Opinion ID: 3134619
Heading Depth: 3
Heading Rank: 1

Heading: Was a Suit Filed?

Text: Ehlco initially contends that the appellate court erred in holding that Wausau had no duty to defend Ehlco as to the Mena site because no true suit was filed against Ehlco concerning that site. According to Ehlco, the appellate court’s holding directly contradicts the plain language of the insurance policies at issue and this court’s opinion in Lapham-Hickey . Ehlco maintains that Wausau’s duty to defend was triggered when the EPA filed its lawsuit against Ehlco in the federal district court in Arkansas. Our decision in Lapham-Hickey is dispositive of this issue. In that case, the EPA began investigating possible environmental contamination at a Lapham-Hickey facility. The Minnesota Pollution Control Agency (MPCA) took over the investigation. During the investigation, the MPCA sent Lapham-Hickey a proposed consent order, which stated that Lapham-Hickey was a PRP and which required certain remedial actions. Lapham-Hickey declined to sign that consent order. Following negotiations, the MPCA issued Lapham-Hickey a “no-action” letter, and Lapham- Hickey agreed to conduct a voluntary investigation of its facility. No suit was ever filed against Lapham-Hickey. Later, upon discovering contamination at its facility, Lapham-Hickey filed its own declaratory judgment action against its insurer seeking reimbursement of costs expended. The insurance policy at issue provided that the insurer would “defend any suit against the Insured” that alleged liability for certain damages. The question presented to this court was whether, although no “suit” was ever filed against Lapham-Hickey, the insurer’s duty to defend was triggered by the MPCA’s proposed consent order or its other actions. We held that because no suit was filed, the insurer’s duty to defend was never triggered. Lapham-Hickey , 166 Ill. 2d at 529- 33. Lapham-Hickey established a bright-line test for determining when a “suit” exists in this context. “Suit” “refers to a proceeding in a court of law” and requires a complaint. Lapham-Hickey , 166 Ill. 2d at 531-32. Neither a PRP letter, a draft consent order, nor a “no-action” letter constitutes a “suit.” Lapham-Hickey , 166 Ill. 2d at 533. In the present case, the comprehensive general liability insurance policies at issue imposed on Wausau the “duty to defend any suit against the insured.” The question to be resolved, therefore, is whether a “suit” was filed against Ehlco sufficient to trigger Wausau’s duty to defend. Under Lapham-Hickey , it is clear that a “suit” was filed against Ehlco with respect to the Mena site. The EPA filed a suit against Ehlco in the federal district court in Arkansas, pursuant to CERCLA, on March 17, 1988. This suit was instituted by the filing of a complaint. The EPA’s action thus constitutes a “suit” because it was a proceeding in a court of law, and it was instituted with a complaint. Nonetheless, Wausau urges us to adopt the appellate court’s reasoning that the Arkansas complaint was not a true suit because it was “a mere formality” and “but an extension or implementation of the administrative proceeding,” since the parties had executed and contemporaneously filed the proposed consent decree with the Arkansas complaint. Wausau claims that there cannot be a suit where one party’s liability in the suit is a foregone conclusion by reason of a previously executed consent decree. Wausau contends that the “any suit” language in its policies cannot be construed to encompass a complaint filed in a court of law, if that complaint is accompanied by a proposed consent decree. We reject this argument. Lapham-Hickey held that the word “suit” is unambiguous in this context and therefore gave the word its plain and ordinary meaning. Lapham-Hickey , 166 Ill. 2d at 531-32. As discussed above, the Arkansas complaint meets Lapham-Hickey ’s definition of suit. Even assuming, arguendo , that Wausau’s interpretation of “any suit” is reasonable, at best it would create an ambiguity in the policy language. “A policy provision is ambiguous only if it is subject to more than one reasonable interpretation.” Lapham- Hickey , 166 Ill. 2d at 530. Wausau’s interpretation would then compete with the definition of suit, set forth above. Where competing reasonable interpretations of a policy exist, a court is not permitted to choose which interpretation it will follow. Outboard Marine Corp. v. Liberty Mutual Insurance Co. , 154 Ill. 2d 90, 108-09 (1992). Rather, in such circumstances, the court must construe the policy in favor of the insured and against the insurer that drafted the policy. American States Insurance Co. v. Koloms , 177 Ill. 2d 473, 479 (1997); Outboard Marine Corp. , 154 Ill. 2d at 108-09. Since Wausau’s interpretation affords less coverage to Ehlco, we would be required to reject it. Wausau’s argument thus fails in any event. Wausau also asserts that Ehlco waived its argument that the Arkansas complaint was a suit requiring a defense. According to Wausau, Ehlco waived this argument in the circuit court when it requested judgment on the pleadings based on the PRP letter. The record does not support Wausau’s waiver argument. The record reveals that the circuit court was presented with argument on the issue of whether the Arkansas complaint was a suit within the meaning of the policies’ language. Ehlco presented a memorandum of law in support of its pleadings in which Ehlco maintained that Wausau’s duty to defend had been triggered. Wausau argued that no triggering event had occurred because there was no suit within the meaning of its policies. Ehlco responded: “Wausau’s claim that the underlying environmental matters were not suits  is plainly wrong. Those matters involved actions filed in federal courts  and a  [PRP] letter from the [EPA].” In support of this assertion, Ehlco directed the circuit court to the copies of the complaints filed in both the Wyoming and Arkansas actions. Given that Ehlco argued to the circuit court that the Arkansas complaint was a suit requiring a defense, this claim was preserved. That Ehlco also argued in the circuit court that Wausau’s duty to defend was triggered by the PRP letter is of no consequence with regard to waiver. Therefore, Wausau’s waiver argument is without merit. In accordance with the above holdings, we reverse the appellate court’s determination that Wausau owed no duty to defend with respect to the Mena site because no sufficient suit was filed. Wausau, however, asserts other arguments concerning its duty to defend Ehlco with respect to the Mena site. We address these arguments below.