Certain Underwriters at Lloyd's v. Abbott Laboratories

                                  Illinois Official Reports

                                          Appellate Court



                 Certain Underwriters at Lloyd’s, London v. Abbott Laboratories,
                                   2014 IL App (1st) 132020



Appellate Court              CERTAIN UNDERWRITERS AT LLOYD’S, LONDON,
Caption                      Subscribing to Policy Number 548/NS3003500; CERTAIN
                             UNDERWRITERS AT LLOYD’S, LONDON, Subscribing to Policy
                             Number 548/NS3003700; UNDERWRITERS AT LLOYD’S,
                             LONDON, Subscribing to Policy Number 769/009020; and
                             UNDERWRITERS AT LLOYD’S, LONDON, Subscribing to
                             Certificate   Number       MPT-00144300;      Plaintiffs and
                             Counterdefendants-Appellants and Cross-Appellees, v. ABBOTT
                             LABORATORIES, Defendant and Counterplaintiff-Appellee and
                             Cross-Appellant.


District & No.               First District, First Division
                             Docket Nos. 1-13-2020, 1-13-2035 cons.


Filed                        July 28, 2014

Held                         On appeal from a dispute over the insurance coverage for the losses
(Note: This syllabus         suffered by defendant pharmaceutical company as a result of a recall
constitutes no part of the   of a drug it manufactured, the trial court’s finding rejecting plaintiff
opinion of the court but     insurers’ claim that coverage had been rescinded and the finding that
has been prepared by the     plaintiffs’ ratified coverage and waived rescission were upheld;
Reporter of Decisions        furthermore, the appellate court affirmed the trial court’s denial of
for the convenience of       plaintiffs motion to compel production of certain privileged
the reader.)                 documents, the rejection of defendant’s counterclaims for vexatious
                             delay and prejudgment interest, and the date set from which the award
                             of postjudgment interest to defendant would accrue.



Decision Under               Appeal from the Circuit Court of Cook County, No. 03-CH-9307; the
Review                       Hon. Richard J. Billik, Jr., and the Hon. Thomas R. Mulroy, Judges,
                             presiding.
     Judgment                  Affirmed.


     Counsel on                Forde Law Offices LLP (Kevin M. Forde and Joanne R. Driscoll, of
     Appeal                    counsel), Shefsky & Froelich Ltd. (J. Timothy Eaton and Jonathan
                               Amarilio, of counsel), and Richard J. Prendergast, Ltd. (Richard J.
                               Prendergast, of counsel), all of Chicago, for appellants.

                               Tabet DiVito & Rothstein LLC (Gino L. DiVito and John M.
                               Fitzgerald, of counsel) and Winston & Strawn LLP (Lawrence R.
                               Desideri, Stephen V. D’Amore, Neil M. Murphy, and Matthew R.
                               Carter, of counsel), both of Chicago, for appellee.




     Panel                     JUSTICE DELORT delivered the judgment of the court, with opinion.
                               Presiding Justice Connors and Justice Hoffman concurred in the
                               judgment and opinion.




                                                 OPINION

¶1          This case involves who should bear the cost of the Italian government’s recall of a
       prescription drug: the insured or the insurer. The plaintiffs are various underwriters
       subscribing to certain insurance policies and certificates (the Underwriters). They sued Abbott
       Laboratories (Abbott) to rescind policies that they had issued to Abbott. Abbott
       counterclaimed, seeking (1) a declaratory judgment regarding coverage, (2) damages for an
       alleged breach of contract, and (3) damages for vexatious delay in paying on the policies. An
       array of professionals from all over the world testified at two extensive bench trials. At the first
       trial to determine liability, the trial court rejected the Underwriters’ rescission claim and
       Abbott’s vexatious delay claim. At the second bench trial as to damages, the trial court found
       in favor of Abbott on its breach of contract claim, entered judgment against the Underwriters,
       and awarded Abbott $84.5 million (the limits of the insurance policies at issue here) and
       certain recoverable costs. The trial court rejected Abbott’s request for prejudgment interest,
       but granted the request for postjudgment interest, awarding Abbott an additional $739,375. On
       appeal, the Underwriters contend that the trial court’s rejection of their rescission claim and its
       finding that the Underwriters ratified coverage and waived rescission were against the
       manifest weight of the evidence. The Underwriters raise an additional claim regarding the trial
       court’s denial of their motion to compel production of certain privileged documents prepared
       by a witness whom Abbott had withdrawn as an expert witness and presented only as a fact
       witness. On cross-appeal, Abbott contends that the trial court abused its discretion both in
       rejecting Abbott’s counterclaim for vexatious delay damages and Abbott’s request for
       prejudgment interest. We affirm.

                                                    -2-
¶2                                        BACKGROUND
¶3       Various underwriters at Lloyd’s, London (Lloyd’s) issued product recall insurance policies
     to Abbott for a three-year term beginning on April 13, 2000. The Underwriters seek to rescind
     those policies on the basis that Abbott made material misrepresentations in its insurance
     application regarding potential risks created when it acquired Knoll Pharmaceutical Company
     (Knoll).

