Fifth District affirms dismissal of suit seeking indemnity from several insurers

By Charmaine Little | Jun 12, 2019

MOUNT VERNON - The Fifth District Appellate Court denied a company's request for relief after it sued dozens of insurance companies with hopes of getting declaratory judgment concerning their insurance policies and an asset purchase agreement. 

Justice James R. Moore delivered the Rule 23 decision on May 24 with justices David Overstreet and Judy Cates concurring, affirming a ruling dismissing the complaint filed by The Premcor Refining Group Inc.

Premcor sued insurance companies including Ace Insurance Company of Illinois, AIU Insurance Company, All State, Midland Insurance Company, et. al. The plaintiff's first amended complaint was dismissed in the Madison County Circuit Court. Then Premcor filed a second amended complaint for declaratory judgment. 

"Premcor's complaint requested a declaration of its defense and indemnity rights under liability insurance policies issued by a myriad of insurance companies to the defendant, Apex Oil Company, Inc. between 1966 and 1987," Moore wrote.

Apex and its predecessors were owners and operators of an oil refinery located in the Village of Hartford from 1967 to 1988. Apex and a number of its subsidiaries filed for Chapter 11 bankruptcy in 1987. The following year, Apex sold the refinery to Premcor via an asset purchase agreement. When a bankruptcy green-lighted the APA, that allowed Apex to "emerge from the bankruptcy through a plan of reorganization, which was confirmed by the bankruptcy court in 1990," the opinion states. 

Premcor then sued the insurers for declaration that the insurers must indemnify it in seven lawsuits, state and federal administrative orders and more responsibility that has come to the surface about the refinery. 

Apex filed a motion to dismiss, which was granted by the circuit court. 

Premcor appealed. 

According to the appellate court decision, Premcor didn't argue with the claim that the insurance policies aren't listed anywhere in the asset purchase agreement in question. 

The appellate court also noted a portion of the agreement relating to the sale of business, properties and purchased assets, finding that “the reading Apex ascribes” to in the section is “persuasive. On top of that, another section also approved by the appeals court reads, “assignments and assumptions of the acquired contracts, and any other contracts, agreements, instruments, and other documents relating to the assumed liabilities, and leases, licenses in the cease of leasehold properties, franchises, rights and commitments related to the purchased assets, together with the written consent of each contract party under such or any other contract being assigned hereunder (if such consent is required under applicable law, including section 365 of the bankruptcy code.”

Welch wrote that all of the contracts should be “assigned intact and without any encumbrances of any kind resulting from their assignment to purchase hereunder.”

The appellate court also concluded that the contract language concerning liability insurance rights and any vows to inform Premcor of proceeds from pending claims for the assets Premcor bought from Apex supported dismissal. 

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