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VELSICOL CHEMICAL LLC v. WESTCHESTER FIRE INSURANCE COMPANY

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Case Number: 
1:15-cv-02534 Search Pacer
ACE Group party(s): 
Opposing Party: 
Velsicol Chemical LLC
Court Type: 
Federal
US District Court: 
Northern District of Illinois
Date Filed: 
Mar 25 2015

COMPLAINT

Plaintiff, Velsicol Chemical, LLC, as successor to Velsicol Chemical Corporation
(“Velsicol”), by its counsel, Greensfelder, Hemker & Gale, P.C., complains against
Defendant Westchester Fire Insurance Company, as successor to International Insurance
Company (“International”), as follows:
Nature of the Action
1. Velsicol brings this action to enforce its rights under insurance policy
number 523 2388653 issued to it by International (the “International Policy”). A copy of
the International Policy including the endorsements to the International Policy, is
attached as Exhibit 1.
2. Through its complaint, Velsicol seeks to recover damages it has incurred
arising from International’s failure to meet its contractual obligations under the
International Policy as a consequence of International’s failure to make the payments due
of it in response to claims made by Velsicol under the International Policy.
3. Additionally, Velsicol seeks declaratory relief pursuant to 28 U.S.C. §
2201 concerning the obligations owed to it by International pursuant to the terms of the
International Policy in connection with Velsicol’s ongoing defense expenses and
obligations to hand the remediation of environmental damages at sites that are the subject
of claims made by Velsicol under the International Policy.
The Parties
4. Velsicol is an Illinois limited liability company organized under the laws
of the State of Illinois. Velsicol’s member is an Illinois limited liability company and
that entity’s member is a Delaware corporation. Velsicol has its principal place of
business in Rosemont, Illinois. Prior to September 30,2008, Velsicol was known as
Velsicol Chemical Corporation and was a Delaware corporation with its principal place
of business in Rosemont, Illinois.
5. Velsicol was a subsidiary of Northwest Industries, Inc. at the time Velsicol
purchased the International Policy. Northwest Industries, Inc. sold Velsicol to Velsicol’s
management in or about 1986. Northwest Industries, Inc. subsequently changed its name
to Fruit of the Loom, Inc.
6. Defendant International is a foreign property and casualty insurance
company that is a resident of Pennsylvania. International transacted business within the
State of Illinois at times material to the claims asserted in this complaint.
7. This Court has subject-matter jurisdiction over this case pursuant to 28
U.S.C. § 1332. There is complete diversity between the parties, and the amount in
controversy, exclusive of interest and costs, exceeds the jurisdictional minimum of
$75,000.
8. This Court has venue over this matter pursuant to 28 U.S.C. § 1391(b) as a
substantial part of the events and omissions giving rise to the claims that are the subject
of this litigation occurred within this judicial district.

The Insurance Policies

9. At the times material to the claims at issue, Velsicol and its predecessors
in interest, engaged in the manufacture, distribution, sale, marketing, and disposal of a
variety of specialty chemical products.
10. Velsicol’s products were manufactured, distributed, sold, marketed and
disposed of at various sites throughout the United States.
11. Velsicol and its predecessors in interest purchased a variety of insurance
products to address the risks associated with its business operations.
12. In particular, Velsicol purchased various standard-form primary
comprehensive general liability policies providing coverage for the period from
November 1947 through January 1983 containing non-negotiated type standard-form
language to Velsicol.
13. The obligations assumed by the primary carriers arose under language
substantially similar to the following:
The company will pay on behalf of the insured all sums which the insured
shall become legally obligated to pay as damages because of bodily injury
or property damage to which this insurance applies, caused by an
occurrence, and the company shall have the right and duty to defend any
suit against the insured seeking damages on account of such bodily injury
or property damage, even if any of the allegations of the suit are
groundless, false or fraudulent.
14. VelsicoFs underlying primary comprehensive general liability insurance
policy applicable to the International Policy, for the period from January 1, 1983 through
January 1,1985, was Transportation Insurance Company Policy No. MAN 007 436 945
with a $1,000,000 per occurrence limit (the “Transportation Policy I”). A copy of
Transportation Policy I is attached as Exhibit 2.
15. Velsicol’s underlying primary comprehensive general liability insurance
policy applicable to the International Policy, for the period from January 1,1985 through
January 1,1986 was Transportation Insurance Company Policy No. CCP 001 702094
with a $1,000,000 per occurrence limit (the “Transportation Policy II”). A copy of
Transportation Policy II is attached as Exhibit 3.
16. All of the primary comprehensive general liability insurance coverage that
Velsicol purchased for the policy periods spanning November 1947 through January
1986 has been exhausted by payment of claims, settlements or through the insolvency of
the insurance carriers.
17. Velsicol purchased the International Policy, excess liability insurance
policy number 523 238865 3, for the policy period from January 1,1983 through January
1, 1986. Velsicol is the named insured on the International Policy.
