of federal and state appellate
courts that the trigger of coverage for wrongful
conviction lawsuits takes place, at the latest, at the
time of conviction and that a continuous trigger
should not apply to wrongful convictions.
Coverage–25
Conclusion To date, however, the cases to consider trigger of
coverage for wrongful conviction have rejected the
Recent exonerees increasingly pursue civil claims for application of a continuous trigger in this context.
wrongful conviction, and these claims generate These decisions recognize that a continuous trigger
substantial demands directed at public entities, is inapplicable because the acts or omissions leading
public officials and their liability insurers. With few to the circumstances of which the exoneree
cases addressing trigger of coverage in the context of complains were committed, at the latest, by the
personal and advertising injury, insureds or claimants time of conviction. Furthermore, these decisions
to whom the insureds’ rights have been assigned have recognize that wrongful conviction claims do not
pushed courts to consider whether a continuous implicate the underlying concerns that sparked the
trigger applies. development of the continuous trigger.
1
Brandon L. Garrett & Peter J. Neufeld, Invalid Forensic Science Testimony and Wrongful Convictions, 95 VA. L. REV. 1, 4 (2009).
2
According to one study, more than three hundred people were exonerated between 1989 and 2003. ‘‘The rate of exonerations has
increased sharply over the fifteen year period of this study, from an average of twelve a year from 1989 through 1994, to an average of
forty two a year since 2000.’’ Samuel R. Gross, et al., Exonerations in the United States 1989 through 2003, 95 J. CRIM. L. & CRIMINOLOGY
523, 527 (2005).
3
In re Davis, __ U.S. __, 130 S. Ct. 1 (2009) (granting writ of habeas corpus filed directly with the Supreme Court—for the first time in
over 50 years—and ordering district court to hear testimony and argument concerning evidence of actual innocence not available at
criminal trial); District Attorney’s Office v. Osborne, __ U.S. __, 129 S. Ct. 2308 (2009) (holding that there is no constitutional right to
DNA testing following guilty verdict); Pottawattamie County v. McGhee, __ U.S. __, 129 S. Ct. 2002 (2009) (granting petition for
certiorari regarding whether prosecutors are absolutely immune for procuring false testimony during criminal investigation); Van De
Kamp v. Goldstein, __ U.S. __,129 S. Ct. 855 (2009) (ruling that prosecutors have absolute immunity from supervisory liability
concerning failure to disclose potentially exculpatory evidence related to jailhouse informant).
4
See 18 U.S.C. § 3600 (2004). Governmental policymakers continue to confront issues related to wrongful convictions. In November
2009, the Senate Judiciary Committee heard testimony concerning improvements to the Innocence Protection Act. See Strengthening Our
Criminal Justice System: Extending the Innocence Protection Act: Hearing Before S. Comm. on Judiciary (Nov. 10, 2009). Likewise, the
U.S. National Institute for Justice (part of the Department of Justice) issued in March 2009 a report discussing recent governmental
initiatives aimed at exonerating the wrongfully convicted. See Nancy Ritter, Postconviction DNA Testing Is At Core of Major NIJ
Initiatives, NIJ J., Mar. 2009, at 18–25.
5
Rob Warden, The Revolutionary Role of Journalism in Identifying and Rectifying Wrongful Convictions, 70 UMKC L. REV. 803, 804
(2002).
6
See Robert P. Mosteller, The Duke Lacrosse Case, Innocence, and False Identifications: A Fundamental Failure to ‘‘Do Justice,’’ 76
FORDHAM L. REV. 1337 (2007). Other examples are prevalent. John Grisham published The Innocent Man in 2006, which chronicled a
minor league baseball player’s efforts over a decade to establish that he was wrongfully convicted. John Grisham, The Innocent Man:
Murder and Injustice in a Small Town (2006). Betty Anne Waters, a film to be released in 2010 starring Hillary Swank in the eponymous
title role, will tell the real-life story of an unemployed single mother who put herself through college and law school in order to
demonstrate that her brother was wrongfully convicted of murder.
7
Limone v. United States, 579 F.3d 79 (1st Cir. 2009).
8
Insurance Services Office (ISO) Policy Form CG 00 01 10 01, Section I.B.
9
ISO Policy Form CG 00 01 10 01, Section V.14.
10
See, e.g., Sarsfield v. Great American Insurance Company, No. 08-1890, 2009 U.S. App. LEXIS 14304, at *6 (1st Cir. July 1, 2009).
11
Wallace v. Kato, 549 U.S. 384, 388–90 (2007) (‘‘False arrest and false imprisonment overlap; the former is a species of latter. . . . We
shall thus refer to the two torts together as false imprisonment. . . . The sort of unlawful detention remediable by the tort of false
imprisonment is detention without legal process’’) (emphasis in original).
12
Wallace, 549 U.S. at 388–89.
13
Wallace, 549 U.S. at 389–90.
14
Wallace, 549 U.S. at 390 (citation and quotation omitted).
15
Prosecutors generally have absolute immunity from most claims connected to the actual prosecution. See, e.g., Imbler v. Pachtman,
424 U.S. 409 (1976); Burns v. Reed, 500 U.S. 478 (1991). The narrow exception to this rule denies absolute immunity to prosecutors for
actions taken in connection with the criminal investigation. See Buckley v. Fitzsimmons, 509 U.S. 259, 275 (1993).
16
See generally W. Page Keeton, et al., Prosser & Keeton on Torts § 119, at 871 (5th ed. 1984).
17
See, e.g., Nieves v. McSweeney, 241 F.3d 46, 53 (1st Cir. 2001).
18
See, e.g., Wilkins v. DeReyes, 528 F.3d 790, 795 (10th Cir. 2008) (liability for fabrication of evidence by coercing false statements
from witnesses); Brown v. Miller, 519 F.3d 231, 237 (5th Cir. 2008) (liability for laboratory technician’s misleading and scientifically
inaccurate serology report).
19
See, e.g., Wray v. City of New York, 490 F.3d 189 (2d Cir. 2007); Gregory v. City of Louisville, 444 F.3d 725, 746–47 (6th Cir.
2006).

Coverage–26 Volume 20, Number 1, January/February 2010

 20
See, e.g., Higazy v. Templeton, 505 F.3d 161, 173 (2d Cir. 2007); Cunningham v. City of Wenatchee, 345 F.3d 802, 810 (9th Cir.
2003).
21
See, e.g., Stonewall Insurance Company v. Asbestos Claims Management Corporation, 73 F.3d 1178 (2d Cir. 1995).
22
See, e.g., Eagle-Picher Industries, Inc. v. Liberty Mutual Insurance Company, 682 F.2d 12 (1st Cir. 1982).
23
See, e.g., Insurance Company of North America v. Forty-Eight Insulations, Inc., 633 F.2d 1212 (6th Cir. 1980).
24
See, e.g., Owens-Illinois, Inc. v. United Insurance Company, 650 A.2d 974 (N.J. 1994).
25
Cole v. Celotex Corporation, 599 So.2d 1058, 1065–66 (La. 1992).
26
Owens-Illinois, 650 A.2d at 983–84.
27
See, e.g., North River Insurance Company v. Broward County Sheriff’s Office, 428 F. Supp. 2d 1284, 1290 (S.D. Fla. 2006);
Newfane v. General Star National Insurance Company, 784 N.Y.S.2d 787, 791 (N.Y. App. Div. 2004); TIG Indemnity Company v.
McFatridge, No. 06-2008, 2007 U.S. Dist. LEXIS 23788, at *10 (C.D. Ill. Mar. 30, 2007); Coregis Insurance Company v. City of
Harrisburg, No. 1:03-CV-920, 2006 U.S. Dist. LEXIS 20340, at *33–36 (M.D. Pa. Nov. 8, 2005); S. Freedman & Sons, Inc. v. Hartford
Fire Insurance Company, 396 A.2d 195, 198–99 (D.C. 1978).
28
See, e.g., City of Erie v. Guaranty National Insurance Company, 109 F.3d 156, 165 (3d Cir. 1997); Coregis, 2006 U.S. Dist. LEXIS
20340, at *11; North River, 428 F. Supp. 2d at 1292; Idaho Counties Risk Management Program Underwriters v. Northland Insurance
Companies, 205 P.3d 1220, 1226 (Idaho 2009); Sarsfield v. Great American Insurance Company, Civ. A. No. 07-11026-RWZ (D. Mass.
June 2, 2008).
29
For example, in Trizec Properties, Inc. v. Biltmore Construction Company, the United States Court of Appeals for the Eleventh
Circuit applied a continuous trigger theory in a property damage case where it ‘‘ha[d] no way of conclusively knowing exactly when the
damage occurred’’ since leakage resulting from the faulty roof installation ‘‘continued gradually over a period of time.’’ 767 F.2d 810, 813
(11th Cir. 1985). The Trizec court found that such situation was analogous to asbestosis cases, where the ‘‘lengthy latency period . . .
renders efforts to pinpoint the date on which the disease was contracted virtually impossible, medically and legally.’’ Trizec, 767 F.2d at
813.
30
Sarsfield, 2009 U.S. App. LEXIS 14304 (1st Cir. 2009).
31
Sarsfield, 2009 U.S. App. LEXIS 14304, at *1.
32
Sarsfield, 2009 U.S. App. LEXIS 14304, at *1–2.
33
Sarsfield, 2009 U.S. App. LEXIS 14304, at *3.
34
Sarsfield, 2009 U.S. App. LEXIS 14304, at *7, 10–11.
35
Sarsfield, 2009 U.S. App. LEXIS 14304, at *7–8 (emphasis in original). Because it found that coverage was not triggered, the First
Circuit did not address additional points raised by the district court, which are discussed below.
36
Sarsfield, 2009 U.S. App. LEXIS 14304, at *11 (‘‘The clause [in the underlying wrongful conviction complaint] stating that the
defendants ‘continued to cover up their misconduct’ . . . is not enough to allege a ‘wrongful act’ [defined to include personal injury]
occurring during the coverage period.’’).
37
Sarsfield, 07-11026-RWZ at 8–9 (‘‘Plaintiff fails to identify any injury resulting from the alleged concealment during the policy
period that is distinct from the injuries he incurred when he was convicted and imprisoned. Moreover, even if the concealment could be
said to cause a distinct injury, as noted above the concealment first occurred prior to the policy period and any resulting injury would
predate the policy.’’) (citation omitted). See also Coregis, 2006 U.S. Dist LEXIS 20340, at *35–36 (‘‘the underlying [wrongful conviction]
complaint is devoid of any specific allegations of distinct wrongful acts or offenses committed after Crawford’s third conviction for
Mitchell’s murder. More importantly, the Crawford Complaint does not allege any specific wrongful acts occurring during the respective
policy periods that allegedly caused personal injury distinct from the injuries Crawford allegedly incurred in the 1970s.’’).
