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Whirlpool Corp. v. Certain Underwriters at Lloyd's London

March 19, 1998



The opinion of the court was delivered by: Justice Wolfson

There is nothing unusual about litigants jockeying for position. Sometimes position matters, sometimes it does not. Here, for four years the litigants have waged a fierce battle over which forum will host their pollution insurance coverage dispute. Here, apparently, position matters. We affirm the trial Judge's dismissal of the lawsuit on forum non conveniens grounds.


In the early 1970s, Whirlpool, a Delaware corporation with its business headquarters in Michigan, sought excess pollution insurance coverage on the "London Market." It contacted Bowes & Company (Bowes), an independent Illinois broker, which "placed" insurance in London. After meeting with Whirlpool representatives in Michigan and discussing Whirlpool's insurance requirements, Bowes contacted J.H. Minet & Company, Ltd. (Minet), a London insurance broker, with this information.

Minet, in turn, contacted the "London Market" to find underwriters willing to "obtain the risk" of insuring Whirlpool. Minet found "lead underwriters" Janson Green, Ltd. and Certain Companies per H.S. Weavers Underwriters (Agencies) Ltd. in Lloyd's insurance syndicate to provide coverage for Whirlpool. The underwriters evaluated Whirlpool's risk and conveyed their proposed terms to Minet. Minet conveyed these terms to Bowes, and Bowes conveyed these terms to Whirlpool. Whirlpool agreed to these terms.

Then the communication chain reversed: Whirlpool contacted Bowes, who contacted Minet, who contacted Lloyd's underwriters. According to Bowes representative, Arthur Travis, Whirlpool's coverage began when Lloyd's confirmed: "100 percent placed with underwriters and London market as per our terms."

Travis described this long-distance procedure in his deposition:

"The underwriters [at Lloyd's], the insurers, would--they have the risk and they would present terms saying they would write the risk with these terms and conditions and with this cost. That would come to the London broker who would put it in form to send to us saying here is the underwriters' position.

We , in turn, go to the insured, Whirlpool and say here are the terms that London is willing to entertain to insure us. Whirlpool would then make a decision if they wanted those terms or not. If they did, they would have me place it on an effective date.

I would cable London and say, 'The insured has given us an order to place those terms,' and then London would come back with a cable saying it has been bound and placed, and that would be conveyed back to the insured."

After Lloyd's confirmation, Minet sent its "cover note" summarizing Whirlpool's policy and terms to Bowes, and Bowes sent its own cover note to Whirlpool. Then Minet drafted the formal policy. In a 1971 letter to Whirlpool, Bowes representative Frank Hunter noted, "The lead Underwriter has to approve the final policy forms ***." According to Travis, formal policies to replace interim cover notes were "anufactured in London" by either Lloyd's or Minet and sent to Bowes. Lloyd's underwriter Peter Lowsley-Williams, in his affidavit, agreed: "The policies were negotiated and issued in London. The policy documents in the ordinary course of business would have been issued in London and sent by the London broker to the American broker and from there to the Assured ." Formal policies often followed cover notes two years after the policies' effective dates.

During their relationship Whirlpool and Lloyd's never communicated directly, only through Bowes and Minet, respectively. According to Travis, Bowes did not act as an agent for either Whirlpool or Lloyd's, but rather as a conduit for information: "We would present to the insured and to the insurer the information." Travis said Bowes did not have the authority to bind Lloyd's into insuring Whirlpool.

Additionally, Lloyd's public relations brochure said: "A Lloyd's broker [presumably Minet] is not an insurance agent. He does not represent the underwriters the same way as an insurance company agent. He is, first and foremost, the representative of the insured ***." However, in his deposition Whirlpool's insurance manager, Jake Paschall, said Whirlpool considered Bowes an agent of Lloyd's underwriters: "s far as we were concerned Bowes spoke for the insurers."

The policy became effective on February 15, 1971. Under the policy Whirlpool would make payment of premiums and provide notice of occurrences to Bowes. However, Lowsley-Williams' affidavit disputed the significance of Bowes role: "he designation of Bowes & Company was made as an accommodation to the Assured so that the Assured could make payment of premium and give notice of occurrences to one entity rather than several insurers throughout the London Market." Lloyd's underwriter Peter Wilson, in his affidavit, corroborated Lowsley-Williams' account. Additionally, Bowes issued endorsements only after confirmation from Lloyd's. Through several renewals, and some changes, the policy remained in effect through May 31, 1977.

Beginning in 1974, Whirlpool's Fort Smith Division disposed of its solid and liquid waste at the Industrial Waste Control (IWC) facility near Fort Smith, Arkansas. Whirlpool closed the Fort Smith IWC facility in 1977. In 1982, the United States Environmental Protection Agency named the Fort Smith facility a "superfund" site and Whirlpool a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C.A, §9601 et seq. (West 1995 & Supp. 1997). By the 1990s, Whirlpool had incurred more than $5,000,000 in investigation and remediation (clean-up) costs at the Fort Smith IWC facility.

In 1988, Whirlpool filed suit in Michigan State court against its primary insurers. Whirlpool eventually settled this suit. Knowing its primary insurance would not cover the clean-up costs, Whirlpool notified Lloyd's an occurrence might have happened while Lloyd's still provided coverage in the 1970s. In 1989, Lloyd's reserved its rights under the policies.

On April 3, 1993, Whirlpool filed a declaratory Judgement action in the circuit court of Cook County against Lloyd's. Whirlpool alleged Lloyd's failed to fulfill its contractual obligation to provide excess pollution coverage for the 1970s occurrence which necessitated the clean-up costs. Lloyd's, represented here by one of its underwriters, Garety and Companies (Garety), filed a forum non conveniens motion to dismiss.

On January 11, 1994, Judge Edward Hofert granted this motion. The court said:

"f the laws of the State of Illinois apply, they can be applied by other courts other than this court. Plaintiff is not a resident of this State. The defendant is not. The only issue that possibly could conceivably ffect Illinois has to do with agency, and I see no reason why that cannot be resolved otherwise. And whether or not the laws of this state can be applied, can be applied by any state court. I see no compelling reason for this state to become involved in this case."

In denying Whirlpool's motion to reconsider, the court again noted Whirlpool was not an Illinois resident and Illinois had "plenty of ...

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