SECOND DIVISION

									November 26, 2002

No. 1-00-3954

WHITMAN CORPORATION, a Delaware

Corporation headquartered in Illinois,

and PNEUMO ABEX CORPORATION, a Delaware

Corporation,

	Plaintiffs-Appellants,

	v.

COMMERCIAL UNION INSURANCE COMPANY, a

Massachusetts corporation; MICHIGAN

MUTUAL INSURANCE COMPANY, a Michigan

corporation and UNITED STATES FIRE

INSURANCE COMPANY, a New York

corporation,

	Defendants-Appellees.

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Appeal from the

Circuit Court of

Cook County

Hon. Loretta C.

Douglas, Judge

Presiding.

	PRESIDING JUSTICE McBRIDE delivered the opinion of the court:

	Plaintiffs-appellants, Whitman Corporation (Whitman) and

Pneumo Abex Corporation (Pneumo Abex) (collectively plaintiffs),

appeal from the trial court's dismissal of counts III and IV of

plaintiffs' third amended declaratory judgment complaint under

section 2-615 of the Illinois Code of Civil Procedure.  735 ILCS

5/2-615 (West 1998).  Defendants-appellees are Commercial Union

Insurance Company (Commercial Union), Michigan Mutual Insurance

Company (Michigan Mutual),1 and United States Fire Insurance Company (U.S. Fire)(collectively the Insurers).  In May of 1993, Pneumo Abex sold certain assets to B.F. Goodrich Company (BFG) in

the form of facilities at four separate locations pursuant to an

asset purchase agreement.  The agreement included indemnification

provisions, including special provisions pertaining to

environmental liabilities, where the parties agreed to indemnify

each other for certain environmental remediation expenses at the

four site locations.  On March 12, 1996, Pneumo Abex filed a

complaint against BFG alleging that BFG had violated certain

indemnity terms in the agreement.  In response, BFG filed a

counterclaim alleging that Pneumo Abex had breached the agreement

by failing to indemnify it for environmental expenses at the site

locations.   

	In plaintiffs' third amended complaint, plaintiffs alleged

that the Insurers had an obligation to defend them against the

counterclaim filed by BFG under several policies issued to the

plaintiffs by the Insurers.  According to plaintiffs, the Insurers'

failure to defend amounted to a breach of the policies and resulted

in defense costs incurred by plaintiffs in the amount of

$1,953,186.  The Insurers field a motion to dismiss plaintiffs'

third amended complaint for declaratory judgment which was granted

by the trial court on October 10, 2000.  

	The trial court's primary  ground for dismissal was that the

allegations in the BFG counterclaim arose out of the alleged breach

of the asset purchase agreement and did not amount to property

damage caused by an "occurrence" as defined in the policies issued by the Insurers.  As a result, it found that the allegations in the

counterclaim did not fall within or potentially within the

policies' coverage for environmental contamination or property

damage.  The trial court further found that "plaintiffs" failed to

precisely allege when the damage, for which BFG sought

reimbursement, occurred.     

	We first review whether the trial court properly granted the

Insurers' motion to dismiss on the grounds that the allegations in

the BFG counterclaim did not amount to property damage caused by an

"occurrence" under the policies and therefore did not fall within

or potentially within the policies' coverage.  We state the following additional facts.

	The Insurers provided primary general liability and umbrella

insurance coverage to Cleveland Pneumatic Company through 46 separate policies that were collectively effective from December 1,

1960, to February 1, 1985.  The policies contained similar language

with regard to coverage.  Specifically, the policies stated: 

			"The company will pay on behalf of the

insured all sums which the insured shall

become legally obligated to pay as damages

because of *** property damage *** to which

this policy applies, caused by an occurrence,

and the company shall have the right and duty

to defend any suit against the Insured seeking

damages on account of such *** property damage."

An "occurrence," as defined in the policies, "means an accident,

including continuous or repeated exposure to conditions, which

results in bodily injury or property damage neither expected nor

intended from the standpoint of the insured."

	Cleveland Pneumatic was a subsidiary of Pneumo Dynamics

Corporation, which was subsequently named Pneumo Corporation. 

Cleveland Pneumatic owned or leased and operated several facilities

at four sites: two of which were located in Cleveland, Ohio; one in

Tullahoma, Tennessee; and one in Miami, Florida, respectively.  In

1984, Whitman acquired Pneumo Corporation, which remained a wholly

owned subsidiary of Whitman until August 28, 1988.  Pneumo Abex is

a successor to Pneumo Corporation.  The record reveals that a 

stock purchase agreement (SPA) existed as part of the financial

relationship between Pneumo Abex and Whitman.  

