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Emerson Electric Co. v. Aetna Casualty and Surety Co.8/30/2004
property damage at the Erie, Pennsylvania, and Dixiana, South Carolina, waste disposal sites until, at the earliest, 1995 or 1996, when they resolved their respective liabilities with the EPA. Plaintiffs point out that, as of November of 1983, they had not incurred liability resulting from the waste haulers' improper disposal of the wastes at the third-party sites and further claim that they had no reason to believe that they could be held liable for property damage at either site. In addition, plaintiffs argue that no legal basis for holding Urick liable even existed prior to United States v. Wade, 577 F. Supp. 1326, 1331-33, 1339-40 (E.D. Pa. 1983), which was decided December 20, 1983, after the inception of the policy, and held that shipment of non-hazardous wastes-such as Urick's foundry sand, which did not contain a reportable quantity of hazardous substances under the Federal Water Pollution Control Act-could result in retroactive liability under CERCLA. Lastly, plaintiffs point out that there is no evidence that they misrepresented or concealed material facts concerning the claims that had been, or likely could have been, asserted against them concerning the waste disposal sites, notwithstanding the fact that the trial court had presented Republic with an opportunity to provide such evidence.
We agree that under the approach to the "known loss" doctrine taken in Monsanto, coverage is not precluded under these facts. However, Monsanto was decided by a trial court of Delaware and, as such, has weak persuasive authority. Moreover, although the court in Monsanto purported to decide the question of applicability of the "known loss" doctrine under Missouri law, in fact, as discussed above, in the absence of Missouri authority applying the "know loss" doctrine to a third-party insurance policy, the court relied on California and Nevada cases. As we held in Emerson I, where Missouri law does not address the issue at hand, we presume that Missouri law as to that issue is the same as that of the forum, Illinois . Emerson I, 319 Ill. App. 3d at 252, 743 N.E.2d at 654. For the foregoing reasons, we decline to follow Monsanto and, instead, will follow the decision on point of our supreme court in Outboard Marine Corp., 154 Ill. 2d 90, 607 N.E.2d 1204.
In Outboard Marine Corp., 154 Ill. 2d at 103-04, 607 N.E.2d at 1210, our supreme court applied the "known loss" doctrine to a CGL policy. In contrast to the Monsanto court, our supreme court did not distinguish between a first-and third-party insurance policy. Outboard Marine Corp., 154 Ill. 2d at 103-04, 607 N.E.2d at 1210. Rather, the court adhered to the same general principles of insurance law as enunciated under Missouri law in Hoodco and Presley:
"By its very nature, insurance is fundamentally based on contingent risks which may or may not occur. [Citations.] One dictionary defines 'insurance' as ' contract whereby one undertakes to indemnify another against loss, damage, or liability arising from an unknown or contingent event and is applicable only to some contingency or act to occur in future.' (Emphasis added.) (Black's Law Dictionary 721 (5th ed. 1979).) If the insured knows or has reason to know, when it purchases a CGL policy, that there is a substantial probability that it will suffer or has already suffered a loss, the risk ceases to be contingent and becomes a probable or known loss. [Citation.] Where the insured has evidence of a probable loss when it purchases a CGL policy, the loss is uninsurable under that policy (unless the parties otherwise contract) because the 'risk of liability is no longer unknown.' [Citations.] Therefore, the insurer has no duty to defend or indemnify the insured with respect to the known loss ab ini
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