Court Opinion

ID: 2999561
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:55:20.033571+00
Date Added: 2024-06-11T11:45:35.638331
License: Public Domain

In the
    United States Court of Appeals
               For the Seventh Circuit
                        ____________

No. 05-3412
KEYSTONE CONSOLIDATED INDUSTRIES, INC.,
and VALHI, INC.,
                               Plaintiffs-Appellants,
                        v.

EMPLOYERS INSURANCE COMPANY
OF WAUSAU (F/K/A EMPLOYERS MUTUAL LIABILITY
INSURANCE COMPANY OF WISCONSIN),
                                          Defendant-Appellee.
                        ____________
           Appeal from the United States District Court
                 for the Central District of Illinois.
          No. 03-01201 5292—Michael M. Mihm, Judge.
                        ____________
     ARGUED JANUARY 17, 2006—DECIDED AUGUST 3, 2006
                     ____________

    Before CUDAHY, POSNER, and WOOD, Circuit Judges.
  CUDAHY, Circuit Judge. Keystone Consolidated Indus-
tries, Inc., and Valhi, Inc.1 (collectively, Keystone) operate
a number of mills that manufacture wire products, chemi-
cals and other industrial materials, and have done so in
some capacity since the early 1900s. Beginning in 1942 and

1
  In 1984, Keystone spun off some of its businesses, facilities
and assets, including coverage rights associated with the trans-
ferred facilities, to a predecessor of Valhi.
2                                               No. 05-3412

continuing through the late 1980s, Keystone purchased
dozens of comprehensive general liability and excess
umbrella insurance policies from Employers Insurance
Company of Wausau (Wausau). Keystone
seeks indemnification from Wausau for approximately $13.5
million, which represents the costs it has incurred
or expects to incur cleaning up environmental damage
that its operations caused at four sites in Illinois and
Indiana. Wausau has refused to indemnify Keystone on
the theory that the policies require indemnification only
when a lawsuit triggers its duty to defend. The district
court agreed with Wausau and granted its motion for
summary judgment. Because, under Illinois law, the duty
to indemnify may arise even in absence of a lawsuit trigger-
ing the duty to defend, we reverse the judgment of the
district court and remand for further proceedings.

                      I. Background
  Four of Keystone’s industrial sites are at issue in this
case: Peoria, Impex, Chicago Steel & Wire and Ninth
Avenue. Keystone has requested indemnification from
Wausau for costs associated with cleaning up ground-
water and other contamination at each site. The Peoria Site
constitutes the most extensive claim by far; the
others involve only a fraction of the Peoria Site’s cleanup
costs. We summarize the relevant facts about each site
and its attendant claims and costs below.
  Keystone opened a wire mill near Peoria, Illinois in 1901.
This wire mill, which is one of the largest in North America,
draws and finishes wire products such as fence materials
and nails. In 1917, Keystone opened a steel mill, which
produces steel rod coils, at the same facility in Peoria.
  Keystone began to use chlorinated solvents, including
trichloroethylene (TCE), in vapor degreasing cabinets to
clean nails in the wire mill at the Peoria Site in 1958. By
No. 05-3412                                                  3

