In 1997, Maplehurst Farms sold its property to Dean Foods. Dean then discovered environmental contamination on the property as a result of underground storage tanks dating from the 1950s. Travelers vs. Maplehurst II
Maplehurst submitted a corrective action plan to IDEM in September 2002. Later in 2002, Maplehurst and Dean entered into a settlement agreement. The agreement acknowledged the existence of the corrective action plan.
Maplehurst then attempted to recover for cleanup costs from three of its insurers. Travelers denied Maplehurst’s claim and refused to provide a defense. Travelers had been notified of the issues in mid-2003. In 2004, IDEM issued a revised corrective action plan.
The denial of coverage made it to the Court of Appeals in 2011, in which the judges held that Travelers does not have to pay pre-notice costs and expenses. However, the Court of Appeals held that the Travelers was liable for the costs and expenses that Maplehurst incurred after it notified Travelers of the claim. The trial court entered judgment against Travelers for more than $512,000. Travelers vs. Maplehurst I
This case involved a determination as to when Maplehurst incurred the costs and expenses at issue. Judge Barnes wrote that “Maplehurst clearly obligated itself to remediate the property when it entered into the Dean Settlement, not when IDEM approved the final CAP. The final CAP merely described how Maplehurst would be required to remediate the property; Maplehurst agreed in the Dean Settlement to remediate to IDEM’s standards long before Travelers was notified of the claim.”.
“Although some of the remediation occurred after notice to Travelers, all of the post-notice costs at issue flowed from the Dean Settlement. As Travelers points out, an award of such costs would allow an insured to settle a claim, notify the insurer, and obligate the insurer to cover the settlement. Such a result would violate the policy provision that prevents an insured from voluntarily assuming any obligation without the insurer’s consent.”
The court concluded that the trial court erred when it interpreted Maplehurst I to require Travelers to pay costs that were incurred as a result of the Dean Settlement. The trial court was reversed.