Zen Continental Co., Inc. v. Intercargo Ins. Co.Zen Continental Co., Inc. v. Intercargo Ins. Co.
OPINION AND ORDER
Plaintiff Zen Continental Company, Inc. (“Zen”) brought this declaratory judgment action against its insurer, Defendant Intercargo Insurance Company (“Defendant” or “Intercargo”), and certain other parties, 1 in the wake of two misadventures on the high seas involving cargo originating from the People’s Republic of China. The primary issue in the case is whether Intercargo has a duty to defend certain claims brought against Zen, under a maritime insurance policy. 2
BACKGROUND
Unless otherwise specifically noted, the following facts are not controverted by the parties.
The Insurance Policy
Zen’s business involves a variety of shipping-related activities. Most notably for purposes of this litigation, until 1999 it acted as a non-vessel owning common carrier (“NVOCC”) of goods shipped from Asia to the United States. (Yen Decl. ¶¶ 2-3.) An NVOCC in effect acts as a middleman in the shipping process. Among other things, an NVOCC facilitates the delivery of cargo from its shipper to the vessel that will be responsible for transporting the cargo to its ultimate destination, and issues a bill of lading to the ship’s captain.
3
(Yen Decl. ¶ 3.) An NVOCC often assists shippers in booking cargo space on vessels by consolidating several smaller lots together. By doing this, the NVOCC obtains much lower prices for a constituent shipper than the shipper would otherwise be able to find if it were to engage in one-on-one negotiations with the vessel owner.
Prima U.S. Inc. v. Panalpina, Inc.,
In 1992, defendant TIS acted as a broker for both Zen and Sunway Line, Inc. (“Sunway”) (apparently one of Zen’s subsidiaries), 5 by assisting in procuring a liability policy (the “Policy”) from Intercargo to cover certain risks attendant on Zen’s business as an NVOCC. The parties first executed the Policy, styled an “International Transit Liability Insurance Policy,” on April 15, 1992, and, following three consecutive annual renewals, it remained in effect until at least April 15,1996. (Second Amended Compl. ¶¶ 19-20; Llaneta Aff. Ex. 1.) 6
The Policy specified that Zen would receive coverage for the following occurrences:
(a) physical loss or damage to customers’ cargo arising out of the issuance of your bill of lading when conducting your business as a consolidator (principal), or;
(b) financial loss resulting from your negligence committed in conductingyour business as an International Transportation Specialist.
(Llaneta Aff. Ex. 1 at 1.) Additionally, the Policy contained a standard provision that required Intercargo to defend Zen under certain scenarios:
We will defend a suit for a covered claim even if the suit is groundless or fraudulent. We have the right to adjust, investigate, negotiate and settle any suit or claim. We will pay all costs of investigating and defending the suit, including interest on any covered part of any judgment provided that the amount does not exceed the applicable limit of coverage .... The term “claim” means any oral or written demand received by you or a suit against and served upon you for money damages.... We have no duty to defend any claim that is not covered by this agreement and we will not pay you or any protected persons for any loss of earnings.
(Id.; original italics, other emphasis added).
As* is characteristic of most insurance policies, however, Intercargo incorporated numerous exclusions in the Policy that operated to deny coverage for certain risks. With regard to the instant litigation, the most significant such exclusion (captioned “Hazardous Materials/Pollution/Contamination”) reads as follows:
We will not cover any claims for environmental damage, pollution, or contamination of any kind however caused, including but not limited to: claims arising out of accidental, sudden or gradual, foreseeable or unforeseeable, intentional or unintentional occurrences.
We will not cover any claims arising out of any activity, transaction, incident or occurrence involving any explosives; pressurized gases; nuclear parts, fuels, materials or devices; hazardous, radioactive, toxic; [sic ] 7 or flammable materials; any weapons or armaments; or any means of biological or chemical warfare.
Further, we will not cover claims arising out of the actual, alleged or threatened discharge, disposal, release or escape of pollutants in any stage of storage, handling or transportation; whether accidental, sudden or gradual, foreseeable or unforeseeable, intentional or unintentional.