the 1960s, Keystone was using four such vapor degreasing
cabinets. Around 1976, Keystone switched from TCE
to another chlorinated solvent known as 1, 1, 1—
trichloroethane (TCA). Keystone abandoned the chlorinated
solvents and converted to water-based cleaning agents in
1993.
  During the time that Keystone used the chlorinated
solvents in its degreasing cabinets, it—as part of the
cleaning process—discharged wastewater containing
spent pickle liquor, which is sulfuric acid used to clean steel
rods for wire drawing. Because spent pickle liquor contains
lead and chromium, the U.S. Environmental Protection
Agency (U.S. EPA) has designated it a hazardous waste
(known as K062). 40 C.F.R. § 261.32 and Part 261 App. VII
(2006).
  On July 18, 1986, the United States filed a complaint
against Keystone alleging that its Peoria Site violated the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901-
7000 (2006) (RCRA) and seeking to enjoin it from depositing
spent pickle liquor into earthen impoundments at the site.
On June 29, 1988, Keystone entered into a consent decree
with the United States. In that consent decree, Keystone
agreed to pay a civil penalty and to close its spent pickle
liquor impoundments pursuant to a plan it would negotiate
with the Illinois Environmental Protection Agency (IEPA).
During a 1988 sampling required for the closing of the
spent pickle liquor impoundments, Keystone discovered
TCE and TCA contamination (collectively, the TCE contam-
ination) in the groundwater beneath the Peoria Site.
  On October 31, 1989, Keystone began the installation and
sampling of twenty-six groundwater monitoring wells to
determine the extent of the TCE contamination. Keystone
notified Wausau of its potential liability for TCE contami-
nation on November 2, 1989. In 1993, the IEPA filed a
complaint and proposed consent decree in Illinois state
4                                                No. 05-3412

court essentially alleging that Keystone failed to meet its
obligations under the 1988 consent decree. In 2000, Key-
stone submitted claims against the Wausau policies seeking
indemnification for costs incurred in remediating the TCE
contamination. Wausau has thus far refused to pay.
Keystone expects to incur a total cost of approximately $11
million in cleaning up the Peoria Site. It has, to date,
incurred costs of about $4.5 million.
  The Impex Site is a former metal-working plant located
in Crawfordsville, Indiana. The National Lock Company, a
subsidiary of Keystone, acquired the facility in 1964. While
Keystone owned the plant, it used volatile organic com-
pounds (VOCs) for metal cleaning and finishing. Keystone
arranged for an environmental assessment of the property
in preparation for its proposed sale. This assessment
identified VOC contamination of the soil and groundwater
exceeding permissible state and federal levels. Keystone
submitted a voluntary cleanup plan to the Indiana Depart-
ment of Environmental Management in 1991. Under that
plan, Keystone installed and began to operate both a VOC
soil vapor system and a groundwater pump-and-treat
system at the Impex Site in 1992.
  Keystone’s investigation and cleanup costs at the Impex
Site exceed $2.1 million. Keystone seeks indemnifica-
tion from Wausau for expenses incurred and a declaration
that Wausau will be liable for future costs.
  Keystone acquired the third site, the Chicago Steel &
Wire Site, in 1964. During a site investigation in 2000,
Keystone discovered VOC and lead contamination in the
soil and groundwater. Keystone notified the IEPA of its
findings and enrolled the site in Illinois’ pre-notice environ-
mental remediation program. The IEPA approved Key-
stone’s remediation in August 2002. Keystone incurred a
total of about $500,000 relating to this remediation
and seeks indemnification for those and future costs.
No. 05-3412                                                  5

  The final site relating to this lawsuit is the Ninth Avenue
Site, a former waste disposal site located in Gary, Indiana.
Keystone transferred spent pickle liquor from the Chicago
Steel & Wire Site to the Ninth Avenue Site for disposal
between April 30, 1973, and November 6, 1975. In 1989, the
U.S. EPA ordered Chicago Steel & Wire and other poten-
tially responsible parties to investigate and remediate the
site. Keystone has incurred costs of approximately $1.1
million to date to remediate the Ninth Avenue Site.
  The district court granted Wausau’s motion for sum-
mary judgment, concluding: (1) that Illinois courts require
the filing of a formal complaint in a court of law to trigger
the “duty to defend” clause of a comprehensive general
liability insurance contract; and (2) that where there is no
duty to defend, there will be no duty to indemnify. Keystone
timely appealed and now seeks a reversal of summary
judgment so that it may proceed to trial. Keystone also
argues that, even if Illinois law requires a lawsuit to trigger
an insurer’s duty to indemnify, the IEPA’s 1993 complaint
alleging that Keystone failed to prevent and remediate the
TCE contamination satisfies that standard for the Peoria
Site.