18. Except as otherwise addressed in the International Policy, the International
Policy follows the form of the underlying primary insurance policies identified in
Schedule A to the International Policy.
19. The per occurrence limit for the International Policy during the period
from January 1, 1983 through January 1, 1985 was $25,000,000 per occurrence. The per
occurrence limit for the International Policy during the period from January 1,1985
through January 1, 1986 was $15,000,000 per occurrence.
20. Pursuant to the International Policy, the insurer agreed “to pay on behalf
of the insured the ultimate net loss in excess of the retained limit hereunder stated, which
the insured may sustain by reason of the liability imposed upon the insured by law,
arising out of an occurrence or assumed by the insured under contract for:
(a) Personal Injury Liability
(b) Property Damage Liability.. ..”
Exhibit 1.
21. The International Policy defines “Personal Injury” as “(a) bodily injury,
sickness, disease, disability, shock, mental anguish and mental injury....”
22. The International Policy defines “Property Damage” as “physical injury
to, destruction of or loss of use of tangible property.”
23. The International Policy defines “Occurrence” for the purposes of bodily
injury and property damage coverage as “either an accident or happening or event or a
continuous or repeated exposure to conditions which unexpectedly and unintentionally
causes injury to persons or tangible property during the policy period. All damages
arising out of such exposure to substantially the same conditions ... considered as arising
out of one occurrence.”
24. International’s liability for bodily injury and property damage under the
International Policy is the ultimate net loss in excess of the insured’s retained limit as
defined as the greater of: (a) the total of the applicable limits of the underlying policies
listed in Schedule A to the International Policy, and the applicable limits of any other
insurance collectible by the insured; or (b) an amount as stated in item 4(C) of the
declarations as the result of any one occurrence not covered by the said policies or
insurance; and then up to an amount not exceeding the amount as stated in item 4(A) of
the declarations as the result of any one occurrence.
25. Under the International Policy, there is no limit as to the number of
occurrences during the policy period for which claims may be made, except that the
liability of the company arising out of the products hazard on account of all occurrences
during each policy year shall not exceed the aggregate amount stated in Item 4(B) of the
declarations.
26. The International Policy provides that in the event of the reduction of the
aggregate limits of liability of the underlying policies listed in Schedule A to the
International Policy by reason of losses paid under the underlying insurance policies, the
International Policy, subject only to the limitations described in the International Policy,
shall pay the excess of the reduced underlying limits.
27. The International Policy also provides that in the event of the exhaustion
of the aggregate limits of liability of the underlying policies listed in Schedule A to the
International Policy by reason of losses paid under the underlying insurance policies, the
International Policy, subject only to the limitations described in the International Policy,
shall continue in force as underlying insurance.
28. The International Policy defines “Ultimate Net Loss” for the purposes of
bodily injury and property damage coverage as the total of the following sums with
respect to each occurrence:
a. All sums which the insured, or any company as his insurer, or
both, is legally obligated to pay as damages, whether by reason of
adjudication or settlement, because of personal injury or property damage
to which the International Policy applies; and
b. All expenses, other than defense settlement provided in the
International Policy, incurred by the insured in the investigation, negotiation,
settlement and defense of any claim or suit seeking such damages, excluding only
the salaries of the insured’s regular employees, provided “ultimate net loss” does
not include any damages or expense because of liability excluded by the
International Policy.
29. The International Policy also provides that it is not applicable to defense,
investigation, settlement or legal expenses covered by underlying insurance.
30. Transportation Policy I has a $ 1,000,000 per occurrence limit.
31. Transportation Policy II has a $ 1,000,000 per occurrence limit.
32. There is no coverage available to Velsicol under Transportation Policy I.
33. There is no coverage available to Velsicol under Transportation Policy II.

Count I
Breach Of Contract Adame Case

34. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of this paragraph 34.
35. In 2008, Velsicol was sued in the Superior Court of the State of California,
County of Santa Clara, in the matter Adame v. State o f California, et ai, No.l-08-CV-
106710 (the “Adame Case”).
36. The plaintiffs in the Adame Case amended their complaint on July 9,2008
adding claims against Velsicol, an entity that had previously been ‘identified’ as “Doe
41” in the original complaint.
37. The plaintiffs in the Adame Case filed a second amended complaint on
October 20, 2008.
38. In the Adame Case, approximately one hundred thirty three (133)
individuals filed suit complaining of bodily injuries and property damages that they
attributed to the actions of various entities including Velsicol.
39. The plaintiffs in the Adame Case complained of personal injuries and
property damages that they alleged arose from exposure to various chemicals, including
chlordane, that the plaintiffs claimed had migrated onto properties owned or occupied by
them, as a consequence of the actions of defendants including Velsicol.
40. The plaintiffs in the Adame Case alleged that they were exposed to
various dangerous neurotoxic, developmental, mutagenic and carcinogenic toxins that
had been applied to the vegetation and soil at various times over a period of time from
1921 until 2003 at a site located at 90 North Winchester Boulevard, San Jose, California
(“BAREC”).
