THE ATCHISON, TOPEKA AND              )
SANTA FE RAILWAY COMPANY,             )
                                      )
                Plaintiff,            )	
                                      )	
vs.                                   )    Case No. 94- CV-1464
                                      )
STONEWALL INSURANCE COMPANY, et al.,  )
                                      )
                Defendants.           )
______________________________________)

This matter comes before the court on Certain Defendants' Motion for Summary Judgment on the Issues of Fortuity and "Known Loss" and Plaintiff's, The Atchison, Topeka, and Santa Fe (Santa Fe), Cross-Motion for Partial Summary Judgment on the "Known Loss" and "Fortuity" Defenses pursuant to K.S.A. 60-256 and Supreme Court Rule 141. After careful consideration, the court grants Santa Fe's Cross-Motion for Partial Summary Judgment on the "Known Loss" and "Fortuity" Defenses and denies Certain Defendants' Motion for Summary Judgment on the same issues.

1. December 22, 1970, Dr. Forrest H. Kendall of the Old Wesport Medical Association wrote a letter to Mr. F.W. Walters, Administration, Santa Fe RR advising that a Santa Fe employoee to whom he had recently administered an audiogram had a rather severe type of hearing loss in both ears, the type of hearing loss associated with acoustic trauma. Dr. Kendall further advised:

I am impressed by the number of railroad employees I see, both from your railroad and other railroads, for which my office does business, with the hearing loss associated apparently with noise exposure at work. It is our recommendation that anyone who is associated with working in an area where they cannot hear a co-worker speak at normal voice within [illegible] feet, is indeed in an area of too great a noise exposure. These people should all wear a type of protective device to reduce the possibility of acoustic trauma and irreversible hearing loss.

However, as Santa Fee points out, "acoustic trauma" is not necessarily noise induced hearing loss (NIHL).

2. During the period of August 1, 1965 through June 30, 1971, Santa Fe settled at least 10 employee claims involving hearing loss.

However, nine of the ten claims pertain to traumatic hearing loss - not NIHL. Paul Klotman brought a claim for hearing loss that had developed over a period of time and which settled in January, 1970, for $1,300.00. The other nine claims were as follows:

1) Robert J. Adams: injured when a topedo exploded.

2) Elmore Horton, Jr.: injured when a torpedo exploded.

3) David L. Doss: injured when tire on tractor blew out an he received a concussion.

4) Illegible name: injured air hose ruptured.

5) J.L. Jennings: injured while standing near horn that sounded.

6) L.G. Butler: injured when a torpedo exploded.

7) W.R. Long: injured when air compressor blew up.

8) J.A. Collins: injured when torpedo exploded.

9) John M. Johnson: injured while standing near horn that sounded.

3. July of 1971, MTS Associates, Inc. Advised Santa Fe's Director of Safety, D.D. Baird:

Hearing conservation programs are now a necessity in almost all industry. Even more for the railroads, since their compensation problems do not have the monetary limits imposed in Workmen's Compensation in the various states.

Both you and Dr. Hanson certainly have a knowledge of the problems. There remains no doubt that noise induced hearing loss is the number one, non fatal, hazard in industry today. Experience in the railroad industry shows that large numbers of your personnel, particularly in the shops and operating groups, are in the various exposure patterns. The risk proabilities [sic] of hearing impairment are significant.

In order to reduce future liability and the human problems related to this hearing impairment, we must prevent the hearing loss from occurring. A complete controlled, continuing, valid hearing conservation program provided in the proposal presented to Mr. McMillan is designed to meet these requirement.

Santa Fe admits that quotation is accurate but argues that the letter was a marketing letter to Santa Fe and should not be used to infer that Santa Fe had knowledge that MTS Associates, Inc.'s statements were true and accurate.

4. July 14, 1971, one of Santa Fe's attorneys wrote to Dr. Hanson, Santa Fe's Medical Director, the following:

Since our recent telephone conversation, I contacted General Claim Agent Harrington to [illegible] claims we have had involving hearing loss by employees. He checked with Messrs. Eschenburg and Ketring, and [illegible] forwarded to me a summary of claims involving hearing loss for the three Grand Divisions over the past five years. Attached are copies of their reports.

As you can see, relatively few of the claims are based on an overall high noise level [illegible]. I suspect you are correct, however, that [illegible] the type of claim we can expect to see more of in the future, expecially if and when federal standards are set.

5. On September 7, 1972, the Kansas Department of Labor conducted a sound level survey at one Santa Fe location and found that the noise levels exceeded the permissible standards for the following area in one tie gang: Rail Lifter and Tie Pusher, Tie Handler, Tie Inserter Operator and Helper, Dual Hydraspiker, Air Compressor and Jack Hammer Operators and Helpers. Since the tie gang was soon to be disbanded no further action was taken on the complaint.

6. In response to the September 7, 1972 citation, Santa Fe conducted its own noise survey and confirmed that the noise levels did in fact exceed the permissible 90dba for eight hours.

7. There were several noise-related complaints at various Santa Fe sites that resulted in some type of citations by an outside agency that were resolved by Santa Fe or by agreement between the agency and Santa Fe. Some of the noise-related complaints were due to violations of city noise ordinances and were not based on impermissible employee noise exposure levels.

8. November 1, 1974, Mr. Shaver (In 1973, Mr. Shaver was assigned by Mr. Cena, Santa Fe's Vice President of Operations, to oversee and coordinate all noise related matters) sent Mr. Cena a 4 page letter in which he discussed the proposed OSHA regulations for noise levels and further advised:

OSHA printed its proposed new noise standard in the October 24, 1974 Federal Register (Volume 39, No. 207). While most of the requirements mentioned in my February letter now appear in the OSHA proposal, there are some very important changes that may greatly affect the railroads. All of this, of course, depends on the long-pending decision of who will ultimately wind up with jurisdiction over the railroads, the DOT or the DOL. Should FRA end up with jurisdiction, they might possibly interpret the regulations differently, but I am convinced that the ground rules will remain essentially the same.

While 90dba is still the time weighted, eight-hour exposure, OSHA is now concerned about the 85-90 dba range. This range is important to us because noise levels in most locomotive cabs fall between those values. Previously, we felt safe if we kept locomotive cab noise levels below 90 dba. However, should the new regulation be adopted in its present form, we could be subjected to a whole host of requirements that would be almost impossible to comply with. ...

We have three major areas that would be affected by these regulations: trainmen and enginemen, Maintenance of Way and shops. Identifying trainmen and enginemen who are subjected to an eight-hour time-weighted exposure of 85dba would be extremely difficult. Most freight and passenger runs today are not a duration that would expose the crew to over 85dba for an eight-hour period. However, there are many runs that do and the problem of determining which employees fall into which category would be next to impossible. The only way we could be certain that we comply would be to identify and test ALL enginemen and trainmen. In order to avoid getting into this in the first place, I suggest that we see what can be done to reduce the noise level in locomotive cabs below 85dbA. If this can be done, we would eliminate a large part of our employee population who would otherwise be subject to these noise regulations.

The next area, Maintenance of Way, will be our greatest concern. Most of our roadway machines do not meet the 90dbA limit much less 85. Here, too, we must identify those employees who are subjected to an eight-hour time-weighted exposure of 85dbA and arrange to give them annual audiometric tests as outlined in the quoted passages preceding. I can foresee the day when we will have to equip an old passenger car with audiometric equipment and send it around to various locations to perform these tests. The testing of all those connected with roadway machines would be an administrative and physical nightmare and I suggest we continue to devote much effort toward quieting our machines. The CWE Shop has been involved in conducting noise studies of roadway machines for several months now and I suggest they do all that is necessary to reduce the number of machines that fail to comply with noise standards.

The third area is that of our shops. These will probably be the easiest to deal with because of their stationary nature. Nevertheless, it will take considerable effort to identify those needing testing and arrange the necessary tests to see that this is accomplished annually. Here, too, we should see what can be done to quieten [sic] those machines and processes that do not meet the regulations.

In summary, I suggest that we immediately get very involved in a hearing conservation program. The less people we have exposed to 85 dbA noise, the less people we will have to test. Mr. J.M. McMillan of my office is available to help in any way possible.

9. In connection with the hearing loss claim of a Santa Fe employee in 1975, Santa Fe's General Attorney, Robert Bateson, advised Mr. Shaver:

This has reference to your February 25 letter to Dr. Hanson and myself regarding a complaint as described above, which arises as a result of a letter from an Amarillo doctor to Superintendent K.C. Kay. From a reporting standpoint there is little doubt in my mind but that the matter is reportable. The patient contends the hearing loss arose following his assignment to a "spike hammer" and the doctor in testing the complainant finds a 45% sensorineural hearing loss in the left ear. Notwithstanding the possibility if such loss exists it is not a result of job connected activity, the fact is from a reporting standpoint the situation is presented in such a way it should be reported. There is simply no provision in the requirements which apply to us which permits the facts to be questioned and because of the magnitude of the problem generally I would not think it practical to do so. If the complaint matures into a FELA cause of action we will of course investigate thoroughly the possibility of a defense based on some physical element other than work connected causes.

The situation also suggests another problem which I think should be brought to your attention. In this case there is no specific incident of the type which normally would come to the attention of the Claim Department. However, with the advent of health and occupational illness regulations we are confronted with new types of cases which have possibilities for liability under the FELA. It is my suggestion that cases of this type in which a work connected disability is claimed and doctor's advice to the effect is received, the Claim Department should be advised so that it can maintain a file and have a starting point in the event that thereafter some contention about FELA liability is made. It may be we should discuss how best to determine which situations should be referred to the Claim Department, but certainly cases such as the one which is the subject of this letter must be.

However, Santa Fe points out that it is unclear from the cited document whether the claim discussed was for traumatic hearing loss or for NIHL. In addition, Santa Fe points out that the reporting referred to was not insurance reporting but reporting to the Santa Fe claims department.

