Opinion ID: 1506273
Heading Depth: 3
Heading Rank: 1

Heading: Suit.

Text: There is nothing ambiguous or all-inclusive about the word suit. It has always referred to an action brought in a court of justice seeking a legal remedy. The term is certainly a very comprehensive one, and is understood to apply to any proceeding in a court of justice, by which an individual pursues that remedy in a court of justice, which the law affords him. The modes of proceeding may be various, but if a right is litigated between parties in a court of justice, the proceeding by which the decision of the court is sought, is a suit. Weston v. City Council of Charleston, 27 U.S. (2 Pet.) 449, 464, 7 L.Ed. 481 (1829) (op. by Marshall, C.J., construing section 25 of the Judiciary Act of 1789). To characterize an administrative agency proceeding as a suit is akin to saying that a bulldozer is a building. See Commonwealth v. Plowman, 86 S.W.3d 47, 50-54 (Ky.2002) (Keller, J., dissenting). Ambiguity (as opposed to outright lack of understanding) is created only by converting an insured's hope or assumption that every out-of-pocket payment is covered into a part of the contract language. Patrons Oxford, 573 A.2d at 19. Under [CERCLA], the federal government may seek an injunction requiring the responsible party to clean up an environmentally contaminated site. See 42 U.S.C. section 9606(a) (2000). In the alternative, the government may: (1) clean up the site and demand reimbursement for its incurred costs (42 U.S.C. sections 9604(a)(1), 9607(a) (2000)); or (2) issue an administrative order requiring the responsible party to perform the cleanup, subject to civil fines for a failure to comply. 42 U.S.C. section 9606(a), (b) (2000). Central Illinois Light Co. v. Home Ins. Co., 342 Ill.App.3d 940, 277 Ill.Dec. 45, 795 N.E.2d 412, 425 (2003) (note the absence of any reference to site measures). In the alternative, the government can bring a suit in federal court. In addition to any other action taken by a State or local government, when the President determines that there may be an imminent and substantial endangerment to the public health or welfare or the environment because of an actual or threatened release of a hazardous substance from a facility, he may require the Attorney General of the United States to secure such relief as may be necessary to abate such danger or threat, and the district court of the United States in the district in which the threat occurs shall have jurisdiction to grant such relief as the public interest and the equities of the case may require. 42 U.S.C. § 9606(a). Thus, CERCLA authorizes both suits and administrative proceedings. Under ANI's policies, the duty to defend is triggered only by a suit. [T]he policies do not treat the terms suit and claim as interchangeable, but consistently treat them separately. This careful separation indicates that the insurers' differing rights and obligations with respect to suit[s] and claim[s] were deliberately and intentionally articulated in the policies. The effect of such policy language is that an insurer owes a duty to defend suits but no duty to defend claims which have not yet become suits. Instead, the insurer has the discretionary right to investigate and settle as it deems expedient. Foster-Gardner, Inc. v. Nat'l Union Fire Ins. Co., 18 Cal.4th 857, 77 Cal.Rptr.2d 107, 959 P.2d 265, 280-281 (1998) (holding that order issued by state EPA, pursuant to state Superfund law, directing insured to remediate pollution allegedly caused by its fertilizer and pesticide business, did not constitute suit within meaning of comprehensive general liability (CGL) insurance policies, so as to give rise to insurer's duty to defend). Thus, the duty to defend extends only to suits and not to allegations, accusations or claims which have not been embodied within the context of a complaint. In the instant case, a complaint alleging liability for property damage has never been filed against Lapham-Hickey. Without a complaint, there is no suit. And without a suit, Protection's duty to defend Lapham-Hickey is not triggered. That the word suit refers to a proceeding in a court of law is also apparent by looking at the Protection policy itself. If all of the policy's language is to be given effect, then the words suit and claim as used within provision 5 must have different meanings. While Protection 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. The distinction the policy draws between suits and claims must be respected. Neither the initial letter from the EPA, the draft consent order nor the no-action letter initiated a suit. None was filed in a court of law and none accomplished service of process upon Lapham-Hickey. Rather, the draft consent order and ultimately the no-action letter were mechanisms used to encourage Lapham-Hickey to voluntarily investigate the contamination at the facility. Though the tone of these documents may have been confrontational, these documents by themselves are not complaints and do not impose liability. Lapham-Hickey Steel Corp. v. Prot. Mut. Ins. Co., 166 Ill.2d 520, 211 Ill.Dec. 459, 655 N.E.2d 842, 847-48 (1995) (internal citations omitted). See also Aetna Cas. and Sur. Co. v. Gen. Dynamics Corp., 968 F.2d 707, 713-14 (8th Cir.1992) (holding that letters sent by EPA to insured requiring insured to clean up hazardous waste were not suits that triggered CGL insurer's duty to defend under Missouri