## I L L I N O I S 

## O F F I C I A L 

## R E P O R T S Appellate Court

Water Application s & System s Corp. v. Bitu m inou s Casu alty Corp. ,

2013 IL App (1st) 120983

Appellate Court Caption WATER APPL I CATI ONS AND SYST E M S CORPOR ATI ON, n/k/a WASC O L L C, Plaintiff-Appellant, v. BI TUMI NOUS CASUAL TY CORPOR ATI ON, De fenda nt-Appellee

.

District & N o. First District, Six th Division
Docke t No. 1-12-0983

Filed Fe bruar y 15, 2013

Held (Note : Th is syl lab us

c ons ti tut es no par t o

f the opi nio n of the cour t but has bee n pre

par ed by the R epo rt er of D e c i s i o n s f

o r t h e

c o n v e n i e n c e o

f t h e

rea der

. ) The trial court proper ly dismiss ed a complaint all eging that defe ndant insurer brea ched its d u t ies to defe nd plaintiff afte r the Environmental Protection Ag ency g ave plaintiff notice of potential liab i l i t y , since the policies at issue wer e issue d t o a company plaintiff purcha sed, the antiassig nment provisions in the policies wer e enfor cea ble un d er the
g overning Maryland l aw , d efendant never g ave written consent to an assig nment, and even assuming the policies wer e proper ly assig ned, they did not cover a

regulatory

action by the Ag ency

.

Dec ision Under Review Appea l from the Circuit Court of Cook County
, No. 09-C H-16371; the Hon. L eRoy

Martin, J udg e, pre siding.

J udg ment Affir med.Counsel on

Appea l Daniel J

. Bie derma n, Sr., of Bie derma

n & Novi, L L C, of Chicag o, for appellant.

J ohn E. Rodewald and Richard B. Bor oski, both of Bates Carey Nicolaides L L P, of Chicag o, for a ppellee.

Panel J USTI CE GORDON delivere d the judgme nt of the cour t, with opinion. Presiding J ustice L ampkin and J ustice Rey es concur red in the judgme nt and opinion.

OP INION

¶ 1 The plaintiff, WASC O L L C, filed this suit claiming that defe ndant Bituminous Casualty Corporation, an insurance company , brea ched its duties under two insurance policies when it did not defe nd plaintiff afte r rec eiving a notice of potential liability from the United States Environmental P rotec tion Ag ency (EPA) during an EPA investigat i on proce ss. Def endant claims that plaintiff cannot be an assig nee of the policy without defe ndant’s written consent pursuant to the terms of the i n s uranc e policy

. Plaintiff claims that no written consent is require d. The trial court g rante d defe ndant’s motion for summary judgme nt dismissing the suit. P laintiff appe als, and for the following rea sons, we af firm.

¶ 2 BA CKGROUND
¶ 3 Plaintiff filed a brea ch of cont r a c t a c tion ag ainst defe ndant involving two g ener al liability insurance policies wher e plaintiff wa s n o t n amed as an insured. Plaintiff argues that it assumed the policies by purcha sing the assets of Palm Oil Recove ry , I nc., a palm oil

rec y cling compa n y , the named insured. Def endant claims that plaintiff did not prese nt sufficie nt evidenc e to cre ate a materia l issue of fac t about whether it was cover ed under the subject policies, and defe ndant further argues that the subject policies could not be assig ned without defenda

nt’s consent.

¶ 4 I . The Policies and the Purc hase A g ree ment ¶ 5 Policy A was issued as an “occ urre nce” liability policy (N o

. GA 6 3 7 2 5 8 ; here inafter Policy A) for the policy period of November 6, 1968, throug h November 9, 1971. Under the section titled “Comprehe nsive Gene ral L ia b il it y I n suranc e,” Policy A provided the following

cover ag e:
“The company [defendant] will pay on behalf of the insu red [P alm Oil Recove ry , I nc.,]

-2 -sums which the insu red shall become leg ally obligated to pay

as dam ages beca

use of

A. bodi ly inju ry or

B. property dam age

to w hich this insurance applies, cause d by an occurr ence , and the company shall have the right and duty to defe nd any suit ag ainst the insu re d s ee k i n g dam ages on acc ount of such bodi ly injury or property dam age , even if any of the alleg ations in the suit are g roundless, false, or fra

udulent, and may make any such investigation and settlement of
any claim or suit as it deems expedient ***.”
¶ 6 Policy A define s “occ urre nce” as “an acci d en t , i n cl u d i n g i n j u ri o u s ex p o s u re to conditions, which results during the po l i cy period, in bodi ly injury or property dam age neither expected nor intended from the standpoint of the insu red .” I t define s “dama g es” as including “dama g es for death and for car e and loss of service s resulting from bodi ly injury and damag es for loss of use of proper ty resulting from property dam age .” “P roper ty damag e” is define d as “injury to or destruction of tang ible proper ty .” Policy A also contains an antiassig nment clause , which states:

“ 9. Assignme nt: Assignme nt of interest under this policy shall not bind the company unless its consent is endorsed he reon ***.”

On J anuar

y 15, 1971, Policy A was am en d ed b y endorse ment to add “PORI
, I NC.” as a named insure d, eff

ective January

1 of that y ear

. ¶ 7 Palm Oil Recove ry , I nc.’s corpor ate history since the issua n ce o f P o l icy A is disputed betwee n the parties. Plaintiff cl ai m s t h at, in 1971, Palm Oil Recove ry , Inc., merg ed with

some other companies to form Pori, I nc., which was then sold in 1981 to Pori Holdings, I nc.,

an d t h ereafte r rena

med PORI I nterna tional, I nc. We will discuss the evidentiar y basis for plaintiff’s fa ctual cla ims in i ts proper se quence

. ¶ 8 On November 30, 1971, defe ndant issued a second third-par ty liability insurance policy (No. GA686764; here inafter Policy B)
, which cover ed Pori, I nc., as the named insured from November 9, 1971, throug h November 9, 1972. Policy B was issued with the same contra ct lang uag e as Policy A and included the same provisions. Unde r its decla rations, Policy B states that it is a rene wal of Policy A. ¶ 9 On Fe bruar

y 28, 1997, PORI I nterna tional, I nc., executed a n asset purc hase a g ree ment (Purcha se Ag ree ment) to sell its a ssets to U.S. Filter Recove ry Service s (Midatlantic), Inc. (USFRSM), a subsidiary wholly owned by U.S. Filter Recove ry Service s, I nc. (USFRS). USFRS was a wholly owned subsidiary of United States Filter Corporation (USFC). At the time of the Purchase Ag ree ment, plaintiff was known as USFC. On Aug ust 2, 2004, USFC chang ed its name to Water Applications & Sy stems Corpor ation, which was later rena med WASC O L L C on Dece mber 22, 2006.
¶ 10 The Purchase Ag ree ment set forth the t er m s o f t he sale of PORI I nterna tional, I nc.’s
assets to plaintiff. The Purchase Ag ree ment desig nated California as the choice of law under

-3 -section 8.7:

“ 8.7 Of fset; Assignme nt; Gove rning Law

. *** This Ag ree ment shall be g overne d by and construed in acc ordanc e with the laws of California without reg ard to its conflict of law doc trines.” The pre amble to the Purcha se Ag ree ment sets forth the f ollowing:

“Seller [P ORI I nterna tional, I nc.,] desires to s el l and assig n to Buy er [US FRSM] *** substantially all of Seller’s assets and cer tain of S el l er’s liabiliti es on the terms and subject to the conditions set forth be low.”

Section 2.1 descr ibes the sale of assets:

“ 2.1 Sale and P urchase of Assets. At the Closing, Seller shall sell and transfe r to Buy er *** all of Seller’s proper ties and business as a g oing conce rn and g oodwi ll and assets of e very

kind ***.”