38
Sarsfield, Civ. A. No. 07-11026-RWZ at 9–12.
39
Sarsfield, Civ. A. No. 07-11026-RWZ at 9–10 (quoting Keene Corporation v. Insurance Company of North America, 667 F.2d 1034,
1042–47 (D.C. Cir. 1981)).
40
Sarsfield, Civ. A. No. 07-11026-RWZ at 10.
41
Sarsfield, Civ. A. No. 07-11026-RWZ at 11–12.
42
Idaho Counties, 205 P.3d at 1221–22.
43
Idaho Counties, 205 P.3d at 1222.
44
Idaho Counties, 205 P.3d at 1226.
45
Idaho Counties, 205 P.3d at 1226–1228.
46
Idaho Counties, 205 P.3d at 1227.
47
City of Erie, 109 F.3d at 158 and n.1.
48
City of Erie, 109 F.3d at 158.
49
City of Erie, 109 F.3d at 160–62.
50
City of Erie, 109 F.3d at 165.
51
City of Erie, 109 F.3d at 164.
52
City of Erie, 109 F.3d at 164.
53
City of Erie, 109 F.3d at 164.
54
City of Erie, 109 F.3d at 164.

Volume 20, Number 1, January/February 2010 Coverage–27

Insurance 101-Insights for Young Lawyers:
What Counts?
Determining the ‘‘number of
occurrences’’ under General Liability
Insurance Policies
by Michael F. Huber
 Michael F. Huber is a partner at Ver
Ploeg & Lumpkin, P.A., a Miami, Florida, law
firm that represents policyholders in disputes
with insurance companies. The author thanks
R. Hugh Lumpkin and Christine A. Gudaitis, of
Ver Ploeg & Lumpkin, and Alan M. Ruley, of
Bell, Davis & Pitt, P.A., Winston-Salem, N.C.,
for their insights
I. Introduction
Multiple plaintiffs sue a blood bank for exposing
them to HIV-infected blood. The blood bank’s liabi-
lity insurer maintains that the applicable policy’s per-
occurrence limit of $1 million must be spread among
all of the claims. A federal district court disagrees,
holding that each act of distributing the infected
blood constitutes a separate occurrence and triggers
a separate $1 million limit.1
Multiple plaintiffs sue a petting zoo for exposing
them to E. coli bacteria. The petting zoo’s liability
insurer maintains that the applicable policy’s per-
occurrence limit of $1 million must be spread
among all of the claims. A federal district court
agrees, holding that all of the exposures to E. coli
constitute a single occurrence and trigger only a
single $1 million limit.2
A defective plumbing system damages 19 buildings
in an apartment complex. The apartment complex’s
insurer maintains that 19 per-occurrence deductibles
apply. A federal appeals court agrees, holding that the
damage to each building constitutes a separate occur-
rence implicating a separate deductible.3
Defective paneling damages 1,400 houseboats,
house trailers, motor homes and campers. The
Coverage–28
paneling manufacturer’s insurer maintains that
1,400 per-occurrence deductibles apply. A federal
appeals court disagrees, holding that the damage to
all the vehicles constitutes a single occurrence impli-
cating a single deductible.4
‘‘Number of occurrences’’ can be a knotty issue
for courts and coverage counsel
How have these courts, applying the same interpre-
tive doctrine to the same policy language, reached
results that are so . . . harmonious? As we will see,
these apparently conflicting decisions are principled
and consistent. At the same time, however, they illus-
trate just how knotty the issue of ‘‘number of
occurrences’’ can be for courts and coverage counsel.5
II. The Pertinent Policy Language
In determining the number of occurrences, courts must
look first at the declarations page, which typically
provides the limit of coverage and applicable deduc-
tible (or self-insured retention) for ‘‘each occurrence.’’
This directs the court to the definition of ‘‘occurrence,’’
which is found in Section V of the standard policy and
states: ‘‘ ‘Occurrence’ means an accident, including
continuous or repeated exposure to substantially the
same general harmful conditions.’’6 The last stop is
Section III, which states in pertinent part:
The Limits of Insurance shown in the Declara-
tions and rules below fix the 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[.]’’7
Volume 20, Number 1, January/February 2010
III. Cause vs. Effect
In interpreting the standard policy language, the vast
majority8 of courts count the causes rather than the
effects of the harm allegedly attributable to the
insured to determine the number of occurrences.
‘‘In determining whether there was a single occur-
rence or multiple occurrences, we look to the cause
of the property damage rather than to the effect.’’9
For example, a car crash caused by a single act of
negligence is a single occurrence under the ‘‘cause
test,’’ even if it resulted in eight deaths.10 Under the
‘‘effects test,’’ on the other hand, the harm to each of
the eight victims would be a separate occurrence.11
Courts have sometimes found this principle easier to
assert than to apply, however, because virtually all
occurrences have a host of ‘‘causes,’’ specific and
overarching, immediate and remote.12 If one
follows the chain of causation far enough back, in
fact, every tort has a single cause: human fallibility.13
In interpreting the standard policy language,
the vast majority of courts count the causes
rather than the effects of the harm to determine
the number of occurrences
IV. Immediate Cause vs. Overarching
Cause
Seeking to limit their exposure to a single policy
period or a single per-occurrence limit, insurers in
product liability cases frequently argue that all the
damage attributable to a particular defective
product resulted from a single cause: the policyhol-
der’s general failure to manufacture nondefective
products. That’s not much better than blaming
human fallibility. And it’s contrary to the great
weight of authority, which holds that courts must
look at the specific act of the insured that immediately
precedes the harm and directly led to liability.14
The blood bank case mentioned above15 is instruc-
tive. The issue was whether the Red Cross’s
distribution of tainted blood constituted one occur-
rence, as the primary insurer maintained, or multiple
occurrences, equivalent to the number of separate
acts of distribution, as the policyholder and excess
insurers argued. Applying the ‘‘cause test’’ to the
occurrence policy language, the court framed the
question as whether ‘‘there was but one proximate,
uninterrupted and continuing cause which resulted in
all of the injuries and damages.’’16 The court, in
ruling for the policyholder, reasoned:
Defendant Travelers argues that the underlying
cause of the HIV-contaminated blood claims
Volume 20, Number 1, January/February 2010
was plaintiff’s general, negligent practice in
handling HIV-contaminated blood. The facts
do not support the suggestion that plaintiff
engaged in a single, negligent practice that
could be considered ‘‘one cause.’’ Rather, plain-
tiff made many decisions with regard to its
handling of the blood. . . . Each of these deci-
sions independently may have affected
whether bodily injury would result from a trans-
fusion. Moreover, negligence with regard to
screening, testing, or notification could not
result in injury until a particular unit of contami-
nated blood was provided to an entity which
would administer the transfusion. Thus, the
Court declines to resort to the level of generality
urged by defendant Travelers in applying the
cause test. Instead, the Court finds that the
proximate cause of the injuries was the distribu-
tion itself of HIV-contaminated blood.
Accordingly, each act of distribution of
contaminated blood constitutes an ‘‘occur-
rence’’ for purposes of applying the $1 million
per occurrence limit.17
The court in the petting zoo case mentioned above
applied the same principles but reached a different
conclusion.18 A number of fairgoers became ill after
being exposed to E. coli bacteria at a petting zoo
operated by the policyholder at the 2004 North Caro-
lina State Fair.19 The court determined there was a
single occurrence because there was a single cause of
all claimants’ illnesses: the presence of E. coli.
Unlike in the blood bank case, there were not
multiple acts of negligence that caused the harm.
There was no causative act or event other than the
mere presence of animal feces containing E. coli. The
only way the court could have found multiple occur-
rences would have been to apply the effects test
rather than the cause test.
To determine the number of occurrences,
courts must look at the specific act of the
insured that immediately precedes the harm
and directly led to liability
If separate outbreaks had occurred at, say, the
2004, 2005, 2006 and 2007 fairs, however, the
court presumably would have found four separate
occurrences. The next factor in the analysis shows
why.
V. Time and Space
There is a single occurrence only when the damage or
injuries ‘‘occur close in time with no intervening
agent.’’20 Courts in cases involving underlying
Coverage–29
asbestos claims have routinely applied this reasoning
to hold that each individual claimant’s asbestos expo-
sure is a separate occurrence because, although the
claims ‘‘shared a common cause’’ (i.e., injurious
asbestos fibers), there was no ‘‘spatial or temporal
relationship’’ among the exposures.21
Insurers sometimes rely on the ‘‘continuous or
repeated exposure to substantially the same general
harmful conditions’’ language in the standard policy’s
definition of ‘‘occurrence’’ to argue that a long-tail
claim should be a single occurrence. Courts interpreting
such policy language, however, ‘‘have rejected
attempts by insurers to characterize seemingly discrete
events as emanating from a single, ongoing cause.’’22
In fact, the inclusion of the phrase ‘‘continuous or
repeated exposure’’ actually serves to expand rather
than restrict coverage.23 In a 2003 case, the Supreme
Court of Florida, which applies the majority ‘‘cause
test’’ to determine number of occurrences, was faced
with the question of whether a shoot-out at a fraternity
party that left several people injured was a single occur-
rence or multiple occurrences under a CGL policy
incorporating the standard definition of ‘‘occurrence.’’
The policyholder, who was the owner of the
restaurant where the melee occurred, argued there
were two occurrences because two separate shotgun
blasts caused the injuries. Relying on the ‘‘contin-
uous or repeated exposure’’ clause, the insurance
company argued there was a single occurrence: the
policyholder’s overarching failure to provide
adequate security. As it was a case of first impression
in Florida, the court went to great lengths to analyze
decisions from around the nation, as well as the
drafting history of the pertinent policy language, in
reaching its holding. The decision, consequently,
deserves quoting at length:
The ‘‘continuous or repeated exposure’’
language was intended to broaden coverage. . . .
[T]he restrictive definition of accident as ‘‘an
event happening suddenly’’ [in pre-1966 CGL
policies] proved to be unsatisfactory to the
policyholder, the public and the courts. As a
result, in 1966 and again in 1972, changes
were made to standard comprehensive general
liability policies by substituting the word
‘‘occurrence’’ for ‘‘accident,’’ and by defining
‘‘occurrence’’ to mean ‘‘an accident, including
continuous or repeated exposure to conditions,
which result[s] in bodily injury or property
damage neither expected nor intended from the
standpoint of the insured.’’ . . .