10. May 5, 1977, R.L. Riess, an audiologist, wrote to Dr. Don Lynch of Santa Fe Employees Hospital Association:

It has come to my attention that a number of employees of the Santa Fe Railroad are possibly not having adequate ear protection available in their work. I am somewhat concerned about the great number of people that we are testing that have a significant hearing loss. I believe that it would be of Santa Fe's best financial interest to initiate a hearing conservation program, including use of ear protection.

11. May 6, 1977, Dr. Lynch wrote to Dr. Hanson, Santa Fe's Medical Director - System:

Over the past few months I have become increasingly concerned about the hearing problem which seems to occur among Santa Fe Railroad employees. We have sent a great many of these folks to the audiology department for check and today I received this memo from Dr. R.L. Riess, the audiologist at Scott and White, who also focuses concern upon this problem.

I am relating this to you as a matter of information and would appreciate hearing from you as to any suggestions or remedies that you might have. I do not know whether the railroad has any type of program set up in this regard nor how well enforced it is if such program is in effect.

12. May 11, 1977, Dr. O.L. Hanson wrote Dr. Don J. Lynch at the Santa Fe Employees Hospital Association the following:

Thank you for your letter dated May 6, 1977, with enclosure from Dr. R.L. Riess regarding hearing loss. For several years I have encouraged the Santa Fe to conduct a hearing conservation program including audiograms, etc. The program we have now is chiefly the furnishing of hearing protectors. No well-organized employee education program has been established. I am sure that we will establish one but as you may know there has been a big hassle in Washington for several years about hearing conservation requirement. At any rate, I appreciate your letter and will circulate it where it will do the most good. We have had many offers of help from audiologist, otologists, safety engineers, etc.

13. June 10, 1977, Mr. Shaver wrote Mr. Cena the following:

Dr. Hanson contacted Dr. Don J. Lynch of the Temple Hospital concerning the apparent hearing loss of employees at Cleburne Shops. Dr. Lynch stated that there appears to be a significant loss to those employees working within the Main Shop buildings. There does not seem to be a problem with those working in other areas. ...

14. July 22, 1977, J. Fitzgerald quoted Dr. Lynch of the Santa Fe Employees Hospital Association as reporting:

We have investigated this to some extent and have found no clear-cut pattern in the records that have been reviewed, although, we get the impression that there may be a higher incidence of the problem in the machinist and surprisingly enough in the operating trainmen. However, we are doing an on-going study of all requests for audiograms and may be able to develop some statistics at a later date.

15. August 23, 1977, Mr. T.R. Lenert, Santa Fe Safety Department in Los Angeles, wrote Mr. Shaver the following:

My purpose in writing this letter is manifold. First, I believe the time for us to begin an audiometric testing program is near. More and more we can expect engineers and their trainmen to claim total or partial hearing loss at the end of their career and blame it entirely upon their occupation. With no records to come to our aid, we will be entirely at their mercy.

With an audiometric testing program, problems can be spotted before they reach a serious stage. Without such a program, hearing loss is usually quite serious before the loss is noticed. ...

However, Santa Fe contends that the document included highly speculative language.

16. R.D. Shaver received a letter from MTS Associates, Inc., hearing consultants, dated October 6, 1978 which read:

It was good to talk with you recently at the National Safety Council meeting. The discussions on communication and motivation Wednesday morning were impressive. You are to be congratulated on the program.

Data over a number of years indicate that hazardous noise exposure with resultant noise induced hearing loss are indeed the number one non-fatal health problem in the railroad industry. You, I, and Dr. Hanson have discussed the problem a number of times. A proposal was presented to Santa Fe in 1971. It has been demonstrated on a number of railroads that effective Hearing Preservation Programs can be initiated and continued in railroad facilities.

The enclosure defines an effective Hearing Preservation Program. The only way to reduce further liability, is to prevent as much noise induced hearing loss as possible. The program must be complete, coordinated, controlled, and continuing with involvement of all employees at a given location.

17. Mr. C.H. Harrington received a letter from the Burlington Northern Railroad dated October 23, 1980, advising:

Mr. Temple has asked us to advise you of any claims of hearing loss and tinnitus allegedly due to the noise from diesel engines.

A check of our files discloses that we have had three such cases which generally fall into this category, as follows:

On October 12, 1978 a locomotive engineer at Aurora, Illinois alleged hearing loss because of the constant exposure to noise from engines. The hearing specialist on examination found both ears to be perfectly normal with the exception of a sharply localized precipitous high tone nerve drop, stating this loss is typical of prolonged noise exposure and undoubtedly related to this occupation as a locomotive engineer. Settlement was arranged by payment of $500. The engineer has since retired.

At Vancouver, Washington a mechanic employed in the Motorcar Shop filed a claim for hearing loss on January 7, 1980. Again, the specialist concluded that exposure to railroad noise contributed significantly to the present hearing loss. Settlement was arranged by payment of $1,500 which primarily covered the purcase [sic] of a sophisticated hearing aid.

Approximately one year ago a locomotive engineer at Seattle alleged a hearing loss over the years due to noise of a diesel locomotive. Medical evidence indicated that long exposure to the roar of the diesel locomotive was a primary cause of the loss. Following filing of his claim the engineer retired and we understand moved to Arizona and nothing further has been heard from him.

18. In connection with the investigation into the noise levels generated by the humpyard retarders in Barstow, professional consultants recommended to Dr. Khuri in February 1981:

1. Instituting mandatory ear protection in the form of EAR plugs for all individuals moving to the observation tower by the retarders, into and out of the fabricated house and to the parking lot, while the humpin process is in action. I am sending plugs to Tom Lennert.

2. Immediately initiating a hearing testing program of all those individuals in the tower, and those moving around the retarders and in the bowel. This can be set up with Steve Barwick, Vector Management, Inc.

3. Obtain a spectrum analysis of the high frequency noise generated by the retarders and calculate the risk of that noise to hearing.

4. Construct a reflecting and isolating, moveable wall along the 250 ft of retarders.

19. On June 18, 1971, Dr. O.L. Hanson of Santa Fe wrote to Mr. S.R. Brittingham of Santa Fe Legal Department:

Because of the Walsh-Healey Act of 1969, the Occupational Health and Safety Act of 1970 impending regulations of the Federal Railway Administration, the subject of acoustic trauma has surfaced. Activity in this field is increasing. ... Since there are many legal factors involved in conducting a hearing conservation program, I would appreciate the opportunity of consulting with one of the members of your department.

20. In approving the submission of the sample noise readings to the EPA, Santa Fe's Vice-President of Operations, Cena, expressly acknowledged the forthcoming noise regulations regarding community noise pollution.

21. April 15, 1974, C.R. Kaelin, Director of Technical Research and Development responded to The Association of American Railroads regarding a DOT proposed plan for a comprehensive study of noise related to locomotives and trains.

22. December 19, 1975, Santa Fe received correspondence from The Association of American Railroads regarding "Control of Noise Exposure, Temperature and Exhaust Emission in Locomotive Cabs and Cabooses including an attached memorandum entitled "Noise Environment in Locomotive Cabs and Cabooses" which states at paragraph 66 "it does not appear that a train crew noise exposure problem, in the context of OSHA regulations, exists in the railroad industry."

23. Santa Fe's efforts to establish a system-wide Hearing Conservation Program continued into 1982.

24. In an April 7, 1982, memorandum, Santa Fe reported:

The Santa Fe Heering [sic] Conservation Committee has been investigating numerous locations throughout the System to determine the extent and nature of occupational noise exposure among our employees. Occupational noise is a hazard in several ways:

a) Persons exposed to excessive levels of noise can develop permanent hearing damage;

Occupational noise is also the subject of extensive federal regulation and FELA litigation. ...

25. By August 9, 1982, Santa Fe in an internal memo announced that its hearing conservation program was ready for implementation and would be tested first in the Argentine ships and then implemented system-wide tentatively scheduled for early 1983. In connection with this announcement, Santa Fe reported:

... Discussion of the OSHA regulations (Appendix A) and hearing conservation initiated investigation into the nature of existing noise measurement results. Review of the data previously collected by the Medical and T&RD Departments indicated that excessive noise levels were present and that further measurements should be done. Noise surveys were then made at numerous locations. The results (Appendix B) were reviewed by the Committee, which concluded that noise exposures in excess of 85dBA were present for a wide variety of tasks and that the need for a hearing conservation program existed.

OSHA regulations apply to areas where the FRA does not exercise its jurisdiction. In the case of hearing conservation the FRA does not have requirements for hearing testing. The Law Department has recommended that hearing testing be done for both groups. It is their opinion that the major liability involves FELA claims and not regulatory penalties.

26. By the end of 1970, H.W. Chastain advised Mr. Baird that he had complied with a request to look into the procurement of hearing protectors for workers in areas of hazardous noise and had tested the NOISEFOE MARK IV at Santa Fe's Argentine Shops in Kansas City, Missouri. December 1970, Mr. H.W. Chastain reported that the employees were amazed as to the amount of noise the hearing protector kept out while retaining the ability to hear the voice of another nearby. Finally, Mr. Chastain stated that the intent was to provide the hearing protectors to those employees subjected to high noise levels such as load testing of diesel engines.

27. December 8, 1980, Mr. Chastain advised Mr. Townley:

THE N.S.A. NOISEFOE MARK IV hearing protector as examined by Mr. Baird, Dr. Hanson and representatives of this office and approved for use. ... Please issue the necessary detailed instructions to Mechanical Managers, Mechanical Superintendents, Superintendents of Shops and all others concerned as to the approval of the hearing protector and how it is to be issued and used. ...

28. August 17, 1979, Santa Fe requested the Safety Department to conduct some safety tests for the use of earplugs by its train, engine and yard men of the Operating Department under certain conditions.

29. Prior to 1979, Santa Fe's policy was not to allow employees in Train, Engine and Yard Service to wear ear plugs.

30. October 1981, the Santa Fe Hearing Conservation Committee was formed to review the August 21, 1981 Workplace Noise Exposure Regulations issued by the Occupational Safety and Health Administration.

