This post considers the 7th Circuit’s July 15, 2010 decision in Medmarc Casualty Insurance Company v. Avent America, Inc., which can be found here. But first a word or two about the title. The phrase “A Whim and a Prayer” is actually a mangled version of “A Wing and a Prayer” which is from a popular 1943 song about a shot-up pilot that limps back to base, according to Professor Paul Brian’s entertaining and insightful Common Errors in English Usage, a link to which appears here. As Professor Brian correctly notes, “whim” and “prayer” don’t belong together. And indeed that is one of the messages of the Court’s opinion in Medmarc.
Illinois, whose law was being applied by the 7th Circuit in Medmarc, had developed a rule that the duty to defend should not depend on the “whim” of the plaintiff’s counsel in crafting the complaint, and that a court, in considering the duty to defend, should look beyond the specific words used in the underlying complaint to determine whether coverage existed. See Int’l Ins. Co. v. Rollprint Packaging Prods., Inc., 728 N.E.2d 680, 688 (Ill. App. Ct. 2000). The court refused to apply the “whim” rule and rejected defense coverage under a CGL policy applicable to “damages ‘because of bodily injury’” regarding a class action claim against Avent, whose “prayer” for relief was limited economic losses to parents who purchased but did not use plastic baby bottles because they were found to contain BPA, a substance alleged to have health risks.
The court noted:
Although Illinois courts have recognized that a duty to defend should not be at the mercy of the drafting whims of plaintiffs’ attorneys, these omissions were not mere whims. In the underlying cases, the plaintiffs’ attorneys have limited their claims solely to economic damages that resulted from the plaintiffs purchasing a product from which they cannot receive a full benefit because they were falsely led to believe that it was safe. This is not a drafting whim (or mistake) on the part of the plaintiffs’ attorneys, but rather a serious strategic decision to pursue only this limited claim. The strategic intention behind this decision is clear from the plaintiffs’ concession in the underlying suit that they are seeking only economic damages and do not claim any bodily injury.
Medmarc Slip Op. at 16 (citations omitted).
In reaching its decision, the 7th Circuit considered and rejected the insured’s argument that coverage was warranted because its CGL coverage included the broader “damages because of bodily injury” language instead of “damages for bodily injury” found in other forms. The court recognized the distinction and noted that “because of” is more broadly construed:
Avent is correct that courts do interpret these phrases differently and courts generally interpret the phrase “because of bodily injury” more broadly. The logic of this difference in interpretation can be illustrated by considering the following example: an individual has automobile insurance; the insured individual caused an accident in which another individual became paralyzed; the paralyzed individual sues the insured driver only for the cost of making his house wheelchair accessible, not for his physical injuries. If the insured driver had a policy that only covered damages “for bodily injury” it would be reasonable to conclude that the damages sought in the example do not fall within the insurer’s duty. However, if the insurance contract provides for damages “because of bodily injury” then the insurer would have a duty to defend and indemnify in this situation.
Medmarc Slip Op. at 19 (citations omitted).
Nevertheless, the court focused on the relief claimed in rejecting coverage notwithstanding the references in the complaint to the allegedly harmful nature of products containing BPA:
Even considering the broader duty to defend created by the phrase “because of bodily injury,” the complaints in the underlying suits do not reach the level of asserting claims “because of bodily injury.” Implicit in Avent’s argument is that the damages claimed are somehow, at least tangentially, tied to a bodily injury caused by BPA. As discussed above, that simply is not the case here. The theory of relief in the underlying complaint is that the plaintiffs would not have purchased the products had Avent made certain information known to the consumers and therefore the plaintiffs have been economically injured. The theory of the relief is not that a bodily injury occurred and the damages sought flow from that bodily injury.
Id. at 19-20.
Thus, while duty to defend coverage should not be determined by the “whim” of the pleadings in the underlying claim, insureds don’t have a “prayer” if the prayer for relief doesn’t seek damages “because of bodily injury.” While the court’s analysis never mentions “reasonable expectations” and does not address the business risk exclusions, the decision reflects a common sense consideration of which risks ought to be the subject of liability insurance (bodily injury and property damages resulting from the insured’s products) , and which risks are inherently uninsurable business risks (economic losses resulting from the non-utility of the insured’s products).