Pollutants mean but are not limited to: any solid, liquid, gaseous, thermal, radioactive, sonic, magnetic, electric or organic irritant; contaminant; or anything which causes or contributes to damage, injury, adulteration, or disease. This includes, but is not limited to smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste.
(Id. at 6; emphasis added.)
Additionally, the Policy contains a clause that precludes Zen from commencing a court proceeding against Intercargo if Zen were to bring the action “after one (1) year after the accident/incident” that gives rise to, for example, a putative duty to defend. (Id. at 14.)
The Accidents Aboard the Cho Yang Park and the Tokyo Senator
On February 13, 1994, Zen issued a bill of lading to the captain of the vessel Han-jin Bangkok to transport eighty drums of salicylaldehyde from Tianjin in the People’s Republic of China to the port of Busan in the Republic of Korea. (Inter-cargo
The Cho Yang Park set sail from Busan on February 23, 1994. (Yen Decl. Ex. H.) On March 13, 1994, apparently while en route to Savannah, Georgia (the ship’s first port of call in the United States), at least one of the drums containing the chemical leaked into the ship’s hold, supposedly because the drum had been loaded improperly. (Intercargo
Another Zen shipment made later in 1994 sustained an even worse fate. On March 25, 1994, Zen issued another bill of lading to the captain of the Hanjin Bank-gok to transport 300 drums of thiourea dioxide from Tianjin to Busan. (Intercar-go
After the Hanjin Bangkok arrived in Busan, Zen issued a bill of lading to the captain of the Tokyo Senator to transport the drums containing thiourea dioxide to New York City. (Intercargo
Claims Asserted Against Zen
On May 15, 1995, Zen was served with a summons and an amended verified complaint in an admiralty action (“the Eastern District Action”) commenced against it in the United States District Court for the Eastern District of New York. Senator Linie GmbH & Co. KG a.k.a. Senator Lines v. Zen Continental Co., Inc., et al., 95 Civ. 1733 (Amon, D.J.). 12 (Malley Reply Aff. Ex. 1 at 3.) The complaint alleged, among other things, that (1) Zen had issued bills of lading for “chemicals” transported by the Cho Yang Park and the Tokyo Senator, (2) the chemicals on the Cho Yang Park leaked into the hold of the ship, resulting in approximately $20,000 of damages for which Zen was allegedly jointly and severally liable, (3) the chemicals aboard the Tokyo Senator “spontaneously ignited inside the container,” resulting in approximately $1.2 million of damages for which Zen and other named defendants were alleged to be jointly and severally liable. (Amended Verified Compl. ¶¶ 3, 6-11.) On December 27, 1995, Judge Carol Bagley Amon entered an order transferring the action to this District, where it was assigned to Judge Miriam Goldman Cedarbaum under docket number 96 Civ. 8. (See Malley Reply Aff. Ex. 1 at 4.)
Subsequently, on May 22, 1995, Zen was served with a summons and verified complaint in an admiralty action commenced in this District against, among other parties, two of its apparent subsidiaries— Eastern Sunway Line, Inc. (“Eastern Sunway”) and Sunway Line, Inc (“Sunway”). Insurance Co. of North America a/s/o Burlington Coat Factory and Daniel Young Int’l v. M.V. Tokyo Senator, her engines, etc., et al., 95 Civ. 3303(KTD) (“the Southern District Action”) (Llaneta Aff. Ex. 5.) The complaint alleged that Eastern Sunway and Sunway acted as NVOCCs for the 300 drums of thiourea dioxide on board the Tokyo Senator, which (as detailed above) “experienced a violent chemical reaction” prior to the vessel’s arrival in Norfolk on April 28, 1994. (Verified Compl. ¶ 32.) Plaintiffs alleged that as a consequence of the accident, Eastern Sunway and Sunway are jointly and severally liable for damages sustained to the following cargo located adjacent to the burning containers of thiourea dioxide: (1) ladies’ jackets destined for the Burlington Coat Factory, valued at $365,420 and (2) mens’ jackets destined for Daniel Young International, valued at $5,749.50. (Id. ¶ 41.) Judge Kevin Thomas Duffy later reassigned the action to Judge Cedarb-aum.