41. The plaintiffs in the Adame Case alleged that chemicals to which they
were exposed that caused their injuries, including chlordane, were manufactured and
distributed by Velsicol.
42. The plaintiffs in the Adame Case complained that Velsicol encouraged,
approved, or knowingly took part in or ratified the testing of chlordane at B AREC and
that chlordane was among the toxins of which they complained.
43. The complaint in the Adame Case asserts that the various toxins remained
in the soil at BAREC as well as in the aquifer below BAREC and had migrated onto the
properties owned or occupied by them causing serious bodily injury as well as property
damage.
44. The plaintiffs in the Adame Case sought recovery of special damages,
including medical care, monitoring expenses, loss of earning or earning capacity,
property damage, damages for pain and suffering, the costs of the suit, pre-judgment
interest, and punitive damages.
45. After becoming aware of the Adame Case, Velsicol tendered the claim to
its insurers including International.
46. The claims asserted against Velsicol in the Adame Case fall within the
definition of “personal injury” used in the International Policy.
47. The claims asserted against Velsicol in the Adame Case fall within the
definition of “property damage” used in the International Policy.
48. At the time Velsicol tendered the claim pertaining to the claims asserted in
the Adame Case, the coverage under its primary comprehensive general liability policies,
including the coverage under Transportation Policy I and Transportation Policy II, had
been exhausted.
49. The Adame Case asserted claims for occurrences that arose within the the
policy periods covered by the International Policy.
50. The claims asserted against Velsicol in the Adame Case fall within the
coverage of the International Policy.
51. Asa consequence of the exhaustion of the underlying primary
comprehensive general liability insurance policies, including Transportation Policy I and
Transportation Policy II, International was obligated to indemnify and defend Velsicol
for the bodily injury and property damage claims asserted against it in the Adame Case.
52. International failed to accept Velsicol’s tender of its defense in the Adame
Case.
53. As a consequence of International’s failure to accept Velsicol’s tender of
defense, Velsicol was required to fund its own defense.
54. Velsicol incurred more than one million dollars in defense expenses in
defending against the allegations of the Adame Case.
55. Facing the burden of funding its escalating defense costs on its own, and
the risk of a substantial verdict, Velsicol ultimately settled with the plaintiffs.
56. Denied coverage by International’s failure to accept the claim, Velsicol
was required to fund the entirety of the settlement without contribution from
International.
57. Velsicol incurred more than one million dollars in settlement of the claims
asserted against it in the Adame Case.
58. Velsicol performed its obligations under the terms of the International
insurance policy in connection with the Adame Case.
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59. International breached its obligations to Velsicol owed under the
International Policy by failing to pay for Velsicol’s defense of the claims asserted in the
Adame Case.
60. Additionally, International breached its contractual obligations to Velsicol
owed under the International Policy by failing to indemnify Velsicol for the amount that
Velsicol paid to settle the Adame Case.
61. Asa consequence of International’s breaches of its contractual obligations
owed under the International Policy related to the Adame Case, Velsicol incurred
damages in excess of $2,000,000.00.
WHEREFORE, Velsicol asks for judgment in its favor and against International
for the damages that it proves at trial and for such other relief as this Court deems just.
Count II
Breach Of Contract Shenkel Case
62. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of this paragraph 62.
63. In 2008, Velsicol was sued in the Superior Court of the State of California
in the matter Shenkel v. Velsicol (the “Shenkel Case”).
64. In the Shenkel Case, the plaintiff alleged that he had been employed as a
landscaper and gardener during the period from 1969 until 2007 and that in that work, he
was exposed to a variety of herbicides and pesticides including chlordane.
65. The plaintiff in the Shenkel Case alleged that the chemicals to which he
was exposed and that caused his injuries, including chlordane, were manufactured, sold,
and distributed by Velsicol.
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66. The plaintiff in the Shenkel Case alleged that as a consequence of his
exposure to herbicides and pesticides manufactured, sold and distributed by Velsicol,
including chlordane, he developed Parkinson’s disease.
67. The plaintiff in the Shenkel Case sought special damages, including
medical care and for pain and suffering for the injuries he claimed to have sustained as a
consequence of his exposure to the chemicals, including chlordane, that he alleged were
manufactured, sold, and distributed by Velsicol.
68. After becoming aware of the Shenkel Case, Velsicol tendered the claim to
its insurers including International.
69. The coverage under its primary comprehensive general liability policies,
including the coverage under Transportation Policy I and Transportation Policy II
applicable to the Shenkel Case, had been exhausted.
70. The claims asserted against Velsicol in the Shenkel Case fall within the
definition of “personal injury” used in the International Policy.
71. The claims asserted against Velsicol in the Shenkel Case fall within the
coverage of the International Policy.
72. The claims asserted against Velsicol in the Shenkel Case are occurrences
within the policy periods covered by the International Policy.