31. October 14, 1987, in the underlying lawsuit of John R. Smith v. The Atchison, Topeka and Santa Fe Railway Company, Santa Fe responded to interrogatory No. 24 as follows:

INTERROGATORY NO. 24: Have any claims been made against this Railroad in the past for damages resulting from hearing loss? If so, for each claim made state:

a. Name of claimant and address;

b. Date of claim;

c. Job classification of claimant;

d. If suit was filed, name and address of attorney representing claimant;

e. How claim was resolved.

ANSWER:

1. a. W.I. Gambill, Guthrie, Oklahoma.

b. No claim.

c. Brakeman.

d. No lawsuit, no attorney.

e. Closed - barred by statute.

2. a. W.E. Bueker, 1602 Ave. A, Fort Madison, Iowa.

b. Attorney notice on March 28, 1985.

c. Engineer.

d. Attorney Gary W. Becker, 790 Galaxy Bldg., Minneapolis, MN.

e. U.S. District Court, Southern District of Iowa.

3. a. W.L. Bryant, Route 1, Nauvoo, IL.

b. Attorney notice on October 11, 1986.

c. Engineer.

d. Attorney John C. Boylan, Rerat Law Firm, 1735 Piper, Jaffrey Tower, 222 South 9th street, Minneapolis, MN.

e. U.S. District Court, Southern District of Iowa, Central Division.

4. a. H.M. Bailey, 850 N. 92nd east Avenue, Tulsa, Oklahoma.

b. Legal service on July 23, 1986.

c. Switchman.

d. Attorney Wilson Jones, Frasier & Frasier Law Firm, 1700 Southwest Blvd., Suite 100, Tulsa, Oklahoma.

e. Settled.

5. a. C.E. Nave, 1120 Evergreen Drive, Chillicothe, IL.

b. January 31, 1986.

c. Conductor.

d. No lawsuit; no attorney.

e. Reimbursed for purchase of hearing aids.

6. a. Fred Engler, 13124 Eastbrook Street, Downey, CA.

b. May 21, 1981.

c. Engineer.

d. Attorney Larry Lockshin, 1212 Broadway, Suite 830, Oakland, CA.

e. Settled.

7. a. J.A. Chay, 4886 W. Mountain View, San Diego, CA.

b. April 23, 1986.

c. Switchman.

d. Attorney D.A. Hon, 2232 El Cajon, Blvd., San Diego, CA.

e. Settled.

8. a. M.S. Rowe, 29677 N. 1st Street, Barstow, CA.

b. May 19, 1986.

c. Switchperson.

d. None

e. Open.

9. a. J.B. Conner, #5 Alegre Court, Los Lunas, NM.

b. April 29, 1987.

c. Engineman.

d. None.

e. Open.

10. a. D.L. Wallace, 314 Mesquite, Amarillo, TX.

b. Legal service on October 5, 1982.

c. Brakeman.

d. J. Donald Bowen, Helm, Pletcher, Hogan, Bowen & Saunders, 2929 Allen Parkway, Houston, Texas.

e. Pending in 251st Judicial District Court of Potter County, Texas.

11. a. John Lynch, 1024 North B, Wellington, KS.

b. June 3, 1983.

c. Conductor.

d. None.

e. Closed; barred by statute.

12. a. D.L. Cheatheam, 801 LaSalle, Amarillo, Texas.

b. January 23, 1980.

c. Locomotive Engineer.

d. J. Donald Bowen, Helm Pletcher, Hogan, Bowen & Saunders, 2929 Allen Parkway, Houston, Texas.

e. Pending in 32nd Judicial District Court, Nolan County, Texas.

13. a. J.R. Smith, 3800 South Parker, Amarillo, Texas.

b. Attorney notice on October 27, 1986.

c. Switchman.

d. J. Donald Bowen, Helm Pletcher, Hogan, Bowen & Saunders, 2929 Allen Parkway, Houston, Texas.

e. Pending in 32nd Judicial District Court, Nolan County, Texas.

14. a. D.H. Barclay, Box 625 Pineland, Texas.

b. July 28, 1983.

c. Brakeman.

d. J. Donald Bowen, Helm Pletcher, Hogan, Bowen & Saunders, 2929 Allen Parkway, Houston, Texas.

e. Pending in 32nd Judicial District Court, Nolan County, Texas.

15. a. K.O. Mouser, 408 S. Jefferson, Wellington, KS.

b. January 22, 1987.

c. Brakeman.

d. None.

e. Open.

16. a. S.L. Ethridge, 1931 Howard Drive, Amarillo, Texas.

b. Filed Form 1787-B on March 3, 1987.

c. Brakeman.

d. J. Donald Bowen, Helm Pletcher, Hogan, Bowen & Saunders, 2929 Allen Parkway, Houston, Texas.

e. Pending in 32nd Judicial District Court, Nolan County, Texas.

17. a. W.L. Culp, Route 2, Box 159-F, Whitney, Texas.

b. March 3, 1987.

c. Brakeman.

d. J. Donald Bowen, Helm Pletcher, Hogan, Bowen & Saunders, 2929 Allen Parkway, Houston, Texas.

e. Pending in 32nd Judicial District Court, Nolan County, Texas.

18. a. J.M. Newcomb, Borger, Texas.

b. Attorney notice on April 13, 1987.

c. Switchman.

d. J. Donald Bowen, Helm Pletcher, Hogan, Bowen & Saunders, 2929 Allen Parkway, Houston, Texas.

e. Dismissed without prejudice May 14, 1987, 32nd Judicial District Court, Nolan County, Texas.

19. a. Adrian Pamplin, 4010 East 12th, Amarillo, Texas.

b. Attorney notice on April 13, 1987.

c. Engineer.

d. J. Donald Bowen, Helm Pletcher, Hogan, Bowen & Saunders, 2929 Allen Parkway, Houston, Texas.

e. Pending in 32nd Judicial District Court, Nolan County, Texas.

32. December 10, 1976, Santa Fe employee Edward Hill filed a lawsuit against Santa Fe alleging severe hearing impairment as a result of his years of working for Santa Fe.

33. March 13, 1984, Santa Fe employee Norman Johnson filed a lawsuit against Santa Fe alleging permanent loss to his hearing ability as a result of his years of working for Santa Fe.

34. May 19, 1987, Santa Fe settled with Harold M. Bailey for $22,000 in full settlement of his claim regarding damages sustained as a result of noise exposure.

35. May 22, 1989, Santa Fe employee Gerald F. Mahoney filed a lawsuit against Santa Fe alleging noise-induced occupational hearing loss as a result of his years of working for Santa Fe.

36. November 16, 1989, Santa Fe paid Gerald Mahoney $2,750 in full settlement of his claim.

37. April 4, 1989, Santa Fe employee Rudolph Negrete, Jr. filed a lawsuit against Santa Fe alleging injury and/or disability to his hearing as a result of his years of working for Santa Fe.

38. On June 27, 1989, Rudolph A. Negrete agreed to receive $125,000 in settlement for his personal injuries, ear problems, tinnitus and hearing loss of any kind.

39. October 29, 1986, Santa Fe employee John R. Smith filed a lawsuit against Santa Fe alleging high frequency bilateral hearing loss as a result of his years of working for Santa Fe.

40. August 16, 1982, Santa Fe employee Fred B. Engler filed a lawsuit against Santa Fe alleging severe injuries to his ears, hearing mechanism and body as a result of his years of working for Santa Fe.

41. October 30, 1984, Santa Fe paid Fred B. Engler $150,000 in full settlement of his claim.

42. December 1978, Santa Fe paid Willie G. Taylor $12,500 in full settlement of his hearing loss claim.

43. August 22, 1980, Santa Fe paid Robert C. Lowry $11,500 in full settlement of his hearing loss claim.

44. August 21, 1986, Santa Fe employee Willard Lee Bryant filed a lawsuit against Santa Fe alleging noise-induced hearing loss as a result of his years of working for Santa Fe.

45. In the underlying lawsuit of David L. Wallace v. The Atchison, Topeka and Santa Fe Railway Company, Santa Fe responded to the following interrogatory:

11. Please state the following:

a. How many employees of the Atchison, Topeka and Santa Fe Railway Company have been found, to the knowledge of Defendant, to have suffered a hearing loss within the past ten years? State their names, the nature of their employment (i.e., switchman, brakeman, engineer, etc.). [answer] There is no data available prior to 1982. Hearing Conservation Program tested 1,418 employees in 1982 of whom 73.3% were found to have hearing deficiencies in excess of 25 decibels. In 1983, 11,340 employees were tested; and ... of them 75.8% were found to have deficiencies in excess of 25 decibels. In 1984 14,711 employees were tested; and of them 73.5% were found to have deficiencies in excess of 25 decibels.

However, Santa Fe points out that the data does not show that the hearing loss occurred while the employees worked at Santa Fe. Santa Fe further contends that a large percentage of the audiogram results were baseline results and that the results don't specify whether the hearing loss was NIHL or traumatic or for that matter neither.

46. Some of the pre-1974 disputed insurance contracts define "occurrence" as:

C. The term "occurrence" shall mean one or more accidents or disasters and/or series of accidents or disasters arising out of or resulting from one event. Each "occurrence" shall be deemed to commence on the first happening of any material damage not within the period of any previous "occurrence".

or

13. Occurrence shall mean one or more accidents or series of accidents arising out of or resulting from one event.

Numerous post-1974 policies including the one to which the cited policy "follows form," contain the following "occurrence" language:

The term "occurrence" shall mean one or more accidents or disasters and/or series of accidents or disasters arising out of or resulting from one event.

For the purpose of windstorm coverage, all losses occurring during each period of 72 consecutive hours shall be considered as one "occurrence" whether continuous or sporadic is its sweep or scope, and irrespective of whether the same was due to the same meteorological conditions.

Each "occurrence" shall be deemed to commence on the first happening of any material damage not within the period of any previous "occurrence".