Section 2.3 sets forth the a ssumption of li abilities:

“ 2.3 Assum ption of Liab ilities. *** Buy er shall *** assum e *** the following L iabilities of S eller and only such L iabilities ***: (i) thos e specific L iabilities ac cr u ed

on the Adjus tment Ba lance S h ee t as t h ey exis t on the C losing Date ***, and (ii) those L iabilities incurre d afte r the Closing Date and pursuant to the express terms of the Contracts [disclosed on Schedule 3.13, 3.16, 3.20, or 3.21] ***.”

Section 3.19 of the Purchase Ag ree ment included the following reg arding the assig nment of insurance policies under w hich PORI I nterna tional, I nc., wa s insured:

“ 3.19 Insu rance. Schedule 3.19 discloses all insurance policies on an ‘occ urre nce’ basis with respec t to which Seller is the owner , insured or be nefic iary .”

I t is important to note that schedule 3.19 did not list the subject policies. Section 5.5 provides that PORI I nterna tional, I nc., would pay the insurance premiums until the closing date of the Purchase Ag ree ment. The Purchase Ag ree ment contained the following provision reg arding
reta ined liabilities:

“ 2.4 Ret ained Liab ilities. Ex cept for the Assumed L iabilities, Buy e r d o e s not here by and shall not assume or in a ny way undertake to pay
, perf

orm, satisfy or di schar g e any other L iability of Seller, whether exis ting on, befor e or afte r the Closing Date or arising
out of any transac tions enter ed into, or any state of fac ts exis ting on, prior to or afte r the Closing Date (the ‘Re tained Liab ilities’ ), and Seller ag ree s to pay and satisfy when due all Retained L iabilities. Wit hout limit ing the fore g oing, except fo r the Assumed L iabilities, the term ‘Re tained Liab ilities’ shall include L iabilities:

* * * (v) a g ainst which seller

is insured or other

wise indemnified ***.”

The Purcha se Ag ree ment additionally contained the following clause on consent rig hts:

-4 -“ 2.12 Cer tain Consents

. Nothing in this ag ree ment shall be construed as an attempt to assig n any contra ct, ag ree ment, Permit, fra nchise, or claim included in the Purchase d Assets which is by its terms or in law nonassig nable without the consent of the other party or parties there to, unless such consent shall have been g iven, or as to which all the

reme dies for the enfor ceme nt there of enjoy ed by Seller would not, as a matter of law, pass to Buy er a s an incident of the assig nments provided for by this Agr eeme nt.” The appellate recor d does not show that d ef en d an t consente d to the allege d assig nment of the subject policies. The appellate rec ord does not contain the alleg ed assig nment or any evidenc e that its premiums were prora ted or pa id by

plaintiff.

¶ 11 I I . EPA I nvestig ation
¶ 12 On Aug us t 6
, 2 0 0 7
, t h e EPA sent a “Notice of Potential L iability ” to Siemens Water Tec hnologie s (S i emens). The “Notice of Potential L iability ” identified Siemens as a “Potentially Responsible Party ” (PRP) to an “Emer g ency Removal Action.” The PRP letter 1

war ned that Siemens may incur, or may have incurre d, liability under se ction 107(a) of the Comprehensive Environmental Response, Compensation, and L iability Act of 1980 (42 U.S.C. § 9607(a) (2006))
, and that it might be responsible for the clea nup of the Sauer Dump site in Dundalk, Maryland and/or costs the EPA has incurre d in clea ning up the site. The PRP letter reque sted a response from Siemens within 3 0 day s indicating its willingness or unwillingness to eng ag e in future neg otiations conce rning the site. A copy of the PRP letter

was forwa

rded to plaintiff, which enter ed into neg otiations with t h e E P A o n August 21, 2007. ¶ 13 On Au gu s t 1 7
, 2 0 07, the EPA sent Siemens a draf t of a proposed “ Administrative Settlement and Orde r on Consent for Removal Response Action” naming sever al responde nts. The draf

t order names Siemens as a succe ssor in interest to PORI Interna tional, I n c. , which it alleg es improperly disposed of hazardous materia ls at the Sauer Dump site during the 1960s, 1970s, and 1980s. The draf t order indicates that the EPA holds the

T he EPA is re spo nsi ble for re spo ndi ng to the re le ase of hazar dous sub st anc es i n t o t he 1 envir onment unde r sec ti ons 106( a) and 122( a) o f the Com pre hen si ve Enviro nm ent al Resp ons e, Com pen sat ion , and Liabi li ty Act of 1980 (CERCLA) , as amended by the Supe rf und Am end m ent s and Reau tho ri zati on Act of 1986 (42 U.S.C. §§ 9606 (a ), 9622 (a ) (20 06) ). CERCLA imposes li abi li ty

on par ti es des ignat ed as re spo nsi ble for the re le ase of hazar dous sub st anc es int o the ai r, la nd, sur fa ce wat er , or groundwa te r. 42 U.S.C. §§ 9601 (8) (B)
, (14 ), (22 ), 9607 (a ), (b)

. T he EPA m ay see k an inj unc ti on re qui ri ng the re spo nsi ble par ty to cl ean up a con ta m ina te d si te , or it m ay is sue a n adminis tr at ive ord er re qui ri ng the re spo nsi ble par ty to per for m the cl ean up, sub j ect to ci vil fi nes for a f ai lur e t o co m

ply. 42 U.S.C. § 9606 (a ), (b)

. Alt er nat ively, the gov er nm ent m ay c le an up t he s it e and demand re imburse m ent for it s inc urr ed cos ts

. 42 U.S.C. §§ 9604 (a )( 1), 9607 (a ). T he EPA m ay fi rs t not if y a par ty tha t it m ight be re spo nsi ble for cl ean ing up con ta m ina ti on tha t it al le gedly cau sed

. Fol lowi ng an inves ti gatio n, the EPA m ay the n ent er an emergency re m oval act ion unde r CERCLA, whic h ho lds th e pa rt y lia ble fo r t he c le anu p of th e c ont aminat ed s it e.

-5 -responde nts liable for the contamination and require s them to conduct a clea nup of the site. The time period of the claimed dumping coincides with the policy period of the s u b j ec t policies, which insured Palm Oi l R ec o v ery , I nc., and Pori, Inc., ag ainst claims that arose betwee n 1968 and 1972. Under section I I I
, titled “F inding of Fa cts,” the remova l action states that PORI I nterna tional, I nc., was sold in 1997 to US FRSM, a subsidiary of USFRS. I t further states that USFRS was then sold to Siemens Corporation on Aug ust 1, 2004, and that USFRSM then merg ed into Siemens on Aug ust 31, 2006. ¶ 14 On September 28, 2007, plaintiff forwa rded a cop y o f t h e P R P l et t er to defe ndant,
reque sting that it provide that a defe nse to the EPA’s impending action under the provisions of the subject poli ci es

. Def endant responde d to plaintiff’s letter on May 22, 2008, and informed it that it would not defe nd ag ainst the E P A i n vestig ation beca use it was not a named insured on the insurance policy and it was unable to verify that plaintiff proper ly assumed the subject polices. Def endant offe red to rec onsider its decision if plaintiff wer e to provide additional information showing t h at it was entitled to cover ag e. Plaintiff did not provide de fenda

nt with any

new infor

mation.
¶ 15 Plaintiff claims that it obtained evidence proving that PORI I nterna tional, I nc., did not
g ener ate the hazardous materia ls found at the Sauer Dump site, which led to the EPA’s deter mination that Siemens was not a potentially responsible party

. Howeve r, the appellate

rec ord contains no evidenc e of this outcome. Howeve r, plaintiff incurre d $28,186.86 in leg al fee s in d efending the EPA claim. Def endant did not reimburse plaintiff for the costs expended in its defense , nor did it provide counse l.