                       II. Discussion
  We review a district court’s grant of summary judg-
ment de novo. Magin v. Monsanto Co., 420 F.3d 679, 686
(7th Cir. 2005). Federal jurisdiction in this case rests upon
diversity of citizenship. 28 U.S.C. § 1332(a)(1). The parties
agree that Illinois law governs the substantive issues
underlying the appeal.

A. The Duty to Defend and the Duty to Indemnify Under
   Illinois Law
 The district court concluded that, under Illinois law,
where an insurance policy includes both the duty to de-
6                                                     No. 05-3412

fend and the duty to indemnify, the duty to indemnify
arises only in circumstances involving lawsuits. Proceed-
ing from that conclusion, the district court then reasoned
that since the insurance policies at issue contain both
duties, Keystone’s indemnity rights must be limited to
claims involving lawsuits. Both steps of the district
court’s reasoning, however, are erroneous. First, although
some authority suggests otherwise,2 it appears fairly
well settled that under Illinois law, an insurance policy may

2
   There appears to be some confusion in the Illinois courts on this
point, which seems to stem primarily from Crum & Forster
Managers Corp. v. Resolution Trust Corp., 620 N.E.2d 1073 (Ill.
1993). In Crum & Forster Managers Corp., the Illinois Supreme
Court said that “[c]learly, where there is no duty to defend, there
will be no duty to indemnify.” Id. at 1081. Taken literally and
ignoring context, this statement would seem to preclude indemni-
fication in the absence of a lawsuit under any circumstances.
When the statement is read in context, however, it becomes
evident that Illinois law is significantly more nuanced. See
generally Cent. Ill. Light Co. v. Home Ins. Co., 821 N.E.2d 206 (Ill.
2004); Sokol & Co. v. Atl. Mut. Ins. Co., 430 F.3d 417 (7th Cir.
2005). The statement, as originally appearing in Crum & Forster
Managers Corp., was intended to summarize a more complex,
case-specific, proposition: the insurer was not obligated to defend
or indemnify the insured because those obligations arise only
under circumstances stated in the policy. 620 N.E.2d at 1081; see
also Sokol & Co., 430 F.3d at 420-21. Under the facts of Crum &
Forster Managers Corp., the activities for which the insured
sought indemnification could never have fallen within the stated
coverage of the policy. 620 N.E.2d at 1081. In fact, the only case
we find that takes the proposition literally and at face value
seems to be an anomaly. Zurich Ins. Co. v. Carus Corp., 689
N.E.2d 130, 133 (Ill. Ct. App. 1997) (concluding, without analysis,
that the duty to indemnify hinged on the duty to defend); Sokol &
Co., 430 F.3d at 421 n.1. Given this context, it becomes apparent
that Crum & Forster Managers Corp. does not establish a bright-
line rule to preclude indemnification in the absence of a lawsuit.
No. 05-3412                                                  7

