Circuit Court Of Cook County Again Rules That Policyholder Failed To Prove Primary Exhaustion In Asbestos Coverage Case

May 8, 2018 / Writing and Speaking

The Circuit Court of Cook County recently ruled that John Crane, Inc. did not demonstrate that its primary policies were exhausted and thus, any ruling regarding exhaustion of the umbrella and excess policies would be premature. John Crane Inc. v. Admiral Insurance Company, et al., Case No. 04-CH-08266 (Dec. 28, 2017). This is the second time during the course of this protracted litigation that the Circuit Court found that the policyholder did not prove primary exhaustion.

Facts/Procedural Background

The insured, John Crane Inc., manufactured gaskets containing asbestos. Since 1979, John Crane has been named as a defendant in over 250,000 asbestos-related bodily injury claims throughout the United States. From January 1, 1944 through August 1, 2001, John Crane purchased primary insurance coverage from Kemper Insurance Company. These policies contained a duty to defend and provided that defense costs would be paid in addition to policy limits. John Crane also purchased umbrella and excess policies above the Kemper primary policies. This case only involves John Crane’s umbrella and excess carriers who issued policies from 1961 to 1985.

John Crane filed suit in 2004. In 2008, the Circuit Court conducted a trial on the issue of whether John Crane’s primary coverage was exhausted. The Circuit Court found that John Crane did not prove primary exhaustion under a pro rata allocation. John Crane appealed this decision.

In a June 4, 2013 opinion, the Illinois First District Appellate Court reversed the Circuit Court’s pro rata ruling and holding that John Crane failed to prove primary exhaustion. The Appellate Court found that all sums allocation applied to asbestos injuries where the policies at issue contain all sums language and to determine horizontal exhaustion of the primary policies an insured must only prove exahaustion of limits in a period of bodily injury, sickness or disease. The Appellate Court remanded for a determination of exhaustion based upon its opinion and directed the Circuit Court to consider any judgments and settlements John Crane and its primary carrier Kemper paid since the first exhaustion trial which took place in 2008.

In February and March 2017, the parties conducted another exhaustion trial in which John Crane attempted to prove primary exhaustion of its policies under an all sums allocation. Prior to the trial the court issued various legal opinions including but not limited to a ruling that Crane must horizontally exhaust its primary policies prior to allocating claims to umbrella and excess policies, certain insurers’ policies only apply excess of the Kemper umbrella policies due to other insurance clauses, enforcing prior insurance and non-cumulation clauses in certain excess insurer policies and prohibiting the use of vertical exhaustion.

Prior to trial, John Crane amended its expert report several times to comply with the court’s various legal rulings.

During the twenty-three day trial, John Crane relied primarily on the opinion of its expert Ross Mishkin of The Claro Group to show primary exhaustion. Mr. Mishkin conducted a claims analysis, determined trigger dates, conducted payment verification and conducted insurance allocation for the 141 underlying asbestos claims against John Crane that were at issue.


The insurers objected to Mr. Mishkin’s use of the underlying claim files to establish trigger dates on the basis that these files were hearsay. The court rejected this argument, finding that U.S. Gypsum Co. v. Admiral Ins. Co., 268 Ill. App. 3d 598 (1st Dist. 1994), allowed John Crane to utilize the underlying claim documents to establish trigger dates. The court also found that under Rule 703 of the Illinois Rules of Evidence it was permissible for Mr. Mishkin to rely on the underlying claim files to make trigger date determinations.

Despite the court’s ruling in favor of John Crane on its expert’s use of the underlying claim files, the court still found that John Crane failed to prove primary exhaustion. Specifically, the court found that John Crane’s expert did not consistently follow the rules he created for allocation. Further, the court found Mr. Mishkin’s methodology to be problematic because neither he nor anyone at The Claro Group reviewed all of the underlying claim files. The court noted that John Crane’s expert’s failure to review approximately two-thirds of the documents in the case greatly harmed the reliability and credibility of his allocation. The court also rejected Mr. Mishkin’s method of “banking” claims in which Mr. Mishkin chose to reserve or bank either a portion of or a full claim payment until either all of the primary policies were exhausted or certain umbrella policies were exhausted. The court found that this practice violated Mr. Mishkin’s protocol of allocating claims in payment order. The court stated that banking claims does not comply with the standards in the insurance allocation field and is a method that allowed Mr. Mishkin to improperly circumvent the horizontal exhaustion doctrine.

The court further rejected Mr. Mishkin’s allocation of specific claims even under the assumption that his methodology was not flawed. For these specific claims, the court found that Mr. Mishkin’s trigger conclusions were unsupported by the record and thus, those claims were not properly allocated.

John Crane filed its notice of appeal on January 29, 2018.

Learning Point: Clausen Miller has been actively involved in this litigation and will report on further developments in future editions of the CM Report. For more information, contact Colleen at

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