Judge Cedarbaum proceeded to consolidate the two actions for a bench trial. In a Finding of Facts and Conclusions of Law, issued on March 9, 2001, she ruled,
Intercargo’s Refusal to Defend
By letter dated May 19, 1995, Zen notified TIS about the Eastern District Action and provided TIS with copies of the amended verified complaint filed in the action and bills of lading that Zen had issued for transporting the drums of thiourea dioxide and salicylaldehyde. (Yen Deck Ex. C.) On May 22, 1995, Zen notified TIS by letter that it had been served with a summons by the plaintiff in the Southern District Action. (Yen Deck Ex. F.) The following day, Zen sent additional materials to TIS, including a Material Safety Data Sheet for thiourea dioxide specifying, among other things, that it was “highly recommended” that handlers of the chemical wear “rubber gloves, goggles and [a] respirator.” 14 (Yen Aff. Ex. G at 3.) . Zen, by letter dated May 25, 1995, once again supplemented its disclosures to TIS, providing basic information about the chemical cargo on the two vessels and the accidents in question. (Yen Deck Ex. H.) TIS proceeded to forward the documentation to Intercargo on May 25, 1995. (Yen Deck Ex I.)
By letter dated June 1, 1995, Intercargo notified Zen that, following a review of the complaints filed in the Eastern and Southern District Actions, it was not obligated to provide any coverage to Zen under the Policy. Intercargo based its position on the hazardous materials/pollution exclusion clause embodied in the Policy. With regard to the Eastern District Action, Inter-cargo noted in its letter that the claim against Zen “ar[ose] out of the leakage of certain chemicals.” (Yen Deck Ex. J at 1.) As for the Southern District Action, Inter-cargo stated that the subrogated plaintiffs claims concerned “alleged damage to [the] assureds’ goods as a result of the chemical leak.” (Id. at 3.) Nevertheless, Intercargo invited Zen to provide any “further information and/or documentation relevant to [your] claim. We would be pleased to review these [sic ] information and/or documentation as they may relate to any possible changes in our position regarding coverage of this claim.” (Id.)
On July 19, 1999 — more than five years after the accidents aboard the two vessels and more than four years after Intercargo initially denied coverage — Zen once again requested that Intercargo provide policy coverage for claims relating to the accidents aboard the Cho Yang Park and the Tokyo Senator. Zen based its position on documentation purporting to illustrate that an international maritime organization had not classified thiourea dioxide as a “hazardous material” as of 1994 (Yen Deck ¶ 18; Intercargo
On February 16, 2000, Zen brought a declaratory judgment action in this Court against Intercargo, TIS and IAS. 15 With regard to Intercargo, Zen alleged the following claims (many of which appear to be cumulative) in its Second Amended Complaint: (1) breach of contract (Count I) arising out of failures to defend Zen in the Eastern and Southern District Actions and provide indemnification under the policy for claims arising out of those actions; (2) breach of duty of good faith (Count II) to provide Zen with comprehensive liability coverage; (3) breach of duty of good faith (Count III) to advise Zen of its right to supplement the Policy with additional liability coverage; (4) negligence (Count IV), apparently regarding Intercargo’s putative dereliction of its duty to defend Zen or provide coverage under the Policy; and (5) breach of duty of good faith arising out of a failure to defend Zen in the Eastern and Southern District actions (Count V). (Second Amended Compl. ¶¶ 40-61.) Intercar-go subsequently asserted a counterclaim for a declaratory judgment that the Policy did not provide coverage for the accidents underlying the claims asserted against Zen in the Eastern and Southern District Actions. (Answer ¶¶ 69-70.) 16
TIS vehemently objected to its inclusion as a defendant in the instant action. In a letter to Zen’s counsel dated July 5, 2000, TIS’s counsel stated, among other things, that TIS had strong personal jurisdiction and statute of limitations defenses, and would seek the imposition of sanctions and an award of attorneys’ fees and costs if Intercargo did not voluntarily dismiss. TIS from the action. (Malley Reply Aff. ¶ 3 & Ex. 3.) Counsel for Zen apparently did not respond to the letter.
