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Employers Insurance of Wausau v. Ehlco Liquidating Trust, No. 1-95-1337

1st District, December 14, 1999

SECOND DIVISION

JUSTICE GORDON DELIVERED THE SUPPLEMENTAL OPINION OF THE COURT ON REMAND:

The instant appeal is considered on remand from the Illinois Supreme Court in the case of Employers Insurance v. Ehlco Liquidating Trust, 186 Ill. 2d 127, 708 N.E.2d 1122 (1999). That Court directed this Court to consider issues not previously addressed in Employers Insurance v. Ehlco Liquidating Trust, 292 Ill. App. 3d 1036, 687 N.E.2d 82 (1997), aff'd in part, rev'd in part, 186 Ill. 2d 127, 708 N.E.2d 1122 (1999), and the unpublished portion of that decision filed in accordance with Supreme Court Rule 23 (166 Ill. 2d R. 23).⁽¹⁾ The parties agree that the only issue remaining for appellate review is whether the counterclaim for declaratory judgment filed by Ehlco Liquidating Trust and its managing trustee, Noel H. Goodman (collectively "Ehlco"), against Employers Insurance of Wausau, A Mutual Company ("Wausau"), was time-barred.

BACKGROUND FACTS

I. Prior Appeals

On February 26, 1993, Wausau instituted a declaratory judgment action against Ehlco, a trust created by order of the Delaware chancery court to resolve the contingent liabilities of Edward Hines Lumber Company ("Hines"), a dissolved Delaware corporation; Goodman, Ehlco's managing trustee; C.H. Heath, the successor to Employers Surplus Hines Insurance Company of Wilmington, Hines's excess carrier; and various other insurance companies. Wausau sought a declaration that it had no defense or indemnity obligations under certain insurance policies in connection with a lawsuit filed against Ehlco relating to a contaminated industrial site in Albany County, Wyoming (the "Wyoming site"). One year later, on March 1, 1994, Ehlco filed a counterclaim, seeking a declaration that Wausau breached its duty to defend and indemnify Ehlco in connection with another lawsuit relating to an industrial site in Mena, Arkansas (the "Mena" site). Wausau moved to dismiss Ehlco's counterclaim, arguing that it was barred by Arkansas' statute of limitations. Ehlco moved for judgment on the pleadings as to both sites, arguing that Wausau breached its duty to defend the two underlying claims. The circuit court denied Wausau's motion to dismiss and granted Ehlco's motions on the pleadings. Wausau appealed pursuant to Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)).

On review of Wausau's appeal, this Court reversed the trial court's grant of judgment on the pleadings to Ehlco. As to the Wyoming site, we held, among other things, that the trial court erred in precluding Wausau from arguing that the insured breached the notice provisions of the insurance policies and remanded that issue to the circuit court for a determination as to whether Ehlco had satisfied the notice conditions of Wausau's policies. Employers Insurance, 292 Ill. App. 3d at 1047-54, 687 N.E.2d at 90-94; Employers Insurance, No. 1-95-1337, slip op. at 46 (September 10, 1997) (material unpublished under Supreme Court Rule 23 (166 Ill. 2d R. 23)). As to the Mena site, this court held that Wausau had no defense or indemnity obligations because, consistent with the holding in Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill. 2d 520, 655 N.E.2d 842 (1995), no "suit" had been filed. Employers Insurance, 292 Ill. App. 3d at 1040-46, 687 N.E.2d 86-89. We further held, academically, that coverage relative to the Mena site could have been precluded if Ehlco provided Wausau with late notice. Employers Insurance, 292 Ill. App. 3d at 1047-54, 687 N.E.2d at 90-94; Employers Insurance, No. 1-95-1337, slip op. at 46 (material unpublished under Supreme Court Rule 23). On further appeal, the Illinois Supreme Court reversed this Court's holding as to the Wyoming site, finding that Wausau had breached its duty to defend and was estopped from asserting a late notice defense. Employers Insurance, 186 Ill. 2d at 155, 158, 708 N.E.2d at 1137, 1138. It also reversed this Court's holding as to the Mena site, finding under its decision in Lapham-Hickey that a suit filed pursuant to a fully-executed consent decree was nonetheless a "suit" sufficient to trigger Wausau's duty to defend. It further held that the parties should be given the opportunity to amend their pleadings in the circuit court to address the issue of whether Wausau had actual notice of the Mena lawsuit (Employers Insurance, 186 Ill. 2d at 143-44, 146, 708 N.E.2d at 1131, 1132) and remanded to this Court issues raised but not reached in the earlier appeal.

II. Facts Relevant to Statute of Limitations Contention

Since the only issue before us involves Ehlco's counterclaim which was directed at the Mena site, we will recite only those facts relevant to that site. Briefly, as explained in the prior appeals (Employers Insurance, 186 Ill. 2d 127, 708 N.E.2d 1122; Employers Insurance, 292 Ill. App. 3d 1036, 687 N.E.2d 82), Hines and its subsidiary operated lumber treatment facilities at the Mena site from 1967 until 1978 when it was purchased by Mid-South Wood Products of Mena, Arkansas, Inc. On March 18, 1982, pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C.