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Illinois Tool Works, Inc. v. Ace Specialty Insurance Co.

Court of Appeals of Illinois, First District, Sixth Division

August 23, 2019

ILLINOIS TOOL WORKS, INC., Plaintiff-Appellant,
v.
ACE SPECIALTY INSURANCE COMPANY, NEW HAMPSHIRE INSURANCE COMPANY, and MARYLAND CASUALTY COMPANY, Defendants-Appellees.

          Appeal from the Circuit Court of Cook County. No. 14 CH 20792 Honorable Moshe Jacobius, Judge Presiding.

          Attorneys for Appellant: Angela R. Elbert and Eric Y. Choi, of Neal Gerber & Eisenberg, LLP, of Chicago, for appellant.

          Attorneys for Appellee: Joshua A. Boggioni, of Hinkhouse Williams Walsh LLP, Karen M. Dixon, of Skarzynski Marick & Black LLP, and Frank Slepicka, of Cohn Baughman & Serlin, all of Chicago, for appellees.

         JUSTICE CUNNINGHAM delivered the judgment of the court, with opinion. Presiding Justice Delort and Justice Harris concurred in the judgment and opinion.

          OPINION

          CUNNINGHAM JUSTICE

         ¶ 1 The plaintiff-appellant, Illinois Tools Works, Inc. (ITW), filed a declaratory judgment action in the circuit court of Cook County against the defendants-appellees, Ace Specialty Insurance Company, New Hampshire Insurance Company, and Zurich American Insurance Company[1] (collectively, the insurers). ITW sought a declaration that the insurers had a duty to defend it from claims regarding environmental contamination. The circuit court granted partial summary judgment in favor of the insurers, and ITW filed this appeal. For the following reasons, we affirm the judgment of the circuit court of Cook County.

         ¶ 2 BACKGROUND

         ¶ 3 ITW is a diversified manufacturer headquartered in Glenview, Illinois. In 2001, ITW acquired Diagraph Corporation (Diagraph). Diagraph, along with its subsidiaries and related companies, manufactured stencils, stencil machines, ink, duplicators, and related products from 1947 to 2002 at various manufacturing facilities within a location in south central Illinois known as the Crab Orchard Site.

         ¶ 4 The Crab Orchard Site consists of approximately 44, 000 acres of land and is the site of a former Illinois Ordnance Plant. Large-scale bombs and munitions were manufactured at the plant during World War II. After the war, the site was designated as a U.S. fish and wildlife refuge. The United States Fish and Wildlife Service also manages the site's manufacturing facilities.

         ¶ 5 In 1987, an investigation of the Crab Orchard Site identified certain areas that allegedly posed unacceptable risks to human health and the environment, due in part to the release of hazardous substances from the manufacturing facilities located at the site. The United States Environmental Protection Agency (EPA) subsequently listed the Crab Orchard Site as a National Priorities List Superfund Site.

         ¶ 6 The EPA divided the Crab Orchard Superfund Site into six separate "operable units."[2]One of the operable units is the Miscellaneous Areas Operable Unit (MISCA-OU). MISCA-OU contains a tract of land known as Site 36. The Crab Orchard Superfund Site's former wastewater treatment plant was located in Site 36.

         ¶ 7 In 1991, the United States government, through the EPA and several other agencies, began developing response initiatives to remediate the various hazardous operable units within the Crab Orchard Superfund Site. The cleanup effort of Site 36 was mostly completed by 2006, and the United States government incurred costs in excess of $8.9 million.

         ¶ 8 In 1997, the EPA created a seventh operable unit to address additional releases of hazardous substances that were not included in the six original units. That unit is known as the Additional and Uncharacterized Sites Operable Unit (AUS-OU). Diagraph's manufacturing facilities were located within AUS-OU.

         ¶ 9 The Policies

         ¶ 10 Between 1974 and 1985, the insurers issued a series of general liability insurance policies to Diagraph, which are now applicable to ITW as Diagraph's successor (the policies). Each policy provides an identical duty to defend ITW against a "suit":

"[T]he company shall have the right and duty to defend any suit against the insured seeking damages on account of *** property damage *** and make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after ...

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