¶ 16 I I I . The Instant Action
¶ 17 Plaintiff broug ht suit in the circ uit cou rt o f C ook County ag ainst defe ndant on May 1, 2009. Plaintiff’s complaint contained three counts: (1) brea ch of contra ct; (2) bad faith under section 155 of the I llinois I nsuranc e Code (215 I L CS 5/155 (West 2004)); and (3) decla ratory relief . For counts I and I I
, plaintiff soug ht $28,186.86 in damag es for defe nding the EPA’s claim.
¶ 18 Plaintiff did not respond to defe ndant’ s first set of written interrog atories and the ca se

was dismiss ed for want of prosec ution (DWP) on October 15, 2010. Plaintiff filed a motion
to vacate the dismissal, which was g rante d on November 8, 2010, reinstating the ca se. ¶ 19 During the discovery proce ss, neither plaintiff nor d ef en d an t p ro v i d ed i n fo rm ation establishing a link betwee n the subject policies and PORI I nterna tional, I nc. When questioned at deposition, Robert G. Huer ter, plaintiff’s desig nated corpor ate ag ent, testified that he did not know if there was a link betwee n Palm Oil Recove ry , I nc., or Pori, I nc., and PORI I nterna tional, I nc. ¶ 20 On November 15, 2011, defe ndant filed a motion for summary judgme nt, claiming that plaintiff did not provide any evidenc e that it had proper ly assu med the subject policies by assig nment and there fore was not entitled to a defe nse of the EPA matter. Def endant arg ued

-6 -that assig nment of the subjec t policies require d defe ndant’s conse nt, which was not g iven.

¶ 21 On December 27, 2011, plaintiff filed its response to defe ndant’s mot ion for summ ary j udg ment, claiming that defe ndant’s consent was not require d. As part of its response , plaintiff provided two letters that wer e not produce d during the discovery proce ss. The first letter was written to the EPA on April 30, 1997, by Ernest Kovac s, then-pre sident of PORI I nterna tional, I nc., which detailed t h e co rp orate history of PORI I nterna tional, I nc. I n his letter, Mr. Kovac s states that Palm Oil Recove ry , I nc., beg an its operations in 1950. I n 1971, Palm Oil Recove ry , I nc., combined with other companies to become Pori, I nc. I n 1981, Pori, I nc., sold its assets to Pori Holdings, I nc., which later merg ed with Pori I nterna tional, I nc., and Pori Holdings, I nc., beca me the surviving corpor ation. Pori Holdings, I nc., then chang ed its name to PORI I nterna tional, I nc. And, in 1997, PORI I nterna tional, I nc. , s o l d its assets to USFC, n/k/a WASC O. Mr. Kovac s’ letter was not acc ompanied by an aff idavit, deposition testimony , or any

thing indica ting its authenticity or ver acity

. ¶ 22 The second letter was written on J uly 3, 1991, by Peter G. Dahl, an insurance broker for PORI I nterna tional, on the letterhe ad of Rigg s, Counselman, Michae ls & Dow nes, I nc., an insurance broker ag e firm, a ddresse d to Anne C. L ove, Esq., at Cable , McDa niel, Bow ie & Bond, with the subject heading “Re: PORI I nterna tional, I nc.” The letter stated in rele vant

2 part: “Comprehe nsive Gene ral L iability cover ag e was provided to PORI and its prede cessor , Palm Oil Recove ry , I nc., for the period of November 9, 1968 to No v ember 9, 1971 by the B ituminous Casualty

Corporation. Their

policy number wa s GA637258. ***

* * * Coverag e was rene wed in the same company under Policy #GA686764 for the period of Nove mber 9, 1971 to Nove mber 9, 1972 ***.”

Mr. Dahl’s letter was also not acc ompanied by an aff idavit and he was not deposed to verify the authenticity

of the letter

. ¶ 23 On J anuary 17, 2012, defe ndant filed its reply in support of its motion fo r s u m m ar y judgme nt ar gu i n g that the letters wer e new information not produce d during discovery

. Def endant further argued that the letters had not been proper ly authentica ted and constituted hear say evidenc e that would not be a dmissibl e at tria l.
¶ 24 On J anuar

y 27, 2012, plaintiff filed a motion for leave to supplement plaintiff’s re sponse to defe ndant’s m o t i on for summary judgme nt to submit a transcr ipt of the deposition 3 testimony of L eRoy Dra

per, a corpor ate desig nee, as evidenc e that PORI I nterna tional, I nc., owned the subject pol i cies that wer e is sued t o Palm Oil Recove ry , I nc., and Pori, I nc. The deposition was taken on J anuar y 23, 1992, in the matter captioned United States of Americ a

T he app el la t e r e c o r d doe s not ind ic at e ei the r the re la ti ons hip of thi s fi rm to PORI 2
I nte rna ti ona l, Inc., or th e e xac t n at ure of th e c orr esp onde nce

. T he d is pos it ion of

th e motio n i s no t i n t he r eco rd on a ppe al

. 3

-7 -v. Edwar d Azarae l, N o. WN-89-2898 (D. Md. 1992), a suit that was pending in the United

States District Court for the District of Mary land. I n that action, PORI I nterna tional, I nc., was a third-pa rty defe ndant and its corpor ate history was a t issue. 4
¶ 25 The transcr ipt contains the following exchang e betwee n Br ian R. L and, Esq., on behalf of defe ndant Gene ral Motors Corporation and Thomas L

. Crowe, Esq., on behalf of defe ndant PORI I nterna tional, I nc.:
“MR. L AND: L et me ask y ou a few questions a bout PORI Interna tional’s history

. I understand that P OR I I n terna tional, I nc., and previous companies that operated at Sparrows Point wer e known by differ ent names during differ ent time p er i o d s

. I don’t
want to g o into de tail a

bout the company ’s corpor ate history , but I do want to establish what names the company was known by and the associate d time periods during which it used that name.

MR. CR OWE: We’r e g oing to obje ct beca use I don’t think they

are nece ssarily

the

same c ompany .”

Mr. L and then questioned Mr. Dra per on the corpor ate history of Palm Oil Recove ry , I nc. Mr. Dra per testified that Palm Oil Recove ry , I nc., chang ed its name in 1971. Mr. L and then asked Mr . Dra

per to re ad fr om an exhibit marke d as Dra per Exhibit 2:

“MR. L AND: *** This is a document that’s been produce d by BF I in this matter, it

was former ly known as Robb Ty ler, I nc. I t’s a letter on PORI letterhe ad dated Dec ember 31st, 1970, with the caption: We are ha ppy to announce a chang e in our name . Do y ou

rec all this document?

MR. DRAPER : Not specifica lly

. MR. L AND: Why

don’t y ou rea d the first two par ag raphs.

MR. DRAPER: Gentleman: We are happy to announce a chang e in our name. You ’ ve known us till now as Palm Oil Recove ry , I nc. and Palm Oil Recove ry , Pennsy lvania, I nc., and Palm Oil Recovery
, W es t Virg inia, I nc. Starting J anuar y 1, 1971, all three
corpor ations will be joined toge ther in PORI , I nc.
MR. L AND: I s that con s i s t en t with y our rec ollection of about the time the name chang e took place ?

MR. DRAPER : Yes.”

Mr. Dra per then testified th at P o ri, I nc., subsequently chang ed its name in 1979 to Pori Holdings, I nc., and that in 1980 or 1981, the name was ag ain chang ed to PORI Interna tional, I nc. Mr. L and then prese nted another letter to Mr. Dra per, this one marke d as Dra per Ex hibit 3:

T he app el la te re cor d doe s not exp la in the exa ct nat ure of the con tr oversy in Unit ed Sta te s

4 of Am er ic a v. Edwar d Azarae l, No. WN- 89- 2898 (D. Md

. 1992 ), or the eventu al out come of the sui t.

-8 -“MR. L AND: *** This is a letter dated May 16, 1989, from Dar y l T uckey
, direc tor of environmental af

fairs and safe ty , to J oan Martin-B anks, U.S. Environmental Protection Ag ency , on PORI I nterna tional, I nc. letterhe ad. Can y ou take a look at the first numbere d para g raph, N o. 1, and re ad that to me?

