Motorola Solutions, Inc. v. Zurich Ins. Co.

• Decision Date: 29 May 2015
• Docket Number: Nos. 1–13–1529,1–13–1530.,s. 1–13–1529
• Citation: 33 N.E.3d 917
• Parties: MOTOROLA SOLUTIONS, INC., Plaintiff–Appellee, v. ZURICH INSURANCE COMPANY and Associated Indemnity Corporation, Defendants–Appellants (Continental Casualty Company; National Fire Insurance Company of Hartford; Transportation Insurance Company; American Casualty Company of Reading, Pennsylvania; National Union Fire Insurance Company of Pittsburgh, Pennsylvania; Liberty Mutual Fire Insurance Company; and Liberty Insurance Company; Defendants).
• Court: United States Appellate Court of Illinois

33 N.E.3d 917

MOTOROLA SOLUTIONS, INC., Plaintiff–Appellee

v.ZURICH INSURANCE COMPANY and Associated Indemnity Corporation, Defendants–Appellants (Continental Casualty Company; National Fire Insurance Company of Hartford; Transportation Insurance Company; American Casualty Company of Reading, Pennsylvania; National Union Fire Insurance Company of Pittsburgh, Pennsylvania; Liberty Mutual Fire Insurance Company; and Liberty Insurance Company; Defendants).

Nos. 1–13–1529

1–13–1530.

Appellate Court of Illinois, First District, Fifth Division.

May 29, 2015.

James R. Murray, of Tressler LLP, of Chicago, and Jack Thomas, of Crowell & Moring LLP, of New York, New York, for appellant Associated Indemnity Corporation.

Michael M. Marick and Karen M. Dixon, both of Meckler Bulger Tilson Marick & Pearson LLP, of Chicago, for appellant Zurich Insurance Company.

James A. White and Brian J. Murray, both of Jones Day, of Chicago, and Peter D. Laun and Matthew R. Divelbiss, both of Jones Day, of Pittsburgh, Pennsylvania, for appellee.

OPINION

Justice GORDON^* delivered the judgment of the court, with opinion:

¶ 1 The instant consolidated appeals arise from the interpretation of two nearly identical settlement agreements entered into by plaintiff Motorola Solutions, Inc. (Motorola), one with defendant Zurich Insurance Company (Zurich) and one with defendant Associated Indemnity Corporation (Associated).¹ The parties disagree about whether the settlement agreements contained provisions that operated to release defendants from providing insurance coverage for certain claims against Motorola. Each party filed a motion for summary judgment on the issue, all of which were denied after the trial court found that the releases were ambiguous. The parties conducted discovery and a bench trial was held on the issue of the scope of the releases' language. The trial court concluded that the parties had not released Motorola's claims, and defendants now appeal.

On appeal, defendants claim that the trial court erred in not granting summary judgment in their favor and erred in finding that the claims had not been released after the bench trial. Additionally, defendants claim that the trial court erred in denying their joint motion to compel discovery of certain Motorola documents. For the reasons that follow, we affirm.

¶ 2 BACKGROUND

¶ 3 We note that the parties' briefs and portions of the record on appeal were permitted to be filed under seal, including the settlement agreements at issue on appeal. While we respect the parties' wishes to keep confidential material private, our consideration of the trial court's interpretation of the settlement agreements will necessarily require us to discuss details of these documents in the instant appeal. However, we only include those details necessary to our resolution of the issues on appeal.

¶ 4 I. Complaint

¶ 5 On February 18, 2011, Motorola filed a complaint for declaratory judgment and breach of contract against a number of insurance companies, including Zurich and Associated; the complaint was amended on July 1, 2011, and again on February 22, 2013. Motorola sought the defendants to provide it legal representation to defend Motorola and/or coverage for defense costs under insurance policies issued by each of the defendants for four underlying personal injury actions in which claims were asserted against Motorola. The complaint identified one Associated policy with a policy period from July 1, 1983, through July 1, 1985, and 13 Zurich policies with coverage from January 31, 1963, through July 1, 1983, and from July 1, 1985, through July 1, 1987.

¶ 6 The four underlying actions (the clean room cases) alleged that Motorola was liable for injuries that children of former Motorola employees and contractors allegedly sustained as a result of exposure to various chemicals in “clean rooms” in Motorola manufacturing facilities. According to Motorola's complaint, from the 1960s through 2003, Motorola operated facilities that manufactured, among other things, semiconductor products. These facilities included certain rooms that were designated as “clean rooms” in which the semiconductor products were manufactured, which “were designed to prevent dust and other similar materials from contacting semiconductor components during the manufacturing process.” The clean room cases all involved substantially similar allegations, in general alleging that hazardous or toxic materials were present in the “clean rooms” and that “either the father, the mother, or both worked in a Motorola clean room facility for some period of time before, and in a number of cases after, the plaintiff child was born; often the period of employment [was] alleged to have continued through the in utero period. The plaintiffs generally claim[ed] that the children were injured as a result of parents working in clean rooms.”