Accordingly, on August 1, 2000, TIS moved to quash service of process pursuant to
On October 6, 2000, Intercargo moved for summary judgment on the claims asserted against it in the Second Amended
On February 9, 2001, the Court heard oral argument from counsel for the parties regarding all pending motions and TIS’s application for attorneys’ fees and costs. At oral argument, in addition to conceding that TIS was not a proper party, Zen’s counsel also conceded (1) that IAS was not a proper party and should be dismissed from the action and (2) that all tort claims asserted against Intercargo should be dismissed. (Tr. at 26.)
DISCUSSION
I. Intercargo and Zen’s Cross-Motions for Summary Judgment
A.Choice of Law
The Supreme Court has held that in the absence of a specifically-applicable admiralty rule, state substantive law governs cases about marine insurance policies.
Wilburn Boat Co. v. Fireman’s Fund Ins. Co.,
B. Standard for Summary Judgment
Generally, summary judgment may only be granted when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”
C. Statute of Limitations
Intercargo first argues that it is entitled to summary judgment on Zen’s claim that Intercargo breached the Policy’s duty-to-defend clause, because that claim is time-barred by a contractually-specified statute of limitations.
The Policy provides that Zen may not commence a civil action against Inter-cargo arising out of any putative breach unless Zen does so within “one (1) year after the accident/incident.” (Llaneta Aff. Ex. 1 at 14.) Although such a limitations period is much shorter than that which is specified by statute,
17
Illinois law clearly allows parties to an insurance policy to set what is tantamount to a private statute of
Zen instituted the instant action well after the period in which it was required to do so had run. The Cho Yang Park (sali-cylaldehyde) accident occurred on March 13, 1994, and the Tokyo Senator (thiourea dioxide) fire on April 28, 1994. (Intercar-go
In opposition, Zen first argues, without citing any authorities in its favor, that Intercargo is estopped from asserting a statute of limitations defense because it failed to conduct an independent investigation of the accidents that gave rise to the Eastern and Southern District Actions.
18
However, no such duty exists under Illinois law, which requires only that an insurer compare the policy at issue to the complaint served on the insured.
See, e.g., Outboard Marine Corp. v. Liberty Mut. Ins. Co.,
Second, Zen contends that Illinois law precludes Intercargo from relying on a contractual statute of limitations to circumvent a duty to defend (Ph’s Mem. Opp’n Summ. J. at 6-8.) In support of its argument, it cites principally to Wausau. In that case, the Illinois Supreme Court held, among other things, that an insurer is precluded from avoiding a duty to defend an insured simply because the insured failed to provide timely notice of a claim (a condition precedent for coverage that is often required under a policy). Id. at 1136.
It is hardly clear that the decision in
Wausau
extends so far as to excuse a lengthy delay in seeking adjudication of an insured’s rights under an insurance policy, in the face of a clear limitations provision. In
Wausau,
the court refused to allow an insurer who had refused to defend to rely on a procedural condition precedent to coverage to defeat a covered claim. Here, Zen did not simply fail to provide timely notice before seeking coverage; rather, after submitting a claim and being clearly advised that Intercargo denied coverage, it chose to sleep on any rights it had and failed to seek judicial resolution of a ripe dispute about the terms of the Policy. If
Wausau
extended to that situation, an insured would have
carte blanche
to bring a declaratory judgment action at its convenience — even if it waited so long (more than 10 years, for example) that the action would otherwise be time-barred under Illinois’ statutory limitations period for duty-to-defend claims. Such an expansive rule
When exploring unchartered areas of state law, however, a federal court must be mindful of its limited expertise in state law — especially in the law of a jurisdiction other than the forum' state - and of the undesirability of reaching out unnecessarily to decide novel issues of state law.
Cf. Erie R.R. Co. v. Tompkins,
D. Duty to Defend
Under Illinois insurance law, an insurer is not required to defend an insured if it is “clear from the face of the underlying complaint” against the insured that the “facts alleged ... [do not] fall within, or potentially within, the policy’s coverage.”