MR. DRAPER: Palm Oil Recove ry was the name the firm used from its inception in 1950 until approximately 1971. In that y ear the name was chang ed to PORI
, I nc., and in 1981, the firm’s name wa s aga i n chang ed to PORI I nterna tional, Inc., which it still
reta ins today . ***

* * *

MR. L AND: I n terms of the names of the companies, the company or companies, and the time periods it held those name s, is it accurate to that extent?

MR. DRAPER : Yes ***.”
¶ 26 On Fe bruar

y 2, 2012, defe ndant filed its opposi t i o n t o plaintiff’s motion for leave to supplement its response to defe ndant’s motion for summary judgme nt. Def endant argued in his reply brief that the tr a

n s c r ip t w a s u

n authentica

ted, inadmissible hear say evidenc e that was not produce d in discovery . Def endant a rg ued that the transcr ipt wa s not signe d or ce rtified by the cler

k of court, nor was it acc ompanied by an aff idavit or other documentation to verify its authenticity

. ¶ 27 The appellate rec ord is silent about whether the trial court ever ruled on plaintiff’s motion and whe ther the tria l court consider ed the letter s in its decision-making pr ocess. ¶ 28 The trial court g rante d plaintiff’s motion for summary judgme nt on Marc h 2, 2012. The trial court’ s order

stated in full:

“The motion coming to be hear d on Def endant Bituminous Cas. Corp.’s Motion for Sum m ar y J u d gm ent filed November 15, 2011. The court being full advised of the premises, it is here by

order ed that:

1. The Motion for Summary J udg ment is g rante d and judgme nt is enter ed in favor of B ituminous . This is a final and a ppeala ble orde r.” Although the order contains a “1.,” there was no “2.” Neither a transcr ipt of the hear ing nor a by standers r eport for

Marc h 2, 2012, is provided in the appe llate re cord.

¶ 29 ANAL YSI S ¶ 30 P l ai n t i ff fi l ed this appea l seeking to reve rse the trial court’s order g ranting summary j udg ment in favor of defe ndant. Plaintiff claims that the trial court err ed beca use plaintiff
prese nted sufficie nt evidenc e to cre ate a mater i al issue of fac t about whether it owns the subject policies and is entitled to a defe nse in an action by the EPA. Plaintiff also argues that it assumed the subject policies whe n it purchase d the assets of PORI I nterna tional, I nc., in 1997. Def endant claims that the policies wer e not assig ned to plaintiff beca use they wer e not

-9 -listed under schedule 3.19 of the Purchase Ag ree ment. Def endant further argues that plaintiff failed to provide any evidenc e of owner ship of the subject policies, which re q u i re defe ndant’s consent in order for the policies to be assig ned. We will first deter mine whether the Purchase Ag ree ment listed the policies at issue to be assig ned to plaintiff. Next, we will explore whether the antiassig nment clause in the insurance policies prohibited t he transfer of the policies to plaintiff. L ast, we will review wh et her the policies cover ed the EPA’s inve s ti g a ti on proce ss. We need not addre ss defe ndant’s rema ining argument that plaintiff has
not prese nted sufficie nt evide nce to show that it owned the policies prior to the asset sale beca use we aff

irm on other g rounds.

¶ 31 I . Standard of Re view
¶ 32 Summary judgme nt is appropr iate wher e the pleading s, depositions, and admissions on file, toge ther with any aff

idavits and exhibi ts, when viewed in the light most favor able to the nonmoving party , indicate that there is no g enuine issue of materia l fac t and the moving party is entitled to judgme nt as a matter of law. 735 I L CS 5/2-1005(c) (West 2008). We revie w a circ uit court’s decision on a motion for summary judgme nt de novo

. Outboard Marine Corp. v. Liberty Mutual Insurance Co. , 154 I ll. 2d 90, 102 (1992). De nov o consideration means the revie wing court perf

orms the same analy sis that a trial judge would perf orm. K h a n v. BDO Se idman, LLP , 408 I ll. App. 3d 564, 578 (2011).
¶ 33 “Summary judgme nt is a drastic measure and should only be g rante d if the movant’s rig ht
to judgmen t is clea

r and fre e from doubt.” Outboard Marine Corp. v. Liberty Mutual Insurance Co.
, 154 I ll. 2d 90, 102 (1992). “Mer e specula tio n , conjec ture, or g uess is insufficient to withstand summary judgme nt.” Sorce v. Naperville Jee p Eagle, Inc.
, 309 I ll. App. 3d 313, 328 (1999). A defe ndant m oving f or sum mary judgme nt bear s the burden of proof. Nedzvek

as v. Fung
, 374 I ll. App. 3d 618, 624 (2007). The defe ndant may meet its burden of proof either b y af fi rm atively showing that some element of the case must be resolved in its favor
, or by establishing “ ‘that there is an absenc e of evidenc e to support the nonmoving party ’s case .’ ” Nedzvek as , 374 I ll. App. 3d at 6 2 4 (q u oting Celotex Corp. v. Ca t r et t , 4 7 7 U.S. 317, 325 (1986))

. We may aff irm on any basis appea

ring in the rec ord, whether or not the trial court relied on that basis, and even if the trial court’s rea soning was incorre ct. Ray Danc er, Inc . v. DM C Corp. , 230 I ll. App. 3d 40, 50 (1992).

¶ 34 I I . The Purcha se Ag ree ment ¶ 35 Plaintiff argues that it assumed t h e subject policies in the Purchase Ag ree ment, which assig ned to plaintiff “substantially all of [P ORI I nterna tional, I nc.’s] assets and cer tain *** liabiliti es.” Def

endant claims that while the sale included many i nsuranc e policies, the policies at issue wer e not identified among them. De fenda nt argues that any insurance policies not named in the Purchase Ag ree ment are reta ined liabiliti es that do not transfe r in

an asse t sale.

-1 0 -¶ 36 The Purchase Ag ree ment did not assig n the subject policies to plaintiff. Section 3.19 of

the Purcha se Ag ree ment states:

“ 3.19 Insu rance. Schedule 3.19 discloses all insurance policies on an ‘occ urre nce’ basis with respe ct to which Seller [P ORI I nterna tional, I nc.,] is the own er, insured or benef iciary .”

Sched u l e 3

. 19 lists sever al insurance policies but does not list the policies issued by defe ndant. I t is undisputed betwee n the parties that the subject policies are on an “occ urre nce” basis.
¶ 37 The Purchase Ag ree ment further states t h at an y l i abil ities that are not named in the Purchase Ag ree ment are considere d reta ined liabiliti es. Section 2.4 sets forth the following
reg arding reta ined liabilities:

“ 2.4 Ret ained Liab ilities. Ex cept for the Assu me d L ia biliti es, Buy er does not here by and shall not assume or in any way undertake to pay
, perf

orm, satisfy or di schar g e any other L iability of Seller, whether exis ting on, befor e or afte r the Closing Date or arising
out of any transac tions enter ed into, or any state of fac ts exis ting on, prior to or afte r the Closing Date (the ‘Re tained Liab ilities’ ), and Seller ag ree s to pay and satisfy when due all Retained L iabilities. Wit hout l i m i t i ng the fore g oing, except for the Assumed L iabilities, the term ‘Re tained Liab ilities’ shall include L iabilities:

* * * (v) a g ainst which seller

is insured or other

wise indemnified ***.”

