Yamada Corp. v. Yasuda Fire and Marine Insurance Co.6/4/1999
Defendants, Yasuda Fire & Marine Insurance Company, Ltd. (Yasuda Fire), and The Yasuda Claims Service, Inc. (Yasuda Claims) (collectively, defendants), appeal from an order of the circuit court of Kane County granting summary judgment in favor of plaintiffs, Yamada Corporation (Yamada) and Yamada America, Inc. (Yamada America) (collectively, plaintiffs), on count I of plaintiffs' first amended complaint. On appeal, defendants contend that the trial court erroneously refused to enforce a forum-selection clause, a choice-of-law clause, and a pollution exclusion clause and erroneously struck portions of two of defendants' affidavits. We reverse and remand with directions based on the forum-selection clause.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
On October 25, 1994, an air-operated diaphragm pump, manufactured by Yamada and purchased by CWC Fluids, Inc., d/b/a Culligan Water Conditioning (CWC), to pump acid and caustic solutions from two separate tanks to regenerate spent water purification systems, failed. The pump's failure resulted in the release of acid and caustic solutions that destroyed the metallic parts of the regeneration system enclosed within a concrete retention wall. In addition, the release produced an acid vapor that traveled through the interior of CWC's building, damaging electrical, mechanical, metallic, and other structures. When the retention wall developed a crack, the acid also spilled onto the main plant floor and into the drain to the city sewer system.
On October 1, 1996, CWC filed a complaint in the circuit court of Cook County against plaintiffs, among others, alleging strict product liability, breach of the implied warranty of merchantability, and negligence. CWC sought damages for property damage and business interruption.
Plaintiffs tendered their defense to Yasuda Fire pursuant to a general liability claims-made policy covering the period from January 5, 1995, to January 5, 1996, issued by Yasuda Fire to Yamada. Yasuda Fire rejected the tender.
Yamada was the named insured under the policy, and Yamada America, a distributor of Yamada's pumps, was listed as an additional insured. In addition, the policy included more than 200 other distributors as additional insureds, including distributors in 38 of the states in the United States, Puerto Rico, Canada, Mexico, Central America, South America, Europe, Australia, New Zealand, Asia, and the Pacific Rim.
An endorsement to the policy specifically covered the pump at issue in addition to 11 other air-operated diaphragm pumps. In addition, endorsement No. 10 to the policy contained a forum-selection clause, entitled "Jurisdiction Clause," that provided: "It is agreed that coverage disputes arising out of this insurance shall be subject to Japanese law and forum." The print size on endorsement No. 10 was the same size as the print size in the rest of the endorsements.
The policy was negotiated, underwritten, executed, and delivered in Japan, and Yamada made premium payments in yen to Yasuda Fire in Japan. Yamada America's president admitted in his deposition that he had never purchased any general liability or products liability insurance on behalf of Yamada America, although he had purchased other types of insurance on Yamada America's behalf. Instead, Yamada purchased general liability and products liability insurance for Yamada America.
Yamada was a Japanese corporation with its principal place of business in Tokyo, Japan. Yamada America was a subsidiary of Yamada and an Illinois corporation with its principal place of business in Elgin, Illinois. Yasuda Fire was a Japanese insurance company with its principal place of business in
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