¶ 7 Motorola's complaint alleged that one or more of the insurer defendants had a duty to defend and/or pay defense costs in the clean room cases and that by failing to do so, the defendants had breached their obligations to Motorola under the insurance policies.

¶ 8 The complaints in the underlying clean room cases were attached to Motorola's complaint. The complaints alleged that the parents of the plaintiff children had been employed at Motorola facilities, where they “worked with and [were] exposed to harmful chemicals and substances that were utilized in the process of manufacturing semiconductor devices.” The employees were required to use “teratogenic and reproductively toxic compounds” in the clean rooms, but “[n]o generalized ventilation system was configured explicitly to protect the workers from inhalation or skin exposure to the liquids, vapors, gases and fumes from the chemicals” and “[a]t relevant times [,] these chemicals have been components of the recirculated air in the clean room, have remained in the recirculated air mixture and have not been removed from it.” These chemicals “were defective, unsafe and/or unreasonably dangerous” and caused the children to become “severely and permanently injured.”

¶ 9 On August 5, 2011, Zurich filed its answer and affirmative defenses and also included a counterclaim in which it alleged that Motorola had released all of its claims for coverage for the clean room cases in a settlement agreement and release entered into with Zurich in November 2003 (the Zurich release)

¶ 10 On August 8, 2011, Associated filed its answer and affirmative defenses and also included a counterclaim alleging that it had no defense obligation for the clean room cases due to a settlement agreement and release that was executed between Associated and Motorola on May 30, 2003 (the Associated release).

¶ 11 II. Releases

¶ 12 The releases between Motorola and the two insurers are at the heart of the instant appeal. While the Zurich release and the Associated release are two separate documents executed at different times, the substantive provisions of the releases are nearly identical.

¶ 13 The Associated release was executed on May 30, 2003, and included “whereas” clauses providing, in relevant part:

“WHEREAS, Motorola has been named in several lawsuits by private parties in Arizona for alleged bodily injury and property damage relating to Motorola's disposal of hazardous substances in the Phoenix area * * *, has been identified as being responsible for the investigation and remediation of contamination at and around numerous sites around the United States (‘the Known Sites,’ * * *), and may be liable for claims asserted by the United States Environmental Protection Agency (‘USEPA’), the Arizona Department of Environmental Quality (‘ADEQ’) and/or other similar state or local regulatory authorities or private individuals for alleged harms as a result of contamination at and/or around the Known Sites (collectively, the ‘known Environmental/Toxic Tort Claims');

* * *

WHEREAS, [Associated] has disputed Motorola's claim of entitlement to defense or indemnity in connection with the known Environmental/Toxic Tort Claims;

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WHEREAS, Environmental/Toxic Tort Claims may in the future be asserted against Motorola with respect to the Known Sites and/or additional Sites;

WHEREAS, Motorola and [Associated] now desire to compromise, settle and adjust fully and finally all disputes which now or hereafter may exist between them with respect to any and all claims, known and unknown, past, present or future, which have arisen or may arise under any and all coverages of the Policies for ‘Environmental/Toxic Tort Claims' (as that term is defined herein) on the terms hereinafter set forth.”

¶ 14 The release contained an extensive definition for “Environmental/Toxic Tort Claims,” which we reproduce in full:

“ ‘Environmental/Toxic Tort Claim(s)’ means:

i. any past, present and future Claim involving Motorola, whether presently known, unknown or unknowable, involving actual, alleged, threatened or potential property damage (or injury to property or damage to natural resources including but not limited to ‘NRD’ or ‘natural resource damages'), bodily injury (including sickness, disease, disability or death at any time resulting therefrom), mental injury, mental anguish, shock, emotional distress, fear of injury (including Claims seeking medical monitoring or damages for care and loss of services), personal injury and claims to recover clean-up or remediation costs (including but not limited to costs incurred and sums expended, or which may in the future be incurred or expended for investigation, removal, distribution, treatment or containment), involving actual, alleged, threatened or potential environmental pollution, environmental contamination or other injurious environmental conditions, including exposure to smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other environmental contaminants or pollutants, petroleum or natural gas or derivatives thereof, including without limitation, any hazardous

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