¶4                                         The Lloyd’s Policies
¶5        The policies issued to Abbott were structured into three layers. The second-layer policy
     provided that it would pay Abbott the amounts due resulting from losses covered by the
     first-layer policy, but only after the first-layer policy had paid or had been held liable to pay the
     full amount of the first-layer limits (and after application of the $20 million deductible). The
     third-layer policies, in turn, promised to pay the amounts for which Abbott was liable, but only
     in excess of the first- and second-layer policies and the deductible. The second- and third-layer
     policies stated that they were subject to the same terms and conditions as the first-layer policy,
     and both required that the first-layer policy remain in force. 1
¶6        The first-layer policy provided that it would pay Abbott for losses incurred resulting from
     “Product Tampering or Accidental Contamination” of “Covered Products” during the policy
     period. The policy also provided coverage for government drug recalls under the rather
     counterintuitive rubric of “accidental contamination,” which was defined in relevant part as
     “any formal or informal ruling of any regularly constituted national *** regulatory *** body
     during the Policy Period requiring recall or suspending sales of the Covered Product(s),”
     “Provided that the consumption or use of the Covered Product(s) *** has resulted *** in
     bodily injury, sickness, disease or death to any person or animal if consumed or used ***.”
     “Accidental contamination” also included any consequent adverse publicity.
¶7        The policy further stated that if Abbott merged with or acquired another entity whose
     revenues were more than 5% of Abbott’s, the new entity would automatically be covered by
     the policies, but Abbott had to provide written notice to the Underwriters within 90 days of the
     merger or acquisition and pay an additional premium to cover the additional risk. Computation
     of the premium was left open and was thus subject to negotiation on an ad hoc basis.
¶8        Under the section “Covered Losses,” the policy provided coverage for product tampering
     or accidental contamination losses during the policy term “provided that as of the inception of
     this insurance, [Abbott’s] Director of Risk Management was not aware and could not
     reasonably have been aware of circumstances which could produce” a covered loss. In
     addition, the entire policy would be “void” if Abbott “intentionally concealed or
     misrepresented any material fact or circumstance concerning this insurance” or made “any
     attempt to defraud [Underwriters] either before or after a Loss.” If the policy was in effect for
     60 days, Underwriters could cancel the policy for, in addition to other reasons: (a) Abbott’s
     obtaining the insurance through “material misrepresentation”; (b) Abbott’s violation of any of
     the terms and conditions of the insurance agreement; and (c) “the risk originally accepted has
     measurably increased.” If the Underwriters cancelled the policy, however, they agreed to



         1
          The third-layer policies required the maintenance of the second-layer policy, as well.

                                                    -3-
       refund the unearned portion of any premium paid. Abbott initially paid an advance premium of
       $2.17 million for the three-year policy.
¶9         On December 15, 2000, Abbott announced that it agreed to acquire the global operations of
       Knoll whose products included Synthroid and Meridia. Knoll’s revenues exceeded 5% of
       Abbott’s revenues, so Abbott notified the Underwriters of the acquisition in February 2001,
       and provided written notice when the acquisition closed around March 2, 2001.
¶ 10       As noted above, an additional premium covering the Knoll business had to be determined.
       On February 22, 2001, Ian Harrison, an underwriter with the Beazley syndicate, 2 received
       Abbott’s notice and initially proposed a premium that would have been two times the
       proportional increase in Abbott’s sales following the Knoll acquisition. Abbott rejected that
       proposal.
¶ 11       Abbott submitted three applications to the Underwriters in connection with the Knoll
       acquisition; only the last of the three was signed. Question 25 of each application asked, inter
       alia, whether “the applicant, or its D&O’s [directors and officers] have any knowledge of any
       current situation, fact or circumstance which might lead to a claim under an Accidental
       Contamination *** policy.” Abbott answered “No” in each application. In the signature box at
       the end of the application was a statement that Abbott’s signers declared “to the best of our
       knowledge” that the information provided was true and that no material information that might
       affect the Underwriters’ judgment had been withheld.
¶ 12       On May 14, 2001, Harrison proposed a revised premium of $616,350, 25% of which would
       be refunded if no claims were made over the remaining three-year term. This proposal
       contained various conditions precedent, or “subjectivities,” including a signed application and
       support from the entire “following market” of underwriters (i.e., the underwriters who shared
       the risk with the lead underwriters under the same terms and conditions). Justin Whitehead, a
       broker with the Lloyd’s-approved brokerage firm Heath Lambert, presented this information to
       Kelvin Mercer, the underwriter with American Specialty Underwriters syndicate (ASU). 3
       Mercer then proposed a 50% return premium if no claims were made, to which Harrison
       agreed, subject to the conditions in the May 14, 2001 proposal. On May 22, 2001, Whitehead
       sent an e-mail to Walter Kerr, Abbott’s insurance broker in the United States, noting the 50%
       premium refund, and adding that it was subject to “full market support” and submission of a
       signed and dated application, among other things. Abbott agreed and paid the premium to the
       Underwriters in early July 2001.
¶ 13       Greg Linder, Abbott’s vice president and treasurer, signed the final application on May 29,
       2001. Helmuth Fendel, an Abbott employee, e-mailed Kerr the next day, stating that Linder
       would be “signing the application today [sic]” and that Fendel would forward the application
       via “Fedex” to Kerr. Fendel further confirmed that the April 24, 2001, application disclosed
       “all known losses with a financial impact greater than $1,000,000,” and added, “We are
       unaware of any other losses.” Kerr forwarded this e-mail to Heath Lambert on May 31, 2001.
¶ 14       On June 1, 2001, Mark Colgate (a broker with Heath Lambert), began showing an
       endorsement form summarizing the new proposed terms to the various underwriters. At 7:58
       p.m. (London time) on June 1, 2001, Colgate sent Kerr an e-mail informing him that: (1) Catlin
          2
           The lead underwriter of the Abbott policies.