48. A representative insuring agreement from one of the accident based insurance policies at issue provides:

3 To indemnify the Assured for any and all sums which the Assured shall become liable to pay, and shall pay to any person or persons as compensation for injury or damage to person (whether such injury or damage be fatal or nonfatal) and injury or damage to property (excluding property of the Assured or in its care, custody or control) arising out of any accident or accidents caused by or growing out of the Assure's Railroad operations in the United States of America and all operations incidental thereto during the period commencing 15th January, 1971 Noon and ending 15th January, 1972 Noon, local standard time, at the various places where the Assured's operations are conducted, including also all loss and legal expenses (excluding salaries of employees and office expenses) incurred in investigation, adjustment or litigation of claims made against the Assureds as hereinbefore provided.

49. Santa Fe did not receive a single NIHL claim before or during the 1950's and only one in the 1960's, despite employing thousands of operational employees. Of the ten hearing loss claims between 1965 and 1971, nine were for traumatic hearing loss injuries -- not NIHL, and the only claim that was arguably for NIHL settled in 1970 for $1,300.

50. The U.S. Department of Transportation, prepared a report in 1976 regarding noise exposure among locomotive train crews which concluded that:

From the limited data available, it does not appear that a train crew noise exposure problem, in the context of OSHA regulations, exists in the railroad industry. Equipment duty cycles and distance restrictions, combined with generally low speeds and long periods of idling preclude any general problem. However, noise levels do exist that are above those considered as a threshold for these regulations and therefore indicate that a thorough survey of crew environments is needed if for no other reason than to make clear the facts.

51. However, Certain Defendants also point out that under the conclusions and recommendations the study states that "if the noise exposure criteria were reduced to 85db at 8 hours as proposed by NIOSH, a serious problem could arise." Id.

52. A scientific study of train service employees' hearing, based upon hearing loss data from 1982, found that the overall hearing loss in railroad employees is statistically no greater than that found in the general population, and stated that "trainmen are not typically exposed to hazardous occupational noise." Clark and Popelka Study, Laryngoscope (November, 1989) Santa Fe's Exh. 4, at SF1002, SF1006-08.

53. The Clark and Popelka Study tested trainmen with more than 20 years of experience and concluded:

In this sample, 18.2% of the trainmen experienced a material impairment in hearing. Because this percentage was less than the percentage from non-occupational factors alone (20%), it can be concluded safely that there is no risk of developing an occupational NIHL by working as a trainman, and that the exposure of trainmen does not typically exceed 8-hour TWA of 80 dbA.

Id. at SF1007.

54. The Clark and Popelka Study reviewed previous published results from the 1971-1980 time period and stated:

Taking into consideration typical locomotive crew workshifts and the relative durations of exposure caused by horn, brake and radio operations, Aurelius [in 1971] estimated typical crew noise exposures at 73% of the permissible exposure level [an 8-hour time weighted average (TWA) of 90 dBA]. The data reported [in 1976 and in 1979] from the Remington studies of cab noise and the maximum levels reported by Urman [in 1978] are consistent with the measures reported by Aurelius.

Taken together, the studies of locomotive cab noise published by Aurelius [in 1971], Remington [in 1979], Rudd [in 1976], Urman [in 1978] and the study of cab noise and crew noise exposure by Kilmer [in 1980] all suggest that typical noise exposure levels for locomotive crews is less that 8-hour TWA of 80dBA, and therefore would not be expected to cause significant hearing loss.

Id. at SF1006-07.

55. After 25 to 30 years of employment, over 80% of a normal population will experience high frequency hearing loss and approximately 20% of the population as a whole will develop a "material impairment of hearing" from non-occupational sources. Id. at SF1003-07.

56. The Clark and Popelka Study relied on a population study contained in annex B of the ISO Standard R1999, which was comprised of data from surveys conducted over a 20-year span. Id. at SF1004-05. The ISO control group data, which is graphed in the article, shows that almost 90% of persons aged 55 to 64 have a 25 dB or more hearing deficiency at the higher frequencies. Id. at SF1004-06. In the article, the medical term "[m]aterial impairment in hearing" is defined as involving a 25 dB or more deficiency in both ears at three low speech-frequency ranges, i.e., the 500 Hz, 1000 Hz and 2000 Hz frequencies. Id. at SF1007. The study explains that, "for individuals 55 to 70 years, the risk of [material] impairment due to nonoccapational factors was 20%." Id.

57. As part of Santa Fe efforts to explore whether it had a noise problem in the 1970's, W.L. Barnow reported in November 1973 to R.D. Shaver that he had:

used the sound-level instruments to measure noise levels in the mechanical facilities at Arkansas City, as well as on several Maintenance of Way machines. I have also made the equipment available to all safety supervisors on the Eastern Lines. As of the present time, I have not found any area which does not comply with the OSHA standards.

November 26, 1973 letter from W.L. Barnow to R.D. Shaver, Santa Fe's Exh. 8.

58. In explaining why Santa Fe considered hearing protection to be unsafe for railroad work, M.H. Haverty stated:

it is my concern that if we begin issuing ear plugs to engineers and head brakemen that we may create a condition that is actually adverse to our Safety program. In other words, our employees may not be able to hear emergency radio conversations or for that matter, warnings that another employee or employees in the cab of the unit may try to issue audibly. We could also set up a condition whereby our engineer could say that he did not hear the radio conversation of a trainman trying to do work in the field with a packset. This most assuredly could create an unsafe condition.

July 3, 1978 letter from M.R. Haverty to J.R. Fitzgerald, Santa Fe's Exh. 9, at SFC64112.

59. In response to an inquiry regarding locomotive noise tests, R.D. Shaver stated in an August 1974 letter to L. Cena that "[a]ll three tests have been completed and ... dosimeter readings are all relatively low and indicate no noise problem whatsoever." August 14, 1974 letter from R. D. Shaver to L. Cena, Exh. 14. However, Certain Defendants note that the three tests were conducted at certain points and the dosimeter only registered those sounds above 90dba.

60. In 1977, Santa Fe's safety director stated that the "Safety Department feels that is doing a pretty fair job identifying those areas where there is excessive noise and providing protection for employees working there." June 3, 1977 letter from R.D. Shaver to L. Cena, Santa Fe's Exh. 15. In the same letter Shaver also stated that "... there needs to be more work done with those operating our maintenance of way machines." He also indicated that "(t)here is a difference, however, between a hearing protection program such as ours and a true hearing conservation program. Hearing conservation involves the audiometric testing of employees on an annual basis where they are exposed to the higher noise levels. We have been waiting for three years for OSHA to promulgate its new house standards. These standards spell out in detail what will be required of us in the way of conducting a hearing conservation program. We feel that such a program is necessary, but we would like to wait and see what will be required of us." Id.

61. In August 1977, C.R. Kaelin, Santa Fe's director of the Technical Research & Development Department, explained that his:

department has been taking sound level measurements in and around diesel locomotives for the past twenty years, and conclusions to date have been that locomotive operating personnel (engineers, brakeman, fireman) do not require ear protective devices for the noise levels normally prevailing inside locomotive cabs.

August 11, 1977 letter from C.R. Kaelin to L. Cena, Santa Fe's Exh. 16.

62. Sound level tests conducted by Santa Fe in early 1981 at one of its hump yard facilities showed that "the noise level for the average eight hour exposure was extremely favorable and that the peak levels attained were also for below the maximum allowable peak levels." February 27, 1981 letter from H.D. Fish to D.G. McInnes, Santa Fe's Exh. 17.

63. On August 21, 1981, OSHA issued amended workplace noise exposure regulations that specified for the first time the implementation of an Hearing Conservation Program ("HCP") for employees exposed to noise exceeding 85 dB(A). See 46 Fed. Reg. 162 (Aug. 21, 1981), Santa Fe's Exh. 18. These regulations lowered the noise standard from 90 dB(A) to 85 dB(A) and spelled out the requisite elements of an HCP. Id. The HCP amendments required initial baseline audiograms to be performed by 1984. Id.

However, Certain Defendants point out that the existing standard required a continuing effective hearing conservation program be implemented when employee exposure levels exceeded 90dB without regard to the use of hearing protectors.

64. Santa Fe formed its Hearing Conservation Committee in October 1981. See October 26, 1981 letter from Dr. R.K. Khuri to Messrs. Briscoe, Fish, Fitzgerald, Santa Fe's Exh. 19; August 9, 1982 letter from Dr. R.K. Khuri to Messrs. Briscoe, Fish, Fitzgerald, Autrey, Mason with attached memo, Santa Fe's Exh. 20, at SFC62327.

65. Santa Fe's Hearing Conservation Committee's task was to adopt and then to implement a system-wide HCP in compliance with the new OSHA regulations. Id.; see also Sept. 30, 1981 letter from C.R. Kaelin to Dr. R.K. Khuri, Santa Fe's Exh. 21.

66. Santa Fe's Hearing Conservation Committee's first step was "gathering information, and performing extensive noise measurements in the different areas of the railroad." October 26, 1981 letter from Dr. R.K. Khuri to Messrs. Briscoe, Fish, Fitzgerald, Santa Fe's Exh. 19.

67. In an August 1982 letter summarizing the Santa Fe Hearing Conservation Committee's initial efforts towards the implementation of a system-wide HCP, Dr. Khuri explained:

Discussion of the OSHA regulations (Appendix A) and hearing conservation initiated investigation into the nature of existing noise measurement results. Review of the data previously collected by the Medical and T&RD Departments indicated that excessive noise levels were present and that further measurements should be done. Noise surveys were then made at numerous locations. The results (Appendix B) were reviewed by the Committee, which concluded that noise exposures in excess of 85 dBA were present for a wide variety of tasks and that the need for a hearing conservation existed.

August 9, 1982 letter from Dr. R.K. Khuri to Messrs. Briscoe, Fish, Fitzgerald, Autrey, Mason with attached memo, Santa Fe's Exh. 20, at SFC62327.

68. The Hearing Conservation Committee directed that "all employees who are exposed to an average noise levels above 85 dBA, in an 8 hour average period for 30 or more days in a calendar year are subject to periodic testing." Id. at SFC62343.