entitle the insured to indemnification for claims that do not
arise from the resolution of a lawsuit, so long as those
claims satisfy any requirements set forth in the relevant
provisions of the policy. See Cent. Ill. Light Co. v. Home Ins.
Co., 821 N.E.2d 206, 215-18 (Ill. 2004) (CILCO); see also
Sokol & Co. v. Atl. Mut. Ins. Co., 430 F.3d 417, 420-21 (7th
Cir. 2005). Second, the language of Keystone’s policies
arguably supports a conclusion that Wausau has a duty to
indemnify Keystone that is independent of its duty to
defend.
  An insurer’s most fundamental duty under its insur-
ance contracts is its duty to indemnify—that is, its duty
either to reimburse the insured for losses it incurs directly
or to pay sums that the insured becomes legally obligated
to pay to others. ALAN D. WINDT, INSURANCE CLAIMS
AND DISPUTES: REPRESENTATION OF INSURANCE COMPANIES
AND INSUREDS § 6:1 (4th ed. Supp. 2006). An insurer’s duty
to indemnify often involves its duty to defend the insured in
the event of a lawsuit or its functional equivalent. Id. § 4:1;
Lapham-Hickey Steel Corp. v. Nat’l Surety Corp., 633
N.E.2d 199, 201 (Ill. Ct. App. 1994). But although the duties
to defend and to indemnify may be related, they are not
necessarily mutually dependent or coextensive. See, e.g.,
Sokol & Co., 430 F.3d at 421 (“[W]hile the duty
to indemnify may sometimes nest inside the duty to defend,
that will not always be the case.”).
  Moreover, the fact that the duty to defend is generally
broader than the duty to indemnify does not mean, as the
district court believed, that where there is no duty to defend
there can be no duty to indemnify. The duty to defend is
generally broader because it arises in cases of arguable or
potential coverage. That is, an insured need only put the
insurer on notice of the claim in order to trigger the in-
surer’s duty to defend. WINDT § 4:1. The duty to indemnify,
however, arises only in circumstances of actual coverage; if
the insurance policy does not cover what is alleged in the
8                                               No. 05-3412

claim, the insurer will not have a duty to indemnify based
on that claim. Crum & Forster Managers Corp. v. Resolu-
tion Trust Co., 620 N.E.2d 1073, 1081 (Ill. 1993); see also
Sokol & Co., 430 F.3d at 421.
  But these characteristics do not lead to the conclusion
that the factors required to trigger the generally broader
duty to defend are always required to trigger the duty
to indemnify. In many circumstances, the duty to indemnify
explicitly involves the duty to defend a lawsuit or its
functional equivalent. In other cases, however, the duty
to indemnify is separate from and independent of the duty
to defend. In short, while a lawsuit may be sufficient to
trigger an insurer’s duty to indemnify, it is not a necessary
condition under Illinois law.
  Given these conclusions, the next logical question is what
is required to trigger an employer’s duty to indemnify. The
answer to that question is found in the language of the
policies. Under Illinois law, construction of insurance
policies is a question of law. Outboard Marine Corp. v.
Liberty Mut. Ins. Co., 607 N.E.2d 1204, 1212 (Ill. 1992).
Policies will be construed as a whole; if the words used
in the policies are clear, then they must be given their
“plain, ordinary, and popular meaning.” CILCO, 821 N.E.2d
at 213 (citing Outboard Marine Corp, 607 N.E.2d at 1212).
With those principles in mind, we turn next to the Wausau
policies.

B. The Wausau Policies
  Keystone purchased both general liability and excess
umbrella policies from Wausau beginning in 1942 and
continuing through 1987. The general liability policies cover
Keystone from 1942 into the 1980s; the excess umbrella
policies cover Keystone from 1969 through 1979. Although
each of the general liability and excess umbrella policies is
somewhat unique, Wausau used two basic insuring agree-
No. 05-3412                                                       9

ments for the general policies and two basic insuring
agreements for the excess umbrella policies.
  Each of Keystone’s general liability policies contains a
duty-to-defend provision requiring Wausau to defend any
“suit” against the insured “seeking damages” on account of
property damage. Keystone concedes that under these
general liability policies, Wausau’s obligation to defend is
triggered only by the filing of a “suit.” The term “suit,”
under Illinois law, “requires the commencement of some
action in a court of law before an insurer’s duty to defend is
triggered.” Lapham-Hickey Steel Corp. v. Prot. Mut. Ins.
Co., 655 N.E.2d 842, 847 (Ill. 1995).
   But, as earlier explained, the fact that Wausau’s duty
to defend does not arise unless a lawsuit is filed does not
mean that Wausau’s duty to indemnify depends on the
filing of that lawsuit. In fact, the policies here support a
conclusion that the duty to indemnify is separate and
independent. The pre-1968 general liability policies grant
Keystone coverage for property damage so long as the
liability is “imposed by law” and is “caused by accident.”3
The 1969-1985 general liability policy language changed
slightly, in that liability under these policies are based
on an “occurrence” rather than on an “accident.” Under
the general liability policies, Wausau pledged to “pay on
behalf of the insured all sums which the insured shall