We conclude that the inclusion of the ‘‘continuous
or repeated exposure’’ language does not restrict
the definition of ‘‘occurrence’’ but rather expands
it by including ongoing and slowly developing
injuries, such as those in the field of toxic torts.
Coverage–30
Therefore, we reject [the insurer’s] reliance on the
‘‘continuous or repeated exposure’’ language as a
basis for concluding that [the policyholder’s]
negligent failure to provide security constitutes
a single occurrence under the terms of the
policy. The victims were not ‘‘exposed’’ to the
negligent failure to provide security. If the
victims were ‘‘exposed’’ to anything, it was the
bullets fired from the intruder’s gun.24
The ‘‘continuous or repeated exposure’’
language in the standard liability policy was
intended to broaden coverage
The court then analyzed which potential cause or
causes it should count in determining the number of
occurrences. ‘‘[The policyholder] argues that the
focal point for determining the number of occur-
rences is the ‘immediate cause’ of the injury—the
gunshots. However, [the insurer] argues that the
focal point is the ‘insured’s underlying activity’ ’’—
i.e., its failure to provide security.25 The court
reviewed the case law and concluded that the
immediate ‘‘act which causes the damage constitutes
the occurrence . . . not the insured’s underlying negli-
gence.’’ 26 It further concluded ‘‘that using the
number of shots fired as the basis for the number of
occurrences is appropriate because each individual
shooting is distinguishable in time and space.’’27
Importantly, the court found the insuring grant to
be ambiguous, and the result may well have been
influenced by the truism that, in the presence of ambi-
guity, the interpretation supporting the greater
indemnity will prevail.
The court noted that if the insurer had intended to
avoid this outcome, ‘‘it could have drafted clear
policy language to accomplish that result.’’28 Some
insurers have in fact adopted clearer language, speci-
fying, for example, that a single occurrence shall
include ‘‘all losses or damages that are attributable
directly or indirectly to one cause or to one series of
similar causes. All such losses will be added together
and the total amount of such losses will be treated as
one occurrence irrespective of the period of time or
area over which such losses occur.’’29
VI. New Cases: Single Occurrence
Decisions issued in the past year in which courts have
applied these analytical principles and held that there
was a single occurrence include:
 E.I. du Pont de Nemours & Co. v. Stonewall
Insurance Co.30
DuPont, the policyholder, manufactured and sold a
resin known as Delrin, which was used by third
Volume 20, Number 1, January/February 2010
parties to mold fittings for plumbing systems. Those
systems were installed in millions of homes. All of
the Delrin was made in the same DuPont plant.
Between 1989 and 2007, DuPont incurred more
than $239 million in liabilities from thousands of
claims filed by homeowners alleging that the
plumbing systems had caused water damage to their
homes. DuPont’s insurer argued that the damage at
each individual house constituted a separate occur-
rence, triggering a separate deductible. After a
lengthy analysis of a collection of cases from
across the nation, the Delaware court wrote:
‘‘[T]here are few industrial torts that do not involve
multiple causes of property damage. The proper
focus for insurance coverage purposes, however, is
the underlying cause of the property damage, from
the point of view of the insured.’’31 The court
concluded that, viewed from the policyholder’s
perspective, the damage giving rise to DuPont’s
liabilities all arose from a single occurrence—Del-
rin’s lack of suitability for use in the plumbing
systems.
 Liberty Mutual Insurance Co. v. Pella
Corp.32
The policyholder, a window manufacturer, sought a
declaration that it was covered in regard to class
actions filed by various plaintiffs who alleged
defects in windows they bought for their homes.
Because the policy contained a per-occurrence
deductible, the policyholder argued—successful-
ly—for a single occurrence. Applying Iowa law, the
court wrote that it
agrees with Pella that the damages alleged by each
of the plaintiffs in the Underlying Lawsuits arise
from the ‘the continuous or repeated exposure to
the same general harmful conditions’—that is, to
the design, manufacture, and allegedly fraudulent
sale of a product containing the same latent
defect. Accordingly, the Court finds that the
Underlying Lawsuits allege damages arising
from a single ‘occurrence.’ ’’
 State of California v. Continental Insurance
Co.33
The State of California sued its insurers seeking
coverage for its liability to the federal government
for the costs of cleaning up a hazardous-waste site.
The state argued that multiple per-occurrence limits
applied because there were at least three occurrences,
namely:
1. The escape of contaminants through fractured
rock, caused by the State’s failure to discover
the fractures;
Volume 20, Number 1, January/February 2010
2. The escape of contaminants through a barrier
dam, caused by the State’s use of some natural
materials, rather than all concrete, in the
construction of the dam; and
3. The escape of contaminants through an under-
ground streambed, caused by the State’s failure
to discover the streambed.
The appeals court, applying California law, affirmed
the trial court’s decision that there was only one
occurrence. In so doing, the appellate court relied
heavily on a Third Circuit decision, Flemming v.
Air Sunshine, Inc.,34 which it discussed as follows:
[In Flemming], the plaintiff’s husband had died
after a plane crash. The plaintiff argued that
there had been multiple occurrences, including
(1) the plane crash itself, (2) the failure to
provide a preflight safety briefing, and (3) the
failure to notify passengers of the impending
crash and to provide emergency safety instruc-
tions. The appellate court disagreed: ‘‘[The
plaintiff]’s allegations of pre-crash negligence,
including failure to provide a safety briefing and
failure to provide warning of the crash, do not
meet the policy definition of ‘occurrence’
because they simply cannot be seen as ‘acci-
dents’ independent from the crash itself. Any
pre-crash acts of negligence cannot be termed
proximate causes of [the decedent]’s death
because the crash intervened and the pre-crash
negligence would not have caused any injury
absent the crash.’’35
 Allstate Property & Casualty Insurance
Co. v. McBee36
The policyholders’ dog escaped from their yard and
bit two joggers, Steven and Kristi McBee. The
insurer argued that it was a single occurrence, to
which a single per-occurrence limit applied. The
court, applying Missouri law, agreed. ‘‘[T]he injuries
sustained by each of the McBees[ ] are the result of
continuous exposure to substantially the same
harmful condition, the failure to prevent the dog’s
escape, considered as a single incident. Under the
causation approach I conclude there was one
occurrence.’’
 Dutch Maid Logistics, Inc. v. Acuity37
An employee of the policyholder drove a company
truck into a line of stopped traffic on an interstate,
killing two people and severely injuring three others.
Although five claims were filed, the insurer main-
tained that there was only one accident and that,
therefore, only one $1 million per-accident limit
Coverage–31
applied. The policyholder argued that bodily injury
must necessarily happen to a person, and since there
were five claims resulting from bodily injuries, there
were five accidents. Holding for the insurer, the Ohio
court concluded: ‘‘A simple, plain reading of the
contract reveals that its drafters included ‘cause’
language in it, not ‘effect’ language. The trial court
did not err in applying the meaning of that language
to limit the policy to $1 million in the aggregate.’’
 Kinney-Lindstrom v. Medical Care
Availability & Reduction of Error Fund38
The parents of twins born with a chorioamnionitis
infection won a $13.15 million malpractice verdict
against their doctor. In the ensuing coverage case, the
Pennsylvania court granted the doctor’s insurer
summary judgment that there was only one occur-
rence. ‘‘[T]he failure of Dr. S. to promptly perform
an amniocentesis, or consult a specialist, to determine
whether a chorioamnionitis infection was present in
the uterus of Parent constitutes a single occurrence.’’
VII. New Cases: Multiple Occurrences
Decisions issued in the past year in which courts have
held that there were multiple occurrences include:
 Plastics Engineering Co. v. Liberty Mutual
Insurance Co.39
The insurer argued that there was one occurrence—
the policyholder’s act of selling asbestos-containing
products without warning of their dangers. The
Wisconsin Supreme Court disagreed, holding that
each individual victim’s exposure to the asbestos-
containing products constituted an occurrence. The
court rejected the notion, however, that an individual
victim who had multiple exposures to the products
could account for multiple occurrences. ‘‘[E]ach indi-
vidual claimant’s injuries stem from the continued
and repeated exposure to asbestos-containing
products.’’40
 Evanston Insurance Co. v. Ghillie
Suits.com, Inc.41
The policyholder manufactured and sold a type of
military camouflage apparel known as ‘‘ghillie
suits.’’ 42 Two Marines, Ehart and McClanahan,
suffered severe burns while wearing the suits
during a training exercise. Ehart’s suit was ignited
by a flash from the firing of his weapon. McClana-
han’s caught fire while he was trying to put out the
flames rising from Ehart’s suit. Both Marines sued.
The manufacturer’s insurer argued that the injury of
both men constituted a single occurrence and that,
therefore, only a single per-occurrence limit
Coverage–32
applied. The court, applying California law,
disagreed, holding that the injury to each Marine
was a separate event, separated in time and space,
with a separate cause.
‘‘[I]t is undisputed that the first occurrence (and
accident) was the ignition of Ehart’s supposedly
fireproof suit. . . . Once Ehart’s suit ignited and
the flames began to spread, McClanahan still
was far from the zone of danger and not
‘continuous[ly]’ exposed to ‘substantially the
same’ conditions as Ehart. Only after McCla-
nahan made the independent decision to help
Ehart was he exposed to a harmful condition,
one that was much different from the spark
that ignited Ehart’s suit, as the initial spark
had now turned into a substantial fire.’’
 Addison Ins. Co. v. Fay43
Two teenaged boys died of hypothermia after
becoming trapped overnight in an excavation pit on
the policyholder’s property. The policyholder’s
insurer agreed to settle the claims of the boys’
estates for the policy limits. The insurer then filed
this declaratory action to determine whether one or
two per-occurrence limits applied. The Illinois
Supreme Court held that there were two occurrences,
reasoning:
From the evidence presented at trial, we can
infer that the boys did not become trapped
simultaneously. We can also infer that
Hodgins became trapped after Carr, in an
attempt to free Carr from the sand. Beyond
these basic facts and inferences, there is little
evidence to support Addison’s claim that the
injuries suffered by these two boys were the
result of a single occurrence. The police inves-
tigators could not determine how closely in time
the boys became trapped. They suggested it
could have been seconds or minutes apart, but
acknowledged that there was no way to know.