69. Before launching the system-wide examination of workers, Santa Fe conducted a pilot program at a couple facilities in October 1982, which provided "valuable insight for determining the optimum protocol" under which to conduct the system-wide program. August 9, 1982 letter from Dr. R.K. Khuri to Messrs. Briscoe, Fish, Fitzgerald, Autrey, Mason with attached memo, Santa Fe's Exh. 20, at SFC62328; March 3, 1983 letter from Lew Malter to Dr. R.K. Khuri, Exh. 23.

70. The trial run at the Kansas City Terminal and Argentine Shops included hearing examinations conducted on 769 mechanical personnel and 317 operating personnel. November 30, 1982 letter from Dr. R.K. Khuri to D.G. Ruegg, Santa Fe's Exh. 24.

71. In a February 21, 1984 letter discussing the HCP, D.P. Valentine explained:

Audiometric testing is required annually for all mechanical, train, engine, yard, track, B&B and terminal services employees (excluding clerical). Two mobile testing units are provided and staffed by our contractor, Health Evaluation Programs, Inc. (HEP). A large (two booth) test trailer will visit 38 locations in 1984. It will be followed six to eight weeks later by a small trailer (one booth). The former will visit major stations and the shops. The latter will provide coverage for small stations and follow-up for employees who are unavailable at major locations to be on the large trailer.

February 21, 1984 letter from D.P. Valentine to Messrs. Spann, Merritt, Caldwell, Dixon, Moser, Santa Fe's Exh. 25, at SFC65870.

72. In a 1978 letter to C.H. Harrington, C.R. Kaelin reported:

Federal Railroad Administration Inspector Percy Carney on August 14 and 15, 1974, measured noise levels in locomotives no. 3502, 3518 and 6612 while in regular train operation between Chicago and Chillicothe, Ill. These locomotives, times and locations for the inspection were selected by the inspector from information contained in complaints received from his organization. At the time of the inspection, no personal hearing protective devices of any kind were being used by the locomotive's personnel. Following the inspections, no notification or violation or citation was issued, acknowledging in effect that no Federal noise regulation was being exceeded.

Id.

73. A report sent to Santa Fe in April 1974 by Wayne Kitchen, industrial hygienist for the Kansas Department of Labor, regarding results from sound level tests taken at the Argentine Yard and while onboard a train engine, stated:

It is the finding of this testing survey that only under certain operations did the sound level exceed the permissible standards set forth by OSHA (Table G-16). These operations included the blowing of the train whistle, the release of air pressure used for braking and the radio loud speaker. These readings, however, are so intermittent that they would fall within the acceptable limitation for a time weighted average.

April 26, 1974 letter from Wayne Kitchen to H.L. Rogers with attached report, Santa Fe's Exh. 27, at SFC64448.

74. In an 1977 letter to L. Cena, C.R. Kaelin in response to a request for information on noise levels in locomotives and use of personal noise protective equipment by locomotive engineers, stated:

We have had State and Federal Inspectors ride locomotives of their choosing in regular service for compliance with OSHA noise standards. ... In the two cases mentioned below, the locomotives were selected by the inspectors for being of the same type and class as that mentioned in complaints received by them regarding noise levels. In all cases of regulatory authorities inspection for noise levels in locomotive cabs, as far as we know we have received no objections or complaints.

August 11, 1977 letter from C.R. Kaelin to L. Cena, Santa Fe's Exh. 16.

75. In his deposition in this case, plaintiffs' lawyer Steve Hanks of the Helm Pletcher law firm testified about the NIHL claimants' theory of liability:

Q: Okay. In the noise-induced hearing loss cases, I take it from your affidavit that your belief or feeling or legal position is that the negligence was Santa Fe's failure to have a timely hearing conservation program; is that correct?

Q: Okay. Causation. What's the causation of the claims?

A. Well, as a result of Santa Fe's failure to have a timely and appropriate hearing conservation program, the employees suffered noise-induced hearing loss while working for the railroad. I don't know exactly what your are asking.

Q: I'm asking you, you told me the elements of a FELA cause of action are negligence, causation and damages. Negligence we've talked about. What do you mean by causation?

A: Well, when you have an industry, any industry that generates noise in the process of work, then it is incumbent on the industry to provide a hearing conservation program for their employees who are working, to ensure that they do not suffer damage to their hearing.

The railroad failed to do that. Had the railroad instituted a timely and appropriate hearing conservation program, our clients would not have suffered noise-induced hearing loss.

Hanks Dep., Santa Fe's Exh. 30, at 78-79.

76. In his deposition in this case, plaintiffs' lawyer John Fabry of the Jones & Granger law firm ("J&G") testified regarding the J&G cases:

Q. Can you elaborate for me as well as you can what theory of liability has been in noise-induced hearing loss cases?

A: There was sufficient information available for the railroad to recognize that a hazard existed to their employees and sufficient information to protect them against that hazard by way of implementing a hearing conservation program, and the railroad simply failed to do that. That failure to implement the program caused hearing loss in individual claimants, and, therefore, they were entitled to recover damages from the railroad under the FELA.

Fabry Dep., Santa Fe's Exh. 31, at 73.

77. The only Santa Fe NIHL case that went to trial was Morris D. Derting, Leslie E. Holly and Richard C. Owens v. The Atchison, Topeka & Santa Fe Railway Company, No. 249-188-89, Johnson County, Texas (the "Cleburne Case"). See Cleburne Voir Dire Transcript, Santa Fe's Exh. 32.

78. Mr. Dana Kirk, an attorney representing the plaintiffs in the Cleburne Case, stated to the jury:

Ladies and gentlemen, the Santa Fe Railroad, of course, is headquarterd [sic] in Chicago, Illinois and had its facility down here. . . .And we believe the evidence will indicate that there was an enormous lack of any conduct on the part of the management and medical people at the head office of the Santa Fe Railroad in Chicago that largely caused the hearing loss that these three men and other employees at the railroad here in Cleburne have suffered. And, I guess, what I'm asking you is: Does anyone have a problem evaluating the conduct of the people up in Chicago where these decisions were being made about not instituting the hearing conservation program in a timely way and about not providing proper hearing protection in a timely way and about not providing proper training to these men timely and about not providing them a safe place to work in terms of the noise that they were exposed to? Does anyone have a problem holding the Santa Fe Railroad responsible for the decisions that were made by the hierarchy of the Santa Fe Railroad in Chicago, Illinois? . . . [D]oes anyone have a problem with holding the Santa Fe Railroad responsible for that conduct of the people in Chicago even though the local people really didn't do anything particularly wrong? They were simply following orders.

Id. at SF168-69.

79. David Pels, a Santa Fe defense attorney, testified regarding the NIHL cases against Santa Fe:

Q. Did you make a separate assessment in each case as to the potential that the plaintiff could prove that the railroad was liable?

A: Fairly on in the litigation, particularly with the Helm Pletcher firm, it became apparent as to what their theory of liability was, and it was basically the same in all of their cases.

So I didn't have to go back and reinvent the wheel, if you will, in terms of a liability assessment. The evaluations from that point forward were -- pertained to primarily damages.

Q. And that theory of liability that you are referring to is the Helm Pletcher's allegation that the Santa Fe Railroad provided a null and safe workplace?

A: Well, failure to timely implement a hearing conservation program or an effective hearing conservation program.

Id. at 40.

80. David Pels testified that all the NIHL claims had the same theory of liability. Id. at 46, 60.

81. David Pels testified that in every case the Claimants alleged that the railroad's untimely HCP caused their NIHL. Id. at 63.

82. Robert Attridge, Santa Fe's Director of Occupational Claims, testified: "every time I would meet with the plaintiffs' attorneys, they would continue to tell me over and over again to the point of ad nauseam that, you know, it was Santa Fe's lack of timely implementation to provide a Hearing Conservation Program that caused these people's loss dating back to Dr. Ar[a]m Glorig's famous speech in San Francisco in 1966." Attridge Dep., Santa Fe's Exh. 34, at 102.

83. Charles Bruce, Santa Fe's Regional Claims Manager, also testified that the alleged cause of the plaintiffs' NIHL claims was Santa Fe's untimely HCP. Bruce Dep., Santa Fe's Exh. 36, 15 190, 211.

84. Santa Fe settled its NIHL claims due to potential liability based on the untimely HCP theory of liability and allegation by the plaintiffs. Attridge Dep., Exh. 34, at 105-106, 266-268; Bruce Dep., Exh. 36, at 199; see also Pels Dep., Santa Fe's Exh. 33, at 40, 54-55.

85. One of the plaintiffs' lawyer who filed hundreds of claims stated: "[I]t was our hope to be able to prove that [the lack of HCPs among railroads] was a concerted decision. That was not proof that we were ever able to find, at least with regard to this railroad." Hanks Dep., Santa Fe's Exh. 30, at 86.

86. When asked, "Did you uncover any evidence that Santa Fe conspired with other railroads?," the plaintiffs attorney testified: "We did not." Id.

87. In connection with allegations of intent in the form of misrepresentation or conspiracy, Santa Fe's lead outside defense counsel testified: "[i]t may appear in the pleadings, but it was something that from my experience was never pursued by any of the plaintiffs." Pels Dep., Santa Fe's Exh. 33, at 82.

88. Santa Fe's policies do not contain any definition of the term "accident." See, e.g., Lloyd's Policy No. 614/53930, 12/15/69 - 12/15/70, Exh. 37; Lloyds Policy No. 614/43600, 2/15/74 - 2/15/75, Exh. 38; Lloyds Policy No. 614/50439, 10/16/67 - 10/16/70, Santa Fe's Exh. 39.

89. Santa Fe's policies omit the phrase contained in Comprehensive General Liability (CGL) policies which requires that an "accident" be "neither expected nor intended from the standpoint of the insured." See Id.

