Over Two Year Delay in Notifying Insurer of Environmental Suit Dooms Coverage Case

A federal district court in Illinois has ruled that an insurance carrier did not have to defend or indemnify the defendant in an environmental lawsuit where it had not provided notice of the suit to the insurer for more than two years.  

The Case

 Fairmount Park, Inc., the successor in interest to Ogden Fairmount, Inc., was sued on August 22, 2008 for allegedly violating the Illinois Environmental Protection Act. In May 2011 – over two years later – Fairmount discovered two general liability insurance policies issued to Ogden Corporation, the parent company of Ogden Fairmount. Fairmount notified the insurer of the lawsuit, seeking coverage. The insurer denied its request. 

Fairmount sought a declaratory judgment that the insurer had to defend and indemnify it. The insurer moved for summary judgment. 

The Court’s Decision 

The court granted the insurer’s motion. 

The court found that Fairmount had breached the policies’ notice condition. It explained that the provision requiring Fairmount to notify the insurer of a suit against it was not just a technical requirement but a “condition precedent to the triggering of the insurer’s contractual duties.”  In reaching its conclusion, the court considered:  (1) the specific language of the notice provision; (2) Fairmount’s sophistication in commerce and insurance matters; (3) Fairmount’s awareness of an event that may trigger insurance coverage; (4) Fairmount’s diligence in ascertaining whether coverage was available; and (5) prejudice to the insurer.  Accordingly, the court concluded that the insurer had no duty to defend or indemnify Fairmount in the underlying case. 

The case is Fairmount Park, Inc. v. Travelers Indem. Co., No. 12-CV-827-WDS (S.D. Ill. Sept. 30, 2013).