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The Wyoming action was initiated against Ehlco by the Union Pacific Railroad Company (Union Pacific), and the Arkansas proceedings were initiated against Hines by the USEPA. In that case, the insured received a letter from the USEPA stating that it was potentially responsible for the costs of an environmental cleanup, and also received a draft consent order and a "no action" letter informing the insured that it probably would not be held responsible for the costs of any cleanup. On that basis, the Lapham-Hickey court held that no duty to defend was triggered since a "suit" exists in an environmental coverage context only when there has been a proceeding against the insured filed in a court of law. OMC tendered its defense of the underlying actions to its insurers pursuant to the provisions of certain comprehensive general liability insurance policies, but the insurers refused to defend, alleging that the underlying actions were not covered under the policies. Each underlying proceeding involved allegations of contamination and property damage caused by Ehlco-affiliated entities which operated industrial wood-treatment facilities in Wyoming and in Arkansas and which allegedly dispersed hazardous wastes into the environment. Wausau would urge that it had no duty to defend in those proceedings since they did not constitute a "suit" as defined by the subject policies and under Illinois law. Our supreme court's decision in Lapham-Hickey Steel Corp. Protection Mutual Insurance Co., 166 Ill.2d 520, 211 Ill. None of those written documents led to the filing of any suit against the insured. The Lapham-Hickey court stated that its holding was consistent with the manner in which courts determine whether a duty to defend exists, i.e., by comparing the allegations of the underlying complaint to the relevant policy provisions to see if coverage is even potentially alleged by the pleadings. OMC therefore defended itself and eventually negotiated and entered into the aforementioned consent decree settlement, and then instituted its declaratory judgment action against its carriers.
The trial court also granted Ehlco's motion to strike the new counts and allegations of Wausau's third-amended complaint, apparently on the grounds that the new allegations therein were conclusory and unsupported by allegations of fact, and because in any event, Wausau was estopped from asserting any of the policy defenses in those new counts because of its breach of its duty to defend. The governmental agencies ultimately moved for voluntary dismissal of those actions, which the federal district court granted without prejudice.
In sustaining that motion, the court also said that "the court agrees with all of Ehlco's arguments presented in this motion," which Wausau now construes to be a determination that the court struck its jury demand as well. Thereafter, in October 1988, those agencies both filed new federal complaints against OMC, in which they made the same factual allegations as those set forth in their initial complaints, and in which they prayed for response costs and in addition damages under CERCLA.
After the denial of various post-trial motions to reconsider filed by Wausau (addressed more fully below in our discussion of our jurisdiction to hear this appeal), Wausau appealed. E.2d 278 (1996) (no duty to defend because no suit was filed in that no judicial proceeding was commenced); Forest Preserve District of Du Page County v. In April 1989, the federal district court approved of and entered a consent decree which had been negotiated and entered into by OMC, the EPA and the State of Illinois.
As noted above, this case involves two underlying proceedings, one in Wyoming and one in Mena, Arkansas. In Lapham-Hickey, the relevant coverage provisions required the insurer to defend "suits" against the insured. Pursuant to that decree, OMC was required to make payments into a trust fund for the costs associated with the cleanup of the contaminated waters. E.2d 1338 (1995) (stating that the requirement of timely notice is a condition precedent of the policy).
In its third-amended complaint, Wausau repeated the allegations in its previous complaint and added several new counts seeking a determination of noncoverage under the subject policies. E.2d 414, 416-17 (1997) ("Lapham-Hickey's requirement of a lawsuit to trigger the insurance company's duty to defend is to be applied retroactively."); Fruit of the Loom, 284 Ill. As noted, the consent decree provides in pertinent part as follows: "This Consent Decree shall be lodged with the Court for a period of 30 days for public comment pursuant to the provisions of 28 C. Third, the decree provided its own stipulated penalties.