	On May 15, 1993, Pneumo Abex sold the Cleveland Pneumatics

assets, including the four sites identified above, to BFG pursuant

to an asset purchase agreement.  The agreement included

indemnification provisions, including special provisions pertaining

to environmental liabilities, whereby each party agreed to

indemnify and hold the other party harmless for certain

environmental liabilities.  "Environmental Liabilities" were

defined in the agreement as:

			"Losses or expenses incurred for response

and compliance measures undertaken as a result of Environmental Laws and relating to the

ownership of the Purchased Assets or operation

of the Purchased Business.  'Environmental

Laws' are in turn defined as those laws and

ordinances pertaining to the environment as in

effect on the closing date of the Agreement."

	The agreement further required both parties to acknowledge the

SPA between Pneumo Abex and Whitman.  As part of the asset purchase

agreement, BFG received a copy of the SPA and was to comply with

the SPA and the asset purchase agreement's indemnification

provisions so that Pneumo Abex could in turn be indemnified by

Whitman for certain environmental remediation expenditures. 

	On March 12, 1996, Pneumo Abex filed a complaint against BFG

(Pneumo complaint) alleging that BFG violated certain indemnity

terms of the asset purchase agreement.  In it, Pneumo Abex claimed

that BFG sought indemnification for environmental expenses that

were outside the scope of the agreement.  Specifically, Pneumo Abex

alleged that BFG attempted to shift to Pneumo Abex the obligation

to pay for a wide array of expenses associated with environmental

activities that BFG had chosen to incur voluntarily and that were

beyond the scope of "covered losses" enumerated in the

indemnification provisions of the agreement.  

	Further, according to Pneumo Abex, BFG failed to notify it of

environmental claims with reasonable promptness and specificity as

required under section 13.5 of the asset purchase agreement.  In particular, section 13.5 of the agreement, which governed

indemnification between the parties for certain environmental

liabilities, required that either party, upon becoming aware of any

environmental claim, was to notify the other party with reasonable

promptness and reasonable specificity.

	Pneumo Abex claimed that, in 1994, it began receiving

communications from BFG vaguely describing various environmental

conditions discovered at the Miami, Tullahoma, and Cleveland

facilities.  Beyond these vague communications, Pneumo Abex alleged

that BFG failed to provide reasonable advance notice or an

opportunity to monitor and/or consult on all proposed actions and

failed to provide reasonable specificity of its claims in violation

of the agreement.  Specifically, Pneumo Abex alleged that BFG: (1)

failed to provide it with proposed work plans, draft reports,

consultant correspondence, or work schedules so that field and

sampling activities could be monitored by Pneumo Abex; (2) failed

to advise or consult with Pneumo Abex concerning the anticipated

selection of possible consultants; (3) withheld consultant's

invoices and other invoices related to the claimed activities, risk

assessment reports, data, and results of other remediation studies;

and (4) supplied Pneumo Abex with information that was inconsistent

and outdated.

	The Pneumo complaint alleged that BFG sent Pneumo Abex letters

on August 25, 1994, and October 27, 1994.  The August 25, 1994,

letter concerned a situation at the Miami facility regarding environmental permits but stated that the letter was "preliminary

to any formal notification" for indemnification under the

agreement.  The October 27, 1994, letter contained a summary of the

results of BFG's environmental reviews at the Cleveland and

Tullahoma facilities for which BFG sought costs to be shared under

the agreement.  However, Pneumo Abex alleged that the letter failed

to explain the basis for BFG's belief that these remedial

procedures were indemnifiable claims under the agreement.

	The Pneumo complaint further alleged that Pneumo Abex

requested in writing that BFG provide information relating to

matters on which BFG sought indemnity.  It informed BFG that, under

the agreement, BFG could not pursue indemnification claims where

advance notice had not been provided to Pneumo Abex.  The Pneumo

complaint claimed that, in response, BFG failed to provide Pneumo

Abex with the required information, and furnished only limited

information, all of which was provided months after the activities

had been completed.  According to Pneumo Abex, BFG's deliberate

violation of the agreement prejudiced Pneumo Abex by, among other

things, "precluding Pneumo Abex from monitoring BFG's activities

and/or from consulting with respect to actions taken."   In a

letter dated February 1, 1995, Pneumo Abex reiterated its concerns

that  BFG had disregarded the indemnification procedures outlined

in the agreement and specifically requested that BFG specify any

indemnification claims under the agreement.  Four months later, BFG

responded with a letter notifying Pneumo Abex of an alleged obligation to indemnify BFG for all investigative work performed to

date and for all identified contamination, regardless of the cause

or source or legal obligation.  Pneumo Abex responded with two

letters communicating that it could not acknowledge or disclaim any

indemnification obligations without being supplied with the

information contemplated by the agreement.  On November 3, 1995,

BFG responded stating that it had supplied sufficient information

necessary to satisfy the terms of the agreement.  In response to

another letter from Pneumo Abex requiring more information, BFG

sent a letter demanding payment in the amount of $130,349.65.  