Nor could the medical experts give a time of
death with certainty, or indicate how closely in
time the two boys had died. Any opinions on
these issues of timing would be inappropriately
speculative. . . .
The substantial uncertainty on this issue
persuades us that Addison cannot meet its
burden of proving that the two boys’ injuries
were so closely linked in time and space as
to be considered one event. Because Addison
cannot meet its burden, we hold that the
injuries to Carr and Hodgins constitute two
occurrences.44
Volume 20, Number 1, January/February 2010
VIII. Conclusion time or space. Conversely, there is a single occur-
rence when (1) a single act or event can be isolated
From the foregoing analysis, we can extract a prin- as the immediate cause of the damage, when viewed
ciple: Courts find multiple occurrences when (1) from the insured’s perspective, and/or (2) the acts or
separate acts or events attributable to the insured events are continuous in time or space.
are the immediate, as opposed to remote, causes of
harm and/or (2) the acts or events are separated by
1
Am. Red Cross v. Travelers Indem. Co. of R.I., 816 F. Supp. 755 (D.D.C. 1993).
2
Western World Ins. Co. v. Wilkie, No. 5:06-CV-64-H (3), 2007 U.S. Dist. LEXIS 81677 (E.D.N.C. Nov. 2, 2007).
3
U.E. Texas One-Barrington, Ltd. v. Gen. Star Indem. Co., 332 F.3d 274 (5th Cir. 2003).
4
Champion Int’l Corp. v. Continental Cas. Co., 546 F.2d 502 (2d Cir. 1976).
5
The analysis is further complicated by the fact that when courts are determining the number of occurrences, they are justified in
deciding close calls differently depending upon whether limits or deductibles are at issue. ‘‘It is a well recognized rule of construction and
interpretation of contracts for insurance that the contract or policy must be liberally construed in favor of the insured so as not to defeat,
without plain necessity, his claim to the indemnity which, in making the contract of insurance, it was his purpose and intention to obtain.’’
Inter-Ocean Cas. Co. v. Hunt, 189 So. 240, 242 (Fla. 1939); accord Carey Canada, Inc. v. Aetna Cas. & Sur. Co., CIV. A. Nos. 84-3113
JHP, 85-1640 JHP, 1988 U.S. Dist. LEXIS 8997 (D.D.C. Mar. 31, 1988).
6
ISO Form CG 00 01 12 04 (2003).
7
ISO Form CG 00 01 12 04 (2003). The substance of the provision has changed little in the various iterations of the standard ISO policy
issued since 1973 (ISO Form GL 00 01 01 73). See SUSAN J. MILLER & PHILIP LEFEBVRE, 1 MILLER’S STANDARD INSURANCE POLICIES
ANNOTATED 421.7 (5th ed. 2008).
8
See 64 A.L.R. 4TH 668 § 2 (a) (1988, updated weekly); 2 Allen D. Windt, INS. CLAIMS & DISPUTES, § 11:24 (5th ed. 2008); M. Jane
Goode, LAW & PRACTICE OF INS. COVERAGE LITIG. § 6:18 (2008).
9
Gaston County Dyeing Mach. Co. v. Northfield Ins. Co., 524 S.E.2d 558, 565 (N.C. 2000); accord H.E. Butt Grocery Co. v. Nat’l
Union Fire Ins. Co. of Pittsburgh, Pa., 150 F.3d 526, 530 (5th Cir. 1998) (the number of occurrences is determined by examining the
‘‘events that cause the injuries and give rise to the insured’s liability, rather than on the number of injurious effects’’); Mich. Chem. Corp.
v. Am. Home Assur. Co., 728 F.2d 374, 379 (6th Cir. 1984) (‘‘The vast majority of courts . . . have concluded that although injury must be
suffered before an insured can be held liable, the number of occurrences for purposes of applying coverage limitations is determined by
referring to the cause or causes of the damage and not to the number of injuries or claims.’’); Liberty Mut. Ins. Co. v. Pella Corp., 631 F.
Supp. 2d 1125, 1135–36 (S.D. Iowa 2009) (‘‘The majority of courts . . . appear to answer this question based on the ‘underlying cause’ of
the property damage alleged.’’); Colonial Gas Co. v. Aetna Cas. & Sur. Co., 823 F. Supp. 975, 983 (D. Mass. 1993) (holding that
‘‘consistent with the rule in the majority of states, . . . the number of occurrences turns on the underlying cause of the property damage, and
where . . . there is a single cause . . . there is a single occurrence’’); Chemstar, Inc. v. Liberty Mut. Ins. Co., 797 F. Supp. 1541, 1546 (C.D.
Cal. 1992) (‘‘A majority of courts determines the number of occurrences based on the underlying cause of the property damage.’’);
Owens-Illinois, Inc. v. Aetna Cas. & Sur. Co., 597 F. Supp. 1515, 1525 (D.D.C. 1984) (‘‘the calculation of the number of occurrences
must focus on the underlying circumstances which resulted in the personal injury and claims for damage rather than each individual
claimant’s injury’’); Koikos v. Travelers Ins. Co., 849 So. 2d 263, 273 (Fla. 2003) (‘‘We look not to the number of injuries or victims, i.e.,
we do not apply the ‘effect theory,’ but rather we focus, under the ‘cause theory,’ on the independent immediate acts that gave rise to the
injuries and [the policyholder’s] liability.’’).
10
Aetna Cas. & Sur. Co. v. Clayton, 56 F.3d 60 (4th Cir. 1995).
11
Anchor Cas. Co. v. McCaleb, 178 F.2d 322, 324–25 (5th Cir. 1949).
12
See 2 Allen D. Windt, INS. CLAIMS & DISPUTES, § 11:24 (5th ed. 2008) (‘‘A difficult question, rarely expressly addressed by the courts
outside the context of coverage for third party claims, is whether the ‘cause’ of a loss for the purpose of determining the number of occurrences
is the general overarching cause or the more immediate cause.’’); Society of Roman Catholic Church v. Interstate Fire & Cas. Co., 26 F.3d
1359, 1364 (5th Cir. 1994) (‘‘The meaning of ‘occurrence,’ as used in the insurance policies, can be perplexing in application.’’).
13
See, e.g., U.E. Texas One-Barrington, Ltd., 332 F.3d at 278 (‘‘[T]o look this far back would render any damage . . . occurring at any
time related to the plumbing as arising from the same event.’’). See also THOMAS WOLFE, LOOK HOMEWARD, ANGEL (1929), which explored
the boundlessness of causation in its opening paragraphs:
Each of us is all the sums he has not counted: subtract us into nakedness and night again, and you shall see begin in Crete four thousand years ago the
love that ended yesterday in Texas.
The seed of our destruction will blossom in the desert, the alexin of our cure grows by a mountain rock, and our lives are haunted by a Georgia
slattern, because a London cutpurse went unhung. Each moment is the fruit of forty thousand years.
14
See U.E. Texas One-Barrington, Ltd., 332 F.3d at 278 (‘‘In determining the number of ‘occurrences,’ we should not focus on the
alleged overarching cause, but rather on the specific event that caused the loss.’’); Flintkote Co. v. Gen. Accident Assurance Co., 410 F.
Supp. 2d 875, 891–93 (N.D. Cal. 2006) (each ‘‘event that causes and immediately precedes an injury giving rise to liability’’ is a separate
occurrence); London Market Insurers v. Superior Court, 53 Cal. Rptr. 3d 154, 172 (Cal. Ct. App. 2007) (courts should look to the
immediate, not the remote, cause of harm to determine the number of occurrences); Nicor, Inc. v. Associated Elec. & Gas Ins. Servs., Ltd.,
841 N.E.2d 78, 85 (Ill. App. Ct. 2005), aff’d, 860 N.E.2d 280 (Ill. 2006) (‘‘[W]here each asserted loss is the result of a separate and
independent intervening human act, either negligent or intentional, each loss arises from a separate occurrence.’’).

Volume 20, Number 1, January/February 2010 Coverage–33

 15
See supra note 1.
16
Am. Red Cross, 816 F. Supp. at 761 (quoting Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676 F.2d 56, 61 (3d Cir. 1982)).
17
Am. Red Cross, 816 F. Supp. at 761 (internal citations omitted).
18
Western World Ins. Co., 2007 U.S. Dist. LEXIS 81677.
19
The opinion does not indicate the number of victims, but a December 23, 2005, report by the U.S. Centers for Disease Control placed
the number at 108. See Outbreaks of Escherichia coli O157:H7 Associated with Petting Zoos—North Carolina, Florida, and Arizona,
2004 and 2005, available at http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5450a1.htm.
20
See Appalachian Ins. Co. v. Gen. Elec. Co., 863 N.E.2d 994, 1001 (N.Y. 2007); accord Flemming v. Air Sunshine, Inc., 311 F.3d
282, 295 (3d Cir. 2002). See also Guideone Elite Ins. Co. v. Old Cutler Presbyterian Church, Inc., 420 F.3d 1317, 1332 (11th Cir. 2005)
(‘‘acts . . . were separated by sufficient ‘time and space’ so as to constitute separate occurrences’’).
21
See In re Prudential Lines, Inc., 158 F.3d 65, 81 (2d Cir. 1998) (harm to each asbestos claimant constituted a separate occurrence
because they were exposed at different points in time). But see Liberty Mut. Ins. Co. v. Treesdale, Inc., 418 F.3d 330, 339 (3d Cir. 2005).
22
Worchester Ins. Co. v. Fells Acres Day School, Inc., 558 N.E.2d 958, 973 (Mass. 1990). See Am. Red Cross, 816 F. Supp. at 761 n.8
(criticizing the ‘‘result-oriented approach’’ in ‘‘cases holding that all injuries resulting from sales of a uniformly defective product
constitute continuous and repeated exposure to a general condition’’).
23
Koikos, 849 So. 2d at 267–73.
24
Koikos, 849 So. 2d at 267–73 (citations and punctuation adapted).
25
Koikos, 849 So. 2d at 269.
26
Koikos, 849 So. 2d at 270 (emphasis in original).
27
Koikos, 849 So. 2d at 272. See Lexington Ins. Co. v. Travelers Indem. Co. of Ill., 21 Fed.Appx. 585, 589–90 (9th Cir. 2001) (arson
fires at four different courthouses set by same person constituted four separate occurrences).
28
Koikos, 849 So. 2d at 272. See Pardee Constr. Co. v. Ins. Co. of the West, 92 Cal. Rptr. 2d 443, 456 (Cal. Ct. App. 2000) (‘‘the
insurers’ failure to use available language expressly excluding [a specific type of] coverage implies a manifested intent not to do so’’).
