Manor Care, Inc. v. First Specialty Ins. Corp., 2006 U.S. Dist. LEXIS 48249 (D. Ohio 2006)

Manor Care purchased a policy from First Specialty for coverage of “triggering events” in excess of $500,000 up to an aggregate amount of $25,000,000. The dispute concerned “1) what constitutes a triggering event under the policy; 2) whether a lawsuit is a single “triggering event” for purposes of the policy or if each separate injury alleged in the lawsuit is distinct; 3) the extent of First Specialty’s exposure once a “triggering event” occurs; 4) how settlement damages stemming from suits alleging covered injuries and also injuries not covered by the policy are to be apportioned; and 5) whether Manor Care breached its duty of good faith to First Specialty, particularly with respect to claims handling procedures. … As an example, consider a resident suing Manor Care for malpractice, alleging four separate injuries each causing $ 1 million in damage. Under Manor Care’s reading of the policy, only one SIR would apply per lawsuit, and Manor Care would pay $ 500,000 of the resident’s claim and First Specialty would pay the remaining $ 3.5 million. Under First Specialty’s view, a separate SIR would apply to each injury alleged in the lawsuit, regardless if they were brought together. Manor Care, accordingly, would pay $ 2 million to the resident and First Specialty would pay the remaining $ 2 million.” The Court found that a trigger event occurs only if negligence and injury occur during the policy period. Separate triggering events can occur within a single lawsuit, meaning that Manor Care’s self-insurance retention could exceed $500,000 if more than one occurrence causing injury is alleged. Because it is relatively easy to determine who must bear the loss, First Specialty was not required to respond in full for all damages first and then seek contribution. Factual disputes remained relating to apportionment of settlement damages and claims handling procedures to summary judgment was not appropriate on those issues.