February 4, 2009
Written by Attorneys Michael A. Hamilton and Kevin J. McCloskey
Note: This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.
Disputes concerning the number of occurrences under CGL policies continue to be a hotly debated issue. The Supreme Court of Illinois issued the most recent ruling on this question, finding that the deaths of two boys, trapped in an excavation pit, constituted two separate occurrences under the property owner's CGL policy. Addison Insurance Company v. Fay, 2009 WL 153859 (Ill. January 23, 2009).
In Addison, the factual circumstances were largely unknown. The parties generally believed that one boy became stuck in wet sand in an excavation pit, and when the second boy attempted to rescue him, he also became stuck. Police investigators and experts agreed there was no way to determine how closely in time the boys became trapped or how closely in time each ultimately passed away.
Addison Insurance Company ("Addison") filed a declaratory judgment action to resolve whether the deaths were one or two occurrences under its policy. The Illinois Supreme Court noted that in Nicor, Inc. v. Associated Electric & Gas Insurance Services Ltd., 860 N.E.2d 280 (Ill. 2006), it recognized the "cause theory" as the law of Illinois. Under such a theory, the court will determine the number of occurrences by referring to the cause or causes of the damages alleged.
In this case, the Court acknowledged that liability arose from the property owner failing to properly secure and control the property, without an intervening negligent act between the injuries. The Court stated that strictly applying the "cause theory," however, would lead to an unreasonable interpretation, i.e., that a sole negligent omission would allow injuries over a limitless time period to be considered a single occurrence. Thus, the Court sidestepped its holding in Nicor by explaining that "[i]n situations where a continuous negligent omission results in insurable injuries, some limiting principles must be applied."
The Illinois Supreme Court, in reversing the Court of Appeals, held that "[w]here negligence is the result of an ongoing omission rather than separate affirmative acts, a time and space test effectively limits what would otherwise potentially be a limitless bundling of injuries into a single occurrence." The time and space test determines if the cause and result were simultaneous or so closely linked in time and space as to be considered by the average person as one event.
Applying this test to the facts of the case, the Court found that Addison could not meet its burden of proving that the two boys' deaths were so closely linked in time and space to be considered one event. Too much remained unknown concerning the events during the time the boys were missing. Thus, the Court concluded that the separateness and independence of the acts would be mere speculation. The most important factor in determining number of occurrences issues is the test courts will apply to the circumstances surrounding the loss. The Addison case illustrates that a seemingly clear rule on the applicable test, even from a state's Supreme Court, may not always yield a predictable and consistent result under different factual scenarios.