29
SR Int’l Bus. Ins. Co. v. World Trade Ctr. Props., LLC, 222 F. Supp. 2d 385, 398 (S.D.N.Y. 2002) (emphasis added).
30
E.I. du Pont de Nemours & Co. v. Stonewall Ins. Co., No. 99C-12-253 (JTV), 2009 Del. Super. LEXIS 235 (Del. Super. Ct. June 30,
2009).
31
E.I. du Pont de Nemours & Co., 2009 Del. Super. LEXIS 235 (emphasis in original).
32
Liberty Mut. Ins. Co. v. Pella Corp., 631 F. Supp. 2d 1125 (S.D. Iowa 2009). For the factual background of the case, see Liberty Mut.
Ins. Co. v. Pella Corp., 633 F. Supp. 2d 714 (S.D. Iowa 2009).
33
California v. Continental Ins. Co., 88 Cal. Rptr. 3d 288 (Cal. Ct. App. 2009). This decision is awaiting review by the California
Supreme Court. California v. Continental Ins. Co., 203 P.3d 425 (Cal. 2009).
34
Flemming v. Air Sunshine, Inc., 311 F.3d 282 (3d Cir. 2002).
35
California, 88 Cal. Rptr. 3d at 316 (internal citations omitted).
36
Allstate Prop. & Cas. Ins. Co. v. McBee, No. 08-0534-CV-W-HFS, 2009 U.S. Dist. LEXIS 35158 (W.D. Mo. April 27, 2009).
37
Dutch Maid Logistics, Inc. v. Acuity, Nos. 91932, 92002, 2009 Ohio App. LEXIS 1512 (Ohio Ct. App. Apr. 16, 2009).
38
Kinney-Lindstrom v. Med. Care Availability & Reduction of Error Fund, 970 A.2d 1206 (Pa. Commw. Ct. 2009).
39
Plastics Eng’g Co. v. Liberty Mut. Ins. Co., 759 N.W.2d 613 (Wis. 2009).
40
Plastics Eng’g Co., 759 N.W.2d at 623 (emphasis added).
41
Evanston Ins. Co. v. Ghillie Suits.com, Inc., No. C 08-2099 JF (HRL), 2009 U.S. Dist. LEXIS 22256 (N.D. Cal. Mar. 19, 2009).
42
‘‘A ghillie suit is a form of camouflage that typically consists of an abundance of shredded material attached to pants and a jacket and
is designed to give the wearer a three-dimensional appearance that will blend in with surrounding vegetation.’’ Evanston Ins. Co., 2009
U.S. Dist. LEXIS 22256.
43
Addison Ins. Co. v. Fay, 905 N.E.2d 747 (Ill. 2009).
44
Addison Ins. Co., 905 N.E.2d at 756–57.

Coverage–34 Volume 20, Number 1, January/February 2010

 A Closer Look at the Rights of an
Indemnified Party as Compared to the
Rights of an Additional Insured from an
Insurance Coverage Perspective
by Justin L. Weisberg and Louis J. Gale
 Justin Weisberg is a partner and chair of
the construction law group at Arnstein & Lehr,
LLP. He is currently co-chair of the Additional
Insureds Subcommittee of the Insurance
Coverage Litigation Committee. He has repre-
sented clients in commercial, construction and
environmental insurance coverage disputes
throughout the United States. He also has repre-
sented clients in numerous matters involving
construction contracts and has written a
number of articles concerning construction
contract and coverage issues. He is currently is
a member of the Illinois Society of Construction
Attorneys and has been selected to represent the
American Society of Civil Engineers as a dele-
gate to the Engineers Joint Contract Documents
Committee (EJCDC). Prior to his career in law,
Mr. Weisberg practiced as an Engineer and he
still maintains his license as a Professional Engi-
neer in Illinois and Florida.
Louis J. Gale is an Associate with Arnstein &
Lehr, LLP in the firm’s Chicago office. He is a
member of the firm’s Litigation and Construc-
tion groups, his practice focuses on commercial
and construction litigation, and he is also a
licensed Professional Engineer in the State of
Illinois.
I. Introduction
Commercial contracts often require one or both
contracting parties to indemnify the other party to
the contract. In many instances the contract will
also require one party to provide insurance specifi-
cally designating the other party as an additional
insured under a commercial general liability policy.
While the purpose of both provisions may be to
Volume 20, Number 1, January/February 2010
provide defense and indemnification in the event of
a third party claim relating to bodily injury or prop-
erty damage, the rights of an indemnified party to
insurance coverage can be significantly different
than the rights of an additional insured. This article
will explore the differences between coverage
provided pursuant to the indemnification provision
as compared to coverage provided to an additional
insured.
II. Analysis
A. Indemnification
Indemnity is defined by Black’s Law Dictionary as
‘‘[a] duty to make good any loss, damage, or liability
incurred by another’’ and as ‘‘[t]he right of an injured
party to claim reimbursement for its loss, damage, or
liability from a person who has such a duty.’’1 For
example, a contractor may require a subcontractor on
a construction project to indemnify the contractor
with respect to claims against the contractor that
result from the acts or omissions of the subcontractor.
Thus, the subcontractor is the indemnitor, providing
indemnification to the contractor, which is the indem-
nitee. The claims at issue in these cases typically
involve personal injury or property damage with
owners, architects, consultants and contractors typi-
cally being protected by indemnification provisions.
Indemnification is distinct from contribution, in that
contribution is the distribution of loss among joint
tortfeasors based upon their respective shares of
that particular loss.2
Contract provisions are used to explicitly spell out
the rights of the indemnitor and the indemnitee which
afford the protections desired by contractors and
owners.3 For a third party to a contract to benefit
from an indemnity provision, generally, the contract
must expressly identify an intended benefit to that
third party. For example, the indemnification
language in a construction contract might expressly
identify the Owner and the Architect as indemnified
Coverage–35
parties along with the general contractor. While
contractors and owners are able to protect themselves
via indemnification provisions, such protections are
not limitless. In Illinois, for example, indemnification
on construction projects is limited by statute as
follows:
With respect to contracts or agreements, either
public or private, for the construction, alteration,
repair or maintenance of a building, structure,
highway bridge, viaducts or other work dealing
with construction, or for any moving, demoli-
tion or excavation connected therewith, every
covenant, promise or agreement to indemnify
or hold harmless another person from that
person’s own negligence is void as against
public policy and wholly unenforceable.4
Note that such limits in Illinois are imposed only on
construction contracts and one party can contract to
indemnify another party, even in instances where
indemnity is provided for the other party’s own negli-
gence, outside of the construction context. 5 In
contrast to Illinois law, California allows an indem-
nitor to indemnify an indemnitee for the indemnitee’s
own active participatory negligence, although there is
a statutory prohibition against indemnification for an
indemnitee’s sole negligence in construction
contracts.6
A further restriction on the protections afforded by
indemnification arises under Illinois case law where a
third party, typically an owner or contractor, has been
sued by an injured employee of a subcontractor/em-
ployer, and the owner or contractor has pursued the
employer for contribution.7 Illinois law holds that an
employer is not liable for more than the statutory
measure of worker’s compensation liability in a
third party contribution action.8 The Kotecki doctrine
protects employers, but the protection is not absolute.
In Virginia Surety, the Illinois Supreme Court
determined that typical indemnity provisions
generally found in numerous form construc-
tion agreements with worker’s compensation
limitation waivers do not shift worker’s
compensation liability between the parties.
The Virginia Surety court recognized the
contractual provision to be nothing more than
a waiver of an anticipated affirmative defense
The indemnitor employer can waive the Kotecki
statutory worker’s compensation limits in an express
indemnification agreement.9 For a clear waiver of
Kotecki, language stating that the indemnitor agrees
to indemnify and assume responsibility for all
damages or injury to employees resulting from the
Coverage–36
performance of its work ‘‘to the fullest extent
permitted by law’’ is not sufficient without words
such as ‘‘shall not be limited.’’10 In Virginia Surety,
the Illinois Supreme Court determined that typical
indemnity provisions generally found in numerous
form construction agreements with worker’s compen-
sation limitation waivers do not shift worker’s
compensation liability between the parties.11 The
Virginia Surety court recognized the contractual
provision to be nothing more than a waiver of an
anticipated affirmative defense.12 The joint and
several liability that exists between the employer
and the third party is unaffected by Kotecki and the
third party can always pursue a claim for contribu-
tion.13 The only issue is whether the employer will
assert the affirmative defense of Kotecki as a limita-
tion on its liability exposure.14
Principles of general contract liability may offer
additional protection to third parties, such as
owners and contractors, who may be held liable
based on an employee suit. While commercial
general liability policies typically exclude coverage
to the insured for the insured’s own bodily injuries or
property damage,15 an exception to these exclusion
provisions exists when liability is assumed by the
insured via an ‘‘insured contract.’’16 Such an assump-
tion of liability can occur when an insured assumes
the tort liability of another to pay for personal injuries
or property damage.17
While Virginia Surety is a seminal case under Illi-
nois law, it has received little recognition to date
from the courts of other states.18 Nevertheless,
similar principles regarding indemnification are
addressed by other courts throughout the United
States.19 For example, Massachusetts and Delaware
have laws that place limits on the allowable indem-
nification that can be had by a contractor or owner.20
In an indemnity case in Missouri, the indemnity
provision of a contract between a contractor and
owner was held to take precedence over claims for
contribution.21 A case in Minnesota involving indem-
nification for an injury claim and an exception to the
exclusion applicable to liabilities assumed by
contract held that an indemnification provision in
which the indemnitor assumed tort liability was an
‘‘insured contract’’ and thus the indemnitor—and
therefore its insurer—was liable to the indemnitee.22
When contracts for indemnification are reviewed
by the Illinois courts, they ‘‘are to be carefully scru-
tinized and strictly construed.’’23 Express indemnity
provisions are narrowly construed in other jurisdic-
tions as well.24 However, so long as it is clearly
worded, an indemnification provision will be
upheld.25 In Sears v. Charwil, the court found that
an indemnity provision that covered ‘‘all liability
from any and all’’ claims clearly indemnified
Volume 20, Number 1, January/February 2010
Sears.26 Because the facts in Sears v. Charwil did not
involve a construction project and the contract provi-
sion covered ‘‘any and all’’ claims, the fact that Sears
was being indemnified for liability attributable its
own negligent employee was not an issue.27
When contracts for indemnification are
reviewed by the Illinois courts, they ‘‘are to
be carefully scrutinized and strictly construed.’’
