The purchase order forms, the binding instruments here, were drafted in very broad language. APCOM agreed to "defend [Dayton] . . . from and against any claims, demands, suits, liabilities, penalties, losses, damages, or charges, settlements, judgments, costs and expenses (including attorneys fees incurred) by any person arising out of or allegedly based on any alleged defect, failure, breach of warranty (express or implied), of or connected with any [APCOM manufactured] product . . . ." It is difficult to imagine how any product liability litigation concerning the water heater element would not be covered by this paragraph.
Defendants do not dispute that they had a broad duty to defend. They contend that they were never told that it was an APCOM water heater element that was the subject of the suit. The undisputed facts are heavily to the contrary.
For instance, on February 22, 1988, Joel Gusky, on behalf of Grainger and Dayton, wrote APCOM and asked them to defend Grainger and Dayton in the Philadelphia suits. That letter stated in part, "We have ascertained that the products claimed to contain asbestos are those included in the attached Installation Instructions for Water Heater Elements. Since we have merely purchased these items from you beginning July 29, 1977, we are hereby tendering defense of all these claims to you." Thus, as early as February 22, 1988, defendants knew they arguably had a duty to defend the Philadelphia suits.
Even more demonstrative of the defendants' knowledge that APCOM products were the subject of the Philadelphia suits is the efforts undertaken by APCOM/Liberty Mutual attorney Straub. Straub and Gusky worked together over a period of several months in an effort to obtain an affidavit from APCOM President Fehrmann that stated that the water heater elements contained no asbestos. They eventually obtained the affidavit which ultimately lead to the dismissal of all suits in which Dayton and Grainger were defendants. This extensive involvement would not be necessary if APCOM did not believe its products were the subject of the suits. The evidence overwhelmingly supports the conclusion that defendants knew that their product was the subject of the Philadelphia suits.
Yet defendants contend that they were never told that their products were the allegedly defective ones because Dayton never told APCOM that APCOM was the sole supplier of the elements to Dayton. In the first instance, that is simply not the case. See Letter from Jane Hinto-Kedo, Claims Attorney for W.W. Grainger, Inc, to George Fehrmann, President of APCOM, Inc. 1 (Jan. 19, 1989). However, even absent this letter, APCOM did not need to be completely satisfied that it had a duty to defend before that duty to defend materialized. Potential liability on the part of the insurer, not absolute certainty, triggers the duty to defend. Hertz Corp. v. Garrott, 207 Ill. App. 3d 644, 648, 566 N.E.2d 337, 340, 152 Ill. Dec. 650 (1st Dist. 1990). Even a groundless, baseless, or fraudulent case must be defended by the insurer. Bituminous Cas. Corp. v. Fulkerson, 212 Ill. App. 3d 556, 562, 571 N.E.2d 256, 261 (5th Dist. 1991). When the insurer is unsure of coverage, it may litigate the issue separately, or defend with a reservation of rights. Central Mut. Ins. Co. v. Kammerling, 212 Ill. App. 3d 744, 748, 571 N.E.2d 806, 809, 156 Ill. Dec. 826 (1st Dist. 1991). Here, APCOM knew that Dayton and Grainger were being sued as a result of the sale of some water heater elements. By ignoring the clear statements and indications of Dayton and Grainger that APCOM products were the subject of the suits, APCOM (and thus Liberty Mutual) breached its duty to defend. Playboy Enters., Inc. v. St. Paul Fire & Marine Ins. Co., 769 F.2d 425 (7th Cir. 1985).
Defendants' have moved for summary judgment. They are correct that, based on this extensively developed record, no genuine issue of material fact that remains. However, defendants' are not entitled to judgment as a matter of law. The court has determined that it possesses the power to make a motion for summary judgment SUB site. This court finds that the evidence overwhelmingly favors plaintiff. Therefore, the court grants summary judgment on behalf of the plaintiff.
IT IS SO ORDERED.
CHARLES RONALD NORGLE, Sr., Judge
United States District Court