90. Santa Fe's policies provide coverage for many injuries which do not result from accidental means, including injury caused by a variety of intentional torts:

false arrest, false imprisonment, false eviction, detention, discrimination, malicious prosecution, humiliation, invasion of right of privacy, libel, slander, or defamation of character; and as respects claims arising out of the assured's advertising activities, infringement of copyright, of title, or slogan, piracy or unfair competition, idea, misappropriation under an implied contract, committed or alleged to have been committed.

See, e.g., Lloyds Policy No. 614/53930, 12/15/69 - 12/15/70, Santa Fe's Exh. 37, at SF12.

91. Under Santa Fe's policies, both the Santa Fe railroad and all of its "employees" are Assureds for purposes of coverage. See, e.g., Lloyds Policy No. 614/43600, 2/15/74 - 2/15/75, Santa Fe's Exh. 38, Section V.B. at SF29.

92. The documents relied on by the insurers confirm that the noise on Santa Fe's railroad was generally believed to be within safe levels. See Ins. Mem. at 12, 19. The documents cited by the insurers state: (i) "[i]n nearly all cases the noise levels fall around 85dbA and does not exceed the 90dbA allowable for an 8 hour work day;"(ii) "the inspectors did not consider the OSHA standards to be violated;" (iii) "the maximum unprotected daily limits specified by OSHA were not being exceeded and that Santa Fe was not in violation;" and, (iv) "[m]ost freight and passenger runs today are not a duration that would expose the crew to over 85dbA for an eight hour period." Id.

93. A 1961 letter from Robert S. Judson, Secretary of Lloyd's Underwriters' Fire & Non-Marine Association, to the London underwriters and deputies quotes an excerpt from the October 13, 1961 issue of Smart's Confidential Insurance Bulletin that there were a "flood of loss of hearing claims" being presented at that time, and states that "some 3,000 of these claims are expected to have been filed within the next year [1962]." See November 3, 1961 letter from Robert Judson, Santa Fe's Exh. 50, at SF713-SF714. See Declaration of Michael T. Novak, Santa Fe's Exh. 51, regarding use of this letter.

94. One lead counsel for Certain Underwriters at Lloyd's, London and London market insurers stated in August of 1989 that "[a]s recently as five years ago [NIHL] hearing claims were virtually unknown except as incidental injuries related to other traumatic injuries." Walton N. Smith of Lord, Bissell & Brook, "Hearing Loss Litigation Under FELA," presentation to the American Bar Association Section of Tort and Insurance Practice Rail and Motor Carriers Committee at 1 (Aug. 8, 1989), Santa Fe's Exh. 52, at SF235.

95. A May 17, 1955 letter to London underwriters identified two documents -- the Association of Casualty and Surety Companies' Special Hazards Bulletin on the Subject of Industrial Deafness (March 1955) and Theodore C. Waters, Occupational Impairment of Hearing (January 1955). These reports discuss hearing impairment resulting from noise in the workplace. See Santa Fe's Exh. 53, at SF649-SF703. See Novak Decl., Santa Fe's Exh. 51, regarding use of the May 17, 1955 letter and its attachments.

96. Employers Insurance of Wausau published a booklet in 1967 entitled "Industrial Noise and Hearing Protection" which states it was:

intended to help you ... solve one of the most perplexing problems facing American industry and its employees[,] ... the slow destruction of hearing that takes place in men and women who work every day in locations with high levels of noise.

"Industrial Noise and Hearing Protection," Employers Insurance of Wausau (1967), Santa Fe's Exh. 54, at SF632.

97. The booklet "Industrial Noise and Hearing Protection," published in 1967 by Employers Insurance of Wausau, stated that "[e]xcessive noise has become a threat to the hearing of millions of American men and women. The growing use of loud machinery in industry ... is slowly wearing away the hearing of many employees." Id. at SF633.

98. Roger Quigley, corporate representative of ISLIC, testified as follows:

Q: It was during this time, I believe you testified, from '73 to '76, that hearing loss issues became a factor or consideration in at least some types of workers' compensation policies, correct?

A: Some types of workers compensation submissions I would call them.

Q: And is it also true that during this time period, that the industry in general, the insurance industry in general was becoming more familiar with hearing loss issues in at least in the context of workers' compensation policies.

* * *

A: I've probably already stated that the question of compensability of hearing loss was becoming more of an issue.

Quigley Dep., Santa Fe's Exh. 57, at 64.

Q: One of the risks that one has to consider in writing a comp policy is whether claims for noise-induced hearing loss may be covered under such a policy?

* * *

A: Well, again, you're entering into the word "may," and if memory serves me correctly, in the early '70's, that was an unresolved issue that was not a cause of great concern other than the recognition that it is a possibility. So there may be certain kind of businesses that one would not want to write a workers' compensation on. But others, either the rating structure or the rating approach might have made that risk writeable because hearing loss cases historically have never involved a great deal of money.

Id. at 145-146.

Q: As an insurance professional, you were aware that industrial hearing loss was an emerging issue, correct?

* * *

A: The concern over it was an emerging issue.

Id at 151-152.

Q: Regardless of the type of business you were writing at the time, regardless of that, in the mid to late '70's, did you know that excessive regular noise in the workplace could cause hearing loss?

* * *

A: As I best recall, that was a developing issue on a lot of workplace exposures, not the least of which was the creation of OSHA in that kind of a time frame and what OSHA was going to do in a number of areas. But because we were not writing the kind of business such as a shipbuilding firm, it was not a focal point for us. The construction business did not have that same kind of concern as an example.

Id. at 175-176.

99. Roger Prickett, another corporate representative from ISLIC, testified:

Q: When was the first time that you had occasion to handle hearing loss claims?

A: I don't recall.

Q: Would it have been the time that you were involved with Liberty Mutual?

A: Yes, it would.

Q: Would it have been earlier than 1975?

A: Yes.

Q: Would it have been earlier than 1970?

A: Yes.

Prickett Dep., Santa Fe's Exh. 58, at 36-37.

Q: Were they citing any one specific event like a shotgun blast, or were they alleging that this was a condition that developed over a period of time?

A: I believe they were alleging that their injury occurred as the result of repetitive occurrence over time in the course of their employment.

Id. at 39.

Q: By the early 1970's, did Roger Prickett know that hearing loss in the workplace was a potential risk for insurers?

* * *

A: In the worker's compensation environment, yes.

Q: By the early 1970's, did Roger Prickett know that long term exposure to industrial noise could create a risk of hearing loss?

* * *

A: Yes.

Id. at 63-64.

100. James Laughlin, corporate representative for Lexington Insurance, testified that he believes some railroads submitted reports to Lexington that reflected that they received more than five NIHL claims in some calendar years between 1960 and 1983. Laughlin Dep., Santa Fe's Exh. 59, at 169-71.

101. Robert Attridge testified that the first NIHL claims he could recall was a group of 35 that were brought in 1989. Attridge Dep., Santa Fe's Exh. 34, at 62-63.

102. Plaintiffs' attorney Steve Hanks testified that the first long-term NIHL claims he was involved in were in 1982 or 1983. Hanks Dep., Santa Fe's Exh. 30, at 26-27.

103. Dr. Raja Khuri testified that the first NIHL claims he became aware of were three claims in 1980 or 1981 at the time the HCP was being planned. Khuri Dep., Santa Fe's Exh. 66, at 162, 184.

104. A third-layer excess Lloyd's policy for the period 1967-1970 provides that Santa Fe is indemnified for liability to employees resulting from its operations:

THIS POLICY INSURES AGAINST:

Liability

Bodily Injury and Property Damage Liability, including the loss of use thereof, the Assured's liability to employees and liability for property in the Assured's care, custody and control, excluding property owned by the Assured, arising from all operations conducted by the Assured.

Lloyds Policy No. 614/50439, 10/16/67-10/16/70, Santa Fe's Exh. 39, at SF194.

105. The coverage paragraph in Santa Fe's policies states that the insurers promise to insure "the Assured's Railroad operations in the United States of America and all operations incidental thereto ..." See e.g., Lloyd's Policy No. 614/53930, 12/15/69-12/15/71, Santa Fe's Exh. 37, at SF10.

106. Santa Fe's pre-1974 policies state that the "named assured shall include ... any other employee of the named assured while acting within the scope of his duties as such." See, e.g., id. at SF11-12.

107. Employee claims are covered by Santa Fe's policies; for instance, "Assured's liability to employees" is referred to in the third-layer excess Lloyds's policy as "FELA." Lloyd's Policy No. 614/50439, 10/16/67-10/16/70, Santa Fe's Exh. 39, at SF196, ¶ 7.

108. In each year of coverage, Santa Fe purchased several layers of insurance. See Burr Dep., Santa Fe's Exh. 42, at 56.

109. Each layer has upper and lower coverage limits and each layer is composed of separate, multiple policies issued by different insurance companies. Id.

110. Santa Fe's retentions ranged from $1 million in the 1960's to $7 million in 1985. See, e.g., Lloyd's Policy No. 614/53930, 12/15/69-12/15/71, Santa Fe's Exh. 37, at SF10; Lloyd's Policy No. 614/NTB770, 3/31/84-3/31/85, Exh. 67, at SFIP/0006303.

Santa Fe seeks insurance coverage for its approximate 3,800 employee noise-induced hearing loss (NIHL) claims. Certain Defendants contend that the NIHL claims are not covered under the insurance contracts at issue because the claims do not arise out of a fortuitous event, expressed in the insurance contracts as either an accident or an occurrence. Certain defendants allege that the NIHL claims of Santa Fe's employees are the natural and ordinary consequence of Santa Fe's "deliberate and intentional decision not to provide adequate and sufficient measures to protect its employees' hearing." In other words, Certain Defendants contend that Santa Fe's knowledge of the consequence of its decision to forego any measures to protect its employees' hearing destroyed any fortuity with respects to these claims under the insurance contracts. In addition, Certain Defendants argue that there is undisputed evidence that Santa Fe's liability for the NIHL claims of its employees was a "known loss" by 1955. Certain Defendants urge this court to apply the Known Loss Doctrine and hold that the failure of an insured ie. Santa Fe to disclose its knowledge that a potential loss covered under a policy already has transpired renders the insurance contract void with respect to such loss.