3
  Both Keystone and Wausau reproduce the relevant policy
language in their briefs. The specific language of the pre-1968
policies states that:
    To pay on behalf to the insured all sums which the insured
    shall become obligated to pay by reason of liability imposed
    upon him by law or assumed by him under any written
    contract for damages, because of injury to or destruction of
    property, including the loss of use thereof, caused by accident.
(Appellant’s Br. 5; Appellee’s Br. 13.)
10                                                     No. 05-3412

become legally obligated to pay as damages because of”
bodily injury or property damage “caused by an occurrence.”
The policy further states that Wausau “shall have the right
and duty to defend any suit against the insured seeking
damages” on account of bodily injury or property damage
“and may make such investigation and settlement of any
claim or suit” but Wausau “shall not be obligated to pay any
claim or judgment or to defend any suit after the applicable
limit of the company’s liability has been exhausted by
payment of judgments or settlements” (emphasis added).
   To unpack that language a bit, although the general
liability policies base Wausau’s obligation to defend not
illogically on the filing of a “suit,” the indemnity terms
require Wausau to “pay on behalf of the insured all sums
which the insured shall become legally obligated to pay
as damages.”4 In addition, the indemnity terms also state
that Wausau “shall not be obligated to pay any claim or
judgment” once the policy limits are exhausted. The
disjunctive reference to claims or judgments is significant;

4
    The full text of the 1969-1985 policies reads:
      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 damages, even if any of the
      allegations of the suit are groundless, false or fraudulent, and
      may make such investigation and settlement of any claim or
      suit as it deems expedient, but the company shall not be
      obligated to pay any claim or judgment or to defend any suit
      after the applicable limit of the company’s liability has been
      exhausted by payment of judgments or settlements.
(Appellant’s Br. 6-7; Appellee’s Br. 14.)
No. 05-3412                                                     11

it lends some support to reasoning that a lawsuit is not
necessary to trigger the duty to indemnify. If it were, the
policies likely would not make a disjunctive reference to
“claims.”
  Keystone’s excess umbrella policies likewise indicate that
Wausau’s duty to indemnify is separate from and independ-
ent of the duty to defend. The 1969-71 excess umbrella
policies require Wausau to pay on Keystone’s behalf “all
sums” which Keystone becomes obligated to pay “by reason
of liability imposed . . . by law.” The policies define “sums”
as the insured “loss.” The policies also expressly provide
that defense costs for either “claims” or “suits” are covered,
with “expenses” to be included within the definition of
“loss.”5

5
    The 1969-1971 excess umbrella policies provide that:
      Wausau agrees:
          COVERAGE. To pay on behalf of the insured all sums
          which the insured shall become obligated to pay, either
          by adjudication or compromise, by reason of the liability
          imposed upon the insured by law or assumed by the
          insured under any contract for damages because of
          personal injury and property damage, and all expenses
          incurred by the insured or the company, hereinafter
          called “loss.”
          The term “expenses” as used herein shall mean expenses
          incurred by the insured or the company in connection
          with the investigation, negotiation, adjustment, settle-
          ment and defense of any claims or suits alleging personal
          injury or property damage and seeking damages which
          are payable under the terms of this policy.
          ...
          It is agreed that with respect to any occurrence not
          covered by the underlying insurance, but covered by
                                                  (continued...)
12                                                    No. 05-3412