Since the subject policies wer e neither named in schedule 3.19 nor liste d i n t h e Purchase Agreement as assumed liabiliti es, it follows that any liabiliti es that wer e cover ed b y t h e subject policies wer e reta ined by PORI I nterna tional, I n c

. , a s reta ined liabiliti es under section 2.4. ¶ 38 Plaintiff claims that the s chedule 3.19 did not name the subje ct policies bec ause of the sheer number of policies that wer e assig ned. Howeve r, there is no evidenc e in the appellate

rec ord to support plaintiff’s claim. Plaintiff als o argues that section 5.5 of the Purchase Ag ree ment provides for

the assig nment of def

endant’ s policies. Section 5.5 states in full:

“ 5.5 Insu rance. Following the Closing, Seller shall, to the extent that cover ag e under its insurance policies extends to include the Business in respe ct of claims or occur renc es

conce rning Seller prior to the Closing: (i) take no action to eli m i n at e o r reduc e such

cover ag e, other than normal elimination or reduc tion of cover ag e as they occur by virtue of the filing of claims in the ordinary course under such insurance policies; (ii) pay when due any premiums under such pol i cies for periods ending prior to the Closing Date, including retrospe ctive or retroa ctive premium adjustments; and (iii) use its best eff orts to assist in filing and proce ssing claims under, and otherwise cooper ate with Buy er (and their succe ssors) to a llow the m, in their own names, or on behalf of Seller, to obtain all

cover ag e benef

its applicable to the Business under such insurance policies, including the execution of assig nments or power s of attorne y for the be nefit of Buy er. A ny proce eds

-1 1 -of insurance paid by an insurer to Seller for claims of Buy er made in acc ordanc e with this Section shall be promptly paid to Buy er.”

I n its entirety
, section 5.5 does not assig n the subject policies to plaintiff. I nstead, section 5.5 descr ibes PORI I nterna tional, I nc.’s future responsibilities reg arding insurance policies that

wer e not assig ned to plaintiff in the asset sale. Section 5.5 require s PORI I nterna tional, I nc., to do the following : (1) take no action to eliminate or reduc e a policy ’s cover ag e; (2) pay the premiums due prior to t h e as s i gn m ent; and (3) assist plaintiff in filing claims as well as executing assig n m en t s for the benef it of the buy er. This provision does not opera te as a prese nt assig nment. Ellison Educational Equipment, Inc. v. Chen
, No. SACV02-1184-JV5, 2004 WL 3154592 (C.D. Cal. 2004). Instead, it is an ag ree ment to execute an assignment 5 in the future. Ellison Educational Equipment, Inc. , 2004 WL 3154592. ¶ 39 Additionally , there is no evidence in the appellate rec ord t hat t he subjec t policies were assig ned to plaintiff at any other point in time. The policies at issue we re not named in the
asset sale. The Purchase Ag ree ment clea rly states that all insurance policies that are assig ned

are named in schedule 3.19, which does not list the subject policies. I t fol lows that all insurance policies that wer e not assig ned are reta i n ed liabiliti es that rema in with PORI I nterna tional, I nc., pursua nt to Section 2.4 of the Purchase Ag ree ment. ¶ 40 W e find that the Purchase Ag ree ment did not assig n the subject policies to pl ai n t i ff beca use t hey wer e not listed in schedule 3.19. The re is no evidence in the appellate record
to show th at PORI I nterna tional, I nc., or plaintiff intended for there to be any additional insurance policies included in the sale bey ond what was listed in schedule 3.19. Also, section 5.5 specifie s PORI I n t er n ational, Inc.’s future responsibilities and does not operate as a prese nt assig nment of the subject policies to plaintiff. T h u s , we find that the Purchase Ag ree ment did not assign the policie s to plaintiff.

¶ 41 I I I . Choice of L aw ¶ 42 I n order to interpre t the construction of the subject p o l i ci es , we must first deter mine under wh i ch s t at e’s laws t he poli cies are gove rned. The s ubject poli cies do not contain an
express choice of law provision. I f an insurance policy does not specify a choice of law, its provisions are g ener ally g overne d by the following fac tors: “ ‘loca tion of the subject matter, the place of delivery of the contra ct, the domicile of the insured or of the insurer, the place of the last act to g ive rise to a valid contra ct, the place of perf ormanc e, or other place bear ing a rational rela tionship to the gene ral contract.’ ” Lapham-Hick ey Steel C orp. v. Protec tion Mutual Insurance Co.
, 166 I ll. 2d 520, 527 (1995) (quoting Hofeld v. Nationw ide Life Insurance Co.
, 59 I ll. 2d 522, 528 (1975))

. “T wo ca s es have specific ally stated that an insurance policy is g overne d by the law of the State wher e the policy was issued or delivere d

or by the law of the place of the last act to g ive rise to a valid contra ct.” Lapham-Hick ey Steel

We ci te Cal if

orn ia la w on thi s is sue bec aus e sec ti on 8.7 of the Pur cha se Agreement st at es 5 tha t i ts pr ovisi ons sha ll be con st rue d i n ac cor dan ce wit h t he l aws of Cal if orn ia

.
-1 2 -Corp. v. Protection Mutual Ins u r a n ce Co.
, 166 I ll. 2d at 527 (citing United States Fire

Insurance Co. v. CNA Insurance Cos.
, 213 I ll. App. 3d 568, 575 (1991), and Jadczak v. Modern Se rvice Insurance Co. , 151 I ll. App. 3d 589, 593 (1987)).
¶ 43 I n the instant case , the evi d en ce av ai l ab l e i n t h e rec ord points to Mary land as the
appropr iate choice of law g overning the interpre tation of the subject policies. Reg arding the 6 first fac tor, the occur

renc e g iving rise to the EPA investigation took place at the Sauer Dump site in Maryland. I t was a t this location t hat t he EP A allege d that PORI Interna tional, I nc., contaminated the environment with hazardous materia ls during the 1960s, 1970s, and 1980s. The S auer Dump site was the only location t hat the EP A’s draft order held Siemens liable for cleaning up. Also, the P RP letter did not alleg e PORI I nterna tional, I nc., wa s liable for waste disposal in any

other state.
¶ 44 We next look to the dom icile of the insure r and the insured. Defenda nt is an ins uranc e company with its principle place of business in I llinois

. As far as the e vidence available in the appellate rec ord, this appea rs to be the only contac t with I llinois in the i n suranc e contra cts. Plaintiff WASC O has its re gi s tere d office in Delaw are and curr ently exis ts as a limit ed liability corpor ation under Delaw are l aw. Howeve r, Palm Oil Recove ry , I nc., is desig nated a s the named insure d in Poli cy A, which lists its address as a post office box in Maryland. Also, in Policy B, P o ri
, I n c., is desig nated as the named insured and identified with a di ff

er en t post office box in Mary land. Thoug h plaintiff now exis ts as a Delaw are corpor ation, it alleg edly purcha sed the assets of Palm Oil Recove ry , I nc., and Pori, I nc., which wer e identified as being l o ca ted in Mary land at the time it executed the subject policies.
¶ 45 Another fac tor we must consider is wher e the subj ec t p o l i ci es we re executed. B oth policies are divided into two sections: part A provides automobile insurance cover ag e, and part B provides for g ener al liability insurance cover age

. Bo t h policies include a provision that s t ates that the “policy shall not be valid unless counter signe d by a duly authorized
repr esenta tive of t he company [def en d ant].” I n both policies, part B was counter signe d by defe ndant i n the s tate of Maryland. As such, it appea rs t hat defendant’s signatur e was the 7 last act that g ave r ise to a valid contra ct, which oc curr ed in Mary land.
¶ 46 Al s o , we m u s t consider in which states the subject policies provided cover ag e. Bo t h policies insure premises operations in the states of Mary land, Pennsy lvania, Ohio, and West

I n the app el la te bri ef

s, pla int if f pre sumes I ll ino is la w gov er ns, bu t doe s not exp la in thi s 6 cho ic e by way of a con fl i c t o f l a w s ana lysis quot ed fr om Hofe ld

. Pla int if f ins te ad ar gues tha t the
app el la te re cor d “do es not con ta in suf fi ci ent fa ct s to per m it a dec is ion re gardi ng what la w to app ly” and tha t thi s cou rt sho uld re verse and re m and to the tr ia l cou rt

. Def end a n t d o e s n o t add re ss the Hofe ld con fl ic t o f l aws te st

. I n Pol ic y A, def

end ant cou nte rs igned par ts A and B in Ma rylan d i n a si ngle e ndor sement 7

on Novem

ber 11, 1968
, the dat e the pol ic y was is sue d. I n Pol ic y B, def end ant cou nte rs igned par t A in Penn sylvania
, whil e par t B was cou nte rs igned in Ma rylan d in an end ors ement. Bo th si gnatur es in Pol ic y B were d at ed No vem ber 30, 1971 , th e da te th e po li cy was i ssu ed.

