Mark Zimmerman Wins Summary Judgment for Client on Defense-Cost Claim

Clausen Miller attorney Mark Zimmerman and team – including associate Mitchel Torrence – recently secured a significant win for their insurer client when a Cook County judge granted summary judgment on a policyholders’ defense cost claim in an asbestos insurance-coverage action.

The policyholders claimed that there was an enforceable custom and practice in the insurance industry to pay ‘reasonable’ defense costs under the following “consent to defense” provision:

F. Expenses: Loss and Legal expenses incurred by the insured with the consent of the company in the investigation or defense of claims, including court costs and interest, shall be borne by both the company and the insured in the proportion that each party’s share of loss bears to the total amount of such loss. Salaries and expenses of the insured’s employees shall not be considered as part of the above expenses. Expenses thus paid by the company shall be paid in addition to the limit of liability stated in Declaration 6.

The court rejected the policyholders’ claim and granted the insurer summary judgment. The court held that the policyholders’ proposed meaning was immaterial because it contradicted the clear and unambiguous language of the foregoing provision. Ill. Ins. Guar. Fund v. Nwidor, 2018 IL App (1st) 171378 (custom and usage evidence is only admissible to explain uncertain or ambiguous terms of a contract, “not to contradict a meaning obvious on the face of the instrument”). The court reasoned that it was obvious, from the language of the ”consent to defense” provision, that the Insurer had a right to consent to payment of defense costs and it was therefore immaterial whether the obliged payment was customary.

The court further reasoned that the “consent to defense” language was properly construed with the “assistance and cooperation” clause in the policies, which gave the insurer the right to associate in the defense of a claim but emphasized that the insurer could not be called upon to assume charge of the defense. The court concluded that the right to consent cannot be interpreted as an obligation, and ruled that the policyholders’ proposed custom and practice impermissibly contradicted the plain meaning of the insurers’ policies.

Mark Zimmerman is a shareholder with Clausen Miller P.C. who concentrates his practice in the area of insurance coverage litigation and other commercial disputes.

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Clausen Miller is an insurance and defense law firm recognized as one of the top 10 Insurance Practice firms in the nation. Clausen Miller has offices in Chicago, Illinois; New York, New York; Orange County and San Francisco, California; Florham Park, New Jersey; Michigan City, Indiana; Appleton, Wisconsin; Stamford, Connecticut; Tampa, Florida; and London, England with affiliates located in Belgium, France, and Italy. Clausen Miller represents large commercial and personal lines insurance carriers, including reinsurers, throughout the United States and in Europe. Clausen Miller’s attorneys generally practice in all areas of Insurance Coverage, all areas of Professional Liability and Casualty Defense, Subrogation, and Appeals.