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Montgomery Ward & Co. v. Home Insurance Co.

Case Date: 05/18/2001
Court: 1st District Appellate
Docket No: 1-99-0601 Rel

May 18, 2001

No. 1-99-0601


MONTGOMERY WARD AND COMPANY,
INCORPORATED, AND STANDARD T
CHEMICAL COMPANY, INC.,

               Plaintiffs-Appellants,

                         v.

THE HOME INSURANCE COMPANY,
IMPERIAL CASUALTY AND ANDEMNITY
COMPANY AND CENTURY INDEMNITY
COMPANY, as Successor to CCI
Insurance Company, as Successor to
Indemnity Insurance Company of
North America,

               Defendants-Appellees.

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Circuit Court of
County Cook











Honorable
Dorothy Kirie Kinnaird,
Judge Presiding.


JUSTICE REID delivered the opinion of the court:

Plaintiff Montgomery Ward & Company, Inc. (Ward), appeals from the trial court's grant of summary judgment in favor ofImperial Casualty and Indemnity Company (Imperial) and CenturyIndemnity Company (Century). The central issue considered by thetrial court was whether there was insurance coverage for Ward'sliability for pollution at a Superfund site in Griffith, Indiana,known as the American Chemical Services, Inc. (ACS), site. Thetrial court granted the insurance companies' motion for summaryjudgment, finding that Ward gave the defendant insurancecompanies late notice of an occurrence and therefore had no rightto obtain coverage for the pollution claim asserted against it. The issues considered on appeal are: (1) whether the notice ofoccurrence clauses in the Imperial and Century insurance policieswere satisfied; (2) whether the insurance companies have to showthey were prejudiced because of Ward's late notice in order toavoid indemnifying Ward; (3) whether Imperial and Century areestopped from relying upon the late notice defense; (4) whetherlate notice was waived due to the insurance companies' failure toinform Ward of their intention to rely on a late notice defense;and (5) whether the mend the hold doctrine applies. For thereasons that follow, we affirm in part and reverse in part.

BACKGROUND

Ward owned two subsidiaries, Standard T Chemicals, Inc. (Standard), and Montgomery Ward Paint (Ward Paint), both of whichmanufactured paint. The process of manufacturing paint produceshazardous waste, which Standard and Ward Paint shipped off-siteto recycling centers. One of the sites they sent their wasteproducts to was American Chemical Services, Inc. (ACS), which islocated in Griffith, Indiana.

From 1956 through 1983 Ward Paint and Standard shippedwastes for reclamation to the solvent recovery facility operatedby ACS. The United States Environmental Protection Agency (EPA)identified the ACS site as a hazardous waste site in need ofremediation, in 1984, by placing it on the National PrioritiesList, pursuant to the Comprehensive Environmental Response,Compensation, and Liability Act of 1980 (CERCLA) (42 U.S.C.