Outboard Marine Corp.,
Construing the complaint and the policy language is a matter of law committed exclusively to the court’s determination. In addressing that question, a court must first, by construing the policy as a whole, consider “the subject matter that is insured and the purposes of the entire contract.”
Outboard Marine Corp.,
Evaluating the Policy as a whole in the instant case, it is readily apparent that, given the broadly-worded hazardous materials/pollution exclusion clause (and the numerous other exclusionary clauses in the Policy,
see
Llaneta Aff. Ex. 1 at 4-9), the Policy was not intended to provide Zen with comprehensive coverage in its capacity as an NVOCC. This is presumably because an NVOCC, under well-established admiralty principles, is strictly liable for any damage caused to cargo that has been shipped pursuant to a bill of lading that it issued.
See, e.g., Prima U.S.,
Turning to the specific exclusionary provisions, Intercargo argues that Zen is precluded from coverage because its cargo contained “pollutants” that caused resultant damage on board the respective vessels. (Def.’s Mem. Supp. Summ. J. at 8-16.) However, at least in the context of an ordinary Comprehensive General Liability policy, the Illinois Supreme Court has held that generic pollution exclusion clauses (such as the pertinent portion of the exclusionary language at issue in the instant case) only relate to claims that arise out of industrial environmental pollution.
American States Ins. Co. v. Koloms,
The clause relied on by Intercargo, however, does not apply only to pollution. Intercargo also contends that the accidents on board the Cho Yang Park and the Tokyo Senator were precipitated by “hazardous,” “toxic,” or “flammable” materials shipped by Zen, and the exclusion applies
The language of the exclusionary clause in question supports Intercargo’s argument. The heading for the section (“Hazardous Materials/Pollution/Contamination”) contains three terms that appear to have been consciously set off from one another with slashes. The first and third paragraphs, which contains terms including “environmental damage,” “contamination,” and “pollutants,” cover two of the three topics listed in the heading. The second paragraph of the exclusion reads:
"We will not cover any claims arising out of any activity, transaction, incident or occurrence involving any explosives; pressurized gases; nuclear parts, fuels, materials or devices; hazardous, radioactive, toxic; or flammable materials; any weapons or armaments; or any means of biological or chemical warfare.
(Llaneta Aff. Ex. 1 at 6; emphasis added.) Nothing in this section limits the exclusion to environmental damage caused by the release of pollutants into the air or water; rather, the provision excludes
“any”
claim arising from the shipment of a wide range of hazardous cargo. Particularly when read in conjunction with the heading of this exclusionary section, it is evident that this paragraph has separate force as a broad “hazardous materials” exclusion. Illinois insurance law requires that each term in an insurance policy must be accorded independent meaning.
American Fire & Cas. Co.,
The policy terms themselves illustrate the breadth of Intercargo’s intended exclusion. The Policy excludes “any claims arising out of any activity, transaction, incident or occurrence involving” materials that are “hazardous” or “toxic” (emphasis added) — broadly worded language that would, on its face, include instances such as those alleged in the Eastern and Southern District Actions where damage resulted from cargo shipped under bills of lading that it issued. Indeed, the policy language does not require any showing that a cargo’s intrinsically dangerous properties triggered the accident in question. For example, if Zen were to ship a hazardous liquid chemical that leaked from its container and damaged other cargo simply by wetting it, a claim for such damage would be excluded even though the damage was garden variety and had nothing to do with the chemical’s dangerous properties. Accordingly, if thiourea dioxide and salicylal-dehyde fall within the definitional scope of any one of the three terms at issue, Inter-cargo would not have a duty to defend Zen in the Eastern or Southern' District Actions. 22
• Zen and its subsidiaries were “acting on behalf of’ the shippers of eighty drums of chemicals enumerated in the bill of lading that Zen had issued to the captain of the Cho Yang Park. (Amended Verified Compl. ¶¶ 2(a), 3.) 23
• Sometime during the voyage to the United States, the chemicals, which had been improperly “pack[ed], stuff[ed], block[ed], brac[ed] and prepared] for shipment ... leaked out of their drums, and out of the cargo shipping container, into the hold of the ship.” (Id. ¶ 7.)