law; demand letters did not seek damages, but, rather, sought to have insured participate in, and negotiate, clean up of various sites), reaffirmed by Liberty Mut. Ins. Co. v. FAG Bearings Corp., 335 F.3d 752, 765 (8th Cir.2003); Joslyn Mfg. Co. v. Liberty Mut. Ins. Co., 836 F.Supp. 1273, 1279 (W.D.La.1993) ([T]he August 2 and the amended December 17 compliance orders issued by the DEQ [state environmental agency] do not rise to the level of a suit which would invoke Liberty Mutual's duty to defend. The court bases this conclusion on several factors: (1) the compliance order itself specifically provides that if respondent refuses to comply with the order, the respondent could be subject to possible enforcement procedures ..., i.e., a civil action or civil penalties; (2) the general and traditional definition of a suit refers to a formal proceeding in a court of law; and most importantly, (3) the insurance policies specifically differentiate between the words claim and suit for purposes of the duty to defend. An insurance policy is a contract, and this court finds that Liberty Mutual only contracted to defend Joslyn against suits, not against compliance orders of this nature.); Metro Wastewater Reclamation Dist. v. Cont'l Cas. Co., 834 F.Supp. 1254, 1258 (D.Colo. 1993) (`[S]uit' does not encompass the EPA proceeding alleged here. Thus, ... the defendants had no obligation to defend the plaintiffs under either the property damage liability coverage provisions or the personal injury liability coverage provisions.); Harleysville Mut. Ins. Co., Inc. v. Sussex County, Del., 831 F.Supp. 1111, 1132 (D.Del.1993) ([T]he PRP letters sent to the County by the EPA do not constitute a `suit' and, therefore, the insurers do not have a duty to defend the County against the CERCLA proceeding brought by the EPA to investigate and control the release or threatened release of hazardous substances, pollutants, or contaminants at Landfill No. 5 .... The EPA letter at issue merely informed [the insured] of its potential liability under CERCLA and that the EPA was interested in discussing [the insured's] voluntary participation in remedial measures. The letter was an invitation to voluntary action on [the insured's] part and is not the equivalent of the commencement of a formal proceeding within the meaning of the subject comprehensive general liability policies.); Cedar Lane, 883 P.2d at 603 ([I]nasmuch as we have determined that the damages here were within the policy exclusions, St. Paul had no duty to defend.); Patrons Oxford 573 A.2d at 20 (holding that state DEP's administrative proceeding to compel clean-up of pollution was not suit against the insured seeking damages within meaning of multiperil policy requiring insurer to defend insured in any suit seeking damages); Technicon Elecs. Corp. v. Am. Home Assur. Co., 141 A.D.2d 124, 533 N.Y.S.2d 91, 104-05 (1988) ([T]he `potentially responsible person' letter sent by the EPA to Technicon on March 1, 1985, does not constitute the institution of a `suit' ... as that term is used in the subject policies so as to require a defense.... The EPA letter at issue merely informed Technicon of its potential liability under CERCLA and that the EPA was interested in discussing Technicon's voluntary participation in remedial measures. The letter was an invitation to voluntary action on Technicon's part and is not the equivalent of the commencement of a formal proceeding within the meaning of the subject comprehensive general liability policies.). The facts of this case exemplify why nuclear facility and waste-hauler insurers do not provide coverage or defense costs for CERCLA proceedings. The EPA sent 832 PRP letters to potentially responsible parties in this case. Ultimately, over 200 of these PRPs were found to have no responsibility at all and only 82 had sufficient responsibility to participate in the steering committee. Yet, based on today's majority opinion and the definition of insured in the ANI policies, ANI had a duty to defend each of the 832 PRPs, including not only the NREPC but also the United States Departments of Defense and Energy. Because of obvious conflicts of interest (each PRP would be attempting to reduce its own liability and thereby increase the liability of the others), ANI would be required to provide separate counsel for each insured. See Acushnet Co. v. Coaters, Inc., 972 F.Supp. 41, 70 (D.Mass.1997) (in civil action by PRPs who had entered into consent decree with EPA and sued by common representation other PRPs for contribution, held: In view of their choice for common representation,... the attorneys they have chosen are disabled from arguing to the court for any judicial allocation of shares among settling parties themselves; the attorneys would inevitably be preferring one client's interest over another client's interest in attempting to do so.). The potential for such conflicts of interest among PRPs was recognized during the Congressional debate over the 1986 SARA amendments to CERCLA. See Ohio v. United States Dep't of Interior, 880 F.2d 432, 466 (D.C.Cir.1989). If required to provide a separate defense for each of 832 insureds who received PRP letters from the EPA, the cost of defense of the CERCLA proceedings would no doubt exceed the costs incurred to clean up and improve the containment features of the site, itself. (Appellees claim that their defense costs and expenses presently exceed $7,000,000.)