Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Caterpillar Inc. v. Century Indemnity Co.

Court of Appeals of Illinois, Third District

July 2, 2019

CATERPILLAR INC., Plaintiff-Appellant,
v.
CENTURY INDEMNITY COMPANY, as Successor to CCI Insurance Company, as Successor to Insurance Company of North America; INSURANCE COMPANY OF NORTH AMERICA; EMPLOYERS INSURANCE COMPANY OF WAUSAU; and RESOLUTE MANAGEMENT, INC., Defendants Employers Insurance Company of Wausau, Defendant-Appellee.

          Appeal from the Circuit Court of the 10th Judicial Circuit, Peoria County, Illinois, Circuit No. 11-MR-203 Honorable Katherine S. Gorman Hubler, Judge, Presiding.

          WRIGHT, JUSTICE delivered the judgment of the court, with opinion. Justices Carter and O'Brien concurred in the judgment and opinion.

          OPINION

          WRIGHT, JUSTICE.

         ¶ 1 Appellant, Caterpillar Inc. (Caterpillar), brought a complaint for declaratory judgment, breach of contract, and other relief against appellee, Employers Insurance Company of Wausau (Wausau), among others, seeking an order from the trial court declaring Wausau was contractually required to pay or indemnify Caterpillar for the costs incurred while defending itself against personal injury claims arising from welding fumes. The trial court, pursuant to the parties' 1999 settlement and partial policy release agreement (1999 Agreement), granted Wausau's request to stay this litigation and compelled the parties to comply with the agreed dispute resolution procedure contained in section 7 of the 1999 Agreement. Caterpillar appeals.

         ¶ 2 I. BACKGROUND

         ¶ 3 Wausau sold Caterpillar insurance policies between 1981 and 1985. Between 1995 and 2007, Caterpillar defended itself against thousands of personal injury claims alleging Caterpillar was liable for bodily injuries resulting from exposure to welding fumes. In 2007, as a result of its efforts, Caterpillar was dismissed from the welding fumes litigation pending in federal court. See In re Welding Fume Products Liability Litigation, 526 F.Supp.2d 775, 777 (N.D. Ohio 2007).

         ¶ 4 On March 17, 2011, Caterpillar filed its complaint, requesting a declaration from the trial court that the insurance policies issued by Wausau between 1981 and 1985 required Wausau to pay or indemnify Caterpillar for the $18 million in costs Caterpillar incurred while defending itself against the welding fumes claims.[1] Caterpillar alleged that it provided Wausau notice of the welding fumes claims between 1995 and 2007. However, according to Caterpillar, Wausau and Century Indemnity Company (Century) refused to pay or indemnify Caterpillar for its defense costs.[2] Wausau resisted Caterpillar's lawsuit on the grounds that Wausau's obligation to pay or indemnify Caterpillar for its defense costs must be settled under the parties' 1999 Agreement, including section 7's dispute resolution procedures.

         ¶ 5 The three-step dispute resolution procedure is set forth below.[3]

"7. DISPUTE RESOLUTION. In the event of a dispute between the Parties regarding any aspect of this Agreement, including the application of the terms of this Agreement to a Claim, the Parties agree to attempt to resolve their respective disputes through a three-step procedure-meetings, mediation and then, if necessary, binding arbitration. A Party may not commence mediation without first completing the meeting process and may not commence arbitration under this Agreement without first completing the mediation process as defined below.
7.1 Meetings: The existence of a dispute is established when one Party notifies another, in writing, of the existence and nature of a dispute along with a reference to this provision of the Agreement. Within fifteen (15) business days after receipt of said notice, the Parties or their representatives shall meet in Chicago (or such other location as the Parties may mutually agree) and confer in an effort to determine the nature of the dispute and whether it can be amicably resolved.
7.2 Non-Binding Mediation: If the Parties cannot resolve the dispute at the meeting referenced above, or subsequent meetings held upon agreement of the Parties, the Parties agree to attempt in good faith to resolve the dispute through confidential, nonbinding, third-party mediation. The Parties agree to mediate all disputes in Chicago (or such other location as the Parties may mutually agree) under the auspices of JAMS/ENDISPUTE before a mediator with a substantial background in insurance law. The Parties shall share equally the costs of the mediation and shall each bear their own costs and fees, including attorney fees, associated with the mediation.
7.3 Binding Arbitration: If a mediated resolution to the dispute is not achieved within ninety (90) days of the selection of a mediator (or such additional time as the Parties may agree in writing), any Party may serve on the other a written demand for arbitration of the unresolved dispute.
(a) The unresolved dispute shall be submitted to binding arbitration (without any right of appeal) in Chicago (or such other location as the Parties may mutually agree) before a single arbitrator selected by the Parties with a substantial background in insurance law. If the Parties cannot agree on the arbitrator within thirty (30) days of a written demand for arbitration, the arbitrator shall be selected by the American Arbitration Association [(AAA)] but subject to the Parties' agreement that the arbitrator shall have a substantial background in insurance law.
(b) Unless otherwise agreed by the Parties within thirty (30) days of a written demand for arbitration, the Commercial Rules and Procedures of the American Arbitration Association shall apply to the arbitration under this provision and Illinois law shall govern.
(c) The Parties shall abide by the arbitrator's award, and judgment on that award may be entered by the U.S. District Court for the Northern District of Illinois (Eastern Division) pursuant to the United States Arbitration Act, 9 U.S.C. §§ 1-16, or by the Circuit Court of Cook County, Illinois pursuant to the United States or Illinois Arbitration Act, with each party to share equally the costs of the arbitration and each Party to bear its own costs of the arbitration."