	Also in the Pneumo complaint, Pneumo Abex claimed that BFG's

actions threatened its ability to seek indemnification from Whitman

under the SPA.  Section 13.5(f) of the agreement provided, in

pertinent part: "Buyer and Seller at all times shall use their

reasonable best efforts to comply with the procedures of the SPA

and to reasonably cooperate with each other in obtaining the

benefit of any Whitman obligations under the SPA."  

	On the above grounds, the Pneumo complaint sought five forms

of relief: (1) a declaration that the agreement between Pneumo Abex

and BFG was a valid and existing contract, that Pneumo Abex had

performed all of its existing obligations under the agreement, that

an actual dispute existed as to whether BFG had failed to fulfill

its obligations under the indemnification provisions under the

agreement, and that as a result of BFG's breach, it had no

obligations under the agreement to indemnify BFG for any money it sought in connection with environmental liability; (2) a

declaration that an actual dispute existed as to whether Pneumo

Abex had an obligation to indemnify BFG until BFG fulfilled its

obligations under the agreement and a determination whether such

environmental liabilities were covered by the agreement; (3) a

declaration that BFG materially breached the asset purchase

agreement; (4) a declaration of repudiation of the asset purchase

agreement; and (5) a declaration that BFG breached the covenant of

good faith and fair dealing by failing to notify Pneumo Abex with

reasonable promptness and reasonable specificity of indemnification

claims under the agreement.  

	On April 1, 1996, BFG filed a counterclaim against Pneumo

Abex.  The parties agree that the allegations of the counterclaim

are the sole grounds upon which the duty to defend could arise in

this case.  BFG's counterclaim stated that Pneumo Abex agreed to

indemnify and hold BFG harmless under section 13.5(b) of the asset

purchase agreement.  It also alleged that, under section 13.5(e) of

the agreement, the parties would each bear 50% of the environmental

liabilities until the total amount of those liabilities reached $14

million.  BFG further claimed that, based upon environmental

investigations conducted at all four sites, contamination had

occurred which exceeded human health and environmental protection

standards.  It stated that these conditions were attributable to

events that occurred prior to BFG's current "stewardship" of the

facilities.  BFG argued that its expenditures all constituted environmental liabilities for which Pneumo Abex had agreed to

indemnify it under section 13.5 of the asset purchase agreement. 

The counterclaim further alleged that BFG had complied with all

conditions of section 13.5 and that it had properly and timely

notified Pneumo Abex of the environmental conditions at the four

sites and of BFG's costs incurred in connection with remediating

those conditions.  

	For its relief in the counterclaim,  BFG sought a declaration

that the agreement constituted a valid and existing contract

between it and Pneumo Abex and also that BFG and Pneumo Abex had an

actual dispute over whether Pneumo Abex had an obligation under the

agreement to indemnify BFG for costs "it [had] incurred to date,

[and expected] to incur in the future, in connection with

Environmental Liabilities, in accordance with the indemnity

provisions of the Agreement."  BFG also sought a declaration that

BFG had fulfilled its obligations under the agreement, that Pneumo

Abex had failed to fulfill its obligations under the

indemnification provisions of the agreement, and that Pneumo Abex's

failure to fulfill its obligations under the agreement constituted

a material breach of contract with regard to environmental

liabilities incurred by BFG.  BFG also sought a declaration that

Pneumo Abex's action constituted a wrongful repudiation of its

obligations under the agreement with regard to environmental

liabilities incurred by BFG.  Finally, BFG sought a declaration

that Pneumo Abex breached the covenants of good faith an fair dealing by failing to cooperate with BFG in the performance of

actions in response to known environmental liabilities and by

refusing to remit payments to BFG as requested, for costs incurred,

to address environmental liabilities.

	In plaintiffs' third amended complaint (the subject of this

appeal), plaintiffs alleged that the Insurers had an indivisible

obligation to defend or indemnify them against the counterclaim

filed by BFG and that the failure to defend or indemnify them

amounted to a breach of the policies issued by the Insurers. 

