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Combined Insurance Co. v. Certain Underwriters at Lloyd's London

Case Date: 03/31/2005
Court: 1st District Appellate
Docket No: 1-04-0344 Rel

No. 1-04-0344

COMBINED INSURANCE COMPANY OF AMERICA,

                       Plaintiff-Appellant,

         v.

CERTAIN UNDERWRITERS AT LLOYD'S LONDON,
subscribing to Reinsurance Contract No.
BK0030050 for the 12-month period
incepting on April 30, 2001,

                       Defendant-Appellee.

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)         		Appeal from the
Circuit Court of
Cook County.


No. 03 CH 15225



Honorable
Nancy J. Arnold,
Judge Presiding.


PRESIDING JUSTICE REID delivered the opinion of the court:

The plaintiff, Combined Insurance Company of America (Combined), appeals the trial court's decision to grant the motion under section 2-619(a)(3) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(3) (West 2002)) motion to dismiss of the defendant, Certain Underwriters at Lloyd's, London, subscribing to reinsurance contract No. BK0030050 for the 12-month period incepting on April 30, 2001 (Underwriters). On appeal, Combined argues that the trial court erred when it granted Underwriters' motion to dismiss because it did not follow the standards enunciated in A. E. Staley Manufacturing Co. v. Swift & Co., 84 Ill. 2d 245 (1981). For the foregoing reasons, we reverse the decision of the trial court and remand this matter.

BACKGROUND

Combined issued to its parent corporation, Aon Corporation (Aon), an insurance policy that was effective April 30, 2000. The policy provided accidental-death-and-dismemberment coverage to Aon employees. The Aon policy was drafted, negotiated, and executed in Illinois and expressly provides that it is governed by the laws of the State of Illinois.

On April 14, 2000, Combined and Underwriters entered into a reinsurance contract with respect to the Aon policy. This reinsurance contract was issued for the period of April 30, 2000, to April 30, 2001. Thereafter, it was extended through April 30, 2003.

On September 11, 2001, 176 Aon employees died at Aon's offices at the World Trade Center, during the terrorist attacks on the United States. Combined paid approximately $95 million to the families or beneficiaries of the victims of the events of that day.

On October 31, 2001, Underwriters consented to the payment of the Aon claims by Combined, but specifically reserved its rights to consent to coverage under the reinsurance contract. On November 9, 2001, Underwriters filed a civil action in commercial court in London, England, seeking declaratory relief based on the language of the reinsurance contract. Underwriters sought a declaration that it was not liable to indemnify Combined with respect to any liability that it might have arising out of the deaths of any eligible persons who were not engaged in business travel at the time that they perished on September 11, 2001.

On November 13, 2001, Combined filed a competing action in the United States District Court for the Southern District of New York in reliance on section 408(b)(3) of the then recently enacted Air Transportation Safety and System Stabilization Act (Pub. L. No. 107-42, 115 Stat. 230 (2001)(codified at 49 U.S.C.