  The 1972-79 excess umbrella policies require Wausau to
pay “all sums in excess of the retained limit which the
insured shall become legally obligated to pay . . . as dam-
ages because of . . . property damage.” Additionally, the
policies require Wausau to pay Keystone’s defense costs
once the primary coverage is exhausted for claims or suits.6

5
    (...continued)
            the terms and conditions of this policy except for the
            amount of the retained limit, the company shall:
              (A) Defend any suit against the insured alleging
              such injury, sickness, disease or destruction and
              seeking damages on account thereof . . . .
(Appellant’s Br. 9; Appellee’s Br. 15-16.)
6
    The 1972-1979 excess umbrella policies provide that:
      Wausau agrees:
          I. COVERAGE. To pay on behalf of the insured all sums
          in excess of the retained limit which the insured shall
          become legally obligated to pay, or with the consent of
          the company agrees to pay, as damages because of
              Coverage A—Personal Injury,
              Coverage B—Property Damage, or
              Coverage C—Advertising Injury
          To which this policy applies arising out of an occurrence.
          II. INVESTIGATION, DEFENSE, SETTLEMENT,
          ASSISTANCE AND COOPERATION. With respect to
          any claim or suit seeking damages payable under this
          policy and for which no defense is provided by underlying
          insurance of by any other valid and collectible insurance
          available to the insured,
              (A) The Company may elect, but shall not be re-
              quired, to assume the investigation, defense or
              settlement of such claim or suit, or
              (B) In the absence of such election by the company,
              the insured shall arrange for and assume the inves-
                                                     (continued...)
No. 05-3412                                                       13

Both the 1969-71 and the 1972-79 excess umbrella policies
refer to claims or suits. Once again, the disjunctive “or” is
significant. Its inclusion suggests that claims are to be
distinguished from “suits.” This language suggests that,
under the excess umbrella policies, Wausau’s duty to
defend, like its duty to indemnify, may be triggered by
something less than a lawsuit.
  The excess umbrella policies here are fundamentally
different from policies imposing a duty to defend only in the
event of lawsuits. If Wausau is correct that its duty to
defend requires a formal suit, then the reference to “claims”
would be mere surplusage, which is problematic. It is well
settled that reviewing courts will give meaning to each term
in an insurance policy. See CILCO, 821 N.E.2d at 214.
There is a colorable argument, then, that the excess
umbrella policies impose upon Wausau a duty to defend not
only in the event of lawsuits but also in the event of claims
not taking the form of suits. If, under the excess umbrella
policies, a lawsuit is not necessary to trigger Wausau’s duty

6
    (...continued)
                tigation, defense or settlement of such claim or suit
                ...
          Defense expenses, whether incurred by the Company
          or by the insured, shall be totaled with the amount of
          such judgment or settlement for the purpose of determin-
          ing the liability of the Company in excess of the retained
          limit.
      The conditions portion of this policy provides:
          No action shall lie against the company unless, as a
          condition precedent thereto . . . the amount of the in-
          sured’s obligation to pay, in excess of the retained limit,
          shall have been finally determined either by judgment
          against the insured after actual trial or by written
          agreement of the insured, the claimant and the company.
(Appellant’s Br. 10; Appellee’s Br. 16-17.)
14                                               No. 05-3412

