Water Applications & Systems Corp. v. Bituminous Casualty Corp.
986 N.E.2d 124
Ill. App. Ct.2013Background
- WASCO LLC sues Bituminous for a defense after EPA notice of potential liability under CERCLA.
- Two general liability policies (Policy A 1968–1971 and Policy B 1971–1972) covered PORI entities and included antiassignment clauses.
- PORI International, Inc. sold its assets in 1997 to USFRSM, later owned by WASCO, under a Purchase Agreement with California law and consent provisions.
- Schedule 3.19 in the Purchase Agreement listed insured policies; the subject policies were not listed, raising questions about assignment.
- Section 2.4 retained liabilities and Section 5.5 guidance suggested future assistance with claims but did not effect a present assignment; Maryland law governs interpretation of the policies.
- Trial court granted summary judgment for insurer; the appellate court affirms, holding no present assignment and no CERCLA coverage under Maryland law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Purchase Agreement assigned the subject policies | WASCO argues assignment occurred via asset sale | Assignment required consent; not listed in Schedule 3.19 | No assignment; policies retained by PORI |
| Validity and enforceability of the antiassignment clause under Maryland law | Maryland policy restrictions may be invalid for assignment | Antiassignment clause valid and enforceable under Maryland law | Antiassignment clause valid and enforceable; no assignment without consent |
| Which law governs interpretation of the policies | Illinois law should apply or conflict analysis pending | California law per Purchase Agreement controls | Maryland law governs the policies; third-party choice-of-law provisions do not apply to the policies themselves |
| Whether CERCLA regulatory liability is covered under the general liability policies | PRP/Regulatory action potentially covered as damages | CERCLA regulatory costs are not property damage covered by standard GL policy | No coverage; CERCLA regulatory liability not within policy language |
Key Cases Cited
- Industrial Enterprises, Inc. v. Penn America Insurance Co., 637 F.3d 481 (4th Cir. 2011) (CERCLA not ‘property damage’ under GL policy; regulatory liability not covered)
- Bausch & Lomb Inc. v. Utica Mutual Insurance Co., 625 A.2d 1021 (Md. 1993) ( CERCLA not within GL policy language; coverage not triggered)
- Maremont Corp. v. Cheshire, 288 Ill. App. 3d 721 (1st Dist. 1997) (third parties cannot benefit from contract choice-of-law provisions)
- Hofeld v. Nationwide Life Insurance Co., 59 Ill.2d 522 (1975) (conflict-of-laws factors for insurance contract interpretation)
- Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill.2d 520 (2000) (choice of law factors for insurance contracts; Maryland law applied here)
- Ruberoid Co. v. Glassman Construction Co., 234 A.2d 875 (Md. 1967) (equitable assignment exception to antiassignment clauses)