Foran Glennon shareholders Thomas Orlando, Matthew Ponzi and John Eggum recently obtained a reversal from the Seventh U.S. Circuit Court of Appeals on behalf of an insurer client, with the appellate court ultimately ruling Foran Glennon’s client had no duty to defend against private nuisance claims stemming back to 2010.
A Seventh Circuit panel reversed a decision from the District Court for the Central District of Illinois that originally ruled the insurer had a duty to defend its insured even though the insured withdrew its tender of defense and the insurer’s policy was excess over another insurance company’s policy.
The case centered on a swine farm that allegedly was negligent in the handling of hog waste, resulting in foul and offensive odors and toxic gases to which neighbors of the farm brought multimillion-dollar private nuisance claims (“the action”) against the company in June 2010.
The farm had policies with Foran Glennon’s client and two other insurers throughout the disputed time period, and Foran Glennon’s client agreed to defend the facility in the action subject to a reservation of rights. In 2010, Foran Glennon’s client let the farm know it would file a declaratory judgment action, claiming it had no duty to defend the facility as the action was subject to its policies’ pollution exclusion. Foran Glennon’s client did so and only referenced a 2008 – 2009 policy even though there was also a renewal policy for 2009 – 2010. Subsequently, the farm withdrew its tender of defense, and the declaratory judgment action was voluntarily dismissed.
In November 2013, in a separate case concerning odors from a hog facility involving different parties, an Illinois appellate court ruled the odors were not “traditional environmental pollution” and were therefore not excluded under pollution exclusions. As a result, the swine farm renewed its request that Foran Glennon’s client participate in the defense of the action, and the client insurer responded with a declaratory judgment action that it had no duty to defend the company because:
- The swine farm withdrew its tender of defense
- Foran Glennon’s client’s insurance was excess and therefore had no duty to defend the farm under its policies’ “other insurance” provision
This complaint also only referenced the 2008 – 2009 policy.
In the meantime, the jury in the underlying action ruled in favor of the farm. As a result, both of the other insurers filed suits claiming Foran Glennon’s client was obligated to reimburse some or all defense costs paid in the defense of the underlying action.
The insurers’ suits were consolidated, and the insurers filed separate motions for summary judgment. Foran Glennon once again argued it had no duty to defend. The other insurers denied Foran Glennon’s client should be relieved of its duty to defend and argued that the insurer was estopped from asserting policy defenses because it breached its duty to defend the farm under the 2009 – 2010 policies by not reserving its rights as to those policies or including them in the initial declaratory judgment action.
In 2016, the lower court concluded Foran Glennon’s client had a duty to defend the farm and rejected the insurer’s argument that the farm’s deselection under the targeted tender doctrine was irrevocable.
The case was appealed, and the Seventh Circuit ruled based solely on the application of the “other insurance” clause, holding that Foran Glennon’s client:
- Did not have a duty to defend under that clause.
- Was not estopped from asserting the clause even though it did not identify both of its policies in the initial reservation of rights letter and declaratory judgment action.
Based on this ruling, the appellate court elected not to address the targeted tender issues because whether an insured can retender after deselection does not matter if there is no duty to defend in the first place.
This outcome was featured in Business Insurance and Law360 (subscription required).
Focusing his practice in insurance and appellate law in both insurance and non-insurance disputes, Tom has experience representing both appellants and appellees in several state and federal courts nationwide. He is well-seasoned in a range of insurance coverage disputes, including property and liability coverage and litigation matters involving commercial and personal insurance.
Matt concentrates his practice in insurance coverage and commercial litigation, specifically in the analysis and litigation of commercial property, liability and reinsurance claims. Clients trust his extensive trial experience at both the federal and state level when faced with challenging litigation matters.
John concentrates his practice on insurance coverage disputes and commercial litigation. He is regularly retained in a wide range of insurance coverage matters relating to property and casualty commercial lines disputes.