Enough Evidence of 60-Year-Old Insurance Policies Existed for Coverage

February 6, 2018 / Writing and Speaking

By Don R. Sampen, published, Chicago Daily Law Bulletin
[February 6, 2018]

The 1st District Appellate Court recently upheld a determination that an insured sufficiently established the existence and terms of missing policies from the 1960s.

The insured in Travelers Indemnity Co. v. Rogers Cartage Co., 2017 IL App (1st) 160780 (Dec. 29, 2017), was represented by Lathrop & Gage LLP in Clayton, Mo. Dentons US LLP represented the insurer, Travelers.

Rogers Cartage, a trucking company, hauls bulk liquid chemicals from a shipper to an end-user. Two of its former truck cleaning facilities in downstate St. Clair County became the subject of environmental contamination lawsuits. It tendered defense of the underlying claims to Travelers, seeking coverage under numerous policies Travelers had issued to Rogers.

Travelers paid Rogers’ defense costs under a reservation, and Rogers settled two underlying suits for $9 million. It then sought indemnification from Travelers under numerous commercial general liability and auto policies, including the missing policies that were the focus of this case.

Specifically at issue were the following:

  • The existence, terms and conditions of commercial general liability policies for the policy periods of 1961-62, 1962-63, 1963-64 and 1964-65.
  • The terms of commercial general liability policies for the 1960-61 and 1965-66 policy periods — the “bookend” policies.
  • The terms and conditions of auto policies issued between 1960 and 1971.

On cross-motions for summary judgment, the circuit court ultimately found in Rogers’ favor on all the policies and against Travelers. Travelers took this appeal.

Standard of review

In an opinion by Justice Daniel J. Pierce, the 1st District affirmed. As a preliminary matter the panel noted that Rogers, as the insured seeking coverage, had the burden of establishing by a preponderance of evidence that the policies existed and the terms of the policies.

He also observed that summary judgment typically involved only legal issues giving rise to de novo review. He noted, however, that the mere filing of competing summary judgment motions did not obligate the court to grant one of the motions, if different inferences could be drawn from undisputed facts.

In this case, he pointed out that a denial of summary judgment based on the presence of competing inferences would result in a bench trial where the parties would introduce the same evidence and have no credibility issues. The circuit court thus effectively converted the summary judgment proceedings into a stipulated bench trial.

Pierce said this approach was correct. On the other hand, the standard of review on appeal would still be de novo. This was so because the only evidence presented was documentary and the circuit court did not engage in credibility determinations.

Missing policies

Pierce then turned to the missing policy issues. The evidence Rogers relied on for the existence of the 1961 through 1965 policies included the reservation of rights letter from a Travelers adjuster, who referenced “secondary evidence” that policies may have been issued for the period in question.

Other evidence included the undisputed existence of the bookend policies, the absence of evidence that Travelers did not issue commercial general liability policies to Rogers for the period in question and the absence of evidence that Rogers was covered by commercial general liability policies from other insurers. Pierce concluded that this evidence constituted the necessary preponderance establishing existence.

As for the terms of the 1961-1965 policies, Rogers relied principally on the bookend policies and specimen policies. Travelers argued such evidence was insufficient, but Pierce found that Travelers had not offered any affirmative evidence to undercut Rogers’ evidence.

He further noted Rogers’ evidence showing that the same material terms and conditions were contained in each bookend policy as well as evidence that the same material terms and conditions contained in the Travelers’ specimen policies were contained in each bookend policy.

All of this evidence suggested to Pierce that the missing commercial general liability policies contained the same material terms and conditions as the bookend and specimen policies.

Turning then to the automobile policies, Pierce found that Travelers’ own documentation indicated that it annually renewed Rogers’ auto policy from 1958 to 1970. Various correspondence from Travelers to Rogers, internal Travelers communications and certificates of insurance from the Illinois Department of Insurance confirmed coverage by Travelers for many of the years in question.

As for a specific auto policy, for the 1960-1961 period, which was not a part of the record, Pierce found that its existence and terms could be gleaned from internal Travelers communications and other documents of record.

Pierce and the panel concluded that Rogers had sustained its burden of establishing the terms and conditions of the auto policies by a preponderance of the evidence, similar to the commercial general liability policies. The court, therefore, affirmed in favor of Rogers.

Key points

  • The existence of cross-motions for summary judgment does not require that one of the motions be granted, if the court can draw different — but reasonable — inferences from the undisputed facts.
  • The standard of review applicable to a bench trial on documentary evidence where no credibility determinations are made, is de novo.
  • The insured seeking coverage has the burden of establishing both the existence of missing policies and their terms.
  • Evidence relevant to the existence and terms of missing policies may include communications between the insurer and insured, internal insurer communications, specimen policies, so-called bookend policies and communications with the department of insurance.
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