          3
           The co-lead underwriter for the Abbott policies.

                                                    -4-
       Underwriting Group syndicate had not agreed to the endorsement; (2) Mercer (the underwriter
       with the ASU syndicate) was away and therefore did not sign the endorsement; and (3) the
       other syndicates agreed to the endorsement but “ ‘subject to’ your information regarding the
       losses and QA integration being signed by [Harrison] and [Mercer] ***–both have seen them
       but we do not have them formally agreed yet.” Colgate’s e-mail added as a further point, “This
       is all still subject to the application form being signed and dated–we need this asap [sic].”

¶ 15                                  The Wall Street Journal Article
¶ 16       On June 1, 2001, an article appeared in the Wall Street Journal entitled “FDA Could Make
       Abbott Pull Synthroid, Popular Thyroid Drug, From Market.” The first paragraph of the article
       noted that the United States Food and Drug Administration (FDA) told the manufacturers of
       Synthroid that the medication had a “ ‘history of problems’ ” and could not be recognized as
       “ ‘safe and effective.’ ” The next paragraph added that the drug had been on the market for 40
       years but had never officially been approved for use by the FDA, and it would be subject to
       regulatory action that could, “in the extreme, include removal from the market–a process that
       could begin as early as August.” Finally, the article quoted an Abbott representative as saying:
       (1) it believed it only had to submit its application to the FDA by August 14; (2) it was
       “confident” the drug would be allowed to stay on the market; and (3) the FDA’s two most
       recent inspections of its Synthroid plant found no violations in its manufacturing processes.
¶ 17       At about 2:23 p.m. Chicago time (8:23 p.m. London time) on the same day that the Wall
       Street Journal article appeared, Fendel sent an e-mail to Kerr advising him that Kerr and the
       Underwriters should be aware of the article. Fendel did not attach a copy of the article or
       describe its contents. At approximately 9:40 p.m. (London time), Kerr forwarded that e-mail to
       Whitehead and Ted James, an underwriter with PIA underwriting syndicate. The e-mail to
       Whitehead was automatically forwarded to Colgate at about the same time.

¶ 18                                     Abbott’s Press Release
¶ 19       Also on June 1, 2001, Abbott issued a press release addressing the Wall Street Journal
       article. The press release stated that Synthroid was a safe and effective treatment for
       hypothyroidism and that Abbott intended to submit a “New Drug Application” (NDA) to
       ensure that the 8 million patients being treated with Synthroid had “continued access to their
       medication.”

¶ 20                  The Underwriters’ and Abbott’s Subsequent Communications
¶ 21       The following Monday (June 4, 2001), Colgate (Abbott’s London broker) replied to Kerr
       stating that he could not access the article. Kerr responded with a copy of the article attached.
       Colgate then asked Kerr to obtain written confirmation from Abbott whether the article was
       “correct,” but Kerr responded that Abbott did not state that it was correct. Kerr later forwarded
       Abbott’s press release to Colgate.
¶ 22       On June 5, 2001, Colgate e-mailed Kerr asking why Abbott did not include the information
       from the article in either its April 24, 2001, application or May 31, 2001, e-mail. Colgate also
       added that: he had not approached the “Catlin syndicate,” it was unlikely that the group would
       agree to the endorsement, and that the XL Brockbank underwriting syndicate had not yet
       agreed to the endorsement. Colgate further expressed his intention to show the Underwriters

                                                   -5-
       the “two [sic] news articles” the following day. Colgate stated that, if any Underwriters who
       had placed a subjectivity to their agreement tried to cancel their endorsement, Colgate would
       argue that they were “already on risk” and would await their reaction.
¶ 23        On June 6, 2011, Colgate gave Mercer (of the ASU syndicate) a copy of the Wall Street
       Journal article, and Colgate began distributing the final application, including the article, to
       the underwriters on the following day. Burkinshaw, an underwriter with Catlin, initialed the
       endorsement form, but added a subjectivity that the additional premium must be paid by July 1,
       2001. Harrison stated that, on June 7, 2001, after learning of the Wall Street Journal article, his
       syndication group, Beazley, contacted attorney Michael Leahy to investigate Abbott’s
       disclosures regarding Synthroid.
¶ 24        On June 8, 2001, Colgate spoke with Wright (the underwriter with XL Brockbank) about
       the Abbott application. Before reviewing the Wall Street Journal article, Wright had removed
       his prior subjectivity (requiring his speaking to Harrison) from the endorsement, but he
       reinstated it after reviewing the article. Other underwriters, including Harrison, Mercer, and
       Burkinshaw, initialed the endorsement and added the words “without prejudice.” The phrase
       “without prejudice” meant either the underwriters were “not accepting the information,” they
       were reserving their rights under the policy, or there was a subjectivity in place.
¶ 25        By July 1, 2001, the subjectivity placed by Wright–requiring a discussion with Harrison,
       the lead underwriter–still had not been resolved. Whitehead, the Heath Lambert broker, then
       asked Wright if Wright would allow the “Lloyd’s Policy Signing Office” (LPSO) to distribute
       the pro rata portions of the additional premium to the other underwriters. Wright eventually
       agreed, and the LPSO distributed the premium payments to the other underwriters for the first-
       and second-layer policies on July 5, 2001. Those underwriters neither refused nor returned this
       additional premium. Leahy admitted that, by July 5, 2001, his clients had already formed a
       belief that Abbott had concealed material facts from them. The third-layer underwriters
       negotiated a revision to the endorsement to exclude any Synthroid-related claims (as to the
       third-layer policies only), and they later accepted their pro rata share of the additional
       premium in January 2002.
¶ 26        During August 2001, Leahy and Marc Rosenthal, Abbott’s outside counsel, discussed a
       tolling agreement between the Underwriters and Abbott that would allow the parties to
       preserve their rights with respect to any Synthroid-related claims. Abbott agreed, and the
       Underwriters 4 and Abbott executed the tolling agreement in October 2001.