• Consequently, the plaintiff suffered approximately $20,000 in damages. (Id.)
The Eastern District Complaint also alleged the following about the events that transpired on the Tokyo Senator:
• Zen and its subsidiaries were “acting on behalf of’ the shippers of 300 drums of chemicals enumerated in the bill of lading that Zen had issued to the captain of the Tokyo Senator. (Id. ¶¶ 2(a), 3.) 24
• The chemicals were “inherently dangerous and/or defective” and at a time uncertain during the ship’s voyage “spontaneously ignited inside the container.” (Id. at ¶¶ 9-10.)
• As a result of the fire caused by the chemicals, plaintiff incurred approximately $1.2 million of expenses. (Id. at ¶¶ 10-11.)
In the Southern District Complaint, the plaintiff makes the following allegations about the events that transpired on board the Tokyo Senator:
• Eastern Sunway Line, Inc. and Sun-way Line, Inc. (entities which are apparently Zen’s subsidiaries) acted as NVOCCs for 300 drums of “Thiourea Dioxide” that would be shipped from “Pusan [sic], Korea to Norfolk.” (Verified Compl. ¶¶ 11-12.)
• Sometime before docking in Norfolk, “the thiourea dioxide experienced a violent chemical reaction” within the ship’s hold, “causing damage to cargo stowed in areas adjacent” to the chemical in the amount of $371,169.50. (Id. ¶¶ 32, 34.)
As for the exclusionary terms in question, one commonly-used dictionary has primarily defined “hazardous” as “risky, dangerous.”
25
The Oxford Dictionary and Thesaurus
674 (American ed.1996). The legal definition of the term is quite similar: “Exposed to or involving danger; perilous; risky; involving risk of loss.”
Black’s Law Dictionary
719 (6th ed.1990). The term “toxic,” for purposes of both contemporary and legal usage, has been defined as “of or
Zen concedes that the damage on board both the Cho Yang Park and the Tokyo Senator resulted from the shipment of, respectively, salicylaldehyde and thiourea dioxide.
(See
Zen’s
Zen presents no evidence disputing In-tercargo’s description of the properties of either chemical. Instead, Zen contends that thiourea dioxide is not a hazardous material for the purpose of Policy’s exclusion, because the chemical was not considered “hazardous” by a variety of maritime organizations at the time of the accident.
(See
Pl.’s Mem. Opp’n Summ. J. at 9-13 & McNamara Aff.)
29
This argument fails, however, because Illinois law requires terms in insurance policies to be given their ordinary meanings.
See Outboard Marine Corp.,
Accordingly, because the accidents aboard the Cho Yang Park and the Tokyo Senator resulted from “hazardous” and “toxic” cargos being shipped by Zen, In-tercargo is entitled to summary judgment that the claims asserted against Zen in the Eastern and Southern District Actions were not covered by the Policy.
II. TIS’s Application for Attorneys’ Fees and Costs
TIS seeks attorneys’ fees and costs incurred in moving to dismiss Zen’s action against it. Citing
In response, Zen argues that it had a good faith basis for including TIS in this lawsuit. (Loh Aff. ¶¶ 1-8.) But this contention somewhat misses the point. Whatever basis Zen initially had for believing that it could prevail against TIS, that basis had apparently evaporated by the time TIS filed its motion to dismiss, as Zen failed to oppose that motion. Since TIS presented the basis of its arguments to Zen’s counsel, both orally and in writing, before the motion was filed, and specifically requested that Zen withdraw its claims, it is difficult to understand why Zen ignored TIS’s request and forced it to file a formal motion.
A court cannot condone such behavior by counsel. Lawyers have an obligation, to their adversaries and to the Court, not to persist in frivolous claims, requiring opposing parties and the Court to expend resources considering claims that are no longer viable. Counsel for TIS acted appropriately in presenting his arguments to his adversary before making his motion, and lawyers to whom such a presentation is made have a professional obligation to consider it seriously.