-1 3 -Virg inia. The policies itemiz e t h e p remium s due for eac h location, with the premises in

Maryland requiring a substantially highe r premium than the opera tions in other states. Also, the p o l i ci es cover cer

tain vehicles owned by the insured in Mary land, Pennsy lvania, and Ohio. Most of the vehicle s owned we re loc ated in Mar y land.
¶ 47 Weighing all of the fa ctors, Mar y land is the proper choice of law. The most sig nificant
contac ts are in the state of Maryland, including the addre ss of the n am ed i n s ureds, the location wher e the policies wer e issued by defe ndant’s counter signature, and the location of the environmental contamination t hat gave rise to t h e EPA investigation. Also, the s etting of the policies’ premium ap p ea rs t o be more connec ted to Mary land, beca

use a highe r premium is found on p re m i s es l ocate d in Mary land and it is indicated that more vehicles insured ar e drive n in that state.
¶ 48 Def

endant argues that California law, the choice of law set forth in the 1997 Purchase Agr eeme nt, should apply

. Section 8.7 of the Purchase Ag ree ment states that it “shall b e g overne d by and construed i n acc ordanc e wit h t h e l aws of C alifornia without reg ard to its conflict of law doctrines.” Def endant additionally points to section 2.1 2 of the Purchase Ag re ement, which states: “Nothing in this ag ree ment shall be construed as an attempt to

as s i gn any contra ct *** included in the Purchase d Assets which is by its terms or i n l aw nonassig nable without the consent of the other party or parties t h er et o * * *.” Def endant
arg ues that this clause prohibits the assig nment of contra cts that are nonassig nable under law, which the Purc hase Ag ree ment desig nates as California la w in its choice of la

w provision.
¶ 49 Howeve r, the issues prese nted in the instant case involve the interpre tation of the subject policies, not the Purchase Ag ree ment. I n addition, se ction 2.12 of the Purchase Ag ree ment p ro h i b i t s the assig nment of contra cts that are nonassig nable by its terms or in law. By the
terms of the insurance contra ct, the subject policies cannot be assig ned without defe ndant’s
consent. We must deter

mine whether the p o l i ci es’ antiassig nment clause is valid and enfor cea ble. To do so, we must deter mine which law g overns the subject policies th e ms e lve s, which we have de termined to be the laws of the sta te of Mar y land.
¶ 50 We are instructed by the appellate court in Maremont Corp. v. C heshire
, 2 8 8 I l l

. App. 3d 721, 726 (1997), which held that “third parties cannot take advanta g e of the choice of law provisions in contra cts they did not sign.” I n that case , a landowner sued the plaintiff for
proper ty damag e. Plaintiff noti fi ed t h e i nsuranc e car riers of the suit, which declined to defe nd. The landowner then enter ed into a settlement ag ree ment with plaintiff that included

a choice of law provision that identified South Carolina as the proper forum. The defe ndant insurance companies wer e not parties to the settlement ag ree ment. Plaintiff later filed an action ag ainst defe ndants for brea ch of contra ct beca use t h ey did not defe nd or indemnify plaintiff in the suit broug ht by the landowner

. At trial, the court fac ed the issue of which state law g overne d the insurance policies. The trial court ag ree d wi t h d ef endants that South Carolina law applied beca use it was the forum chosen by p l ai n t iff in the settlement
ag ree ment. On appeal, t he appellate court reve rsed, citing prece dent that a third party may not adopt a choic e of la

w provision in a

contra ct that it did not si g n. Maremont Corp. , 288 I ll. App. 3d at 7 2 6 (c iting Jakubik v. Jakubik
, 208 I ll. App. 3d 119, 122 (1991))

. The

-1 4 -appellate co u rt re as oned that the choice of law provided in the settlement ag ree ment was

intended for the benef

it of plaintiff and the landowner

. Maremont Corp.
, 288 I ll. App. 3d at 727. After conducting the conflict of laws analy sis se t f orth in Hofeld
, 59 I ll. 2d at 528, the appellate court reve rsed, finding that I llinois law applied. Maremont Corp.
, 288 I ll. App. 3d at 727. ¶ 51 I n the instant case , defe ndant similarly attempts to apply a choice of law provision in a
contra ct to which it was not a party

. Thoug h section 2.12 of the Purchase Ag ree ment contains lang uag e reg arding nonassi g nability of contracts, t he antiassignment clause i n the pol icies themselves is the issue in the instant case

. T h u s , we decline to adopt the choice of law provision in the Purchase Ag ree ment when deter mi n in g w h e th e r the policies’ antiassig nment clause is valid and enfor cea ble. Additionally
, we will look at whether the subject policies

even provide cover ag e for an EPA investiga tion p ro ce s s , an issue that is wholly separ ate from the a

ntiassignment pr ovision of the Purchase Ag ree ment. ¶ 52 After considering the Hofeld fac tors conflict of law analy sis, Mary land law g overns the subject policies beca

use it has the most signific ant co n tacts to the policies. We decline to apply the P urcha se Agre ement’s choice of law p ro v i sion beca use we must look to the l aw t h at gover

ns the pol icies t hemselves when i nterpre ting their provisions, not the agr eeme nt that the insurance company was not a party to. Also, Maremont Corp. holds that a third party may not take advanta g e of a choice of law provision that it did not sign. Maremont Corp.
, 288 I ll. App. 3d at 726.

¶ 53 I V. Antiassig nment Clause
¶ 54 Having found that Maryland law g overns the subject policies, we next deter mine whether the antiassig nment clause was valid and enfor cea ble. Plaintiff admits that the subject policies contain an antiassig nment clause that stat es t hat the policies may not be assig ned without defe ndant’s consent. However
, p laintiff argues that this provision is not valid and

en fo rce able under I llinois law, citing Illinois Tool W orks, Inc. v. Commerce & Industr y Insurance Co.
, 2011 I L App (1st) 093084, as support. Def endant argues that Illinois Tool W orks Inc. is distinguishable and cites Henk el Corp. v. Hartford Acc ident & Indem nity Co.
, 62 P.3d 69 (Cal. 2003), in support of its c laim tha t the antiassig nment clause is a valid and enfor cea ble provision that require s defe ndant’s consent for th e p o l i ci es to be assig ned. Neither party cited Mar

y land law in its arg

uments on the assig nment issue.
¶ 55 I t has been well established u n der Mary land l aw that an antiassignment clause i s valid and enfor cea

ble. “[A]nt i-assig nment clause s have been held vali d b y Mary land courts.” Handex of

Maryland, Inc. v. W

aste Mgmt. Disposal Servic es of Maryland, Inc.
, 458 F. Supp. 2d 266, 271 (D. Md. 2006). S ee Della Rat ta v. L arkin
, 856 A.2d 643 (Md. 2004) (holding that purported assig nment in violation of antiassig nment provision of partne rship ag ree ment

was invalid and u n en forceable ); Public Servic e Comm’n v. Panda-Brandywine, L.P.
, 825 A.2d 462 (Md. 2003) (holding that rese ll ag ree ment was an assig nment in contravention of

an antiassig nment provision and there fore invalid and unenfor cea ble); Dwayne Clay, M.D.,