¶ 27                                The Meridia/Sibutramine Claim
¶ 28       On March 6, 2002, the Italian Ministry of Health announced the suspension of all sales and
       marketing of sibutramine in Italy. The parties stipulated that this action (and the resulting
       negative publicity) met the definition of “Accidental Contamination” under the policies. On
       March 21, 2002, Eugene Bader, Abbott’s corporate risk management director, wrote to Robert
       Stellar of McLarens Toplis North America, Inc., informing Stellar of a potential loss related to
       Meridia (its sibutramine product) and asking Stellar to put Abbott’s insurers on notice of the
       suspension. Abbott eventually submitted a claim under the policies for losses arising from the
       Meridia suspension.

          4
           The tolling agreement did not include the third-layer underwriters as a party to the agreement.

                                                     -6-
¶ 29       On May 16, 2003, Holland wrote to Fendel, informing him that the Underwriters were
       cancelling the tolling agreement because Abbott had not fully responded to their document and
       information request. Fendel replied three days later, asking Holland to specify what
       information was still missing, but Holland did not respond. On June 2, 2003, plaintiffs filed a
       complaint for rescission against Abbott, which they amended on January 16, 2004. Abbott
       counterclaimed for a declaratory judgment as to coverage, for breach of contract, and for
       vexatious delay damages.

¶ 30                                          The Liability Trial
¶ 31       The case was bifurcated into liability (rescission) and damages phases. The bench trial on
       liability began on September 16, 2010.
¶ 32       Leahy testified that, before July 5, 2001 (when the Underwriters accepted the additional
       premium payment), he knew the “regulatory situation” surrounding Synthroid after reading the
       FDA materials, and he also knew that “some people within Abbott” also knew about the
       regulatory situation with respect to Synthroid prior to the date of the Wall Street Journal
       article. Leahy further confirmed that his clients had “formed a belief” prior to July 5, 2001, that
       Abbott had concealed material facts from them. Fendel and Linder, however, both testified that
       they were unaware of any situation that might lead to a claim under the policies.
¶ 33       The trial court found that the agreement with respect to the additional Knoll premium was
       subject to “at least” the following: (i) receipt of a satisfactory signed and dated application; (ii)
       full support of the “following market underwriters” for the proposed premium; (iii) receipt of
       the additional premium by July 1, 2001; and (iv) confirmation of no additional claims or
       notifications other than those in the unsigned application of April 24, 2001. The trial court
       further found that Abbott timely and sufficiently disclosed Synthroid’s regulatory situation at
       the time when it provided the Wall Street Journal article with its signed May 29, 2001,
       application. In addition, the trial court observed that the Underwriters accepted the additional
       premium paid by Abbott, notwithstanding the testimony of Abbott’s expert that the
       Underwriters could have refused the additional premium if they were unsatisfied with the
       terms and conditions listed on the endorsement. Accordingly, the court rejected the
       Underwriters’ rescission claim on the dual grounds that Abbott did not intentionally make a
       material misrepresentation in its application and that the Underwriters ratified the Knoll
       endorsement, thus waiving any claim of rescission. The trial court, however, rejected Abbott’s
       counterclaim for fees and costs grounded in the Underwriters’ alleged vexatious and
       unreasonable conduct with respect to the Meridia claim, finding that a bona fide coverage
       dispute existed with respect to Synthroid which, if proved, would have voided the contract and
       excluded coverage for the Italian government-related Meridia claim.

¶ 34                                       The Damages Trial
¶ 35       The Underwriters and Abbott each presented expert witnesses regarding the calculation of
       damages. Both witnesses used regression models to calculate damages. Abbott’s expert, Dr.
       Joel Hay, estimated Abbott’s losses at $155.2 million, including about $5.4 million in related
       out-of-pocket expenses. The Underwriters’ expert, Dr. Gregory Bell, also concluded that
       Abbott incurred $5.4 million in out-of-pocket expenses related to the removal of Meridia from



                                                     -7-
       the Italian market. Dr. Bell’s model, however, excluded longer-term data, which resulted in a
       loss in income of only $33.2 million.
¶ 36       The trial court issued a detailed written opinion, finding Dr. Hay more credible than Dr.
       Bell and that Abbott’s lost profits were therefore $155.2 million. After applying the policies’
       deductible and 10% coinsurance, the trial court found the Underwriters were liable for $84.5
       million, the aggregate limit under the policies. The written opinion stated that a judgment in
       favor of Abbott was “enter[ed] against Underwriters in the amount of $84,500,000.”

