Madison - St. Clair Record

Wednesday, April 1, 2020

Mudge affirmed at Fifth District in insurance dispute involving mesothelioma claim against Apex Oil

State Court

By The Madison County Record | Jan 30, 2020

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MOUNT VERNON – Madison County Circuit Judge William Mudge correctly relieved Arrowood Indemnity of a duty to defend Apex Oil in a mesothelioma suit, Fifth District appellate judges ruled on Jan. 27. 

Arrowood hasn’t covered Apex predecessor Clark Oil since 1982, but Apex tried to apply a perpetual provision for “bodily injury by accident.”  

The Fifth District found the only reasonable interpretation of the policies led to a conclusion that asbestos related disease didn’t constitute bodily injury by accident. 

Justice David Overstreet delivered the opinion, with Justices John Barberis and Mark Boie concurring. 

The underlying action started in 2010, when the estate of Apex employee Richard Krohn sued Apex and other defendants. 

Apex tendered the complaint to Arrowood, which denied coverage. 

In 2012, Apex settled with Krohn’s estate. 

Apex then sued Arrowood for the amount of the settlement plus attorney fees, costs, and penalties for vexatious refusal.  

Apex attached policy language to its complaint. 

The section on definitions stated, “The contraction of disease is not an accident within the meaning of the word accident in the term bodily injury by accident and only such disease as results from a bodily injury by accident is included within the term bodily injury by accident. 

“The term bodily injury by disease includes only such disease as is not included within the term bodily injury by accident.” 

The section on application limited coverage to injury by accident occurring in the policy period or “disease caused or aggravated by exposure of which the last day of the last exposure, in the employment of the insured, to conditions causing the disease occurs during the policy period.” 

The section on exclusions stated that the policy didn’t apply to bodily injury by disease unless prior to 36 months after the end of the policy a claim was made or a suit was brought against the insured. 

Arrowood filed a counter claim to dismiss Apex’s claim for damages and fees. 

Apex moved for summary judgment in 2017, seeking the cost of its confidential settlement plus $236,515.84 in attorney fees from the first and second cases. 

Arrowood moved for summary judgment in 2018, relying on the provision about the last day of last exposure. 

Arrowood argued that Krohn’s last date of last exposure took place in 1996, and the limit of 36 months for bodily injury by disease precluded coverage. 

Mudge held a hearing in April 2018, and ruled in Arrowood’s favor that July. 

He found the last day of last exposure didn’t occur during any Arrowood policy. 

He separately concluded that the limit of 36 months on bodily injury by disease provided a basis to preclude coverage. 

Apex appealed, and Fifth District judges upheld both of Mudge’s decisions. 

Overstreet wrote that plain policy language distinguished an accident as occurring and a disease as caused or aggravated by exposure. 

He wrote that Krohn’s mesothelioma and asbestos related injuries could not be considered bodily injury by accident within the meaning of the policy. 

“We agree that the Krohn complaint, even when liberally construed, did not allege a palpable injury traceable to a definite time, place and cause,” Overstreet wrote. 

“Instead, the Krohn complaint alleged injury caused by extended exposure to asbestos. 

“The only reasonable interpretation of the term bodily injury by accident excluded the underlying claims for asbestos related disease and conditions.” 

Gary Meadows of Hepler Broom in Edwardsville represented Arrowood, which operates out of Charlotte, North Carolina. 

William Knapp of Knapp, Ohl and Green in Edwardsville represented Apex, which operates out of Clayton, Mo. 

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