Specifically, plaintiffs alleged that the policies provided

coverage on behalf of the insureds for "all sums which the

insured[s] shall become legally obligated to pay as damages because

of *** property damage *** caused by an occurrence."  In paragraph 36 of the complaint, plaintiffs alleged that they had received

"claims and demands alleging damages because of property damage" at

the four sites at issue.  Further, paragraph 36 stated, "the

property damage [at issue] *** is allegedly continuous and

progressive beginning before 1961 and continuing to 1986 or

thereafter."  Because of the Insurers' refusal to defend the BFG counterclaim, plaintiffs alleged that they incurred defense costs

of $1,953,186.  The record reveals that the BFG suit was resolved

by settlement whereby plaintiffs were ordered to pay BFG $1

million. 

	In an order entered October 10, 2000, the trial court granted

the Insurers' motion to dismiss plaintiffs' third amended complaint for declaratory judgment.  The trial court concluded that the

allegations in the BFG counterclaim arose out of an alleged breach

of the asset purchase agreement and did not amount to an

"occurrence" as defined in the policies.  Therefore, the trial

court found the allegations in the underlying complaint did not

fall within or potentially within the policies' coverage for

environmental contamination or property damage.  

	The trial court further found that the BFG counterclaim did

not precisely allege when the damage, for which BFG sought

reimbursement under the asset purchase agreement, occurred.  Since

the policies expired eight years before the asset purchase

agreement was executed, the trial court concluded that it was

impossible to determine on the face of the pleadings whether the

policies would have been in effect when the alleged environmental

damage occurred.  In another order entered October 19, 2000, the

trial court confirmed the dismissal order of October 10, 2000, and

made a written finding under Supreme Court Rule 304(a).  155 Ill.

2d. R. 304(a).  Plaintiffs now appeal.

	We first address whether the trial court correctly granted the

Insurers' motion to dismiss on the ground that the allegations in

the BFG counterclaim did not constitute an occurrence under the

policies and, thus, did not fall within or potentially within the

policies' coverage.  This court reviews a trial court's ruling upon a motion to dismiss de novo.  Royal Insurance Co. of America v. Insignia Financial Group, Inc., 323 Ill. App. 3d 58, 63, 751 N.E.2d 164 (2001); Stokes v. Pekin Insurance Co., 298 Ill. App. 3d 278, 280, 698 N.E.2d 252 (1998). 

	It is well settled in Illinois: 

		"To determine whether the insurer has a duty

to defend the insured, the court must look to

the allegations in the underlying complaint

and compare these allegations to the relevant

provisions of the insurance policy.

[Citations.]  If the facts alleged in the

underlying complaint fall within, or

potentially within, the policy's coverage, the

insurer's duty to defend arises. [Citations.]  Refusal to defend is unjustifiable unless it

is clear from the face of the underlying

complaint that the facts alleged do not fall

potentially within the policy's coverage." 

Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 107-08, 607 N.E.2d 1204 (1992). 

	Plaintiffs contend that the allegations in the counterclaim

fall within the policies' coverage.  In support their argument, they primarily rely upon  paragraphs 79 through 85 of the

counterclaim filed by BFG.  These paragraphs alleged the following:

			"79.Environmental investigations

performed on behalf of BFG confirm that a wide-range of 'Hazardous Substances,' as that

term is defined by the [Asset Purchase]

Agreement, have been identified at levels

exceeding those allowable under human health

and environmental protection standards in

soils and groundwater at the facilities

formerly operated by Pneumo Abex and

transferred to BFG.

			80.Environmental investigations conducted

at the Cleveland New Main facility establish

that the soils and groundwater in and around

the facility are contaminated with volatile

organic compounds, solvents, heavy metals, and

total petroleum hydrocarbons at levels

exceeding human health and environmental

protection standards established under

'Environmental Laws,' as that term is defined

in the Agreement.

			81.The contamination at the Cleveland New

Main facility, if left unremediated, threatens

the quality of site groundwater, the safety of

workers and others that may become involved in

site operation, construction or maintenance

activities, and soils and groundwater at

neighboring properties, including residences.  These conditions are attributable to events

and activities that occurred prior to

Plaintiff's current stewardship of the

facility.

			82.Environmental investigations conducted

at the Cleveland Plating facility establish

that the soils and groundwater at the facility

are contaminated with chlorinate organic

contaminants and petroleum at levels exceeding

human health and environmental protection

standards established under 'Environmental

Laws,' as that term is defined in the

Agreement.