¶ 37                     The Awards of Prejudgment and Postjudgment Interest
¶ 38       On May 31, 2013, Abbott filed a motion to amend the judgment to include an award of
       prejudgment interest under the Illinois Interest Act (815 ILCS 205/2 (West 2012)). The trial
       court denied that motion in a written ruling. The court recounted that there was a four-day trial
       solely to determine damages, that the evidence included an “analysis of math and econometric
       concepts and calculations of global business losses,” and that the Underwriters’ and Abbott’s
       experts provided different models to determine Abbott’s losses. The court concluded that the
       damages were neither liquidated nor easily calculable, as would be necessary to impose
       prejudgment interest, and denied Abbott’s request.
¶ 39       One week later, on June 24, 2013, the trial court entered a “final judgment,” awarding
       Abbott $84.5 million (the limits of its coverage), approximately $2.8 million in recoverable
       costs, and postjudgment interest at the rate of 9% per year beginning on May 21, 2013,
       pursuant to section 2-1303 of the Code of Civil Procedure (735 ILCS 5/2-1303 (West 2012)).
¶ 40       This appeal and cross-appeal followed.

¶ 41                                           ANALYSIS
¶ 42                             The Underwriters’ Claim for Rescission
¶ 43       The Underwriters first claim that the trial court erred in rejecting their claim for rescission.
       Among other things, they claim that because Abbott lied on the application regarding
       Synthroid risks, it cannot seek coverage for Meridia claims. The Underwriters argue that
       “Abbott’s fraud in the application process” was “undeniably” shown in two circumstances: (i)
       when it answered “No” to question 25 in its applications that asked whether Abbott or its
       directors and officers had any knowledge of a fact or circumstance that might lead to a claim;
       and (ii) when Abbott and its brokers “deliberately” withheld the Wall Street Journal article
       from the Underwriters “until after they were bound to the Knoll risk.”
¶ 44       Section 154 of the Illinois Insurance Code provides in relevant part as follows:
                   “No misrepresentation *** made by the insured or in his behalf in the negotiation
               for a policy of insurance, or breach of a condition of such policy shall defeat or avoid
               the policy *** unless such misrepresentation *** shall have been stated *** in the
               written application therefor. No such misrepresentation or false warranty shall defeat or
               avoid the policy unless it shall have been made with actual intent to deceive or
               materially affects either the acceptance of the risk or the hazard assumed by the
               company.” 215 ILCS 5/154 (West 2010).
¶ 45       This law thus establishes two situations where insurance policies may be voided: where the
       statement (1) is false and made with an intent to deceive, or (2) materially affects the
       acceptance of the risk or hazard assumed by the insurer. Golden Rule Insurance Co. v.

                                                    -8-
       Schwartz, 203 Ill. 2d 456, 464 (2003). As a result, under the statute, even an innocent
       misrepresentation can serve as the basis to void a policy. Id.
¶ 46        The parties agree that, where, as here, the insurance application includes “knowledge and
       belief” language, it establishes a lesser standard of accuracy than that imposed under section
       154, and thus shifts the focus in a determination of the truth or falsity of an applicant’s
       statement from an inquiry into whether the facts asserted were true, to the applicant’s actual
       knowledge and belief. Id. at 466. This standard, however, does not completely foreclose
       review of the applicant’s responses. Instead, the phrase “knowledge and belief” requires that
       “ ‘knowledge not defy belief.’ ” Id. at 467 (quoting Skinner v. Aetna Life & Casualty, 804 F.2d
       148, 151 (D.C. Cir. 1986)).
¶ 47        “In order for a plaintiff to prevail on a claim of fraudulent misrepresentation, he or she must
       establish the following elements: (1) a false statement of material fact; (2) known or believed
       to be false by the person making it; (3) an intent to induce the plaintiff to act; (4) action by the
       plaintiff in justifiable reliance on the truth of the statement; and (5) damage to the plaintiff
       resulting from such reliance.” Doe v. Dilling, 228 Ill. 2d 324, 342-43 (2008). The trial court, as
       finder of fact, is in the best position to evaluate the conduct and demeanor of the witnesses; as
       such, we must give great deference to its credibility determinations, and we may not substitute
       our judgment for that of the trial court. Samour, Inc. v. Board of Election Commissioners, 224
       Ill. 2d 530, 548 (2007). In addition, the resolution of inconsistencies and conflicts in testimony
       are for the trier of fact. York v. Rush-Presbyterian-St. Luke’s Medical Center, 222 Ill. 2d 147,
       179 (2006).
¶ 48        Therefore, we defer to the trial court’s factual findings unless they are contrary to the
       manifest weight of the evidence. Nokomis Quarry Co. v. Dietl, 333 Ill. App. 3d 480, 484
       (2002). A finding is against the manifest weight of the evidence only if the opposite conclusion
       is clearly evident or if the finding itself is unreasonable, arbitrary, or not based on the evidence
       presented. Best v. Best, 223 Ill. 2d 342, 350 (2006). In other words, if there is any evidence in
       the record to support the trial court’s findings, we may not disturb its findings and judgment.
       Nokomis Quarry Co., 333 Ill. App. 3d at 484.
¶ 49        In this case, there was ample evidence to support the trial court’s findings. The evidence
       showed that Abbott’s insurance policies automatically covered the Knoll purchase–the only
       matter remaining to be determined was the amount of the additional premium. Once a premium
       had been established by the lead underwriter, an endorsement summarizing the revised terms
       was circulated among the other participating underwriting syndicates. As the endorsement
       circulated, various underwriters initialed their agreement but with certain subjectivities, or
       conditions precedent. Among them were the receipt of a complete and signed application, full
       support of the “following market,” and payment of the additional premium by July 1. Abbott
       presented two unsigned applications regarding the information with respect to Knoll; with its
       signed and complete application, it included information regarding the Wall Street Journal
       article that had appeared that day. At the time of the receipt of the application and article, there
       was neither full following market support, nor had the premium been paid (as July 1 had not
       yet arrived).
¶ 50        Moreover, the trial court below properly found that Abbott had disclosed the article in a
       timely manner. On the same day the article appeared, Abbott (through Fendel) notified its
       agent in the United States, Kerr, who then forwarded that information immediately to the
       Lloyd’s-approved broker in London (Heath Lambert). On these facts, we cannot say that the

