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ILLINOIS TOOL WORKS, INC. v. HOME INDEM. CO.

February 28, 1998

ILLINOIS TOOL WORKS INC., et al., Plaintiff,
v.
THE HOME INDEMNITY CO., et al., Defendants.



The opinion of the court was delivered by: MAROVICH

 Plaintiff, Illinois Tool Works Inc. ("ITW"), filed this insurance coverage action against Defendant, American Alliance Insurance Co. ("American"), alleging that American breached its duty to defend and indemnify its insureds RBK Furniture, Inc. ("RBK") and Robert B. Kaplan ("Kaplan"). *fn1" ITW now moves for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c). For the reasons set forth below, the motion is granted.

 BACKGROUND

 The present litigation originates as a result of an underlying lawsuit filed on December 7, 1994 by ITW against RBK in the United States District Court for the Northern District of Illinois. The suit, Illinois Tool Works v. RBK Furniture, No. 94 C 7301, alleged that hazardous waste products deposited at the RBK property contaminated the soil and groundwater underlying ITW's adjacent property. ITW's suit requested damages and other relief from RBK pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. ยงยง 9601, 9607 et seq. ("CERCLA"). The suit also sought damages and other relief from RBK for trespass and nuisance as a result of the contamination from the RBK property entering the ITW property. On January 20, 1995, ITW amended its Complaint adding Kaplan, the owner of the property, as a defendant.

 On January 20, 1995, counsel for RBK notified American of ITW's original Complaint and requested that American defend RBK against the Complaint and indemnify it for any liability pursuant the terms of American's insurance policy with RBK. American responded to RBK's letter on January 23, 1995, denying any obligation to defend or indemnify RBK under the provisions of American's policy.

 On February 20, 1995, counsel for RBK and Kaplan notified American of ITW's Amended Complaint and again requested that American defend RBK and Kaplan against the Amended Complaint and indemnify them for any liability under American's insurance policy with RBK. One week later, on February 27, 1995, counsel for RBK and Kaplan wrote another letter to American and specifically requested a defense against ITW's Amended Complaint and indemnification under the "personal injury" provisions of American's policy, citing as authority the Seventh Circuit case Pipefitters Welfare Educational Fund v. Westchester Fire, 976 F.2d 1037 (7th Cir. 1992).

 On February 28, 1995, American responded to RBK's February 20, 1997 letter and once again denied that it had any duty to defend or indemnify RBK or Kaplan under the provisions of its policy. This letter was followed up by another letter from American to RBK and Kaplan on March 6, 1995 specifically denying any obligation to defend or indemnify RBK or Kaplan under the "personal injury" provisions in American's policy.

 There was apparently no further correspondence between the parties until August 27, 1996, when counsel for RBK and Kaplan wrote to American advising it that ITW, RBK and Kaplan had reached a settlement in principle of ITW's lawsuit, and enclosed a copy of the proposed settlement agreement. The letter also advised American that RBK and Kaplan intended to enter into the settlement within the next week unless American notified RBK and Kaplan that it had reconsidered its decision not to defend or indemnify them. American did not reconsider. Consequently, on October 21, 1996, the district court dismissed the underlying lawsuit with prejudice pursuant to the parties' stipulation and agreement following their settlement.

 ITW, as assignee of RBK and Kaplan, filed the present insurance coverage action against American on March 25, 1997. The Complaint alleges that American breached its duty to defend and indemnify RBK and Kaplan against the underlying lawsuit. Specifically, ITW points to a commercial general liability policy ("CGLP") issued to RBK by American covering the period April 15, 1988 to April 15, 1989, no. PAC 071629400. The American policy has a coverage clause for "personal injury" liability that states, in pertinent part, as follows:

 
We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal injury" or "advertising injury" to which the insurance applies . . .. We will have the right and duty to defend any "suit" seeking those damages.
 
The policy defines "personal injury" as:
 
"Personal injury" means injury, other than "bodily injury," arising out of one or more of the following offenses:
 
***
 
c. Wrongful entry into, or eviction of a person from, a room, dwelling or premises ...

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