         ¶ 6 Section 7.4 of the 1999 Agreement outlines a limitations period. This section provides:

"7.4 Any and all disputes under this Agreement shall be subject to a limitations period of two years from the date on which the dispute arose."

         ¶ 7 On April 6, 2011, Wausau was served with Caterpillar's complaint. On April 27, 2011, Wausau's counsel sent Caterpillar a letter denying any duty to defend against the welding fumes claims. Further, relying on the 1999 Agreement, Wausau's counsel asserted that Wausau was discharged and released from insurance coverage liability for the welding fumes claims and that the parties' insurance relationship was extinguished by the 1999 Agreement.

         ¶ 8 Also in the April 27, 2011, letter, Wausau's counsel stated "a dispute exists between Caterpillar and Wausau with respect to the nature, scope, and effect of the 1999 Agreement and its applicability to the underlying welding rod fumes claims." Accordingly, under section 7.1 of the 1999 Agreement, Wausau's counsel requested a meeting with Caterpillar within 15 days.

         ¶ 9 On May 2, 2011, Caterpillar's counsel responded to Wausau's letter, stating Caterpillar did not agree the 1999 Agreement governed the welding fumes claims. Thus, Caterpillar's counsel argued Wausau could not rely on section 7 of the 1999 Agreement. Nonetheless, Caterpillar agreed to meet with Wausau on July 15, 2011. On May 10, 2011, Caterpillar filed another complaint, adding Resolute Management, Inc., as a party.

         ¶ 10 Wausau answered Caterpillar's complaint and raised multiple affirmative defenses on June 13, 2011. In its answer, Wausau twice requested that the trial court stay the litigation pending arbitration. Further, in its first affirmative defense, Wausau stated Caterpillar's claim for insurance coverage in the trial court was barred by "a dispute resolution agreement." Wausau's second and third affirmative defenses asserted that the parties' insurance relationship had been extinguished and Caterpillar's claims for coverage were barred by discharge and release.

         ¶ 11 On June 28, 2011, Caterpillar requested discovery from Wausau. Thereafter, on July 13, 2011, Caterpillar agreed to give Wausau an extended amount of time to comply.[4]

         ¶ 12 Century filed two cross-claims against Wausau in the trial court on July 11, 2011. The first cross-claim sought a declaration that Wausau must pay a portion of Caterpillar's defense costs from the welding fumes litigation. The second cross-claim sought a declaration that Wausau must indemnify Caterpillar for the costs of defending the welding fumes claims.

         ¶ 13 On July 15, 2011, Wausau and Caterpillar met pursuant to Wausau's request in the April 27, 2011, letter. The record suggests this July 2011 meeting did not resolve the parties' dispute over the scope and applicability of the 1999 Agreement or Wausau's duty to pay or indemnify Caterpillar for the defense costs incurred in the welding fumes litigation.

         ¶ 14 Thereafter, on August 4, 2011, Wausau filed an answer, affirmative defenses, and demand for jury trial with respect to Century's cross-claims. In Wausau's answer to the cross-claims, Wausau twice requested a stay to the litigation pending arbitration with Caterpillar. Further, Wausau filed affirmative defenses to Century's cross-claims, which were identical to the first three affirmative defenses filed against Caterpillar.

         ¶ 15 On March 30, 2012, Wausau filed its first motion to stay the litigation pending "completion of the contracted-for dispute resolution process," arguing Wausau invoked section 7 of the 1999 Agreement by establishing a dispute between the parties under section 7.1 in its letter dated April 27, 2011. Wausau requested that the trial court find section 7 of the 1999 Agreement covered the dispute regarding Caterpillar's defense costs.[5]

         ¶ 16 Further, Wausau's first motion to stay acknowledged the 1999 Agreement was protected by a confidentiality provision. Thus, the details of the 1999 Agreement could not be disclosed in the pending litigation without a court order. Wausau stated it would take the appropriate steps, whether by agreement with Caterpillar or by a motion with the trial court, to produce a confidentiality order. Further, upon entry of that confidentiality order, Wausau indicated it would submit a memorandum in support of its motion to stay with the 1999 Agreement.

         ¶ 17 On March 30, 2012, Wausau's counsel also sent a letter to Caterpillar's counsel, stating "the next step for the parties is *** non-binding mediation in Chicago." Attached to the letter was a JAMS case submission form, signaling a mediation had been initiated under section ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.