The United States District Court for the Northern District of Illinois recently issued an opinion granting summary judgment against an insurance company based on a duty to defend in United States v. Clark, No. 08-CV-4158, which concerned the South Green Plating Superfund Site in Chicago, Illinois.
The federal government sought reimbursement for response costs incurred while cleaning up the site. According to the complaint, heat-treating operations, a thermal process for strengthening metals, were conducted on site. Some of the defendants filed a third-party complaint against several insurance companies seeking a declaratory judgment that the insurers have a duty to defend and indemnify the defendants in the case. The defendants and the insurers filed cross motions for summary judgment on the duty to defend issue.
The Court granted the defendants' motion for summary judgment and denied the the insurers' motion. There was no dispute that Comprehensive General Liability policies established the insurers’ duty to defend certain suits. The policies provided for defense and indemnity of suits alleging property damage:
“The company [Liberty] will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . property damage to which this policy applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such . . . property damage, even if any of the allegations of the suit are groundless, false or fraudulent . . . .”
The Court first held that the government's complaint adequately alleged "property damage" within the terms of the policies, because the allegations indicated the potential of environmental contamination through releases of hazardous substances.
The Court then held that the complaint alleges an "occurrence," which was defined in the policies as "“an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.”
Finally, the Court held that the allegations of the complaint did not fall under one of the policies' exclusions, which excluded coverage for "property damage to property owned or occupied by or rented to the insured." The complaint sufficiently alleged that there may have been exposure to the environment outside of the property owned by the defendants.
Stay tuned to the Illinois Environmental Law Blog for more news and developments.
Showing posts with label Insurance. Show all posts
Showing posts with label Insurance. Show all posts
Saturday, August 28, 2010
Wednesday, April 7, 2010
Insurance Coverage Denied for Designer of Thomas & Friends Toys
On April 5th, the Seventh Circuit Court of Appeals issued its opinion in ACE American Insurance Co. v. RC2 Corp., No. 09-3032. RC2 designs and markets the Thomas & Friends toys, which are manufactured in China.
In 2007, RC2 recalled certain of its wooden railway trains and train set components that had been manufactured in China between 2005 and 2007 because they contained lead. This recall led to numerous class action lawsuits against RC2, alleging that the recalled toys were negligently manufactured and tested.
ACE American Insurance Co. issued commercial general liability policies to RC2. The policies excluded coverage of "occurrences" that took place within the United States. ACE denied coverage for the class action lawsuits against RC2, claiming that the policies excluded the damages in question because the occurrences took place within the United States. RC2 argued that Illinois law compelled the conclusion that an “occurrence” took place in China, where at least some of the negligent acts that “caused” the harm took place.
Under the terms of the policy, the insurance applied only to “bodily injury” and “property damage” caused by an "occurrence" that took place in the "coverage territory." The term “occurrence” was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “Coverage Territory” included anywhere in the world but excluded “the United States of America (including its territories and possessions).”
The Seventh Circuit held that ACE did not have a duty to defend RC2 for the class action lawsuits under the terms of the policies:
"In sum, under Illinois law and unless a particular policy contemplates a different definition, an accident occurs when and where all the factors come together at once to produce the force that inflicts injury and not where some antecedent negligent act takes place. Thus, under the policies in question here, the accident that constitutes the policy-triggering occurrence takes place at the location of the exposure to lead paint, not at the location where the products were manufactured and painted. Because the parties agree that all the alleged exposure to the products took place within the United States, these occurrences took place in the excluded coverage area of the ACE international policies."
Stay tuned to the Illinois Environmental Law Blog for more news and developments.
In 2007, RC2 recalled certain of its wooden railway trains and train set components that had been manufactured in China between 2005 and 2007 because they contained lead. This recall led to numerous class action lawsuits against RC2, alleging that the recalled toys were negligently manufactured and tested.
ACE American Insurance Co. issued commercial general liability policies to RC2. The policies excluded coverage of "occurrences" that took place within the United States. ACE denied coverage for the class action lawsuits against RC2, claiming that the policies excluded the damages in question because the occurrences took place within the United States. RC2 argued that Illinois law compelled the conclusion that an “occurrence” took place in China, where at least some of the negligent acts that “caused” the harm took place.
Under the terms of the policy, the insurance applied only to “bodily injury” and “property damage” caused by an "occurrence" that took place in the "coverage territory." The term “occurrence” was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “Coverage Territory” included anywhere in the world but excluded “the United States of America (including its territories and possessions).”
The Seventh Circuit held that ACE did not have a duty to defend RC2 for the class action lawsuits under the terms of the policies:
"In sum, under Illinois law and unless a particular policy contemplates a different definition, an accident occurs when and where all the factors come together at once to produce the force that inflicts injury and not where some antecedent negligent act takes place. Thus, under the policies in question here, the accident that constitutes the policy-triggering occurrence takes place at the location of the exposure to lead paint, not at the location where the products were manufactured and painted. Because the parties agree that all the alleged exposure to the products took place within the United States, these occurrences took place in the excluded coverage area of the ACE international policies."
Stay tuned to the Illinois Environmental Law Blog for more news and developments.
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