Nevertheless,
First, I find that Zen did have a good faith basis to bring suit against TIS in the first instance. Thus, TIS was legitimately-required to engage in “fact intensive [inquiry] about the nature of TIS’[s] activities in New York,” “research of the law of several states” concerning the time-bar issues, and development of a “novel” argument concerning admiralty jurisdiction over cases involving marine insurance brokers (TIS Post-Argt. Mem. at 4-5), in order to develop the arguments for dismissal presented to Zen in advance of the motion. Indeed, TIS appears to agree that Zen’s counsel can be criticized only for failing to drop the suit after these arguments were presented, and not for bringing the suit in the first place. Thus, the only unnecessary expenses incurred are the relatively modest ones associated with turning TIS’s letter to Zen into a formal motion. Moreover, there is no evidence that Zen or its counsel deliberately persisted in its position in order to impose these unnecessary costs on TIS. It is not unheard-of for lawyers to think they have a plausible argument until they actually attempt to write a brief. Finally, I am influenced by the fact that Zen did not consume further resources by submitting a frivolous response to TIS’s motion, and I am reluctant to give future litigants an incentive to do so by (in effect) treating Zen’s failure to oppose the motion as the smoking gun that justifies an award of sanctions.
For these reasons, the application for attorneys’ fees and costs is denied.
CONCLUSION
Intercargo’s motion for summary judgment is granted. Zen’s motion for summary judgment is denied. TIS’s motion to dismiss and IAS’s motion for summary judgment are granted on consent. TIS’s motion for attorneys’ fees and costs is denied. Intercargo is directed to submit an appropriate form of judgment, on notice to opposing counsel, within ten days.
SO ORDERED.
Notes
. On May 22, 2000, Zen filed a notice of voluntary dismissal, dismissing claims with prejudice that it had asserted against The Roanoke Companies, Inc., Roanoke Agency, Inc., Roanoke Brokerage Services, Inc. and Roanoke Trade Services, Inc. Only the parties listed in the caption remain.
. The Court has admiralty jurisdiction over this action, pursuant to
. A bill of lading serves multiples purposes, including proof of "receipt of goods, contract for their carriage, and ... documentary evidence of title to goods.” Black's Law Dictionary 168 (6th ed.1990).
. For a more complete description of an NVOCC's role in the shipping process,
see, e.g., id.; M. Prusman Ltd. v. M/V Nathanel,
. While the precise relationships among the parties are not entirely clear in the record, Zen has not suggested in its motion papers that there is any functional distinction between itself and Sunway (or another entity called Eastern Sunway Line, Inc.).
. The policy provided in the record was actually issued on May 4, 1995. The parties appear to agree that either this policy or one essentially identical to it was in force on all dates relevant to this action.
. Given the grammatical structure of this clause, it seems that the semi-colon that appears after the term "toxic” is a scrivener's error that should be replaced by a comma.
. As described by Intercargo's chemicals expert, salicylaldehyde is an organic compound that is a member of the "phenol family of chemicals.” (Green Aff. ¶ 12.) ■ A phenol chemical is a "... derivative of benzene used in dilute form as an antiseptic and disinfectant.” Oxford Dictionary and Thesaurus 1119 (American ed.1996).
. For purposes of this motion, the Court assumes the truth of all factual allegations made against Zen in actions commenced against it in both this District and the United States District Court for the Eastern District of New York.
. A reducing agent is a "substance that brings about reduction by oxidation [a process used to, among other things, create certain metals] and losing electrons.” Oxford Dictionary and Thesaurus at 1259.
. Indeed, a document issued to Zen by the manufacturer of the thiourea dioxide suggested it was "highly recommended” that anyone involved in handling the chemical wear "rubber gloves, goggles and [a] respirator.” (Yen Decl. Ex. G at 3.)
. Earlier in 1995, Zen had apparently received a claim arising out of the Tokyo Senator incident, which it forwarded to Intercar-go. (Yen Decl. ¶ 6 & Ex. B.)
. Judge Cedarbaum did not make any findings of fact concerning the accident aboard the Cho Yang Park.
. Zen also furnished copies of a ''[sjhipper's declaration” and "[s]urvey report by Mari-tíme Bureau Inc. for the goods on Cho Yang Park,” which details the consequences of the accident aboard that vessel. (Yen Deck Ex. G at 1.)