			83.The contamination at the Cleveland

Plating facility, if left unremediated,

presents a substantial risk for off-site

migration, and thus threatens the soils and

groundwater at neighboring properties.  These

conditions are attributable to events and

activities that occurred prior to BFG's

current stewardship of the facility.

			84.Environmental investigations conducted

at the Tullahoma facility establish that the

soils and subsurface areas of the facility are

contaminated with volatile organic compounds, heavy metals and total petroleum hydrocarbons

at levels exceeding human health and

environmental protection standards established

under 'Environmental Laws,' as that term is

defined in the Agreement.

			85.The contamination at the Tullahoma

facility, if left unremediated, threatens the

quality of groundwater and presents a

substantial risk for migration to off-site

properties.  These conditions are attributable

to events and activities that occurred prior

to BFG's current stewardship of the property."

	In order to find a duty to defend, we would have to conclude that the above allegations, along with any other in the

counterclaim, fall within or potentially within the subject

policies' coverage.  As noted above, the instant policies provided that:  "'occurrence' means an accident, including continuous or

repeated exposure to conditions, which results in bodily injury or

property damage neither expected nor intended from the standpoint

of the insured."  An accident has been interpreted to mean " 'an

unforeseen occurrence *** of untoward or disastrous character' or

'an undesigned sudden or unexpected event.'"  Bituminous Casualty Corp. v. Gust K. Newberg Construction Co., 218 Ill. App. 3d 956, 965-66, 578 N.E.2d 1003 (1991), quoting Aetna Casualty & Surety Co. v. Freyer, 89 Ill. App. 3d 617, 619 (1980).  Our review therefore requires us to compare the allegations of the complaint with the

policies and determine whether the allegations of the counterclaim

allege or potentially allege an "occurrence" as that term is

defined in the policy.

	We now compare the allegations of the counterclaim and the relevant policy provisions.  Paragraph 71 of the counterclaim

states that "BFG's counterclaims arise out of the transactions or

occurrences, relating to the parties' actions and obligations to

each other under the Agreement with respect to covered

environmental matters, which are the subject matter of [Pneumo

Abex's] complaint ***."  In paragraph 72 of the counterclaim, BFG

sought a declaration of Pneumo Abex's obligation to reimburse BFG

for environmental remediation expenses provided for under "the

Agreement."  In paragraph 74 of the counterclaim, BFG claimed that

Pnuemo Abex agreed to indemnify it for environmental liabilities

relating to purchased assets or business under the agreement.   

	Paragraph 79 indicated that "Hazardous Substances," as defined in the agreement, had been identified at the various sites owned by

BFG.  Paragraphs 80, 82, and 84 indicated the presence of

contamination at the Cleveland New Main, Cleveland Plating, and

Tullahoma facilities exceeding human health and environmental protection standards established under "Environmental Laws," as

that term was defined in the agreement.  Paragraphs 81, 83, and 85

alleged that the contamination, if left unremediated,  threatened

human health and environmental concerns.  Those same paragraphs also alleged that the contamination occurred before BFG maintained "stewardship" over the property.

	Paragraph 86 alleged:

			"To date, BFG has incurred over $400,000

to identify and characterize the presence at

the properties of 'Hazardous Substances'

within the meaning of the Agreement, at or

above levels of regulatory concern, to

evaluate the risks posed by those substances

to site occupants, ground water resources and

neighboring properties, and to implement

appropriate response actions."	

Paragraph 88 further provided: 

			"These expenditures all constitute

'Environmental Liabilities' for which Pneumo

Abex has agreed to indemnify BFG under the

terms of Article 13.5 of the Agreement."

	Considering all of the allegations above, we do not find that they alleged "an accident, including continuous or repeated

exposure to conditions, which [resulted] in bodily injury or

property damage neither expected nor intended from the standpoint

of the insured."  We also find that the counterclaim did not seek

relief for property damage.  Instead, the counterclaim sought

indemnification for expenses incurred for remediating the environmental contamination contemplated by the parties in the asset purchase agreement.  Because the contamination and the

expenses for remediating the contamination were contemplated by the

parties, the damages complained of could not have arisen from an

unforeseen occurrence.

	On appeal, plaintiffs rely primarily upon Outboard Marine, 154 Ill. 2d at 111, and United States Fidelity & Guaranty Co. v. Specialty Coatings Co., 180 Ill. App. 3d 378, 382, 535 N.E.2d 1071 (1989).  They state that broad insuring language in Outboard Marine and Specialty Coatings is similar if not identical to the policy language in this case.  Plaintiffs also suggest that the

allegations of environmental property damage caused by the insured

in the BFG suit are similar to the allegations in the third-party

actions in Outboard Marine and Specialty Coatings.  Because the third party actions in those cases triggered the duty to defend,

plaintiffs claim that the BFG suit triggered the duty to defend in

this case.