                                                    -9-
       trial court’s finding that Abbott did not intend to materially misrepresent the Synthroid
       regulatory status was unreasonable, arbitrary, or not based on the evidence presented, or that
       the opposite conclusion is clearly evident; as such, the trial court’s holding was not against the
       manifest weight of the evidence. Best, 223 Ill. 2d at 350. Since there is “any evidence” in the
       record to support the trial court’s findings, we may not disturb its findings and judgment.
       Nokomis Quarry Co., 333 Ill. App. 3d at 484.

¶ 51               Whether the Underwriters Ratified Coverage and Waived Rescission
¶ 52       The Underwriters also contend that the trial court erred in finding that they ratified the
       terms of the policies after the Knoll acquisition (and thus waived claims of rescission) when
       they accepted the premiums. The Underwriters argue that they immediately voiced their
       concerns with respect to the Synthroid regulatory status and began an investigation, but their
       investigation was delayed due to Abbott’s refusal to tender the Knoll due diligence
       documentation. The Underwriters further claim that they entered into a tolling agreement to
       preserve their rights.
¶ 53       An insurer seeking to rescind an insurance contract based upon fraud or misrepresentation
       must choose to do so promptly after learning of the alleged fraud or misrepresentation.
       Lumbermen’s Mutual Casualty Co. v. Sykes, 384 Ill. App. 3d 207, 223 (2008). By not taking
       such necessary steps to set aside a claimed fraudulent agreement in a timely manner, a party
       may be found to have ratified it and be barred from later attempting to rescind it. Id. It is well
       established that waiver may be found where an insurer continues under an insurance policy
       “ ‘when it knows, or in the exercise of ordinary diligence, could have known the facts in
       question giving rise to the defense.’ ” American States Insurance Co. v. National Cycle, Inc.,
       260 Ill. App. 3d 299, 306 (1994) (quoting Kenilworth Insurance Co. v. McDougal, 20 Ill. App.
       3d 615, 620 (1974)). Strong proof is not required to establish a waiver of a policy defense, but
       only such facts as would make it unjust, inequitable or unconscionable to allow the defense to
       be asserted. State Farm Mutual Automobile Insurance Co. v. Gray, 211 Ill. App. 3d 617, 621
       (1991). The parties agree that the trial court’s findings with respect to ratification and waiver
       may not be disturbed unless it was against the manifest weight of the evidence. See Swader v.
       Golden Rule Insurance Co., 203 Ill. App. 3d 697, 702 (1990).
¶ 54       Here, the Underwriters, when faced with what they believed was Abbott’s intentional
       misrepresentation with respect to the Knoll acquisition, did not reject the terms of the
       endorsement. They initially sought the due diligence materials with respect to the Knoll
       acquisition, but when Abbott responded with a request that the Underwriters provide a more
       focused and concise request, they did not respond to that request nor to Abbott’s invitation to
       meet in person to discuss the issues regarding the Knoll acquisition. Instead, they went ahead
       and issued the insurance by accepting the premium. It is only when the magnitude of the
       Meridia claim became apparent that the Underwriters then renewed their year-old request for
       the Knoll due diligence documentation. In the exercise of ordinary diligence, the Underwriters
       could have ascertained the pertinent facts regarding what Abbott knew about Synthroid’s
       regulatory status, but instead, they did nothing. Waiver has been found under such
       circumstances. See American States Insurance Co., 260 Ill. App. 3d at 306. On this issue, as
       well, we cannot say that the trial court’s finding is unreasonable, arbitrary, or not based on the
       evidence, or that the opposite conclusion is clearly evident; consequently, its finding was not
       against the manifest weight of the evidence. Best, 223 Ill. 2d at 350.

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¶ 55       The Underwriters claim, however, that it was only when Abbott tendered its Knoll due
       diligence, including Exhibit 13.19, that they became aware that Abbott had known of the
       Synthroid regulatory situation prior to June 1, 2001. Dr. Stewart Ehrreich, the Underwriters’
       expert witness as to FDA regulatory matters, however, admitted that all relevant facts
       pertaining to the Synthroid regulatory situation were contained in the Wall Street Journal
       article as well as the publicly available information referenced in that article. In addition, the
       Underwriters’ attorney, Leahy, admitted at trial that he and the Underwriters knew prior to
       accepting the premium on July 5 that Abbott was aware of the Knoll regulatory issues. We
       further note that the Underwriters delayed requesting the due diligence documentation for
       Knoll for more than a year, until shortly after the time that the Meridia claim arose. Finally,
       Exhibit 13.19 is not the “smoking gun” the Underwriters portray it to be: It contains no
       additional information not already set forth in the Wall Street Journal article. The
       Underwriters’ argument on this point is therefore meritless.

