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Thursday, August 03, 2006

Ind. Decisions - 7th Circuit decides environmental insurance case re duty to indemnify

The case is Keystone Consolidated Industries v. Employers Ins. of Wausau, a 17-page opinion. It is an appeal from the CD of Illinois. Judge Cudahy writes:

Keystone Consolidated Industries, Inc., and Valhi, Inc.1 (collectively, Keystone) operate a number of mills that manufacture wire products, chemicals and other industrial materials, and have done so in some capacity since the early 1900s. Beginning in 1942 and continuing through the late 1980s, Keystone purchased dozens of comprehensive general liability and excess umbrella insurance policies from Employers Insurance Company of Wausau (Wausau). Keystone seeks indemnification from Wausau for approximately $13.5 million, which represents the costs it has incurred or expects to incur cleaning up environmental damage that its operations caused at four sites in Illinois and Indiana. Wausau has refused to indemnify Keystone on the theory that the policies require indemnification only when a lawsuit triggers its duty to defend. The district court agreed with Wausau and granted its motion for summary judgment. Because, under Illinois law, the duty to indemnify may arise even in absence of a lawsuit triggering the duty to defend, we reverse the judgment of the district court and remand for further proceedings. * * *

Thus, because the district court erroneously concluded that Wausau’s duty to indemnify depended on its duty to defend, it never reached the key issue whether Keystone undertook its remedial action voluntarily. The court’s incorrect interpretation of Illinois law is enough to justify reversal.

III. Conclusion
In sum, we REVERSE the judgment of the district court and REMAND for further proceedings consistent with this opinion. [emphasis added]

Posted by Marcia Oddi on August 3, 2006 04:02 PM
Posted to Ind. (7th Cir.) Decisions