to defend, then—even under a narrow reading of the duty
to indemnify—a lawsuit certainly would not be required to
trigger the duty to indemnify.
  But although the potential construction of Wausau’s
duty to defend under the excess umbrella policies pro-
vides interpretative support for the conclusion that a
lawsuit is also not required to trigger its duty to indemnify,
the duty to defend is not directly before us. The claims in
this case center on Wausau’s duty to indemnify. Because a
duty to indemnify separate from and independent of a duty
to defend is cognizable under Illinois law and because both
Keystone’s general liability and excess umbrella policies
suggest that Wausau’s duty to indemnify is in fact based on
different conditions from its duty to defend, the district
court erred in granting summary judgment to Wausau on
the grounds that a lawsuit was necessary to trigger the
duty to indemnify.
   Yet that does not end our inquiry. Although the duty
to indemnify and the duty to defend are separate and
independent in Keystone’s policies, those policies require
that Keystone be legally obligated to pay damages before
Wausau’s duty to indemnify attaches. Understanding
CILCO is therefore critical to understanding the indemnifi-
cation terms of the Keystone policies. The CILCO policies,
like those at issue here, also hinged indemnification on the
insured’s “legal obligation” to pay damages. But CILCO
specifically held that a statutory obligation standing alone
was insufficient to trigger the duty to indemnify. Id. at 224-
25. In so holding, the Illinois Supreme Court concluded that
“[a]t a minimum, the insured must be acting in response to
a claim.” Id. at 225. That claim, however, “need not neces-
sarily be in the form of a demand letter, particularly when
the legal obligation being asserted is based on a strict
liability statute.” Id. Thus, although a lawsuit is not always
required to trigger an insurer’s duty to indemnify, here (as
in CILCO) the policies require that some claim or articu-
No. 05-3412                                                  15

lated demand assert a legal obligation on the part of
Keystone to remediate the environmental contamination.
  The key question with regard to each of the four sites,
then, is whether Keystone undertook its cleanup measures
gratuitously or in response to a demand or coercive or
intimidating suggestion by an enforcement agency. See id.
at 225 (concluding that CILCO was operating under a legal
obligation when it agreed to participate in a voluntary
cleanup program because the IEPA suggested that it
could do the necessary cleanup “the easy way or the hard
way”). No lawsuit was filed in connection with the Impex
Site, the Chicago Steel & Wire Site or the Ninth Avenue
Site. Keystone admits that it discovered contamination at
the Impex Site and the Chicago Steel & Wire Site on its
own initiative. Keystone also admits that it enrolled these
sites in voluntary remediation programs. But the district
court did not consider whether coercive suggestions
caused Keystone to undertake this remedial action. Al-
though CILCO precludes the argument that mere statutory
liability is sufficient to trigger an insured’s legal obligation
to remediate, this requirement does not eliminate the
circumstance of demands or coercive suggestions made by
enforcement agencies.
  Likewise, although there was no formal lawsuit against
Keystone relating to the Ninth Avenue Site, the record
indicates that Keystone undertook remedial action there
only after the U.S. EPA ordered it to investigate and
remediate. Since CILCO contemplates the possibility that
such pressure may be sufficient to constitute a “claim” and
to impose a sufficiently focused legal obligation on Key-
stone, the lack of a formal lawsuit does not seem to preclude
indemnification under the policies. Id. at 225-26.
  Finally, Keystone contends that it undertook remedial
action at the Peoria Site only in response to pressure from
the IEPA, including the 1993 complaint alleging that
16                                               No. 05-3412

Keystone failed to meet its obligations under the 1988
consent decree. The district court concluded that the 1993
complaint did not trigger Wausau’s duty to defend (and
therefore its duty to indemnify) because the complaint
alleged only procedural violations on the part of Keystone.
But this analysis does not consider whether Keystone acted
voluntarily or in response to coercive invocation of its
obligation to remediate. In addition, the district court’s
statement is incorrect insofar as its rests on the belief that
a lawsuit is necessary under Illinois law to trigger an
insurer’s duty to indemnify.
  Thus, because the district court erroneously concluded
that Wausau’s duty to indemnify depended on its duty
to defend, it never reached the key issue whether Keystone
undertook its remedial action voluntarily. The court’s
incorrect interpretation of Illinois law is enough to justify
reversal.
No. 05-3412                                           17

                    III. Conclusion
  In sum, we REVERSE the judgment of the district court
and REMAND for further proceedings consistent with
this opinion.

A true Copy:
      Teste:

                      ________________________________
                      Clerk of the United States Court of
                        Appeals for the Seventh Circuit

                  USCA-02-C-0072—8-3-06