73. As a consequence of the exhaustion of the underlying primary
comprehensive general liability insurance policies, including Transportation Policy I and
Transportation Policy II, International was obligated to indemnify and defend Velsicol
for the bodily injury claim asserted against it in the Shenkel Case.
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74. International failed to accept Velsicol’s tender of its defense in the
Shenkel Case.
75. As a consequence of International’s failure to accept Velsicol’s tender of
defense, Velsicol was required to fund its own defense.
76. Velsicol incurred substantial defense expenses in defending against the
allegations of the Shenkel Case.
77. Facing the burden of funding its escalating defense costs on its own and
the risk of a substantial verdict presented by the claims asserted against it in the Shenkel
Case, Velsicol ultimately settled with the plaintiff in the Shenkel Case.
78. Denied coverage by International’s failure to accept the claim, Velsicol
was required to fund the entirety of the settlement without contribution from
International.
79. Velsicol performed its obligations under the terms of the International
insurance policy in connection with the Shenkel Case.
80. International breached its contractual obligations to Velsicol under the
International Policy by its failure to pay for Velsicol’s defense of the claims asserted in
the Shenkel Case.
81. Additionally, International breached its contractual obligations to Velsicol
owed under the International Policy by failing to indemnify Velsicol for the amount that
Velsicol paid to settle the Shenkel Case.
82. As a consequence of International’s breaches of its contractual obligations
to Velsicol related to the Shenkel Case, Velsicol incurred damages.
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WHEREFORE, Velsicol asks for judgment in its favor and against International
of the damages that Velsicol proves at trial and for such other relief as this Court deems
just.
Count III
Breach Of Contract Acevedo Case
83. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of this paragraph 83.
84. In September 1999, a number of individuals filed suit against Union
Pacific in Hidalgo County, Texas, in the matter Acevedo, et al. v. Union Pacific, et al,
No.C4 885-99J (the “Acevedo Case”). The plaintiffs in the Acevedo Case complained
that they were exposed to various chemicals released at chemical storage sites, chemical
formulation sites, and from distribution sites owned, controlled, or used by various
defendants.
85. In 2001, the complaint in the Acevedo Case was amended, and Velsicol
was added as a party.
86. At the time Velsicol was added as a defendant, the Acevedo Case was a
mass tort action that had expanded to encompass claims filed by and on behalf of more
than one thousand eight hundred (1,800) individuals and the estates of individuals
complaining of bodily injuries and death arising from exposure to various toxic chemicals
including chlordane that was manufactured, sold, or distributed by Velsicol.
87. The plaintiffs in the Acevedo Case complained that Velsicol had
manufactured, sold, and distributed chemicals, including chlordane, that caused the
injuries of which they complained.
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88. The plaintiffs in the Acevedo Case complained that the chemicals tht
caused their injuries, including chlordane, had gotten into the air, water, and soil in their
community as a consequence of VelsicoFs negligence.
89. The plaintiffs in the Acevedo Case sought special damages, including
medical care, monitoring expenses, loss of earning or earning capacity, property damage,
damages for pain and suffering, the costs of the suit, pre-judgment interest, and punitive
damages for the injuries that they contend were caused by chemicals, including
chlordane, that they asserted were manufactured and distributed by Velsicol.
90. After becoming aware of the Acevedo Case, Velsicol tendered the claim to
its insurers including International.
91. The claims asserted against Velsicol in the Acevedo Case fall within the
definition of “personal injury” used in the International Policy.
92. The claims asserted against Velsicol in the Acevedo Case fall within the
definition of “property damage” used in the International Policy.
93. The claims asserted by the plaintiffs in the Acevedo Case are occurrences
arising in the coverage periods encompassed by the International Policy.
94. The claims asserted against Velsicol in the Acevedo Case fall within the
coverage of the International Policy.
95. The coverage under its primary comprehensive general liability policies,
including the coverage under Transportation Policy I and Transportation Policy II
applicable to the Acevedo Case, has been exhausted.
96. As a consequence of the exhaustion of the underlying primary
comprehensive general liability insurance policies, including Transportation Policy I and
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Transportation Policy II, International was obligated to defend Velsicol for the bodily
injury and property damage claims asserted against it in the Acevedo Case and to
indemnify Velsicol for the defense expenses incurred by Velsicol in the Acevedo Case.
97. International failed to accept Velsicol’s tender of its defense in the
Acevedo Case.
98. As a consequence of International’s failure to accept VelsicoFs tender of
defense, Velsicol was required to fund its own defense.
99. Velsicol has incurred nearly two million dollars in defense expenses in
defending against the allegations of the Acevedo Case.
100. Velsicol continues to incur defense costs to defend itself against the claims
asserted against it in the Acevedo Case.
101. Facing the burden of funding its escalating defense costs on its own, and
the risk of a substantial verdict, Velsicol ultimately negotiated the terms of a settlement
agreement with the plaintiffs.