	In Outboard Marine, several complaints were filed against Outboard Marine Corporation (OMC) by the state and federal

environmental protection agencies for the discharge of

polychlorinated byphenyls into the North Ditch, Waukegan Harbor,

and Lake Michigan.  The underlying suits also included a third-

party complaint filed by OMC against the Monsanto Corporation.  The

Environmental Protection Agency (EPA) then joined Monsanto as a

party defendant in an amended complaint.  Monsanto filed a cross-

claim for indemnification against OMC in the event it was found liable as a result of the EPA action.  OMC tendered the defense of

the underlying actions to its insurers under comprehensive general

liability insurance policies.  The policy language stated: 

		" '[The insurer] will pay on behalf of the

insured all sums which the insured shall

become obligated to pay as damages because of

*** property damage to which this policy

applies, caused by an occurrence, and the

company shall have the right and duty to

defend any suits against the insured seeking

damages on account of such property damage

***.' " Outboard Marine, 154 Ill. 2d at 109. 

	The question presented in Outboard Marine was whether the underlying actions, which sought primarily equitable relief, fell

potentially within the coverage afforded by the insurer's

commercial general liability policies for "suits seeking damages,"

thereby triggering the insurer's duty to defend OMC.  The supreme

court reasoned that a comprehensive general liability insurance

policy is a very broad policy where the insurer assumes a wide

scope of risks.  It found that the insurer in that case intended to

offer and OMC intended to purchase comprehensive protection against

liability for property damage caused by an occurrence, and

concluded that the underlying actions were "suits seeking damages"

which triggered the insurer's duty to defend.  Outboard Marine, 154 Ill. 2d at 117.

	Outboard Marine is distinguishable from the instant case.  First, the underlying actions in Outboard Marine were filed by state and federal environmental protection agencies against OMC for

environmental contamination.  In this case, the underlying action

arose from the alleged breach of the asset purchase agreement

between the parties.  Thus, the Pneumo complaint here does not

involve an action for environmental pollution.  Instead, the suit

from which plaintiffs seek relief is the counterclaim filed by BFG

concerning Pneumo Abex's alleged failure to comply with the

agreement's indemnification provisions.  Such a claim did not exist

in Outboard Marine. 

	Second, the third-party complaint and cross-claim in Outboard Marine sought indemnification or contribution from the respective  contaminators in the event of liability incurred as a result of the 

action from the environmental protection agencies.  Here, the

Pneumo complaint and BFG counterclaim sought declaratory relief

that the breaching party failed to fulfill its respective

obligations under the asset purchase agreement. 

	Specialty Coatings is also distinguishable.  In Specialty Coatings, Unites States Fidelity and Guaranty Co. (USF&G) issued  the defendants-insureds, who were producers of industrial coatings,

sealants, and adhesives, comprehensive general liability policies. 

The defendants tendered to USF&G the defense of two separate claims 

for environmental damage.  The first was filed by the state for the

alleged delivery and disposal of industrial wastes in Kankakee County.  The second action was a potentially responsible party

(PRP) letter issued from the United States Environmental Protection

Agency.  A third-party action was also filed against the defendants

for contribution in connection with the defendants' disposal of

hazardous wastes at a certain site. 

	The relevant issue decided was whether the PRP letter

triggered USF&G's duty to defend.  The appellate court found that

the duty to defend was triggered because the PRP letter amounted to

a suit and the concomitant duty to defend.  Specialty Coatings, 180 Ill. App. 3d at 389.

	Specialty Coatings is distinguishable because the underlying allegations in that case involved direct action by environmental

agencies for alleged pollution by the defendants.  The third-party

claim was directly related to contribution for potential expenses

incurred by another defendant named in the action taken by the

environmental agencies.  In Specialty Coatings, no asset purchase agreement with indemnification provisions existed between the

parties.

	Although we find Specialty Coatings distinguishable, there is language in that decision which supports our conclusion in this

case.  In Specialty Coatings, the court found that, "where the genesis of the relief sought is 'physical injury to tangible

property' or 'loss of use of tangible property,' the claim seeks

relief from 'property damage' as defined by the contract. 

[Citations.]"  Specialty Coatings, 180 Ill. App. 3d at 393-94.  In the instant case, the genesis for the relief sought was not for "physical injury to tangible property" or "loss of use of tangible

property" but, rather, for monies owed as a result of a breach of

the indemnification agreement.    

