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Outboard Marine Corp. v. Liberty Mut. Ins. Co.

Supreme Court of Illinois

December 4, 1992, Filed

Nos. 71753, 71761 cons.

Opinion

 [*98]   [****695]   [**1208]  JUSTICE BILANDIC delivered the opinion of the court:

This consolidated appeal involves a coverage dispute between the plaintiff-insured, Outboard Marine Corporation (OMC), and its primary and excess insurance carriers, Liberty Mutual Insurance Company (Liberty Mutual), Commercial Union Insurance Company (Commercial Union), Insurance Company of North America (INA), International Insurance Company (International), and Northbrook Insurance Company (Northbrook). The coverage dispute between the parties originated when the United States Environmental Protection Agency (EPA) and the State of Illinois (collectively, governmental agencies) brought separate actions against OMC, both seeking redress from OMC for the discharge of polychlorinated byphenyls (PCBs) into the North Ditch, Waukegan Harbor, and Lake Michigan (underlying actions). OMC tendered the defense of the underlying actions to its insurers pursuant to comprehensive general liability (CGL) insurance policies which OMC had purchased from the insurers. The insurers, however, refused to defend OMC, alleging that the underlying actions were not covered under the [***5]  CGL policies. As a result, OMC was forced to defend itself against the governmental agencies' complaints, incurring substantial defense  [*99]  costs. OMC eventually negotiated and entered into a consent decree with the governmental agencies under the terms of which OMC was required to make payments into a trust fund for the costs associated with the cleanup of these bodies of water.

Due to its insurers' refusal to defend it, OMC instituted this declaratory judgment action against its insurers in the circuit court of Lake County seeking: (1) a declaration that its primary insurers had a duty to defend OMC in the underlying actions; (2) reimbursement from these insurers of the costs it incurred in defending itself against the underlying actions; (3) a declaration that all of its insurers have a duty to indemnify OMC; (4) indemnity with respect to all sums it is required to pay because of property damage to the bodies of water; and (5) its costs and attorney fees for the declaratory action presently before us. Several amici curiae have submitted briefs in support of the parties before us. This court has received briefs in support of OMC from amici Rust-Oleum Corporation,  [***6]  Peoples Gas, Light & Coke Company, Illinois Manufacturers' Association, and Mid-America Legal Foundation. We have also received amici briefs in support of the insurers from, among others, Insurance Environmental Litigation Association, John Richard Youell, Bituminous Casualty Insurance Company, Lumbermens Mutual Casualty Company, Western States Insurance Company, and Transamerica Insurance Company. We note at this juncture that OMC is only seeking coverage from its insurers for the contamination of Waukegan Harbor and Lake Michigan. OMC has assumed complete liability for the contamination of the North Ditch. Therefore, our discussion will entail only the alleged contamination of Waukegan Harbor and Lake Michigan: the contamination for which OMC now seeks coverage.

 [*100]  After initiating this declaratory action, OMC moved for partial summary judgment against Liberty Mutual, Commercial Union, and INA, its primary insurers, on the issue of their duty to defend OMC in the underlying actions brought by the governmental agencies. OMC contended that these actions were "suits seeking damages" within the coverage language of the CGL policies' issued by these insurers. Liberty [***7]  Mutual, Commercial Union, and INA cross-moved for summary judgment on this duty to defend issue, asserting that the underlying actions were not "suits seeking damages" because they prayed for equitable relief rather than compensatory damages.

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154 Ill. 2d 90 *; 607 N.E.2d 1204 **; 1992 Ill. LEXIS 216 ***; 180 Ill. Dec. 691 ****; 36 ERC (BNA) 1188

OUTBOARD MARINE CORPORATION, Appellant and Cross-Appellee, v. LIBERTY MUTUAL INSURANCE COMPANY et al. (Liberty Mutual Insurance Company, Appellee and Cross-Appellant)

Subsequent History:  [***1]  As Substituted December 16, 1992. As Correct February 1, 1993. Rehearing Denied February 1, 1993. As Corrected February 23, 1993.

Prior History: Appeal from the Appellate Court for the Second District; heard in that court on appeal from the Circuit Court of Lake County, the Hon. Emilio B. Santi, Judge, presiding.

Disposition: Appellate Court Affirmed in Part and Reversed in Part; Circuit Court Affirmed in Part and Reversed in Part; Cause Remanded.

CORE TERMS

insurers, pollution exclusion, policies, coverage, sudden, duty to defend, appellate court, damages, complaints, contamination, unexpected, circuit court, pollutants, summary judgment motion, underlying action, unintended, provisions, releases, sudden and accidental, occurrence, ambiguous, property damage, construe, duty to indemnify, summary judgment, abrupt, suits, parties, seek damages, Environmental

Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Judgments, General Overview, Appeals, Summary Judgment Review, Standards of Review, Standards of Review, De Novo Review, Insurance Law, Business Insurance, Commercial General Liability Insurance, Duty to Defend, Claim, Contract & Practice Issues, Known Loss Doctrine, Obligations of Parties, Indemnification, Motions for Summary Judgment, Coverage, Administrative Actions, Liability & Performance Standards, Good Faith & Fair Dealing, Contracts Law, Contract Interpretation, Intent, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Entire Contract, Ordinary & Usual Meanings, Question of Law, Plain Language, Reasonable Expectations, Reasonable Person, Remedies, Injunctions, Mandatory Injunctions, Environmental Law, CERCLA & Superfund, Enforcement, Abatement, Environmental Claims, Hazardous Wastes & Toxic Substances, Cleanup Costs, Exclusions, Pollution, Accidental & Sudden Exception, Pollution, Triggers, Genuine Disputes, Materiality of Facts, Opposing Materials, Accompanying Documentation, Supporting Materials