102. The settlement agreement negotiated in the Acevedo Case has not yet been
ratified by the requisite number of plaintiffs to make it effective.
103. In the event the settlement negotiated in the Acevedo Case is ratified,
Velsicol will be obligated to pay one million dollars toward the settlement.
104. To this date, despite Velsicol’s best efforts, it has not been able to obtain
the ratification of the settlement of the Acevedo Case.
105. In the event that the Acevedo Case is not settled, Velsicol will be required
to go to trial on the cases of each of the claims brought by the plaintiffs.
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106. Velsicol performed its obligations under the terms of the International
insurance policy in connection with the Acevedo Case.
107. International breached its contractual obligations owed under the
International Policy by failing to pay for Velsicol’s defense of the claims asserted in the
Acevedo Case.
108. As a consequence of International ’ s breaches of its contractual obligations
under the International Policy, Velsicol incurred damages in excess of $2,000,000.00.
WHEREFORE, Velsicol asks for judgment in its favor and against International
for the damages that Velsicol proves at trial and for such other relief as this Court deems
just.
Count IV
Declaratory Judgment: Acevedo Case
109. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
and 84 through 108 as if fully set forth herein as the allegations of this paragraph 109.
110. A justiciable controversy exists between Velsicol and International
concerning International’s obligations to Velsicol under the International Policy with
respect to the Acevedo Case including its duty to pay for Velsicol’s defense on a going
forward basis as well as to indemnify it in connection with the settlement agreement
negotiated in the Acevedo Case.
WHEREFORE, Velsicol asks that the Court enter judgment in its favor and
against International declaring that International is obligated to pay Velsicol’s defense
expenses incurred in the Acevedo Case as those expenses are incurred.
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Count V
Breach Of Contract: Arlington Blending Site
111. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of this paragraph 111.
112. Velsicol was joined as a party in the matter of United States o f America v.
Monsanto Company, William Bell, and Robert Meeks, Case No. 86-2862-TUV pending
in the United States District Court for the Western District of Tennessee, Western
Division (the “Arlington Blending Litigation”) pertaining to a site known as the
Arlington Blending and Packaging Superfund Site in Arlington, Shelby County,
Tennessee (the “Arlington Blending Site”).
113. The issue in the Arlington Blending Litigation was environmental damage
alleged to have been caused by chemicals manufactured, sold, distributed, stored, or used
by various entities at the Arlington Blending Site in Tennessee.
114. Among the chemicals alleged to have caused the environmental hazards
constituting the property damage at issue in the Arlington Blending Litigation was
chlordane alleged to have been manufactured and distributed by Velsicol in addition to
other chemicals manufactured and distributed by Velsicol.
115. Velsicol was identified as a potentially responsible party for the
contamination of the environmental conditions at the Arlington Blending Site in 1991
including as the manufacturer and supplier of the chlordane at issue as well as of other
chemicals found at the Arlington Blending Site.
116. Velsicol was joined as a party to the Arlington Blending Litigation and
various third-parties asserted claims against Velsicol relating to the property damage at
the Arlington Blending Site.
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117. All of the underlying primary comprehensive general liability insurance
coverage applicable to VelsicoPs claim relating to the Arlington Blending Site, including
its coverage under the Transportation Policy I and Transportation Policy II, has been
exhausted.
118. The claims at issue in the Arlington Blending Litigation and the property
damage at the Arlington Blending Site are occurrences within the policy period
encompassed by the International Policy.
119. Velsicol tendered its defense of the claims relating to the Arlington
Blending Site to its insurers including International.
120. International did not respond to VelsicoPs tender.
121. Velsicol was required to incur substantial defense expenses in response to
its claim pertaining to the Arlington Blending Site.
122. On or about August 16, 1996, Velsicol entered into a consent decree
pursuant to which it was obligated to fund certain remediation to address environmental
conditions at that site.
123. In 1997, Velsicol entered into settlement agreements with various parties
to the Arlington Blending Litigation settling those claims.
124. Under the terms of the settlements that Velsicol reached related to the
Arlington Blending Site, Velsicol was obligated to contribute substantial funding on an
ongoing basis, including through the current date and into the future, to remediate the
environmental damage to the Arlington Blending Site attributed to Velsicol.
125. Velsicol has been required to pay substantial amounts as a consequence of
the property damage it is alleged to have caused at the Arlington Blending Site.
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126. Velsicol will be required to pay additional substantial sums as a
consequence of the property damage Velsicol is alleged to have caused at the Arlington
Blending Site.
127. VelsicoPs claim pertaining to the Arlington Blending Site falls within the
coverage of the International Policy.
128. Velsicol has performed its obligations under its contract with
International.
129. International has failed to reimburse Velsicol for any of the expenses or
costs associated with Velsicol’s defense or settlement of the Arlington Blending
Litigation and damages to the Arlington Blending Site.
130. International has breached its contractual obligations to Velsicol in
connection with Velsicol’s claim related to the Arlington Blending Site.