. Although Zen enumerated IAS in the caption of its complaint, it failed to allege any claims against IAS or set forth even a rudimentary theory as to how it might be liable for the acts of an affiliated corporation. In fact, except for alleging that it is an Illinois corporation (¶ 9), and setting forth its alleged corporate relationships to the other parties (¶¶ 15-17), the pending Second Amended Complaint does not even mention any action of IAS. For this reason alone, as Zen conceded at oral argument (Tr. at 27), IAS is entitled to dismissal of the action for failure to state a claim against it.
. Intercargo is permitted to seek a declaratory judgment because the actions in which Zen requests that Intercargo exercise a putative duty to defend were pending as of the date Intercargo made its motion.
See, e.g., Sears, Roebuck and Co. v. Seneca Ins. Co.,
. Absent a contractual limitations provision, Illinois law provides that an action alleging a breach of a duty to defend must be commenced within 10 years after the claim’s accrual. II. St. Ch. 735 § 5/13-206 (West. 2000);
Employers Ins. of Wausau v. Ehlco Liquidating Trust,
. Zen first raised this argument at oral argument. (Tr. at 15-16.)
. Zen argues that
Wausau
stands for the proposition that an insurer must either bring an action to obtain a declaratory judgment of no coverage or defend the insured under a reservation of rights. (Pl.’s • Mem. Opp’n Summ. J. at 7.) However, the Illinois Supreme Court states with unmistakable clarity that an insurer may simply decline to defend if the claims asserted against the insured do not fall within the scope of the Policy's coverage.
Wausau,
. The language at issue in that case read, in pertinent part, as follows:
This insurance does not apply to:
f.(l) ‘Bodily injury or ‘property damage’ arising out of actual, alleged, or threatened discharge, dispersal, release or escape of pollutants....
[Pollutants are defined as] any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.
American States,
. Zen argues in opposition that the entire exclusion, when read thematically, relates exclusively to accidents and activities involving pollution. (PL's Mem. Opp.'n Summ. J. at 10-13.) But this ''gestalt” argument is inconsistent with Illinois’ insistence that each term be given separate meaning. Moreover, when compared to the generic pollution exclusionary language used by the insurance industiy (which is quoted above in note 20), it is quite clear that Intercargo intended to exclude a far wider array of accidents from coverage.
. Judge Cedarbaum's ruling on March 9, 2001, that Zen was not responsible as a matter of admiralty law for the damages caused by the spontaneous combustion of thiourea dioxide aboard the Tokyo Senator does not
.The chemical is listed on the bill of lading as "salicylaldehyde.” (Llaneta Aff. Ex. 2.)
. The chemical is listed on the bill of lading as "thiourea dioxide.” (Llaneta Aff. Ex. 2.)
. Synonyms of "hazardous” include the following: "unsafe, unsound, risky, dangerous, shaky, questionable, unreliable, unpredictable, precarious, uncertain [and] chancy.” The Oxford Dictionary and Thesaurus at 674.
. ''Poison” is defined in the same dictionary as "a substance that when introduced into or absorbed by a living organism causes death or injury.” The Oxford Dictionary and Thesaurus at 1151.
. Illinois case law makes clear that it is appropriate for a court to consult dictionaries when determining the "plain, ordinary and popular meaning” of terms in an insurance contract.
See, e.g., Outboard Marine Corp.,
. Intercargo's argument that the chemicals are “flammable” is somewhat less availing. Intercargo's expert admits in his affidavit that salicylaldehyde "is not an especially flammable material.” (Green Aff. ¶ 14.) Thiourea dioxide, on the other hand, can spontaneously combust at temperatures approaching the boiling point of water (Id. at ¶ 10), which certainly seems to fall within the dictionary definition of "flammable” — which means "easily set on fire.” The Oxford Dictionary and Thesaurus at 553
. Zen does not provide similar evidence about salicylaldehyde.
. Other courts have noted that in order to impose sanctions under this statute, willful bad faith on the part of counsel must be found,
see, e.g., Williams v. Giant Eagle Markets, Inc.,