Express indemnity provisions are narrowly
construed in other jurisdictions as well
A potentially important aspect of any indemnifica-
tion relationship may involve the ability of the
indemnitor to obtain insurance coverage to secure
its capacity to honor its indemnification obligation.
Sears v. Charwil serves as an example of the
coverage that an indemnitor can be tasked to
obtain. 28 Generally, a loss which is voluntarily
assumed by an insurer under contract is not covered
under a CGL policy.29 To the extent that the subject
indemnity agreement imposes liability upon the
indemnitor for which it would have no responsibility
absent the agreement, it is hard to view the indemnity
agreement as anything other than a voluntary
assumption by the indemnitor of potential liability
pursuant to a contract which is excluded from
coverage under the indemnitor’s CGL policy.
However, there is an exception to this contractual
liability exclusion under many CGL policies for
certain types of contracts to which an insured is a
party in the ordinary course of its business. These
contracts, designated in many CGL policies as
‘‘Insured Contracts,’’ may include side-track agree-
ments, certain types of agreements with
municipalities and, in the specific context of
commercial and construction contracts, an agreement
by an insured to accept the tort liability for ‘‘bodily
injury’’ or ‘‘property damage’’ of another party with
which it is engaged in a business enterprise. Thus,
whether the liability exposure voluntarily assumed by
the indemnitor constitutes as an ‘‘Insured Contract’’
is a determining factor regarding whether the protec-
tion provided to the indemnitee under an
indemnification agreement would be covered by the
indemnitor’s insurance. Where a purported indem-
nity agreement does not shift the pro rata liability
imposed by law on the indemnitee as a consequence
of its own negligence to the indemnitor, it is not an
‘‘Insured Contract.’’30 Thus an agreement by a
contractor to indemnify a store owner from the
contractor’s negligence and the negligence of the
contractor’s subcontractors was not defined as an
‘‘Insured Contract’’ but instead was considered liabi-
lity voluntarily assumed by contract.31 As a result,
Volume 20, Number 1, January/February 2010
the indemnitor’s CGL insurer had no coverage
obligation.
Originally in Illinois, there was a split of authority
between two appellate district courts concerning
whether an indemnity provision which only required
an indemnitor to indemnify an indemnitee to the
extent of the indemnitor’s own negligence was an
‘‘Insured Contract.’’ The Fifth District Appellate
Court determined that such an indemnity agreement
was not an ‘‘Insured Contract.’’ 32 The Second
District of Illinois disagreed, determining on two
occassions that indemnity provisions that were
limited to the indemnitor’s negligence were Insured
Contracts and therefore the indemnitors were covered
for their indemnification obligations to the indemni-
tees.33 The Illinois Supreme Court, in Virginia
Surety, agreed with the Fifth District and determined
that a purported indemnification agreement which
was limited to the indemnifier’s negligence was not
an indemnification agreement at all. The provision at
issue in the Virginia Surety case required the indem-
nifying party to indemnify the indemnitee for liability
caused in whole or part by the negligent acts of the
indemnitor. The Virginia Surety Court effectively
read out of the provision the portion of the language
suggesting possible indemnification of the indem-
nitee for its own negligence, in implicit recognition
of the prohibition imposed by Illinois law, as the
provision at issue actually stated the following:
‘‘To the fullest extent permitted by law, the
Subcontractor WAIVES ANY RIGHT OF
CONTRIBUTION AGAINST AND shall
indemnify and hold harmless the Owner,
Contractor, Architect, Architect’s consultants,
and agents and employees of any of them from
and against claims, damages, losses, and
expenses, including but not limited to attorneys
fees, arising out of or resulting from perfor-
mance of the Subcontractor’s Work under this
Subcontract, provided that such claim, damage,
loss or expense is attributable to bodily injury,
sickness, disease or death or to injury to or
destruction of tangible property (other than the
Work itself) including loss of use therefrom,
WHICH IS caused in whole or in part by negli-
gent acts or omissions of the Subcontractor,
the Subcontractor’s subcontractors, anyone
directly or indirectly employed by them or
anyone for whose acts they may be liable,
regardless of whether or not such claim, loss,
or expense is caused in part by a party indemni-
fied hereunder.’’34
In construing the above quoted indemnity provi-
sion, the court decided that the provision would not
be covered under the indemnitor’s commercial
general liability policy as an ‘‘Insured Contract.’’
Coverage–37
The relevant portion of the ‘‘Insured Contract’’ defi-
nition contained in the CGL policy at issue in
Virginia Surety was as follows:
That part of any other contract or agreement
pertaining to your business (including an indem-
nification of a municipality in connection with
work performed for a municipality) under which
you assume the tort liability of another party to
pay for ‘bodily injury’ or ‘property damage’ to a
third person or organization. Tort liability means
a liability that would be imposed by law in the
absence of any contract or agreement.35
In finding that the indemnity provision was not such
an ‘‘Insured Contract’’, the Virginia Surety Court
determined that the parties intended the indemnity
provision at issue not to be an indemnity provision
at all, but instead to be merely a waiver of the indem-
nitor’s affirmative defense. In its analysis, the Virginia
Surety court regarded the waiver of the statutory
worker’s compensation cap defense under Kotecki to
be the assumption of liability already imposed upon
the indemnitor by law for its own negligence.36
Form construction contracts require subcontractors
to execute indemnification/waiver agreements of the
type addressed in Virginia Surety almost as a require-
ment for doing business, even though many small
contractors are ill-equipped to assume the obligations
imposed by a typical indemnification provision in the
event of a catastrophic injury. Therefore, the Virginia
Surety decision left Illinois subcontractors with
potentially uncovered liability for assumed amounts
above the Kotecki (or statutory worker’s compensa-
tion) cap, which could be fatal to a subcontractor’s
ability to continue conducting business in the face of
a large claim. The only solution remaining for such
subcontractors would either be found under employ-
er’s liability policies, which generally had smaller
insuring limits than CGL policies, or by adding the
indemnitees to the subcontractor’s existing CGL
policies as additional insureds.
Furthermore, under the targeted tender rule in
Illinois, the insured may direct its own insurer
and any additional implicated insurers not to
participate in its defense, which eliminates the
right of the selected insurer to seek equitable
contribution from the additional insured’s
other primary insurers. The Burns Construc-
tion Court disregarded the ‘‘other insurance’’
clauses in the relevant policies in this context,
stating that ‘‘[a]n ‘other insurance’ provision
does not in itself overcome the right of an
insured to tender defense of an action to one
insurer alone.’’
Coverage–38
B. Additional Insured
Even if an indemnification agreement is not covered
by the indemnitor’s CGL policy, the indemnitor may
still have protection against claims by an indemnified
party to the extent that the subject contract also
required the indemnifying party to add the indemni-
fied parties as additional insureds to its general
liability policy. 37 The election by an owner or
contractor, which has been named as an additional
insured under the subcontractor’s policy, to seek
coverage under that policy for a claim while noti-
fying its own CGL insurer that it is not being
requested to cover the claim is referred to as a
targeted tender.38 That is, a general contractor that
has been named as an additional insured under its
subcontractor’s policy may select the policy under
which it is named as an additional insured to cover
a claim and forego tendering the claim to its own
insurer.39 Furthermore, under the targeted tender
rule in Illinois, the insured may direct its own
insurer and any additional implicated insurers not
to participate in its defense, which eliminates the
right of the selected insurer to seek equitable contri-
bution from the additional insured’s other primary
insurers.40 The Burns Construction Court disre-
garded the ‘‘other insurance’’ clauses in the relevant
policies in this context, stating that ‘‘[a]n ‘other insur-
ance’ provision does not in itself overcome the right
of an insured to tender defense of an action to one
insurer alone.’’41
In contrast to Illinois law, under which the insured
has considerable discretion to eliminate the obliga-
tions of certain insurers to contribute to the costs of
defending a claim, while imposing the complete cost
of the claim upon other selected insurers, certain
other states limit the insured’s right to restrict the
chosen insurer’s opportunity to seek participation or
contribution from other insurers. For example,
contrast B. P. Air Conditioning, applying New
York law, which recognized that an insurer had a
right to demand that the selected insurer bear 100
percent of its defense costs, but held that the insured’s
selection did not preclude the selected insurer from
seeking contribution from other primary carriers.42
Moreover, the targeted tender rule in Illinois is not
without its limits. When a policy contains an ‘‘excess’’
insurance clause, the targeted tender rule does not
permit the insured to choose that insurer’s policy
unless (or until) ‘‘all primary insurance available to
the insured has been exhausted.’’43 Extending the
scope of the targeted tender rule into the realm of
excess insurance would ‘‘eviscerate the distinction
between primary and excess insurance.’’44 Thus
targeted tender can be applied to circumstances
where concurrent primary insurance coverage
Volume 20, Number 1, January/February 2010
 exists for additional insureds, but to the extent
that defense and indemnity costs exceed the
primary limits of the targeted insurer, the dese-
lected insurer or insurers’ primary policy must
answer for the loss before the insured can seek
coverage under an excess policy. This holding
preserves the distinction between primary and
excess insurance policies.45
Another limit placed on an additional insured can be
found within the policy that covers the additional
insured. If a claim arises out of a named additional
insured’s acts and the additional insured seeks coverage,
the additional insured will not be covered if the insur-
ance policy under which it is the additional insured and
seeks coverage contains a ‘‘sole negligence’’ exclusion
and the injured party only alleges that the additional
insured’s negligence is what caused their injury.46
The application of Burns by the courts in other
states has been limited.47 Nevertheless, courts in