131. Through the present date, Velsicol has incurred in excess of $ 10 million to
pay defense costs and remediate the property damages at the Arlington Blending Site.
WHEREFORE, Velsicol asks for judgment in its favor and against International
for the damages that Velsicol proves at trial and for such other relief as this Court deems
just.
Count VI
Breach Of Contract: Chattanooga Site
132. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of this paragraph 132.
133. Velsicol owned a 45 acre chemical manufacturing plant located in
Chattanooga, Tennessee (the “Chattanooga Plant”).
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134. The Chattanooga Plant was built in 1948 and operated the Chattanooga
Plant as a manufacturing facility ffom 1963 until 2007 at which it manufactured
chlorinated toluene-based products.
135. As a consequence of studies undertaken pursuant to directives from state
and federal agencies, it was determined that the operations at the Chattanooga Plant have
resulted in extensive groundwater and soil contamination arising from the facility.
136. The investigations found that VelsicoTs operations at the Chattanooga
Plant caused damage to the property beyond the borders of the Chattanooga Plant.
137. Velsicol has been ordered by state and federal regulators to remediate the
environmental conditions arising from Velsicol’s operation of the Chattanooga Plant.
138. Velsicol is alleged to have caused property damage beyond the
Chattanooga Plant as a consequence of the migration of contaminants beyond the
Chattanooga Plant.
139. Velsicol gave notice of the written demands that it has received from state
and federal regulatory agencies pursuant to which it is required to remediate the
environmental conditions beyond the boundaries of the Chattanooga Plant alleged to have
been caused by Velsicol’s operation of the Chattanooga Plant to its primary
comprehensive general liability insurance carriers as well as to International (the
Chattanooga Claim”).
140. All of the underlying primary comprehensive general liability insurance
coverage applicable to the Chattanooga Claim, including Velsicol’s insurance coverage
under the Transportation Policy I and Transportation Policy II, has been exhausted.
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141. Velsicol’s Chattanooga Claim falls within the coverage of the
International Policy.
142. The occurrences at issue in the Chattanooga Claim took place within the
period covered by the International Policy.
143. International did not respond to Velsicol’s tender of the Chattanooga
Claim.
144. Velsicol was obligated to contribute substantial funding on an ongoing
basis, through the current date to remediate the environmental conditions at issue in the
Chattanooga Claim.
145. Velsicol has incurred in excess of $ 10 million in defense costs and
remediation costs to address the environmental conditions that the state and federal
governments have attributed to Velsicol in connection with the Chattanooga Claim,
including the property damage beyond the boundaries of the Chattanooga Plant that is
alleged to have been caused by contaminants alleged to have been produced by Velsicol
at the Chattanooga Plant and that have migrated beyond the Chattanooga Plant.
146. Velsicol has performed its obligations under its contract with International
with respect to the Chattanooga Claim.
147. International has failed to reimburse Velsicol for any of the expenses or
costs associated with Velsicol’s defense or settlement of the Chattanooga Plant.
148. Through its silence in response to Velsicol’s tender of Velsicol’s claim
arising from Velsicol’s operations at the Chattanooga Plant, International has disavowed
legal responsibility for funding the remediation of the property damage alleged to have
been caused by Velsicol’s activities at the Chattanooga Plant.
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149. International has breached its contractual obligations to Velsico! in
connection with VelsicoPs Chattanooga Claim.
WHEREFORE, Velsicol asks for judgment in its favor and against International
for the damages that Velsicol proves at trial and for such other relief as this Court deems
just.
Count VII
Breach of Contract Cypress Creek
150. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of paragraph 150.
151. Cypress Creek was a storm water drainage ditch in and around Memphis,
Tennessee, that collects run off and discharges the run off into the Wolf River.
152. During the time period from approximately 1952 until approximately
1963, prior to the completion of the City of Memphis’ sewer collection system, Velsicol
discharged wastewater generated from its operations into Cypress Creek.
153. Upon completion of the City of Memphis’ sewer collection system,
Velsicol discharged the wastewater generated from its operations into Memphis’ sewer
collection system.
154. Velsicol’s releases of wastewater into Cypress Creek released pesticide
contamination into the soils and sediments along the creek.
155. The natural flow of the creek, including seasonal flooding, caused
contaminated soil and sediment to overflow into the environs of Cypress Creek.
156. The City of Memphis engaged in certain construction work in Cypress
Creek’s bed and the environs of Cypress Creek that resulted in some of the contaminated
soil and sediment to be relocated causing the contamination to spread outside the creek.
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157. Among the actions undertaken by the City of Memphis was the
installation of a concrete liner for portions of Cypress Creek in order to control erosion of
the contaminated sediments and soils found in Cypress Creek.
158. In 2003 and 2004, Velsicol entered into settlement agreements to provide
for the settlement of the State of Tennessee’s past Superfund responses related to Cypress
Creek and the remediation of the environmental conditions alleged to have been caused
by Velsicol.
