Insurance Coverage Dispute Arising From $22 Million Verdict To Injured Worker Continues In Illinois

In March 2014, an Illinois state court jury found in favor of an injured worker and returned a judgment of approximately $22 million against Company A, which was hired for work on a trade show.  Company A had filed a third-party complaint against Company B, the worker’s employer for contribution and the jury determined that Company B had to contribute 75% of the judgment.  Company B had a commercial general liability insurance policy providing $1 million per occurrence limit; an umbrella liability policy providing a $5 million per occurrence limit; and a workers’ compensation and employer’s liability insurance policy providing a $1 million per occurrence limit.  Company A had a $1 million per occurrence limit commercial general liability policy as well as an umbrella liability insurance policy providing a $25 million per occurrence limit.

While the worker’s case was pending, Company A initiated a state-court declaratory judgment action seeking a judgment that their insurers owed a defense and coverage as additional insureds under its policy, and the coverage issues remain pending in state court.  While that action was pending, Company B‘s insurers filed an interpleader suit in Illinois federal court claiming that the $6 million at issue under their policies is claimed by competing claimants, including the worker as a judgment creditor, Company B, Company A, and the other involved insurers.  On motions to dismiss, the other parties asked the U.S. District Court for the Northern District of Illinois to dismiss for lack of subject matter jurisdiction and to abstain from deciding the case while the state-court coverage cases proceeded.

The court denied the motion to dismiss, but because many of the abstention principles favored abstention, the court stayed the case pending the outcome of at least the appeal of the worker’s judgment, and then will determine at that time whether dismissal is warranted.