The Supreme Court of Illinois recently held that the deaths of two boys caused by a property owner's single but continuous negligent act constituted multiple "occurrences" under the owner's liability policy. Addison Ins. Co. v. Fay, No. 105752 (Ill. Jan. 23, 2009). Although the court expressed agreement with the majority view, which focuses on the cause of the damage or injury rather than the effect of the negligence when determining the number of occurrences, its holding in this case appears to conflict with that principle.
In Addison, the insurer filed a declaratory action against the estates of two teenage boys who died after becoming trapped in an excavation pit partially filled with water on the insured's property. The insurer did not dispute its liability but asked the court to determine whether the injuries to the boys constituted a single occurrence or multiple occurrences under the terms of the insured's liability policy.
The boys' bodies were discovered in the pit three days after last seen leaving for a fishing trip together. Investigators concluded that when the boys reached the pit and water, one boy attempted to jump across the water but became trapped in the pit's sand and clay. The other boy attempted to help his friend but became trapped himself. When their bodies were discovered, the boys were facing different directions but physically touching. However, investigators could not ascertain how much time had elapsed between the boys' entrapments.
Medical doctors for both parties concurred that the immediate cause of death for one boy was hypothermia and the immediate cause of death for his friend was drowning secondary to hypothermia. Neither medical doctor could conclude the time of death of either boy nor how closely in time they died.
The property owner's liability policy provided a "general aggregate limit" of $2 million and an "occurrence" limit of $1 million. The policy defined "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
To determine the number of occurrences under an insurance policy, Illinois courts have adopted the majority view's "cause theory," which examines the cause or causes of the damage or injury rather than the number of individual claims or injuries resulting from the negligence. Addison, Slip Op. at 5 (citing Nicor, Inc. v. Assoc. Elec. & Gas Ins. Servs., 860 N.E.2d 280 (Ill. 2006)); see also Heggem v. Capitol Indem. Corp., 154 P.3d 1189, 1194 (Mont. 2007).
The trial court found that the boys' deaths were the result of two occurrences because the causes of death were different and the circumstances immediately prior to their deaths were different. Addison, Slip Op. at 2. The Illinois Court of Appeals reversed the trial court's decision by holding that the boys' deaths were "so closely linked in time and space as to be considered by a reasonable person as one occurrence." Id. (Citation omitted.)
The Supreme Court held that, the property owner's liability arose from his negligent failure to properly secure and control his property. Slip Op. at 6. Although the court held that he did not commit any intervening acts between the injuries of each boy, calculating "occurrence" according to the number of negligent acts by the insured alone would result in an unreasonable interpretation of the insurance policy. Id. at 7. Under such an interpretation, the insured would be exposed to a significantly greater liability by allowing multiple injuries sustained over an indefinite period of time to be subject to a single per-occurrence limit. Id. To limit the insured's liability, the court applied a "time and space" test that deems multiple injuries to be the result of one occurrence "if cause and result are simultaneous or so closely linked in time and space as to be considered by the average person as one event." Id. at 8.
Under the time and space test, the court concluded that the boys' deaths were two occurrences because the evidence demonstrated that the boys did not become trapped simultaneously and that one boy became trapped in an attempt to free his friend. Id. at 9. However, the court's rationale indicates that the uncertainty surrounding the exact amount of time that elapsed between each boy's entrapment and death prevented the insurer, who bore the burden to demonstrate an exclusion or limitation to the coverage, from showing that the boys' deaths were so closely linked in space and time as to be considered one event. Id. This holding suggests that if the insurer had evidence that the entrapments and deaths occurred only seconds or minutes apart, the court's ruling may have been different.
The "time and space" test and holding in Addison appears to be inconsistent to the "cause theory" by focusing on the effects of the insured's negligence. In fact, Addison conflicts with some holdings in other jurisdictions under similar circumstances where the insured is accused of some inaction or inadequate action. See, e.g., Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286, 294-96 (Pa. 2007) (holding homeowners' negligence in securing firearms used by son to kill six individuals was one occurrence because the insurer's obligation is to the insured and the occurrence should be an event over which insured had some control); Washoe Co. v. Transcont'l Ins. Co., 878 P.2d 306, 308 (Nev. 1994) (holding where separate instances of molestation arose from the same negligent licensing of a daycare center, insurer only liable for single occurrence of negligent licensing).