159. In January 2005, the City of Memphis advised Velsicol that a 30 foot long
section of the concrete lining that the City of Memphis had constructed in Cypress Creek
to contain the contaminated soil and sediments had failed such that the contaminated soil
and sediments that had been contained by the concrete liner were no longer contained.
160. Additionally, Velsicol has been sued by various property owners in the
area of Cypress Creek complaining that soil and sediment that had been contaminated by
waste discharged by Velsicol into Cypress Creek had caused property damage. Among
the entities that have complained of property damage attributed to contaminants
discharged by Velsicol is Springdale Memphis LP, an entity that owned the Springdale
Apartments.
161. Velsicol has been required to incur substantial defense expenses and costs
to remediate property damage claims related to Cypress Creek including claims related to
the Springdale Apartments.
162. In connection with settlements that Velsicol has entered related to property
damage claims related to discharges into Cypress Creek, Velsicol has been required to
establish a soil consolidation area at its Memphis Plant to store contaminated soil
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removed from the environs of the Memphis Plant including from the Springdale
Apartments.
163. The property damage claims asserted against Velsicol are claims within
the coverage of the International Policy.
164. The property damage claims that Velsicol has been required to address
related to Cypress Creek are occurrences within the policy period encompassed by the
International Policy.
165. Velsicol tendered the claim related to the property damage resulting from
the discharge of wastewater into Cypress Creek (the “Cypress Creek Claim”) to its
insurers including International.
166. The coverage under its primary comprehensive general liability policies,
including the coverage under Transportation Policy I and Transportation Policy II
applicable to the Cypress Creek Claim has been exhausted.
167. As a consequence of the exhaustion of the underlying primary
comprehensive general liability insurance policies applicable to the Cypress Creek Claim,
including Transportation Policy I and Transportation Policy II, International was
obligated to defend Velsicol for the bodily injury and property damage claims asserted
against it in the litigation that Velsicol has faced relating to Cypress Creek and to
indemnify Velsicol for the defense expenses incurred by it to respond to litigation related
to Cypress Creek.
168. International is obligated to reimburse Velsicol for the expenses it has
incurred in remediation of the environmental conditions at issue in the Cypress Creek
Claim.
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169. The claims asserted against Velsicol in the Cypress Creek Claim fall
within the definition of “property damage” used in the International Policy.
170. International failed to accept Velsicol’s tender of its defense in the
Cypress Creek Claim.
171. Asa consequence of International’s failure to accept Velsicol’s tender of
defense or fund the remediation of the property damage at issue in the Cypress Creek
Claim, Velsicol was required to fund its own defense and fund the remediation required
to address the Cypress Creek Claim.
172. Velsicol has incurred millions of dollars in defense expenses as well as in
remediation to respond to the Cypress Creek Claim.
173. Velsicol continues to incur defense costs and remediation costs in
response to the Cypress Creek Claim.
174. International’s failure to pay for Velsicol’s defense of the claims and
remediation expenses to respond to the property damage asserted in the Cypress Creek
Claim is a breach of International’s contractual obligations owed under the International
Policy.
175. As a consequence of International’s breaches, Velsicol incurred millions
of dollars of damages.
WHEREFORE, Velsicol asks for judgment in its favor and against International
for the damages that Velsicol proves at trial and for such other relief as this Court deems
just.
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Count VIII
Breach Of Contract: Marshall Site
176. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of this paragraph 176.
177. Velsicol owned and operated a chemical manufacturing facility in
Marshall, Illinois (the “Marshall Plant”) beginning in 1935.
178. Originally, Velsicol produced petroleum derivatives and resins at that
plant.
179. Beginning in 1940, the Marshall Plant was the primary site at which
Velsicol manufactured the pesticide chlordane.
180. Process waters from the manufacturing of chlordane at the Marshall Plant
permeated the soil and tributaries in the area of the Marshall Plant.
181. Contaminants from Velsicol’s operations at the Marshall Plant spread
beyond the boundaries of the Marshall Plant causing property damage beyond the
boundaries of the Marshall Plant.
182. After the Marshall Plant was closed, Velsicol was ordered by state and
federal regulators to remediate the site to stop the spread of contaminants from the site
and to remediate the soil and groundwater beyond the boundaries of the Marshall Plant.
183. State and federal environmental agencies claimed that Velsicol’s activities
at the Marshall Plant caused property damage beyond the boundaries of the Marshall
Plant.
184. The remediation ordered by them was designed to address the property
damage beyond the boundaries of the Marshall Plant caused by VelsicoPs operations at
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the Marshall Plant.
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185. Velsicol gave notice of the written demands that it has received from state
and federal regulatory agencies pursuant to which it is required to remediate the
environmental conditions emanating from the Marshall Plant to its primary
comprehensive general liability insurance carriers as well as to International (the
“Marshall Claim”).
186. The Marshall Claim includes the expense Velsicol incurred when it was
ordered to demolish the buildings at the Marshall Plant and to remove the sediment from
the waterways abutting the Marshall Plant to address the contaminants that were
spreading beyond the boundaries of the Marshall Plant.