Santa Fe, however, urges this court to reject Certain Defendants "fortuity" defense. Santa Fe contends that the NIHL losses were accidental as a matter of law for a number of reasons. Additionally, Santa Fe argues that this court should reject Certain Defendants' "Known Loss" defense because the "Known Loss" doctrine constitutes an implied exclusion in violation of Kansas law requiring coverage exclusions to be explicitly stated in insurance policies. Santa Fe further argues that even if the court were to adopt a "Known Loss" doctrine, the doctrine requires actual, subjective knowledge of a certain loss in an amount exceeding the policies' lower limits.

Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Dickens v. Snodgrass, Dunlap & Co., 255 Kan. 164, 166, 872 P.2d 252 (1994).

Generally before summary judgment may be granted, the record before the court must show conclusively that there remains no genuine issue as to a material fact and the moving party is entitled to judgment as a matter of law. A mere surmise or belief on the part of the trial court, no matter how reasonable, that a party cannot prevail upon a trial will not warrant a summary judgment if there remains a dispute as to a material fact which is not clearly shown to be sham, frivolous, or so unsubstantial that it would be futile to try the case. The manifest purpose of summary judgment is to obviate delay when there is no real issue of fact. A court should never attempt to determine the factual issues on a motion for summary judgment, but should search the record for the purpose of determining whether factual issues do exist. If there is a reasonable doubt as to their existence, a motion for summary judgment will not lie. A court, in making its determination, must give to the party against whom summary judgment is sought the benefit of all inferences that may be drawn from the facts under consideration.

Mechtley v. Price, 217 Kan. 344, 347, 536 P.2d 1385 (1975).

Where genuine issues of fact remain undetermined, the granting of summary judgment is improper. Willard v. City of Kansas City, 235 Kan. 655, syl ¶ 1, 681 P.2d 1067, (1984). The court upon drawing all inferences in the light most favorable to the non-moving parties, finds that no genuine issues of material fact have been raised and that Plaintiff Santa Fe's Cross-motion for Partial Summary Judgment should be granted and Certain Defendants' Motion for Summary Judgment should be denied as a matter of law.

Santa Fe contends that the NIHL loss was accidental because the NIHL claimants' liability theory was based on Santa Fe's negligence and not on intentional conduct by Santa Fe. Santa Fe bases its contention on several Kansas cases in which the Kansas Supreme Court has held that "Kansas does not look to the underlying cause of the injury to determine coverage, but to the specific theory of liability." Marquis v. State Farm Fire and Casualty Co., 265 Kan. 317, 331, 961 P.2d 1213, 1223 (1998); Upland Mutual Ins. v. Noel, 214 Kan. 145, 519 P.2d 737 (1974); Brumley v. Safeco Ins. Co. of America, 265 Kan. 810, 814 (1998).

Certain Defendants argue that the rule from the Upland line of cases should be limited to "Duty to Defend" cases rather than "Duty to Indemnify" cases. Even though Marquis and Brumley are both indemnification cases, Certain Defendants attempt to distinguish them in other ways. While Brumley and Marquis contain distinct facts and issues from the present case, both cases cited the rule in Upland that the theory of liability rather than the cause of the accident governs coverage. Marquis at 329; Brumley at 814. A slight variation of the rule is found in United Wats, Inc. v. Cincinnati Ins. Co., 971 F. Supp. 1375, 1385 (D. Kan. 1997) where the court held that in an indemnification case the court looks to the theory of liability that served as a basis of the settlement. As set forth in this court's ruling on Santa Fe's Motion for Partial Summary Judgment Declaring the NIHL Loss Arises out of one Occurrence, pp. 16 & 17, the legal liability behind the settlement of the NIHL claims was Santa Fe's negligence in failing to timely implement a Hearing Conservation Program (HCP).

Certain Defendants argue further that the natural and probable consequences of an act do not constitute an accident. Santa Fe counters with the argument that the "Doctrine of Natural and Probable Consequences" applies only to intentional torts and therefore has no application to the negligence theory of NIHL claimants. Kansas Courts have held that an "insured's intent to injure can be inferred when the resulting injury is a natural and probable consequence of the insured's act." Harris v. Richards, 254 Kan. 549, 553, 867 P.2d 325, 327-8 (1994).

Both Santa Fe and Certain Defendants cite Hutchinson Water Co. v. United States Fidelity & Guaranty Co., 250 F.2d 892 (10th Cir. 1957) as support for their argument. The court in Hutchinson Water commented on the difficulty of applying the logic of the rule regarding the natural and probable consequences. "For, if the policy did not cover the loss because the natural and probable consequences of the negligent act did not constitute an accident, then by the same logic, there would be no liability where the damage was the unexpected, hence unforeseen result of the negligent act. In the first instance, the damage would be foreseeable and therefore not accidental, in the latter instance, the damage would not be foreseeable and hence no liability upon the insured for his negligent acts. In either instance, the insurer would be free of coverage and the policy would be rendered meaningless." 250 F. 2d at 894. However, in Hutchinson Water the court held that damages were the natural and probable consequences of Hutchinson Water's negligent failure "to maintain adequate pressure for the ever present fire fighting purposes" and therefore were not caused by an accident within the meaning of the policy. Id. While this case may be distinguished by Hutchinson Water's violation under its water franchise with the City of Hutchinson where it was required to maintain water in its mains in certain quantities and at certain prescribed pressures for use by the Municipal fire Department, it appears that the court did in fact apply the Doctrine of Natural and Probable Consequences to a negligence case even after commenting on the dilemma of applying this logic to negligence actions.

The Kansas Supreme Court in Rowell v. City of Wichita, 162 Kan. 294, 176 P.2d 590 (1947) defined natural and probable consequences as "those which human foresight can anticipate because they happen so frequently they may be expected to recur, while possible consequences are those which happen so infrequently that they are not expected to happen again." Rowell at 302.

NIHL claims during the coverage years were not frequent. The coverage years in question span 1966-85 (see reference to stipulation by Weston Marsh below) and prior to 1985 there were approximately 11 claims filed. Prior to 1980, there were only three claims (one prior to 1971 and two from 1971-79). Approximately eight claims were filed and/or settled between 1980-85 based on the court's conclusions from the uncontroverted facts and in no year were there more than two claims. During the time frame in question NIHL claims fell in the category of possible consequences which happen infrequently. Therefore, the NIHL claims during the coverage years were not natural and probable consequences.

Certain Defendants assert that "accident" should be determined from the standpoint of the insured rather than the injured claimant. Santa Fe contends that because the customary fortuity language "neither expected nor intended from the standpoint of the insured" is omitted from policies in years 1966 - 1984, the "accident" must be construed from the standpoint of the injured party, not the policy holders.

It is true that Santa Fe policies do not include a definition of the word "accident" and that from 1966 - 1984 the policies omitted the customary language "neither expected nor intended from the standpoint of the insured." [The phrase, however, is included in the policy year 1985-86. Any issue relating to year 1985-86, however, may be moot in that Weston Marsh, counsel for Santa Fe, stipulated at oral argument on March 16, 1999, that the occurrence (and thus the liability) started no later than 1966 (the date of Dr. Glorig's report on NIHL) and ended no later than 1984 or 1985. (Transcript of Oral Argument to the court, March 16, 1999, page 43)].

Both Santa Fe and Certain Defendants cite the Kansas Supreme Court case of Brumley v. Lee, 265 Kan. 810. However, the conclusions reached by each are, not surprisingly, at odds. Brumley was a coverage case in which Safeco alleged on appeal that there was no coverage because "the acts causing bodily injury were inflicted by 'any insured.'" The facts of the case were that David Lee and his wife, Kimberlee, agreed to care for Douglas, age 4, in their house. Both David and Kimberlee abused Douglas while he was in their care, however, it was Kimberlee who struck Douglas with the fatal blow. The Safeco insurance policy did not define "accident" in the policy. However, under the exclusion section it provided that "...Personal Liability... do(es) not apply to bodily injury or property damage: a) which is expected or intended by any insured." In addition, the policy had a severability clause which provided that the insurance applied separately to each insured.

The Kansas Supreme Court commented on using the perspective of the injured person in order to determine whether there was an accident. "If the perspective of the injured person is used, then essentially any injury that the injured person did not inflict on himself or herself could be considered an accident, and the broadest possible coverage would be afforded. See 1 Long, the Law of Liability Insurance. § 4.20, pp. 4-151-152 (1997). ('The determination of an accident within the occurrence definition is to be made from the standpoint of the insured, not the viewpoint of the victim to whom any calamity may seem to be unfortuitous.')." Brumley at 823-24.

However, the Kansas Supreme Court apparently was more concerned about the ambiguity of the "occurrence" definition in the policy and held that "the lack of any definition for 'accident' in the Safeco policy and the failure to specify from whose standpoint the accident determination is to be made when more than one insured is involved weighs in favor of finding ambiguity in the 'occurrence' definition and, therefore, construction in favor of the insured." Brumley at 824-25.

The case at hand certainly involves more than one insured in the present case where one set of insured is the group of injured claimants and the other insured is the liable party. In addition, there is a lack of definition for "accident" in the policies at question except for the year 1985-86 and therefore there is ambiguity in the definition of "occurrence" for those post-1970's contracts and an ambiguity in the definition of accident in the pre-1970's policies.

In addition, the policies at issue in this case provide for coverage for intentional torts and imposing the phrase "neither expected nor intended from the standpoint of the insured" to modify accident would create an internal conflict in the insurance contracts.

Finally, the court concurs with Santa Fe that even setting aside the arguments regarding applicable legal standards, the NIHL loss was "unexpected and unintended" from the standpoint of Santa Fe.

