Opinion ID: 1176222
Heading Depth: 4
Heading Rank: 1

Heading: The literal meaning approach

Text: Under the literal meaning approach, the term suit is deemed unambiguous, referring to actual court proceedings initiated by the filing of a complaint. When no complaint has been filed, there is no suit the insurer has a duty to defend. [6] ( Lapham-Hickey Steel Corp. v. Protection Mutual Ins. Co., supra, 211 Ill.Dec. 459, 655 N.E.2d at p. 847 [word suit is unambiguous, and its plain meaning requires the filing of a complaint in a court of law before an insurer's duty to defend is triggered]; Ray Industries, Inc. v. Liberty Mut. Ins. Co., supra, 974 F.2d at p. 761, original italics [Term suit has a plain and unambiguous meaning that excludes PRP letters, because a suit is an attempt to gain an object in the courts. The term refers to formal legal proceedings, as opposed to demands and other tactics that, however powerful, are not enforced by a court of law.].) In addition to the plain meaning of the term suit, some courts find support for their conclusion in the connection between the filing of a complaint and the duty to defend. Generally the issue of whether an insurer's duty to defend has arisen is determined by looking to the allegations in the underlying complaint and comparing these allegations to the policy provisions. ( Lapham-Hickey Steel Corp. v. Protection Mutual Ins. Co., supra, 211 Ill.Dec. 459, 655 N.E.2d at p. 847[[T]he duty to defend extends... not to allegations, accusations or claims which have not been embodied within the context of a complaint.]; City of Edgerton v. General Cas. Co. of Wisconsin, supra, 517 N.W.2d at p. 477.) These references to the `complaint' clearly indicate that insurers generally contract to defend suits filed in a court, rather than mere allegations or threats. ( Ray Industries, Inc. v. Liberty Mut. Ins. Co., supra, 974 F.2d at p. 763.) Where there is no complaint, there is no suit against which the insurer can defend. ( Lapham-Hickey Steel Corp. v. Protection Mutual Ins. Co., supra, 211 Ill.Dec. 459, 655 N.E.2d at p. 847.) Moreover, many courts note that the standard policy language differentiates between a claim and a suit. If all of the policy's language is to be given effect, then the words `suit' and `claim' as used within [the policy] must have different meanings.... While [the insurer] has the power to investigate any claim, it has the duty to defend only suits. If the word `suit' was broadened to include claims, in the face of policy language which distinguishes between the two, any distinction between these two words would become superfluous. ( Lapham-Hickey Steel Corp. v. Protection Mutual Ins. Co., supra, 211 Ill.Dec. 459, 655 N.E.2d at pp. 847-848; Ray Industries, Inc. v. Liberty Mut. Ins. Co., supra, 974 F.2d at p. 762 [court construed the term suit narrowly in order to maintain policy distinction between suit and claim].) Other courts conclude that interpreting suit to mean an action initiated by the filing of a complaint recognizes the variety of options available to the EPA in enforcing CERCLA and state agencies enforcing such laws as the HSAA. ( Ray Industries, Inc. v. Liberty Mut. Ins. Co., supra, 974 F.2d at p. 762.) Under CERCLA (and the HSAA), agencies have express authority to file a lawsuit to recover all costs of removal or remedial action. ( Ibid. ) Or they may chose not to file a lawsuit in a particular case. Like other claimants, the EPA threatens litigation and makes other efforts to pressure potentially liable parties; but these threats, however seriously they may be taken, do not constitute a lawsuit. ( Ibid. ) Because they conclude the term suit does not encompass administrative agency orders and other activity, courts have noted that the insurer would be put in the position of providing coverage for which it did not contract or receive payment. ( City of Edgerton v. General Cas. Co. of Wisconsin, supra, 517 N.W.2d at p. 476, fn. 26 [The original risk assessment becomes a nullity if the language of the policy is redefined in order to expand coverage beyond what was planned for by the insurer in the contract of insurance.].) Finally, at least one court has held that because in that particular jurisdiction an insurer has no duty to indemnify an insured for cleanup costs pursuant to a CERCLA order, there is no duty to defend environmental agency administrative proceedings. ( Becker Metals Corp. v. Transportation Ins. Co., supra, 802 F.Supp. at p. 240; see also Aetna Cas. & Sur. Co. v. General Dynamics Corp., supra, 968 F.2d at p. 714.)