	Plaintiffs also rely upon the Supreme Court of California's

decision in Vandenberg v. Superior Court of Sacramento County, 21 Cal. 4th 815, 982 P.2d 229, 88 Cal. Rptr. 2d 366 (1999).  In Vandenberg, the plaintiff leased a parcel of land from Eugene and Katherine Boyd (collectively the Boyds) for the purpose of selling

and servicing automobiles.  In 1988, plaintiff discontinued the

business and possession of the land reverted to the Boyds.  Testing

of the property revealed contamination of soils and groundwater on

the property as the result of three underground waste oil storage

tanks installed by the plaintiff.  The Boyds filed a complaint

against the plaintiff for several causes of action including waste,

nuisance, and breach of the lease agreement.  

	The plaintiff held commercial general liability insurance from

several insurers.  The policies provided coverage for sums the

plaintiff was "legally obligated to pay as damages" for property

damage.  Vandenberg, 21 Cal. 4th at 825, 983 P.2d at 235, 88 Cal. Rptr. 2d at 372.  The plaintiff tendered the defense of the Boyd complaint to his insurers and only USF&G agreed to defend.  The

parties reached a settlement, and it was agreed between the Boyds

and the plaintiff that the breach of lease issues would be resolved

through arbitration.  USF&G agreed to defend the plaintiff in the arbitration, but reserved its coverage and indemnity obligations

for future resolution.

	In the arbitration, the arbitrator ruled for Boyd in the

amount of $4 million.  The award was confirmed by a superior court

judgment and the plaintiff requested indemnification from his

insurers.  The insurers rejected the plaintiff's indemnification

request and the plaintiff then filed the underlying action against

his insurers alleging a failure to defend, settle, or indemnify in

the Boyd action.  In a motion, the insurers sought summary judgment

on the ground that the arbitrator awarded damages for breach of

lease, a contractual cause of action, and contractual damages were

not covered by the commercial general liability policies at issue. 

The trial court found that the plaintiff had no coverage under the

policies for the arbitration award because the claims submitted to

the arbitrator were contractual.  Vandenberg, 21 Cal. 4th at 827, 982 P.2d at 236, 88 Cal. Rptr. 2d at 373.

	The court of appeals reversed ruling that "coverage under the

insurance policies in question could not be determined by reference

to the 'general rule' that damages for an insured's nonperformance

of a contract are not covered under CGL insurance polices." 

Vandenberg, 21 Cal. 4th at 827, 982 P.2d at 236, 88 Cal. Rptr. 2d  at 374.  The court further reasoned that, "when there is damage to

property, the focus of the inquiry should be the nature of the risk

or peril that caused the injury and the specific policy language,

not the form of the action brought by the injured party."  Vandenberg, 21 Cal. 4th at 828, 982 P.2d at 246, 99 Cal. Rptr. 2d at 374.  The supreme court  affirmed the reasoning of the court of appeals.  Vandenberg, 21 Cal. 4th at 841, 982 P. 2d at 246, 88 Cal. Rptr. 2d at 384-85. 

	In our view, Vandenberg is distinguishable.  First, in Vandenberg, a breach of contract theory was asserted against the plaintiff in the action filed by the Boyds in addition to claims

for environmental damages.  In the instant case, the Pneumo

complaint and BFG counterclaim sought damages for breach of the

asset purchase agreement and for the alleged failure to comply with

the agreement's indemnification provisions.  Thus, the Pneumo

action and BFG counterclaim amounted only to a breach of contract,

which is unlike the breach of lease and environmental claims

brought against the plaintiff in Vandenberg.  Furthermore, we are not bound by this decision.	

	We find that Indiana Insurance Co. v. Hydra Corp., 245 Ill. App. 3d 926, 615 N.E.2d 70 (1993), and Bituminous, 218 Ill. App. 3d at 966, are instructive in this case.  In Hydra, Hydra Corporation (Hydra) contracted to construct a building for B.K. Production

Specialties (B.K.).  The contract provided for arbitration in the

event of a dispute.  When numerous cracks emerged in the building's

concrete floor and the building developed an unsightly appearance

due to loose paint, B.K. initiated an arbitration proceeding for

repairs at Hydra's expense.  The arbitrator ruled in favor of B.K.,

yet Hydra did not make the repairs.  B.K. then filed a complaint seeking enforcement of the arbitration award.  Hydra tendered the

complaint to its insurer, Indiana Insurance Company, for a defense

and indemnity.

