Fairmount Park, Inc. v. Travelers Indem. Co.

• Decision Date: 30 September 2013
• Docket Number: No. 12–CV–827–WDS,12–CV–827–WDS
• Citation: 982 F.Supp.2d 864
• Parties: Fairmount Park, Inc., Plaintiff, v. The Travelers Indemnity Company, Defendant.
• Court: U.S. District Court — Southern District of Illinois

982 F.Supp.2d 864

Fairmount Park, Inc., Plaintiff,

v.The Travelers Indemnity Company, Defendant.

No. 12–CV–827–WDS

United States District Court, S.D. Illinois.

September 30, 2013

Beth C. Boggs, Boggs, Avellino, Lach & Boggs, LLC, St. Louis, MO, for Plaintiff.

Daniel E. Feinberg, Dentons US LLP, Chicago, IL, Deborah C. Druley, SNR Denton US LLP, St. Louis, MO, for Defendant.

MEMORANDUM & ORDER

STIEHL, District Judge:

In this action, plaintiff Fairmount Park, Inc. seeks a declaratory judgment that defendant Travelers Indemnity Company must defend and indemnify plaintiff pursuant to two insurance policies in a matter filed with the Illinois Pollution Control Board. Now before the Court is defendant's motion for summary judgment (Doc. 44), to which plaintiff has filed a response (Doc. 49) and defendant a reply (Doc. 51).

The Court finds that it has subject-matter jurisdiction in this action. Plaintiff originally filed its complaint in Illinois state court. Defendant removed it here based on diversity jurisdiction. See28 U.S.C. §§ 1332(a)(1), 1446. Plaintiff and defendant are both corporations. Plaintiff was incorporated under the laws of Delaware, with its principal place of business in Illinois, while defendant was incorporated under the laws of Connecticut, with its principal place of business also in Connecticut. Thus the parties are completely diverse. See, e.g.,Market St. Assocs. Ltd. P'ship v. Frey, 941 F.2d 588, 589 (7th Cir.1991). The complaint before the Illinois Pollution Control Board alleges over $4.5 million in damages, and plaintiff here seeks a defense and indemnification under two insurance policies that each provide $2 million in coverage for property damages and another $2 million for personal injury. The matter in controversy in this case therefore exceeds the sum or value of $75,000. See§ 1332(a). The requirements of diversity jurisdiction are met.

Background

Plaintiff Fairmount Park, Inc., owns a horse track in Collinsville, Illinois. Plaintiff is the successor in interest to Ogden Fairmount, Inc., which owned the track before plaintiff, and had contracted with Seiber Hauling and Trucking from 1981 to 1994 to dispose of the track's manure and trash.

Seiber was disposing of the manure and trash on its own property. It later sold the property to Caseyville Sport Choice, LLC. When Caseyville sought to develop the property into a subdivision, it found over 159,000 tons of horse manure, and 2,600 tons of municipal trash. It incurred over $4.5 million in clean-up costs and obtained an Environmental No Further Remediation Letter from the Illinois Environmental Protection Agency.

On August 22, 2008, Caseyville brought a complaint against Seiber and plaintiff before the Illinois Pollution Control Board, captioned In the Matter of Caseyville Sport Choice, LLC v. Erma I. Seiber, et al., PCB 2008–030 (“IPCB Matter”). Caseyville alleges that plaintiff “repeatedly paid” Seiber to haul away large amounts of horse manure, mixed with municipal trash, “with the expectation that Seiber would dump the horse manure ... on his own land rather than at a properly permitted waste-disposal site or facility” (Doc. 49, Ex. 3, p. 7). Caseyville believes Seiber and plaintiff violated the Illinois Environmental Protection Act, 415 ILCS 5/21(a), which prohibits the “open dumping of any waste.” Plaintiff's answer to Caseyville's complaint states that Seiber was “polluting his own land ... in violation of the Illinois Environmental Protection Act” (Doc. 44, Ex. 8, p. 3).

In May 2011, plaintiff discovered two general liability policies issued by defendant Travelers Indemnity Company to Ogden Corporation, the parent company of plaintiff's predecessor, Ogden Fairmount, Inc.¹ Plaintiff sent notice to defendant of the IPCB Matter on May 18, 2011, seeking coverage. Defendant denied plaintiff's request.

In the meantime, plaintiff had been defending itself in the IPCB Matter. Discovery was conducted ²; plaintiff filed a summary-judgment motion, which was denied; and plaintiff engaged in settlement negotiations, which were unsuccessful. When defendant's motion for summary judgment was filed here, settlement negotiations were continuing in the IPCB Matter.

