Claim For Economic Damages Only Does Not Give Rise To A Duty to Defend Under "Because Of Bodily Injury" Policy Language
MEDMARK CASUALTY INSURANCE CO. v. AVENT AMERICA (July 15, 2010)
Avent America manufactures a number of products for children and babies. Several class actions have been filed against Avent alleging a) that certain Avent products contain Bisphenol-A (“BPA”), b) that Avent was aware of research indicating that BPA was harmful, c) that Avent claimed their products were safer than its competitors', and d) that plaintiffs suffered economic damages because they stopped using the products once they learned of the risk of harm. The complaints contained no allegations of actual bodily injury to the plaintiffs. In fact, Avent moved to dismiss the complaints because they lacked sufficient allegation of injury. The court did dismiss all but the unjust enrichment counts for any plaintiff who either used or disposed of the product before learning of the BPA -- concluding that those plaintiffs were unaffected by the alleged concealment. Meanwhile, Avent tendered the cases to a number of insurance carriers who had provided general commercial liability insurance over the relevant years. The language in each of the policies was substantially the same and provided coverage for damages "because of bodily injury." The carriers denied coverage and suit was filed. Judge Leinenweber (N.D. Ill) held for the carriers because of the absence of any allegation of bodily injury in the underlying complaint. Avent appeals.
In their opinion, Judges Flaum, Wood, and Hamilton affirmed. The Court began with the familiar Illinois standard for a duty to defend -- the duty to defend arises if the complaint’s allegations are even potentially within the scope of coverage. The Court considered and rejected the carriers' argument that Avent was judicially estopped from arguing that the underlying complaint alleged bodily injury when it argued in its motion to dismiss that the complaint did not allege bodily injury. Cautioning that a court must be careful in applying judicial estoppel in duty to defend cases, the Court found that Avent's argument was not in direct tension with its prior position. On the merits, the Court agreed with the carriers. The theory of relief stated in the complaints was for economic harm -- had the plaintiffs known of the risk of harm of BPA, they would not have purchased the product. There is a total absence of any claim of bodily injury, direct or indirect. The "because of" language in the policies may broaden the umbrella of coverage over a simple "bodily injury" policy, but the damages in such a case must be related somehow to bodily injury. Here, they are not. The Court recognized that the complaints could be amended in the future to include allegations of bodily injury. The Court noted that the carriers admitted during oral argument that they would have to reassess their coverage positions in such a case.