-1 5 -P.C. v. Gove rnment Employe es Insurance Co.
, 739 A.2d 5 (Md. 1999) (af firming judgme nt for insure r and a g ainst purported a ssigne e of insure d wher e ins uranc e poli cy provided that assig nment of intere st under policy without insurer’s c onsent would not bind insurer).
¶ 56 Maryland courts have further held that “[a]ny clause in an insurance contra ct re stricting liability o r co v era g e will be held enfor cea ble unless contra

ry to ‘the public policy of this State, as set forth in *** the I nsuranc e Code’ or another statute.” Columbia Town Center Titl e Co. v. 100 Inve

stment Ltd. Partnership
, 36 A.3d 985, 1007 (Md. Ct. Spec. App. 2012) (quoting Guardian Life Insurance Co. of America v. Insurance Commissioner
, 446 A.2d 1140, 1147 (Md. 1982)). We are not awa re of any provisio n i n t he insurance code of Maryland that would invalidate the antiassig nment clause in the subject policies. Also, Maryland has previously upheld a nonassig nability clause in spite of an argument that it was ag ainst public policy

. I n Dwayne Clay, M.D., P.C. v. Gove rnment Employe es Insurance Co.
, 739 A.2d 5, 8 (Md. 1999), the Mary land appellate court upheld an antiassig nment clause in

an automobile insurance policy as not contra ry to public policy and enforcea ble ag ainst a phy sician for his c are and trea tment of the insured in return for an assig nment of uninsured motorist benef

its. Dwayne Clay, M.D., P.C.
, 739 A.2d at 8. The appellate court rea soned that the nonassig nabil ity clause was enfor cea ble beca use the intended direc t benef iciary of uninsured motorist cover ag e is the acc ident vict i m , n ot health car e providers or other

cre ditors of the insured. Dwayne Clay, M .D., P.C. , 739 A.2d at 8.
¶ 57 I n the instant case , the appe llate re cord does not indicate def endant’ s rea soning be hind the inclusion of the antiassig n m en t cl ause in its policy

. The lang uag e could have been included in the policies to preve nt the insurance company from rec eiving cla ims from multipl e parties or exposi ng itself to additional risks that it did not fore see when it issued its policies. L ike t he ins uranc e company in Dwayne Clay
, defe ndant i n t h e ins tant case likely had valid rea sons for including the clause to protect its own interests. Dwayne Clay, M.D., P.C.
, 739 A.2d at 8. Also, plaintiff has not made an argument that the antiassig nment clause is contra ry to public policy

. The antiassig nment clause in the policies at issue here is simil ar to other such clause s that have been upheld by Mary land courts in the case s previously cited.
¶ 58 Howeve r, we are aware o f o ne ty pe of instance in Mary

land wher e an antiassig nment clause was not e nforc eable

. I n Ruberoid Co. v. Glassman Construction Co.
, 234 A.2d 875, 879 (Md. 1967), the assig nment of a construction contra ct was held to be valid in spite of the

con t ra ct’s antiassig nment clause

. I n that case , a g ener al contra ctor subcontrac ted for floor work o n a school projec t with a sole proprietor ship, which subsequently incorporated its business. Ruberoid Co.
, 234 A.2d at 876. The Mary land appellate court held that the newly incorpora ted business beca

me the subcontrac tor of the g ener al con t ra ct o r by virtue of an equitable assig nment ev en though the subcontrac t contained an antiassig nment clause

. Ruberoid Co.
, 234 A.2d at 879. The appellate court found that the g ener al contra ctor includ ed the antiassig nment clause as assura nce that a competent subcontrac tor would perf orm the work. Ruberoid Co.
, 234 A.2d at 879. The fac t that the sole proprietor incorpora ted i ts business did not defe at t he gene ral contractor ’s assurance s. Ruberoid C o. , 234 A.2d at 879.

-1 6 -¶ 59 I n the instant case , PORI I nterna tional, I nc., was not mere ly chang ing the leg al status of

its business. Rather, it was selling its assets to plaint i ff
, wh i ch is an entirely differ ent corpor ation. The rea soning in Ruberoid was based on t h e fac t that the only thing that had materia lly chang ed was the subcontrac tor’s leg al status beca use, s u b s equent to its incorpora tion, the subcontra ct o r was still owned and opera ted by the same individual. Ruberoid Co.
, 234 A.2d at 879. The instant case is distinguishable from the appellate court’s finding of an equitable assig nment beca use PORI I nterna tional, Inc., was sold to a differ ent entity , rathe r than mer ely

chang ing its leg al status.
¶ 60 Following the well-e stablished Mary land case law holding that antiassig nment clause s

are valid and enfor cea

ble, we find that the subject policies wer e not assig ned t o plaintiff beca use the defe ndant did not provide its written consent. The antiassig nment clause also does not violate the insurance code of Mary land, nor is it in contra diction to its public policy under Ma ry land law.

¶ 61 V. Policy Coverag e ¶ 62 We will next deter mi n e t h e ex t en t o f t h e co v erag e provided. Specifica lly
, we will consider whether defe nd an t h ad a duty to defe nd plaintiff ag ainst the EPA investigation. Def endant first raised t h i s issue in its brief in this appea l, arguing that it had no duty to defe nd plaintiff in the event that I llinois law applies. Def endant claimed that the PRP letter

was not a “suit” that is cover ed under the subject policies, citing Lapham-Hick ey Steel Corp.

v. Protection Mutual Insurance Co.
, 166 I ll. 2d 520 (1995). Def endant argues that the EPA
matter only involved a PRP letter, which is not cover ed under the policies beca use it mere ly informs Siemens of the potential for future liability

. Howeve r, defe ndant based its argument

on I llinois law and did not addre ss the issue under the l aw s o f an y o ther state. We have alre ady deter

mined t h at Maryland law g overns the policies, so we will not consider the I llinois case law cited by defe ndant. P laintiff did not addre ss the coverag e is sue; howeve r, it char acte rized the EPA matter as a “cla im for third-par ty damag es,” lang uag e presumably

cra fted to fit the provisions of the subjec t policies.
¶ 63 The subject policies contain the following cover ag e provision under section I of part B: “The co m p an y [ d ef

endant] will pay on behalf of t he ins ured sums which the insured shall become leg ally obliga ted to pa y as dama g es bec ause of

*** proper

ty damag e to w hich this insurance applies, cause d by an occur renc e ***.” The policies define an “occ urre nce” as “an

acc ident, including injurious exposure to conditions, which results during the policy period, in *** proper

ty damag e neither expected nor intende d from the standpoint of the insured.” “Damag es” are describe d as i ncluding “dama g es for loss of use of property resulting from
proper ty damag e,” and “prope rty damag e” is define d as “injury to or destruction of tang ible
proper ty .” ¶ 64 “I n order fo r co u rt s t o i n terpre t and deter mine cover ag e under insurance policies, the primary principle of construction is to appl y the terms of the insurance contra ct itself.” (I nterna l quotation marks omitted.) Maryland Casualty Co. v. Hanson , 902 A.2d 152, 163

-1 7 -(Md. C t. Spec. App. 2006). W e accor d the words in the contract t heir usual, ordinar y , and

acc epted mea

ning unle ss the re is a

n indication that the parties intended to use words in the policy in a technica l sense. Mitchell
, 595 A.2d at 475. A word’s ordinary meaning is te sted by what meaning a rea sonably prudent lay person would attach to the term. Pacific Indem nity Co. v. In t erst ate Fire & Casualty Co.
, 488 A.2d 486, 488 (Md. 1985). Mary land does not fo l l o w t h e rul e, adopted in many jurisdictions, that an insurance policy is to be construed
most strong ly ag ainst the insurer. Cheney v. B el l National Life Insurance Co.
, 556 A.2d 1135, 1138 (Md. 19 8 9 ). R at h er , the intention of the parties is to be asce rtained from the policy as a whole. Bausch & Lomb Inc. v. Utica Mutual Insurance Co.
, 625 A.2d 1021, 1031 (Md. 1993). A duty to defe nd arises when a claim is cover ed or potentially cover ed under a policy

. Chang v. Brethren Mutual Insurance Co.
, 897 A.2d 8 5 4
, 8 6 5 (Md. Ct. Spec. App. 2006). Under liability cover ag e, when the policy contains a duty to defe nd, an insured may

rec over fee s and ex p en s es incurre d not only in defe nding a claim ag ainst it, but also in enfor cing the insurer ’s obligations under the policy

