In a judgment that followed more than ten years of disputes between a wood recycling plant and its neighbors, a federal appeals court affirmed a lower court and held an insurance company not to provide coverage to the plant's owner due to policy exceptions.
Neighbors in Elkhart, Indiana, had charged that VIM Recycling Inc.'s waste management practices exposed them to dust and odors in violation of federal environmental law, according to Thursday's decision of the 7th U.S. Circuit Court of Appeals in Chicago in Carmine Greene et al. v. Westfield Insurance Co.
The dispute, which involved three separate court cases, eventually led to a default judgment against VIM. "What began as a target of environmental pollution has evolved into a joint safeguard measure against VIM's insurance company, Westfield Insurance, to satisfy part of that $ 50.56 million judgment," the judgment said.
VIM had acquired general commercial liability relationships with Westfield Insurance, a unit of Westfield Center, Ohio-based Ohio Farmers Insurance Co., which operated from January 2004 through January 2008, forcing the insurer to pay up to $ 2 million of each judgment against VIM for property or bodily injury, according to the decision.
The coverage required that VIM notify Westfield of claims "as soon as possible" and that the insurer be notified in writing of a claim or suit.
The policy also stated that it did not cover losses if the insured knew before the policy period for property damage or bodily injury.
The plaintiffs in the case filed suit against Westfield in the US District Court in South Bend, Indiana. The court ruled in favor of the insurer and was confirmed by a three-judge appellate court panel.
"The extent of Westfield's obligations can easily be resolved (as nothing) if VIM ̵
" Evaluating Will's knowledge is simple. Both the complaint and the undisputed facts of a summary judgment give many examples, "it said.
" Considered collectively, the record provides overwhelming evidence that VIM – and Kenneth Will in particular – knew about the volatile dust and resulting damage. before the first Westfield policy came into force. All damages for these damages were then both known claims and expected damages, "said the decision, which also pointed out that Westfield only heard about the case indirectly from his own lawyer.
The judgment, in affirmation of the lower court's decision, stated that the exceptions to the policy applied and that Westfield had "no obligation to pay any portion of the $ 50.56 million overdue judgment that the neighbors secured before he insured himself in the dispute."
Westfield attorney John J. Haggerty, a partner with Fox Rothschild LLP in Warrington, Pennsylvania, said in a statement that the insurer "is satisfied with the decision, as the Seventh Circuit's opinion thoughtfully and thoroughly motivates Westfield and validates its proper management of this ask from beginning to end. "
The complainant's lawyers did not respond to a request for comment.
In January, a federal appeals court upheld a lower court and held Westfield guilty of defending a contractor in arbitration over a construction project under a provision of its commercial general liability policy.