	The language in two policies Indiana issued to Hydra stated

the following: 

			" 'The company will pay on behalf of the

insured all sums which the insured shall

become legally obligated to pay as damages

because of

			Coverage A. bodily injury or

			Coverage B. property damage

		to which this insurance applies caused by an

occurrence, and the company shall have the

right and duty to defend any suit against the

insured seeking damages on account of such

bodily injury or property damage ***.' "

Hydra, 245 Ill. App. 3d at 928. 

Indiana filed a declaratory judgment seeking a declaration that it

need not defend or indemnify Hydra because the damages suffered by

B.K. were not caused by an occurrence.  The trial court entered a

motion for judgment on the pleadings in favor of Indiana.

	On review, the appellate court affirmed the trial court on the

ground that the underlying complaint did not allege damages

resulting from an unforeseen occurrence as required by the

policies.  Instead, it reasoned that the cracks in the floor and the loose paint on the building's exterior were the natural and

ordinary consequences of installing defective concrete and applying

the wrong type of paint, bases for a breach of contract claim. 

Thus, the court determined that B.K.'s breach of contract claim was

not covered under the policies issued by Indiana.  Hydra, 245 Ill. App. 3d at 932.

	In Bituminous, the defendants-insureds were sued by the State of Illinois for various acts and omissions related to the design,

manufacture, and installation of the heating, ventilating, and air

conditioning system (HVAC) in the State of Illinois Building.  The

defendants tendered the claims to their insurance company,

Bituminous Casualty.  The policy provided that the insurer would

defend any suit seeking damage against the insured for property

damage, which was defined in the policy as loss of the use of

tangible property caused by an occurrence.  

	Bituminous filed a declaratory judgment action which sought a

determination that it had no duty to defend or indemnify on the

grounds that the complaint alleged a breach of contract and that a

comprehensive general liability policy was not intended to pay the

costs for repairing or replacing the insured's defective work and

products.  The trial court found in favor of Bituminous and granted

its motion for summary judgment.

	On review, the appellate court concluded that the State's

complaint did not allege a loss of use of tangible property caused

by an occurrence and affirmed the trial court.  Bituminous, 218 Ill. App. 3d at 966.

	In our view, the instant case is analogous to the facts in

Hydra and Bituminous.  Upon de novo review of the paragraphs relied upon by plaintiffs in the counterclaim, we conclude that the

allegations concern a breach of the asset purchase agreement, and

do not amount to claims for environmental property damage caused by

an "occurrence" as required under the policies at issue.  Here, the  Pneumo complaint and the counterclaim solely concern whether monies

are owed for the breach of the asset purchase agreement between the

parties.  Significantly, the first paragraph of the Pneumo complaint

characterizes the nature of the action as "an action by Pneumo Abex

for declaratory and other relief arising out of a breach of a

written contract."  Further, the "WHEREFORE" clause of the same

pleading first seeks a declaration that "BFG has failed to fulfill

its obligations under the [asset purchase] Agreement."  A review of

the counterclaim reveals that it too concerns the parties'

obligations arising out of the asset purchase agreement.  The mere

mention of the words "hazardous substances" or "contamination" in

the counterclaim does not establish that "those conditions" on the

properties were the result of an "occurrence."  

	The language of the policies in the instant case is identical

to the policy in Hydra where the Insurers were legally obligated to pay damages because of property damage caused by an occurrence.  As

we noted above, an occurrence means an accident under the instant

policies and an accident has been defined as " 'an unforeseen occurrence *** of untoward or disastrous character' or 'an

undesigned sudden or unexpected event.' "  Bituminous, 218 Ill. App. 3d at 965-66, quoting Aetna Casualty, 89 Ill. App. 3d at 619.  Here, the underlying complaint reveals that the asset purchase agreement

concerns indemnity provisions pertaining to environmental

liabilities.  We do not find that the environmental liabilities

referred to in BFG's counterclaim arose from an unforeseen

occurrence because the primary purpose of the asset purchase

agreement was to provide indemnification for their remediation. 

Therefore, we conclude that the trial court correctly ruled that the

money damages sought were not for property damage and were not a

result of an "occurrence" but, rather, were the result of a breach

of the asset purchase agreement. 

	For the reasons above, we conclude that the trial court correctly held the allegations in the counterclaim did not amount

to property damages caused by an occurrence.  As a result, the

allegations did not fall within or potentially within the policies'

coverage, and the Insurers' motion to dismiss was properly granted.

	Because of our finding on the first issue, we need not address

the second issue in this case.  For the reasons above, the judgment of the trial court is affirmed.

	Affirmed.

	mMcBRIDE, P.J., and CERDA and BURKE, JJ., concur.