¶ 56                The Underwriters’ Motion to Compel Production of Privileged Documents
¶ 57        The Underwriters next contend that the trial court erred in denying their motion to compel
       the production of certain privileged documents to aid in their cross-examination of Michael
       Skweres, a potential expert witness.
¶ 58        Even assuming, arguendo, that the trial court erred in denying the motion to compel, the
       Underwriters suffered no prejudice. Skweres’s testimony only concerned the preparation of a
       proof of loss for Abbott’s Meridia claim, which was rendered superfluous when the
       Underwriters decided to deny coverage and seek rescission based upon an alleged fraudulent
       misrepresentation. “[W]here an insurer’s denial of liability for a loss claimed by an insured is
       based upon grounds other than the insured’s failure to file a proof of loss, the insurer has
       waived or rendered unnecessary compliance with the proof of loss requirement in the policy.”
       Gray, 211 Ill. App. 3d at 621. Skweres’s testimony was solely factual in nature. To the extent
       that the Underwriters claim that Skweres rendered expert testimony, their claim is without
       merit for two reasons. First, the Underwriters admitted at trial that Skweres did not render
       expert testimony during his direct examination, so they cannot now complain that he did. See
       Meyers v. Woods, 374 Ill. App. 3d 440, 448 (2007) (holding that, where the defendant agreed at
       trial with the trial court’s statement that the claims were based on contract and not negligence,
       the defendant waived the contention that it was error for the trial court to do so). Second, they
       forfeited this issue for failure to raise it following their cross-examination. See
       Wheeler-Dealer, Ltd. v. Christ, 379 Ill. App. 3d 864, 870 (2008) (holding that the failure to
       renew an objection when allegedly improper evidence is offered at trial results in a waiver of
       any challenge to the trial court’s consideration of that evidence). We therefore reject the
       Underwriters’ claim of error.



¶ 59                                      Postjudgment Interest
¶ 60       Finally, the Underwriters appeal from the trial court’s award of $739,375 in postjudgment
       interest in favor of Abbott. This amount represents about a month’s worth of interest on the
       judgment. The month in question ran from May 20, 2012 (the date of the damages award) to
       June 18, 2012 (the date the court ruled on Abbott’s motion to amend the damages award to

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       include prejudgment interest). The Underwriters contend that the trial court should not have
       awarded postjudgment interest earlier than June 18, 2012, because Abbott’s request for
       prejudgment interest was still an outstanding claim that made the May judgment nonfinal and
       not subject to the accrual of interest.
¶ 61        Section 2-1303 of the Code of Civil Procedure (Code) provides in relevant part:
               “Judgments recovered in any court shall draw interest at the rate of 9% per annum from
               the date of the judgment until satisfied ***. When judgment is entered upon any award,
               *** interest shall be computed at the above rate, from the time when made or rendered
               to the time of entering judgment upon the same, and included in the judgment.” 735
               ILCS 5/2-1303 (West 2012).
¶ 62        The trial court has no discretion to deny postjudgment interest, as the imposition of
       statutory interest from the date the final judgment was entered is mandatory. Longo v. Globe
       Auto Recycling, Inc., 318 Ill. App. 3d 1028, 1039 (2001). The Underwriters further agree that
       section 2-1303 mandates the accrual of interest “notwithstanding the prosecution of an appeal,
       or other steps to reverse, vacate or modify the judgment.” 735 ILCS 5/2-1303 (West 2012).
¶ 63        Andrews v. Kowa Printing Corp., 351 Ill. App. 3d 668 (2004), provides guidance on this
       issue. In Andrews, the plaintiffs moved for an award of attorney fees and prejudgment interest
       on April 30, 2003. Id. at 672. On September 29, 2003, the trial court entered the final
       judgment, which incorporated its findings from its earlier April 21, 2003, decision (that found
       in favor of the plaintiffs) and added prejudgment interest from April 21, 2003, to September
       29, 2003. Id. On appeal, the Andrews court affirmed the trial court’s decision, stating, “The
       trial court’s decision, reflected in an 11-page written opinion dated April 21, 2003, was an
       ‘award, report, or verdict’ within the meaning of [section 2-1303 of] the Code; thus, the trial
       court was correct in awarding interest from April 21, 2003.” Id. at 683.
¶ 64        With respect to this issue, the facts of this case are virtually indistinguishable from
       Andrews. Here, the last page of the trial court’s written opinion dated May 20, 2013, awarded
       Abbott its policy limits of $84.5 million, is entitled “Judgment,” and is also an award, report, or
       verdict under section 2-1303. Although the Underwriters assert in reply that Andrews is
       distinguishable because “the interest claimed and awarded was after a written judgment had
       been entered but before the final ‘wrap up’ judgment,” we fail to see that distinction–the trial
       court’s order awarding Abbott its postjudgment interest was also entered after the initial
       award. In any event, Andrews does not include any such factual limitation within its holding.

¶ 65                                       Abbott’s Cross-Appeal
¶ 66       Abbott cross-appeals both the trial court’s rejection of its counterclaim for vexatious delay
       and the denial of its request for prejudgment interest. With respect to the vexatious delay claim,
       Abbott argues that the trial court erred in denying its counterclaim for damages composed of
       attorney fees and costs, arising from the Underwriters’ purported “vexatious and
       unreasonable” handling of the Meridia claim. Abbott claims that the trial court “did not give
       due weight to its own many factual findings” in rejecting Abbott’s counterclaim because the
       Underwriters had all of the information regarding the Synthroid regulatory situation by early
       July 2001 but kept the additional premium payment and allegedly “resurrect[ed]” this matter
       upon learning of the magnitude of the Meridia claim.
¶ 67       Section 155(1) of the Illinois Insurance Act provides in part as follows:


