Yamada Corporation v. Yasuda Fire and Marine Ins. Co.

Full Case File

305 Ill.App.3d 362 (2d Dist. 1999)

Industrial pump manufacturer Yamada sued its insurer Yasuda for its failure to provide a defense and indemnity in a case filed against Yamada in the Cook County Circuit Court by CWC Fluids, Inc., d/b/a Culligan Water Conditioning where the pump failed causing hydrochloric acid to spill throughout the plant ruining plaintiff’s regeneration system. Yasuda denied Yamada’s tender of defense based on the absolute pollution exclusion contained within the commercial liability insurance policy issued by Yasuda to Yamada. The case had a tortured history as Yasuda had filed a declaratory judgment action in Japan against Yamada asserting that it had no duty of defense.

Kane County Circuit Judge Dunn granted Yamada’s motion to enjoin Yasuda from proceeding on its declaratory judgment action filed in the Tokyo, Japan District Court. Yasuda filed an interlocutory appeal on the trial court’s injunction which was affirmed by the Second District Appellate Court. Judge Dunn then granted defendant’s motion to dismiss plaintiff’s complaint based upon the insurance policy’s forum selection clause contained at endorsement 11 to the policy. On plaintiff’s motion to reconsider, Judge Dunn denied defendant’s motion for summary judgment finding that the forum selection clause was unenforceable. Judge Dunn retired and the case was assigned to Judge Dixon. Judge Dixon asked the parties to provide further briefing on the forum selection clause, denied Yasuda’s petition for interlocutory appeal on Judge Dunn’s decision finding the forum selection clause unenforceable and finally granted Yamada’s motion for summary judgment. The Second District Appellate Court then reversed Judge Dixon’s order, finding that the forum selection clause was enforceable ignoring the fact that no Japanese court had ever interpreted a pollution exclusion clause. The Second District also refused to acknowledge that the protection of insureds and injured third-parties was a fundamental public policy of the State of Illinois.