other states have analyzed the issues arising in
connection with naming owners and contractors as
additional insureds, with multiple cases involving
contracts in which both indemnification and the provi-
sion of additional insured protection was required.48
One issue arising when one insurer is called upon to
cover a claim, when other insurers could have been
responsible, is the interaction between the ‘‘other
insurance’’ clauses contained in the contracts of the
insurers.49 The subcontractor’s insurer covering the
owner or contractor as an additional insured may seek
contribution from the owner’s or contractor’s own
insurer pursuant to an ‘‘other insurance’’ clause, but
the mere presence of such a clause in any of the poli-
cies does not necessarily require contribution.50 In
order for any insurer’s responsibilities for a claim to
be activated, its policy must be triggered by some
event.51 Thus, Burns clearly acknowledges and
gives effect to the targeted tender rule and stands
for the proposition that the presence of an ‘‘other
insurance’’ clause does not affect the right of the
insured to select the insurer of its choosing to
respond to a particular claim.52
While indemnification provisions are limited by
statute, because additional insured provisions do not
call for indemnification but simply the addition of a
party onto another party’s insurance, the restrictions
of the Construction Contract Indemnification for
Negligence Act do not apply to this issue.53 Recog-
nizing that the duty to defend is greater than the duty
to indemnify, courts have recognized an insurer’s
duty to defend an additional insured even when the
scope of the additional insured endorsement is
limited to claims based on vicarious liability for the
acts or omissions of the named insured.54
When determining whether an insurance policy
covers the insured, if there is any ambiguity in the
Volume 20, Number 1, January/February 2010
policy language, courts have unanimously held that
insurance contracts must be liberally interpreted in
favor of the insured to afford the protection the
insured sought when applying for insurance.55 The
reason for applying this traditional rule of contract
construction in the context of insurance is that an
insurance contract is typically one of adhesion with
the insured not being capable of negotiating the
terms.56 The liberal rule of construction favoring a
finding of coverage is particularly appropriate in
determining an insurer’s duty to defend its
insured.57 The broad interpretation of an insurance
contract in favor of coverage was discussed by the
Nevada Supreme Court, which held in 2008 that even
negligence by the additional insured was covered
when the policy covered ‘‘liability arising out of
[the named insured’s] ongoing operations performed
for [the additional insured].’’58 In Federal Insurance,
the Nevada Supreme Court observed that the
majority of courts had held in such circumstances
that coverage should be provided to an additional
insured despite its own negligence.59
Furthermore, in determining if a duty to defend
exists, the courts look to the underlying complaint.60
An insurer may not justifiably refuse to defend an
action against its insured unless it is clear from
review of the face of the underlying complaint that
the allegations fail to include facts which bring the
case within, or potentially within, the policy’s
coverage.61 When several theories of recovery are
alleged against an insured, the insurer must defend
even if only one of those theories gives rise to the
potential for coverage.62 In Shell, an Illinois court
determined whether an additional insurance provision
provided coverage to the additional insured for claims
‘‘arising from’’ the named insured’s operations at the
additional insured’s facilities.63 The court determined
the phrase ‘‘arising from’’ to be synonymous with the
phrase ‘‘arising out of’’ and recognized that Illinois
courts gave a broad construction to the term ‘‘arising
out of’’ to include ‘‘originating from’’, ‘‘having
its origin in’’, ‘‘growing out of’’, and ‘‘flowing
from’’.64 The Shell court determined that the insurer
had a duty to defend the additional insured for claims
resulting from injuries to the named insured’s
employee based upon the observation that ‘‘but for’’
the named insured’s operations, the employee would
not have been present at the site to get injured.65
III. Conclusion
Contracting parties that attempt to shift liability
resulting from bodily injury or property damage
arising from or related to the performance of the
contract have found two separate solutions to
achieve this goal, indemnity provisions and addi-
tional insurance requirements. It is important to
Coverage–39
realize the advantages and disadvantages of each its own carrier based upon a possible fear that its
solution. Indemnity provisions in certain types of premiums will be increased, and instead choose to
contracts such as construction contracts are precluded seek coverage under the policy in which it is named
in certain jurisdictions from allowing an indemnitor as an additional insured.66 Additionally, the duty to
to assume the liability of the indemnitee for the procure insurance for a party, especially procuring
indemnitee’s own negligence. It is also important that insurance for that party’s own negligence, is
for all contracting parties to realize the limitations generally not precluded by statute or public
on insurance coverage for the additional liability policy.67 The result is that a party that is precluded
resulting from an indemnification agreement. Impor- from obtaining indemnity under the indemnification
tantly, the liability assumed in an indemnification provision because of its own negligence will still be
agreement can be excluded from coverage as liability allowed to obtain coverage for its own negligence as
voluntarily assumed in a contract or agreement. an additional insured unless the additional insured
There is an exception to this exclusion if the indem- endorsement expressly prohibits such coverage.
nification provision is defined to be an ‘‘Insured However, there are limits to the coverage provided
Contract,’’ although recent Illinois decisions have to the additional insured depending upon the addi-
indicated that many indemnity agreements will not tional insured endorsement. In addition, there is
be defined to be Insured Contracts. likely either a deductible or self-insured retention
which the additional insured must satisfy, which
In broad, summary terms, there are greater will typically not be incurred under an indemnity
agreement.
limits placed on indemnity provisions as
compared to additional insured provisions by In broad, summary terms, there are greater limits
placed on indemnity provisions as compared to addi-
the nature of how those differing provisions
tional insured provisions by the nature of how those
are analyzed by the courts. However, parties differing provisions are analyzed by the courts.
can benefit by negotiating both indemnity provi- However, parties can benefit by negotiating both
sions and additional insurance requirements indemnity provisions and additional insurance
within a single contract as the benefits provided requirements within a single contract as the benefits
by these two solutions do not necessarily overlap provided by these two solutions do not necessarily
overlap. It is also important for the party providing
the indemnification provision to be aware of the
In contrast, an additional insured is permitted to
possibility that it could be assuming risk that will
look directly to the insurer that will provide coverage
not be covered by insurance and to carefully
resulting in a direct obligation by the insurer to the
negotiate language that harmonizes the risk
additional insured. Illinois law recognizes a targeted
assumed with the availability of coverage.
tender rule, which permits an insured to avoid using
1
Black’s Law Dictionary 772 (7th ed. 1999).
2
Virginia Surety Co. v. Northern Ins. Co., 224 Ill. 2d 550, 555 (2007).
3
E.g., Virginia Surety Co., 224 Ill. 2d at 553.
4
740 ILCS 35/1.
5
Sears, Roebuck and Co. v. Charwil Associates, Limited Partnership, 371 Ill. App. 3d 1071, 1077 (1st Dist. 2007).
6
National Union v. Nationwide, 69 Cal. App. 4th 709, 716–17 (4th Dist. 1999).
7
Virginia Surety Co., 224 Ill. 2d at 554.
8
Kotecki v. Cyclops Welding, 146 Ill. 2d 155, 165 (1991).
9
Braye v. Archer Daniels Midland Co., 175 Ill. 2d 201, 210 (1997).
10
Estate of Willis v. Kiferbaum Construction, 357 Ill. App. 3d 1002, 1007 (1st Dist. 2005).
11
Virginia Surety Co., 224 Ill. 2d at 568.
12
Virginia Surety Co., 224 Ill. 2d at 568.
13
Virginia Surety Co., 224 Ill. 2d at 569.
14
Virginia Surety Co., 224 Ill. 2d at 569.
15
See Virginia Surety Co., 224 Ill. 2d at 553; Hankins v. Pekin Ins. Co., 305 Ill. App. 3d 1088, 1090 (5th Dist. 1999.)
16
See Virginia Surety Co., 224 Ill. 2d at 553; Hankins, 305 Ill. App. 3d at 1090.
17
See Virginia Surety Co., 224 Ill. 2d at 553.
18
See, e.g., Amkor Technology, Inc. v. Motorola, Inc., 02C-08-160 CHT, slip op. at 21 nn. 13–14 (Del. Super. Nov. 14, 2007) (citing to
Virginia Surety for propositions regarding contract interpretation).
19
See, e.g., Federal Ins. Co. v. Gulf Ins. Co., 162 S.W. 3d 160, 162 (Mo. Ct. App. 2005).
20
G.L. c. 149, § 29C; 6 Del. C. § 2704; see RCS Group, Inc. v. Lamonica Const. Co., No. 08-P-1111 (Mass. App. Ct. Oct. 30, 2009).

Coverage–40 Volume 20, Number 1, January/February 2010

 21
Federal Ins. Co., 162 S.W. 3d at 168.
22
Soo Line Railroad Co. v. Brown’s Crew Car of Wyoming, 694 N.W.2d 109, 115 (Minn. Ct. App. 2005).
23
Sorrentino v. Waco Scaffolding & Shoring Co., Inc., 44 Ill. App. 3d 1055, 1058 (1st Dist. 1976).
24
See, e.g., Dunn v. CLD Paving, Inc., 140 N.H. 120, 122 (1995).
25
Sears, Roebuck and Company et al. v. Charwil Assoc., 371 Ill. App. 3d 1071, 1077 (1st Dist. 2007).
26
Sears, Roebuck, 371 Ill. App. 3d at 1077.
27
Sears, Roebuck, 371 Ill. App. 3d at 1074.
28
Sears, Roebuck, 371 Ill. App. 3d at 1078.
29
American Family Mutual Insurance v. Fischer Development, 391 Ill. App. 3d 521, 529–30 (1st Dist. 2009).
30
Virginia Surety Co., 224 Ill. 2d at 570.
31
American Family Mutual Insurance, 391 Ill. App. 3d at 531–32.
32
Hankins, 305 Ill. App. 3d at 1093.
33
See Michael Nicholas, Inc. v. Royal Insurance Co. 321 Ill. App. 3d 909 (2d Dist. 2001) and West Bend Mutual Insurance Co. v.
Mulligan Masonry Co., 337 Ill. App. 3d 698 (2d Dist 2003).
34
Virginia Surety Co., 224 Ill. 2d at 553.
35
Virginia Surety Co., 224 Ill. 2d at 555.
36
Virginia Surety Co., 224 Ill. 2d at 570.
37
See e.g. Burns Construction Co. v. Indiana Ins. Co., 189 Ill. 2d 570, 571 (2000).
38
See Kajima Const.Serv., Inc. v. St. Paul Fire and Marine Ins. Co., 227 Ill. 2d 102, 107 (2007).
39
Institute of London Underwriters v. Hartford Fire Ins. Co., 234 Ill. App. 3d 70, 78–79 (1st Dist. 1992).
40
Burns Construction Co., 189 Ill. 2d at 574–75.
41
Burns Construction Co., 189 Ill. 2d at 577.
42
BP Air Conditioning Corp. v. One Beacon Ins., 33 A.D. 3d 116, 131 (N.Y. App. Div. 2006).
43
Kajima Const.Serv., Inc., 227 Ill. 2d at 116.
44
Kajima Const.Serv., Inc., 227 Ill. 2d at 116.
45
Kajima Const.Serv., Inc., 227 Ill. 2d at 117.
46
L.J. Dodd Const., Inc. v. Federated Mutual Ins. Co., 365 Ill. App. 3d 260, 264 (2nd Dist. 2006).