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               “In any action by or against a company wherein there is in issue the liability of a
               company on *** policies of insurance ***, and it appears to the court that such action
               or delay is vexatious and unreasonable, the court may allow as part of the taxable costs
               in the action reasonable attorney fees, [and] other costs ***.” 215 ILCS 5/155(1) (West
               2010).
¶ 68        The determination of whether an insurer’s conduct violates section 155 requires a trial
       court to consider the totality of the circumstances. Golden Rule Insurance Co., 203 Ill. 2d at
       469. Delay in settling a claim may not violate the statute if there is a bona fide dispute over
       coverage. Id. The award of fees under section 155 of the Illinois Insurance Code is a matter
       within the sound discretion of the trial court, and we will not disturb the trial court’s decision
       absent an abuse of discretion. Buckner v. Causey, 311 Ill. App. 3d 139, 150 (1999). A court
       abuses its discretion only where its ruling is arbitrary, fanciful, or unreasonable, or where no
       reasonable person would adopt the court’s view. TruServ Corp. v. Ernst & Young LLP, 376 Ill.
       App. 3d 218, 227 (2007).
¶ 69        Here, the trial court’s denial was not an abuse of discretion. Although the Underwriters lost
       their claim for rescission before the trial court, which we have now upheld on appeal, we
       nevertheless hold that this case presented a bona fide dispute. We recognize that the
       Underwriters’ claim centered on the application disclosures related to Synthroid, not Meridia.
       Had the Underwriters’ claim prevailed, however, they would have been granted rescission and
       would not have been required to pay the Meridia claim. See Weinstein v. Metropolitan Life
       Insurance Co., 389 Ill. 571, 578-79 (1945) (“That an ailment or malady, knowledge of which
       an applicant withheld from an insurer, was not actually the cause of death is not decisive
       against a finding of materiality. Materiality to risk may exist notwithstanding proof of fatality
       owing to another cause.”). Based upon our review of the record, as well as the trial court’s
       detailed opinion, we cannot say that its decision was arbitrary, fanciful, or unreasonable, or
       that no reasonable person would adopt the court’s view. TruServ Corp., 376 Ill. App. 3d at 227.
       As such, the trial court’s decision to deny additional damages was not an abuse of discretion.
¶ 70        Abbott next contends that it is entitled to prejudgment interest because the amount of
       damages was easily calculable in the sense that the claimed amount of its loss always exceeded
       the policy limits. Therefore, according to Abbott, it is entitled to prejudgment interest on the
       $84,500,000 policy limit. The Underwriters respond that the amount at issue was far from
       readily determined, and thus the trial court properly denied the request for prejudgment
       interest.
¶ 71        Section 2 of the Interest Act (815 ILCS 205/2 (West 2010)) states in relevant part that
       creditors shall receive an additional 5% per year for all moneys due on any “instrument of
       writing.” An insurance policy is a written instrument covered by this statute. Marcheschi v.
       Illinois Farmers Insurance Co., 298 Ill. App. 3d 306, 314 (1998). “In order to recover
       prejudgment interest, the amount due must be liquidated or subject to an easy determination.”
       Santa’s Best Craft, L.L.C. v. Zurich American Insurance Co., 408 Ill. App. 3d 173, 191 (2010).
       “[I]f judgment, discretion, or opinion, as distinguished from calculation or computation is
       required to determine the amount of the claim, it is unliquidated.” (Internal quotation marks
       omitted.) Dallis v. Don Cunningham & Associates, 11 F.3d 713, 719 (7th Cir. 1993). The
       award of prejudgment interest under section 2 of the Interest Act is reviewed for an abuse of
       discretion. Marcheschi, 298 Ill. App. 3d at 313. As noted above, we will find an abuse of


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       discretion only where the trial court’s ruling is arbitrary, fanciful, or unreasonable, or where no
       reasonable person would adopt the court’s view. TruServ Corp., 376 Ill. App. 3d at 227.
¶ 72       The trial court did not abuse its discretion on this issue. Evidence was heard over four days
       solely on the issue of damages. Testimony included expert witnesses who presented individual
       regression analyses supported by various econometric models to determine the amount of
       future lost income that Abbott suffered from the recall of Meridia in Italy, as well as the
       decrease in worldwide income from Meridia resulting from the ensuing negative publicity. The
       Underwriters’ and Abbott’s experts reached wildly differing conclusions: Abbott’s expert
       estimated losses at over $150 million (well in excess of the policy limits), but the
       Underwriters’ expert estimated losses at “only” $33 million (well within the policy limits).
       Although the trial court ultimately sided with Abbott’s expert, Abbott points to nothing in the
       record–and we see nothing in the 119-volume record–establishing that the Underwriters’
       expert’s much lower damages estimate was patently unreasonable.

¶ 73                                           CONCLUSION
¶ 74       For these reasons, the trial court’s finding against the Underwriters as to their rescission
       claim was not against the manifest weight of the evidence, nor was its finding that the
       Underwriters ratified coverage and waived rescission. In addition, the trial court’s denial of the
       Underwriters’ motion to compel the production of certain privileged documents was not
       erroneous, and in any event, any purported error was not prejudicial to the Underwriters. We
       further hold that the trial court did not err in setting the date from which postjudgment interest
       to Abbott would accrue. Finally, neither the trial court’s rejection of Abbott’s counterclaim for
       vexatious delay nor its rejection of Abbott’s request for prejudgment interest was an abuse of
       discretion. Accordingly, we affirm the judgments of the trial court.

¶ 75      Affirmed.




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