. Chang , 897 A.2d at 865.
¶ 65 Un d er Mary

land law, it has been held that liability under CERCL A is not liability fo r “prope rty damag e,” but rathe r regulatory liability for response costs. Industrial Enterprises, Inc. v. Penn America Insurance Co.
, 637 F.3d 481, 484 (4th Cir. 2011); Bausch & Lomb Inc.

v. Utica Mutual Insurance Co.
, 625 A.2d 1021, 1036 (Md. 1993). The costs of obtaining a l aw y er for repr esenta tion during an EPA investigation are not cover ed under a st an d ar d
g ener al liability insurance policy beca use the g overnme nt is acting as a regulator and not an injured prope rty

owner

. Industrial Enterprises, Inc. , 637 F.3d at 487.
¶ 66 The instant case is simil ar to Industrial Enterprises, Inc. v. Penn America Insurance Co.
, 637 F.3d 481 ( 4th Cir. 2011), which held that an EPA investiga tion under CERCL A is not

cover ed under the standard form lang uag e of a compre hensive g ener al liability policy

. I n Industrial Enterprises
, the EPA sent the plaintiff a PRP letter informing it that it m ay be liable for the contamination of certain landfills that plaintif f an d o t h er named respondents polluted. Plaintiff forwa

rded the PRP letter to defendant insurance company , which had previously issued a compre hensive g ener al liability insurance policy that named plaintiff as an ins ured. Defe ndant denied plaintiff’s request for a defe nse, claiming t hat t he poli cy did
not cover the EPA investigation. Plaintiff and the other respon d en ts then enter ed into an “Administrative Settlement Ag ree ment and Orde r of Consent” with the EPA. The ag ree ment provi ded that plaintiff and the other responde nts would contribute to a coalition fund that would fun d at fi rs t an investigation and then implement a solution for a clea nup of the environmenta l contamination. Plaintiff subsequently filed an action for a decla rato ry judgme nt in fede ral court alleg ing that the g ener al liability insurance policy cover ed plaintiff for the c osts it ex pended r esponding to the EPA and contributing t o the coa lition fund. On plaintiff’s motion for partial summary judgme nt, the district court found that defe ndant had

a duty to defe nd beca

use there was a “potentialit y ” o f coverag e. The district court held a bench trial on the remaining issues and found that plaintiff’s contributions to the coalition fund we re not de fense costs cover ed by the policies.
¶ 67 On appea l, the appellate court reve rsed, finding that plaintiff’s liability under CERCL A

was regulatory liability for response costs and not liabil i t y for “prope rty damag e” that is

-1 8 -cover ed by the insurance policy

. Industrial Enterprises, Inc.
, 637 F.3d at 483. I n rea ching its

d ec i s ion, the appellate court applied Mary land law, citing Bausch & Lomb Inc. v. Ut i ca Mutual Insurance Co.
, 625 A.2d 1021 (Md. 1993), as the seminal decision in the are a. Industrial Enterprises, Inc.
, 637 F.3d at 487. The appellate court rea soned that “[a] hallmark of the compre hensive g ener al liability policy is tha t it ins ures a g ainst injury done to a third party ’s property
, in con t radistinction to an ‘all-risks’ pol icy also cover ing losses sustained by the policy -ho l d er

. ” (Emphasis omitted.) Industrial Enterprises, Inc.
, 637 F.3d at 487 (quoting Bausch & Lomb Inc.
, 625 A.2d at 1033). The appellate court dete rm i n ed that the E P A was not acting under its proprieta ry interests and was inst ead acting as a regul at o r t o protec t the environment for the public health and welfa re. Industrial Enterprises, Inc.
, 637 F.3d at 487-88. Thus, t h e ap p ell ate court found that the insurance company had no obliga tion s arising from it s g ener al l iability policy beca use t he poli cy insured only ag ainst the insured’s liability for damag es to a third party ’s proper ty

. Indust r ia l E n te rprises, Inc.
, 637 F.3d a t 488.
¶ 68 The g ener al liability policies at issue in Industrial Enterprises and Bausch & Lomb Inc.
conta i n s imilar lang uag e to the pol icies i ssued t o plaintiff i n the i nstant case

. I n Industrial Enterprises , the policy

at issue stated:

“ ‘The Company will pay on behalf of the insured all sum s wh i ch the insured shall become leg ally obliga ted to pay as damag es beca use of

... proper

ty damag e to which this insurance applies.’ ” (Emphasis omitted.) Industrial Enterprises, Inc.
, 637 F.3d at 486. The policy

in Bausch & Lomb Inc. also stated:

“ ‘The company

*** will pay

on behalf of t he ins ured all sums which the insure d shall become leg ally obliga ted to pay as damag es beca use of

... proper

ty damag e to which this insurance applies ***.’ ” Bausch & Lomb Inc. , 625 A.2d at 1024. The subjec t policies in the instant case c ontain near ly identical lang uag e:
“The company will pay on behalf of the insured sums which the insured shall become leg ally obliga ted to pay as damag es beca use of * * * p ro perty damag e to which this insurance applies ***.”

I n holding that the policy did not cover the EPA matter, the ap pellate court in Industrial Enterprises rea soned:

“The standard [comprehensive g ener al liability ] policy lang uag e, which prec eded t h e

enac tment of CERCL A in 1980, was formulated to addre ss an insured’s tort liability for
proper ty damag e cause d to third parties. The scope of that risk was well understood, and there is no evidenc e to indicate that the broad, indeterminate risks of CERCL A liability somehow beca

me automatically includable in the term ‘prope rty damage ’ upon the

enac tment of CERCL A, without any chang e to the p olicy lang uag e.” Industrial Enterprises, Inc. , 637 F.3d at 489.

Given the simil arities betwee n t h e p olicy lang uag e, we follow the holdings in Industrial Enterprises and Bausch & Lomb that held that the insurance companies did not have a duty

-1 9 -to defe nd beca use its g ener al l i ab i l i t y insurance policies did not cover the liability under CERCL A.
¶ 69 A notable distinction betwee n Industrial Enterprises and Bausch & Lomb is that, in those

case s, the insured enter ed into a consent order with the EPA, while in t h e instant case , plaintiff did not. Howeve r, this does not aff ect our rea soning beca

use the court in Industrial Enterprises found that the insurance company did not have a duty to defe nd CERCL A liability

. As stated, a duty to defe nd arises when a claim is co v er ed o r potentially cover ed under the policy

. Chang
, 897 A.2d at 865. I n the instant case , the PRP l et t er warns of potential liability

. Howeve r, that potential liability is regulatory liability under CERCL A and
not for third-par

ty p ro p er t y d amag e. There fore
, defe ndant did not have a duty to defe nd beca use the potential liability threa tened by the EPA was not the ty pe of ac t i o n t h at was

cover ed by

the subject policies.

¶ 70 CONCL USI ON
¶ 71 For the following rea sons, we aff irm the trial court’s order g ranting summary judgme nt in favor of defe ndant. The subject insurance policies are g overne d by Mary land law, which holds that an antiassign m en t clause is a valid and enfor cea ble provision of an insurance
contra ct. The antiassig n ment clause prohibited the assig nment of the subject policies without written co n s en t an d defe ndant never g ave its written consent to an assig nment of the insurance policies. Additionally
, even if the policies wer e proper ly assign ed t o plaintiff, a g ener al liability insurance policy does not cover a regulatory action by the EPA. There fore
, defe ndant did not have a duty to defe nd plaintiff beca use the policies at issue did not cover the EPA investigation proce s s

. W e need not addre ss defe ndant’s additional arguments reg arding plaintiff’s cor

porate history

prior to the 1997 asset sale be cause we ha ve alr eady aff irmed the trial c ourt that found in its favor.

¶ 72 Affir

med.

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