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Michigan Chem. Corp. v. American Home Assurance Co.

Citation: 14 ELR 20290
No. Nos. 82-1438 et al., 728 F.2d 374/(6th Cir., 03/01/1984)

In a suit to determine the scope of insurers' liability for damages caused by negligent shipment of a toxic flame retardant as a livestock feed additive, the court rules that the number of compensable "occurrences" for insurance purposes depends on the number of accidental causes of injury rather than the number of injuries or claims. The court first rules that under the applicable Illinois law, the plain language of the policy controls, with any ambiguities to be construed against the insurer. The court rules that the majority rule, which the Illinois courts would probably follow, ties the number of occurrences to the number of accidents causing injury, not to the number of injuries. The court rejects appellants' argument that where cause and effect are widely separated in time and space, each injury is an occurrence. The court holds that its interpretation of "occurrence" is consistent with the word's use elsewhere in the policies. The policies define "products liability" and related terms as limited to events occurring after possession of insured's goods has been transferred to others and at places away from insured's own property; however, the definitions address only when and where an occurrence must take place to be covered, not how many occurrences have taken place. The court remands the case for findings on how many shipments of toxic materials Michgan Chemical made, and for a ruling on whether the manifestation or exposure theory applies for establishing the date of injury for purposes of determining the insurance policies in effect.

A dissent would construe an occurrence as taking place whenever damage resulted.

Counsel for Appellants
John L. Kirkland, Kendall Griffith
Hinshaw, Culbertson, Moelmann, Hoban & Fuller
69 W. Washington St., Suite 2700, Chicago IL 60602
(312) 630-4400

Margaret Gull
Epton, Mullin, Segal & Druth
140 S. Dearborn St., Chicago IL 60603
(312) 984-1000

Counsel for Appellees
Robert S. Finke
Mayer, Brown & Platt
231 S. La Salle St., Chicago IL 60604
(312) 782-0600

William F. Ryan
Haskell & Perrin
11 S. La Salle St., Chicago IL 60603
(312) 781-9393

Before: KEITH, CONTIE and WELLFORD, Circuit Judges.