While Certain Defendants point to numerous articles and Santa Fe correspondence regarding NIHL during the coverage periods in question, there is uncontroverted evidence that the number of claims during the years 1966 through 1984-85 were low, that Santa Fe's noise levels did not violate OSHA standards, and that Santa Fe's own noise level tests during the 1970's confirmed that railroad employees were neither being exposed to excessive noise levels nor experiencing hearing loss greater than in the general population.

For the reasons set out above, this court rejects Certain Defendants arguments regarding Fortuity.

Certain Defendants also allege that Santa Fe is barred from recovery under the "known loss doctrine" which bars coverage for losses known to the insured before it enters into an insurance contract. As stated by Certain Defendants, the Illinois Supreme Court set forth a clear standard for applying the "known loss" doctrine under liability insurance policies in Outboard Marine Corp. v. Liberty Mutual Ins. Co., 154 Ill. 2d 90, 103-4, 607 N.E. 2d 1204, 1210 (1992). The court held that:

If the insured knows or has reason to know when it purchases a CGL [Comprehensive General Liability] policy, that there is a substantial probability that it will suffer or has already suffered a loss, the risk ceases to be contingent and becomes a probable or known loss. [Citations omitted]. When the insured has evidence of a probable loss when it purchases a CGL policy, the loss is uninsurable under that policy (unless the parties otherwise contract) because "the risk of liability is no longer unknown." [Citations omitted]. Therefore, the insurer has no duty to defend or indemnify the insured with respect to the known loss ab initio, unless the parties intended the known loss to be covered.

Santa Fe raises several arguments against the application of the "known loss" doctrine. First of all, Santa Fe argues that the "known loss" doctrine is an implied exclusion and under Kansas law, coverage exclusions must be explicitly stated in insurance policies. See Catholic Diocese of Dodge City v. Raymer, 251 Kan. 689, 693, 840 P.2d 456, 462 (1992). In Catholic Diocese, the Kansas Supreme Court cited the general rule for narrow construction regarding exceptions, limitations, and exclusions based on the theory "that the insurer, having affirmatively expressed coverage through broad promises, assumed a duty to define any limitations on that coverage in clear and explicit terms." Id. at 698.

In addition, Santa Fe argues that insurance covers risks inherent in the policy holder's business unless specifically excluded. See Bremen State Bank v. Hartford Accident & Indemnity Co., 427 F.2d 425, 427 (7th Cir. 1970); see also Canadian Radium & Uranium Corp. v. Indemnity Insurance Co., 104 N.E. 2d 250 (Ill. 1952).

Furthermore, Santa Fe alleges that the Insurers were equally aware of the risks of NIHL when they signed their contracts of insurance and could have easily added to the contracts a specific exclusion for all kinds of hearing loss injuries or more specifically NIHL.

It is clear to this court from the uncontroverted statements of fact filed by both Santa Fe and Certain Defendants, that Santa and the Insurers knew or should have known of the risks of NIHL prior to 1985. However, as Certain Defendants state, the focus of the inquiry is the insured's knowledge of a loss, not a risk. Certain Defendants allege that Santa Fe "specifically knew its operations were causing its employees to suffer NIHL based upon: (1) the claims and complaints filed by such employees; (2) governmental investigations to which Santa Fe was subjected; (3) the warnings of medical personnel who had examined its employees; and (4) its own internal testing and evaluations." This court, however, disagrees with Certain Defendants' conclusion.

The best indication of knowledge of loss would be claims filed against Santa Fe. The time-frame that Certain Defendants are alleging that Santa Fe had knowledge of the losses would have to be prior to contracting for coverage. Santa Fe stipulated that the occurrence started no later than 1966 and ended no later than 1984 or 1985. Therefore, the coverage years are 1966 through 1984-85. The number of claims for NIHL filed prior to 1985 was approximately 11 as stated above. While there were other claims for hearing loss filed, those claims were for traumatic hearing loss and would not be included in this action. The number of claims prior to 1985 was certainly minimal and did not exceed Santa Fe's retention for even one year since Santa Fe's retentions over the years ranged from $1 million to $7 million. Even though Santa Fe knew or should have known of the risk, several claims are not indicative of a known loss or probable loss that would be covered by any of the CGL policies. Furthermore, there were no specific exclusions in the contracts at issue for hearing loss nor for NIHL nor even generically for "known losses" even though the Insurers knew or should have known of the risk.

In Kansas, as argued by Santa Fe, the insurer does have a duty to define any limitation on coverage in clear and explicit terms. Catholic Diocese at 698. The Insurers' knowledge of the potential NIHL risks certainly put them on notice and if they intended to protect themselves from coverage liability they easily could have done so through a specific exclusion.

However, if the court were to apply the "known loss" doctrine, Santa Fe argues that the standard requires a high level of actual subjective knowledge amounting to a certainty of legal liability which will exceed the policy's lower limit. The Court of Appeals in Pittston Co. Ultramar America Ltd. v. Allianz Ins. Co., 124 F.3d 508, (3rd Cir. 1977), held that "the known loss doctrine will bar coverage only when legal liability is a certainty." Id at 518. In Pittston, owners of an oil storage facility sought a declaration of coverage for contamination clean-up costs. Although the owners had knowledge that the facility was "substantially contaminated with oil in excess of regulatory allowances," the court ruled that the legal liability did not become a certainty until several years later when the state gave notice to the owner of its liability for clean-up costs. Id at 519, 523-24.

Certain Defendants assert that Santa Fe had knowledge of NIHL through governmental investigations to which Santa Fe was subjected and due to its own internal testing and evaluations. The governmental investigations to which Santa Fe was subjected occurred only in certain parts and locations of the railroad's operations. Citations for violations were isolated and appeared to be readily resolved by Santa Fe. Generally Santa Fe was in compliance with the OSHA standards in effect at the time. Many of the citations and complaints noted by Certain Defendants were due to violations of city noise ordinances and were not related to impermissible working conditions which likely would cause injury to employees. In addition, the internal testing and evaluations done by Santa Fe on noise levels appeared to be sporadic and only at certain locations. A testing program of employees began in 1982 and at that time a baseline was established regarding employees' hearing levels. While the 1982 tests showed hearing loss, there wasn't sufficient evidence that the losses had occurred due to the exposure of noise or even that the losses had occurred during the term of the employment. Neither the investigation by outside agencies nor the internal testing and evaluations reach the standard required in Pittston that "the legal liability be a certainty." Pittston at 518. In addition, any warnings of medical personnel who had examined Santa Fe employees failed to meet the standard that legal liability be a certainty.

Certain Defendants cite a Kansas case, Matlock v. Hollis, 153 Kan. 227, 109 P.2d 110 (1941) which they say supports their known loss argument. However, as Santa Fe points out, Matlock is really a fraudulent concealment case in which the insured concealed the fact from the insurer as he was purchasing insurance that his employee had been seriously injured earlier that day. The court does discuss the lack of contingency which is the basic factor in insurance contracts and the principle that "'if no insurable interest exists, the contract is void' (29 Am. Jur. 289)." Id at 234. The reasoning in Matlock is similar to the "known loss" doctrine, but like Pittston it deals with a certainty of loss which this court does not find is present with the NIHL injuries.

The Illinois Appellate Court in Missouri Pacific R.R. v. American Home Assur. Co., 675 N.E. 2d 1378 (Ill. App. 1997) (MoPac), appeal den'd, 684 N.E. 2d 1336 (Ill. 1997) held that the speculation about a future trend of employees filing hearing loss claims does not satisfy the Outboard Marine Corp. test of having knowledge that there was a substantial probability that loss would ensue due to NIHL. The MoPac court also found that the insurers' knowledge of the risk was crucial in determining whether the parties intended to cover the loss. Id at 1384.

Based on the court's findings of fact and conclusions of law as set forth above, this court denies Certain Defendants' Partial Summary Judgment on the Issues of Fortuity and "Known Loss" and grants Santa Fe's Cross-Motion for Partial Summary Judgment on the "Known Losses" and "Fortuity" Defenses. The above constitutes the court's ruling on these motions and no further journal entry is required.

IT IS SO ORDERED.

Dated this 24th day of July , 2000.

 
_______________________
Nancy Parrish
Judge, Third Judicial District
Division Fourteen

I hereby certify that a copy of the above and foregoing MEMORANDUM DECISION AND ORDER was mailed this 24th day of July , 2000, to the following:

 
Weston W. Marsh
David V. Goodsir
Freeborn & Peters
311 S. Wacker Drive
Suite 3000
Chicago, Illinois 60606

 
Steve R. Fabert
Fisher, Patterson, Sayler & Smith
3550 SW 5th Street
Topeka, Kansas 66601

 
Thomas M. Ryan
Bollinger, Ruberry & Garvey
Citicorp Center
500 West Madison Street
Suite 2300
Chicago, Illinois 60661

 
Arthur A. Glassman
Michael E. Francis
Sloan, Listrom, Eisenbarth, Sloan & Glassman
714 Capitol Federal Building
Topeka, Kansas 66603

 
Corliss S. Worford
Richard M. Watson
Lord, Bissell & Brook
One Atlantic Center
1201 West Peachtree Street
Suite 3700
Atlanta, Georgia 30309

 
Daniel E. Murphy, II
Gilberg & Kiernan
1250 Eye Street, N.W.
Suite 600
Washington, DC 20005

 
Steven W. Cavanaugh
Fisher, Cavanaugh & Smith
534 Kansas Avenue
Suite 1035
Topeka, Kansas 66603

 
Eric C. Young
Dunham Boman & Leskera
103 East B Street
Belleville, Illinois 62220

 
Paul E. Escobar
German, Gallagher & Murtagh
The Bellevue
Fifth Floor
200 South Broad Street
Philadelphia, PA 19102

 
Richard W. Bryan
Jackson & Campbell
South Tower
One Lafayette Center
1120-20th Street, NW
Washington, DC 20036

 
Richard V. Eckert
5601 SW Barrington Court South
Topeka, Kansas 66614

 
Stacy S. Freel
Brand & Novak
135 South LaSalle Street
Suite 3700
Chicago, Illinois 60603

 
________________________
Norma J. Dunnaway
Administrative Assistant