Discussion

Under Federal Rule of Civil Procedure 56, the court must grant summary judgment where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The movant “always bears the initialresponsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed. R. Civ. P. 56(c)). A party asserting that a fact cannot be, or is genuinely disputed, must support the assertion by “citing to particular parts of materials in the record” or “showing that the materials cited do not establish the absence or presence of a genuine dispute.” Fed. R. Civ. P. 56(c)(1).

After the moving party has satisfied its burden, the burden shifts to the nonmoving party. The nonmoving party “ ‘must do more than raise some metaphysical doubt as to the material facts; [it] must come forward with specific facts showing that there is some genuine issue for trial.’ ” Argyropoulos v. City of Alton, 539 F.3d 724, 732 (7th Cir.2008) (quoting Keri v. Bd. of Trs. of Purdue Univ., 458 F.3d 620, 628 (7th Cir.2006)). A genuine issue for trial exists “only if sufficient evidence favoring the nonmoving party exists to permit a jury to return a verdict for that party.” Argyropoulos, 539 F.3d at 732 (quoting Sides v. City of Champaign, 496 F.3d 820, 826 (7th Cir.2007)).

Analysis

At issue in this case are two provisions of the insurance policies. The first is a notice provision, which provides: “If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative” (Doc. 44, Ex. 6, p. 21; Ex. 7, p. 21). Defendant believes it is entitled to summary judgment because plaintiff breached this notice provision by not giving defendant notice of the IPCB Matter until over two and a half years after it was filed (specifically, two years and nine months, from August 2008 until May 2011).

The second provision is the policies' pollution exclusion, which denies coverage for the discharge of waste materials into the environment:

This insurance does not apply ... to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contamination or pollutants into or upon land, the atmosphere or any watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental (Doc. 44, Ex. 6, p. 9; Ex. 7, p. 9).

Defendant raises the question of which state's law should be applied, that of New York or Illinois, since the policies themselves do not contain a choice-of-law provision. Defendant finds substantive differences between the laws of these states, particularly involving the pollution exclusion. It concludes that a choice-of-law analysis is necessary and finds that New York law should be applied. Plaintiff responds that questions of fact preclude summary judgment under either Illinois or New York law.

A federal court with jurisdiction based on diversity applies the choice-of-law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496–97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). So this Court applies the choice-of-law rules of Illinois, where the first step is to isolate the issue and define the conflict, Townsend v. Sears, Roebuck & Co., 227 Ill.2d 147, 316 Ill.Dec. 505, 879 N.E.2d 893, 898 (2007). A decision about the choice of law is only needed, however, when a difference in the states' laws would make a difference in the outcome. Id.; Barbara's Sales, Inc. v. Intel Corp., 227 Ill.2d 45, 316 Ill.Dec. 522, 879 N.E.2d 910, 918 (2007).

As will be discussed in the course of this order, the Court does not find a conflict that would make a difference in the outcome of this case on the issues of notice and estoppel; accordingly, Illinois law will be applied.

Defendant points to authority suggesting that New York and Illinois laws conflict on the issue of late notice of a lawsuit. Some courts have found that in Illinois the insurer must prove it was prejudiced by the lack of (or delayed) notice, while in New York prejudice in not necessary. SeeHousehold Int'l, Inc. v. Liberty Mut. Ins. Co., 321 Ill.App.3d 859, 255 Ill.Dec. 221, 749 N.E.2d 1, 8 (2001); Ill. Nat'l Ins. Co. v. Banc One Acceptance Corp., No. 05–CV–1260 (NAM/DRH), 2008 WL 5423262, at *9 (N.D.N.Y. Dec. 29, 2008). That does not appear to be current Illinois law, however. Prejudice is only one factor to consider in deciding whether an insured's delay in notice was reasonable. Country Mut. Ins. Co. v. Livorsi Marine, Inc., 222 Ill.2d 303, 305 Ill.Dec. 533, 856 N.E.2d 338, 346 (2006); Simmon v. Iowa Mut. Cas. Co., 3 Ill.2d 318, 121 N.E.2d 509 (1954). If prejudice is only a factor that may be considered in Illinois, then a showing of prejudice is not necessary. SeeNorthbrook Prop. & Cas. v. Applied Sys., 313 Ill.App.3d 457, 246 Ill.Dec. 264, 729 N.E.2d 915, 922 (2000) (“The general rule in notice cases is that the insurer need not prove prejudice.”). That is the law of New York. Indeed, on this issue defendant itself does not agree there is a conflict and submits authority from both states in support of its motion for summary judgment. Thus the Court does not find a conflict that would make a...