47
See e.g. Federal Ins. Co. v. Maine Yankee Atomic Power Co., 183 F. Supp. 2d 76, 90 n. 23 (D. Me. 2001); Attorneys Liability
Protection v. Reliance Ins. Co., 117 F. Supp. 2d 1114, 1121 (D. Kan. 2000).
48
See JPI Westcoast Const., L.P. v. RJS & Assoc., Inc., 156 Cal. App. 4th 1448, 1451–52 (1st Dist. 2007); Federal Ins. Co., 162 S.W.
3d at 162.
49
Burns Construction Co., 189 Ill. 2d at 573.
50
Alcan United, Inc. v. West Bend Mutual Ins. Co., 303 Ill. App. 3d 72, 81 (1st Dist. 1999); Bituminous Casualty Corp. v. Royal Ins.
Co. of Am., 301 Ill. App. 3d 720, 726 Shepaize (3d Dist. 1998).
51
Burns Construction Co., 189 Ill. 2d at 577; Bituminous Casualty Corp., 301 Ill. App. 3d at 726.
52
Burns Construction Co., 189 Ill. 2d at 578.
53
740 ILCS 35/2 (stating that for construction contracts that contain ‘‘agreement to indemnify or hold harmless’’ another party from
their own negligence are void).
54
Maryland Casualty Co, v. Nationwide Insurance Co., 65 Cal.App.4th 21, 34 (4th Dist. 1998).
55
2 Holmes’ Appleman on Insurance 2d § 6.1; see National Union Fire Insurance Company of Pittsburgh, Pennsylvania v. Glenview
Park District et al. 158 Ill. 2d 116, 123 (1994); CPS Chemical Company, Inc. et al. v. Continental Ins. Co., 222 N.J. Super. 175, 189 (N.J.
Super. 1988); Meritplan Ins. Co. v. Woollum, 52 Cal. App. 3d 167, 170 (2nd Dist. 1975).
56
2 Holmes’ Appleman on Insurance 2d § 6.5.
57
2 Holmes’ Appleman on Insurance 2d § 6.5.
58
Federal Ins. Co. et al. v. American Hardware Mutual Ins. Co., 184 P.3d 390, 393 (Nev. 2008).
59
Federal Ins. Co., 184 P.3d at 395–96.
60
Shell Oil Co. v. AC&S, Inc., 271 Ill. App. 3d 898, 904 (5th Dist. 1995).
61
United States Fidelity & Guaranty Company v. Wilkin Insulation Company et al., 144 Ill. 2d 64, 73 (1991).
62
Wilkin Insulation, 144 Ill. 2d at 73; Shell Oil Co., 271 Ill. App. 3d at 904.
63
Shell Oil Co., 271 Ill. App. 3d at 906–07.
64
Shell Oil Co., 271 Ill. App. 3d at 906.
65
Shell Oil Co., 271 Ill. App. 3d at 906–07.
66
Institute of London Underwriters v. Hartford Fire Ins. Co., 234 Ill. App. 3d 70, 78–79 (1st Dist. 1992).
67
St. John v. City of Naperville, 155 Ill. App. 3d 919, 924 (2d Dist. 1987); National Union, 69 Cal. App. 4th at 720.

Volume 20, Number 1, January/February 2010 Coverage–41

Coverage–42 Volume 20, Number 1, January/February 2010
 AMERICAN BAR ASSOCIATION
SECTION OF LITIGATION INSURANCE
COVERAGE LITIGATION COMMITTEE’S SUBCOMMITTEES
ADR John C. Bonnie
jbonnie@wwhgd.com
Rachel S. Kronowitz Insurer Side
kronowitzr@gilbertrandolph.com
Policyholder Side Coverage Editor-in-Chief
Lori Siwik Erik A. Christiansen
lsiwik@riskinternational.com echristiansen@pblutah.com
Policyholder Side Policyholder Side
Gregory E. Schopf Coverage Managing Editors
gschopf@nixonpeabody.com
Insurer Side Angela R. Elbert
aelbert@ngelaw.com
Advertising/IP Policyholder Side
David Gauntlett Celeste D. Elliott
david@gauntlettlaw.com celliott@lawla.com
Policyholder Side Insurer Side
Scott Wandstrat Georgia Kazakis
scott.wandstrat@agg.com gkazakis@cov.com
Insurer Side Policyholder Side
Asbestos Theodore A. Howard
thoward@wileyrein.com
Kevin J. Kotch Insurer Side
kevin.kotch@obermayer.com
Policyholder Side Michael Levine
mlevine@hunton.com
Frank Winston Insurer Side
fwinston@steptoe.com
Insurer Side Ellis I. Medoway
emedoway@archerlaw.com
Bad Faith Policyholder Side
Steven Brower D&O
sbrower@buchalter.com
Policyholder Side Joan Gilbride
jgilbride@kbrlaw.com
Jeffrey M. Cohen Insurer Side
jmcohen@carltonfields.com
Insurer Side Catherine J. Serafin
serafinc@howrey.com
Nicholas Boos Policyholder Side
Nicholas.Boos@sdma.com
Insurer Side Diversity
Gregory D. Miller Sanaz Asgharzadeh
gmiller@podvey.com asgharzadehs@howrey.com
Insurer Side Policyholder Side
Bankruptcy & Insolvency Toyja E. Kelley
tkelley@tydingslaw.com
Donna Wilson Insurer Side
dwilson@kelleydrye.com
Policyholder Side Ray Wong
RLWong@duanemorris.com
James P. Ruggeri Insurer Side
jpruggeri@hhlaw.com
Insurer Side Emerging Issues
CGL Christopher Loeber
cloeber@morganlewis.com
Sarah H. Dearing Policyholder Side
sdearing@hww-law.com
Insurer Side James J. Cooper (‘‘Jim’’)
jcooper@gardere.com
Dominica Anderson Policyholder Side
DCAnderson@duanemorris.com
Insurer Side Mary Beth Forshaw
mforshaw@stblaw.com
Suzan Charlton Insurer Side
scharlton@cov.com
Policyholder Side William ‘‘Bill’’ Hoover
hooverw@scottsdaleins.com
Brent Huber Insurer Side
brent.huber@icemiller.com
Policyholder Side James Davis
jdavis@reedsmith.com
Computer Technology Policyholder Side
Scott Godes Employment
godess@dicksteinshapiro.com
Policyholder Side Erica J. Dominitz
dominitze@dicksteinshapiro.com
Suzanne Midlige Policyholder Side
smidlige@coughlinduffy.com
Insurer Side Amy J. Woodworth
awoodworth@meagher.com
John Vishneski, III Insurer Side
jvishneski@reedsmith.com
Policyholder Side Helen K. Michael
michaelh@howrey.com
Construction Policyholder Side
Tracy Alan Saxe Environmental
tas@sdvlaw.com
Policyholder Side William Howard
billhoward627@comcast.net
Josephine Hicks Insurer Side
josephinehicks@parkerpoe.com
Policyholder Side Robert Chung
Rchung@andersonkill.com
Policyholder Side
Ethics and Professionalism
Patricia Bronte
pbronte@jenner.com
Policyholder Side
Dana Lumsden
dlumsden@hunton.com
Insurer Side
Neil B. Posner
nposner@muchshelist.com
Policyholder Side
Health, Life & Disability
Eileen Parsons
eparsons@vpl-law.com
Policyholder Side
Rashondra Jackson
rjackson@hblaw.com
Insurer Side
In-House Counsel
Michael Early
mearly@cug.com
Insurer Side
Robert F. Cusumano
Robert.cusumano@ace.bm
Insurer Side
John Sullivan
john.d.sullivan@shell.com
Policyholder Side
International/ London
Joseph L. Ruby
Joseph.ruby@baachrobinson.com
Insurer Side
John M. Sylvester
john.sylvester@klgates.com
Policyholder Side
Membership
Ruth Kochenderfer
rkochenderfer@steptoe.com
Insurer Side
Ernest Martin
ernest.martin@haynesboone.com
Policyholder Side
Tonya Newman
tnewman@ngelaw.com
Policyholder Side
Joanne Sarasin
jsarasin@muchshelist.com
Policyholder Side
Matthew J. Schlesinger
mschlesinger@reedsmith.com
Policyholder Side
Products Liability
Sherilyn Pastor
spastor@mccarter.com
Policyholder Side
G. David Godwin
dgodwin@cbmlaw.com
Insurer Side
Professional Liability
John B. Mumford, Jr.
jmumford@hdjn.com
Insurer Side
Charles Yuen
cyuen@mccarter.com
Policyholder Side
Programming
Ronald L. Kammer
rkammer@hinshawlaw.com
Insurer Side
Steven D. Caley
stevecaley@wncwlaw.com
Insurer Side
Lane Finch
flf@hsy.com
Policyholder Side
Ann Kramer
akramer@reedsmith.com
Policyholder Side
Property
Paul R. Walker-Bright
pwalkerbright@reedsmith.com
Policyholder Side
Marc Shrake
mshrake@ssd.com
Insurer Side
Reinsurance
David Attisani
dattisani@choate.com
Policyholder Side
David Greenwald
dgreenwald@jenner.com
Policyholder Side
Mary Kay Vyskocil
mvyskocil@stblaw.com
Insurer Side
Website Editors
John G. Buchanan
jbuchanan@cov.com
Policyholder Side
James M. Davis
jdavis@reedsmith.com
Policyholder Side
Jayson W. Sowers
jsowers@riddellwilliams.com
Policyholder Side
Rina Carmel
rcarmel@ccplaw.com
Insurer Side
Website Managing Editors
Katherine E. Mast
katherine.mast@sdma.com
Insurer Side
Kimberly McNish
kmcnish@cov.com
Policyholder Side
Jon D. Kardassakis
kardassakis@lbbslaw.com
Insurer Side
Anthony B. Leuin
aleuin@sflaw.com
Policyholder Side
Jason S. Mazer
jmazer@vpl-law.com
Policyholder Side
Young Lawyers
Jennifer C. Wasson
jwasson@potteranderson.com
Policyholder Side
Rahul Karnani
rahulkarnani@wncwlaw.com
Insurer Side
Jodi D. Spencer
spencer@cooperwalinski.com
Policyholder Side
Jamie Carsey
jcarsey@thompsoncoe.com
Insurer Side
Parker Lavin
plavin@weileyrein.com
Insurer Side

Volume 20, Number 1, January/February 2010 Coverage–43

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Coverage–44 Volume 20, Number 1, January/February 2010