187. In the Marshall Claim, Velsicol is alleged to have caused property damage
beyond the boundaries of the Marshall Plant as a consequence of Velsicol’s operations at
the Marshall Plant.
188. The Marshall Claim falls within the coverage of the International Policy.
189. The occurrences at issue in the Marshall Claim are occurrences within the
policy period encompassed by the International Policy.
190. Velsicol gave notice of the written demands that it has received from state
and federal regulatory agencies pursuant to which it is required to remediate the
environmental conditions emanating from the Marshall Plant to its primary
comprehensive general liability insurance carriers as well as to International.
191. All of the underlying primary comprehensive general liability insurance
coverage applicable to Velsicol’s Marshall Claim, including its coverage under the
Transportation Policy I and Transportation Policy II, has been exhausted.
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192. Velsicol has incurred in excess of $ 17 million in defense costs and
remediation costs to address the environmental conditions that the state and federal
governments have attributed to it in connection with the Marshall Claim.
193. International did not respond to Velsicol’s tender of the Marshall Claim.
194. Velsicol has performed its obligations under its contract with International
with respect to the claim related to the Marshall Plant.
195. International has failed to reimburse Velsicol for any of the expenses or
costs associated with Velsicol’s defense or settlement of the Marshall Claim.
196. Through its silence in response to Velsicol’s tender of Velsicol’s Marshall
Claim, International has disavowed legal responsibility for the Marshall Claim.
197. International has breached its contractual obligations to Velsicol in
connection with the Marshall Claim, and Velsicol has been damaged by International’s
failure to meet its contractual obligations to Velsicol in connection with the Marshall
Claim.
WHEREFORE, Velsicol asks for judgment in its favor and against International
for the damages that Velsicol proves at trial and for such other relief as this Court deems
just.
Count IX
Breach Of Contract: Mathis Shaver Farm Site
198. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of this paragraph 198.
199. The United States commenced an action to recover costs from Velsicol for
the remediation of a superfimd site located in Walker County Georgia (the Shaver’s Farm
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Site”) for damage caused by materials Velsicol caused to be shipped to the Shaver’s Farm
Site (the “Shaver’s Farm Claim”).
200. In the Shaver’s Farm Claim, the United States EPA asserted that waste
shipped by Velsicol for storage at the Shaver’s Farm Site caused damage to the property
at the Shaver’s Farm Site.
201. The United States EPA ordered that Velsicol fund past remediation at the
Shaver’s Farm site and fund the remediation of the Shaver’s Farm Site on a going
forward basis to address the property damage caused by Velsicol’s actions.
202. Velsicol timely tendered the Shaver’s Farm Claim to its insurance carriers
including International.
203. All of the underlying primary comprehensive general liability insurance
coverage applicable to Velsicol’s claim relating to the Shaver’s Farm Claim, including its
coverage under the Transportation Policy I and Transportation Policy II, has been
exhausted.
204. The Shaver’s Farm Claim is a property damage claim within the coverage
of the International Policy.
205. The occurrence alleged in the Shaver’s Farm Claim is an occurrence
within the policy period covered by the International Policy
206. In 1997, Velsicol was ordered to pay more than $6.2 million in past
remediation costs as well as to fund the remediation of the Shaver’s Farm Site on a going
forward basis.
207. Through the current date, Velsicol has incurred defense costs exceeding
$4.5 million in connection with the Shaver’s Farm Claim.
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208. Through the current date, Velsicol has incurred remediation costs of
approximately $11.5 million in connection with the Shaver’s Farm Claim.
209. Velsicol has performed its obligations under its contract with International
with respect to the claim related to the Shaver’s Farm Claim.
210. Through its silence in response to Velsicol’s tender of Velsicol’s Shaver’s
Farm Claim, International has disavowed legal responsibility for funding the defense
costs and the remediation of the Shaver’s Farm Site.
211. International has failed to reimburse Velsicol for any of the expenses or
costs associated with Velsicol’s defense or settlement of the Shaver’s Farm Claim.
212. International’s failure to fund or reimburse Velsicol for Velsicol’s defense
and remediation expenses incurred in connection with the Shaver’s Farm Claim is a
breach of International’s contractual obligations to Velsicol owed under the International
Policy.
WHEREFORE, Velsicol asks for judgment in its favor and against International
for the damages that it proves at trial and for such other relief as this Court deems just.
Count X
Breach Of Contract: Mathis Marble Top Site
213. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of this paragraph 213.
214. Between 1973 and 1979, Mose and Sidney Mathis operated a 10 acre nonhazardous
industrial waste landfill in Walker County Georgia (the “Mathis Marble Top
Site”).
215. Velsicol shipped waste from its plant in Chattanooga, Tennessee to Mathis
Marble Top during the period from 1973 until 1980.
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216. After Velsicol shipped waste to the Mathis Marble Top Site, contaminants
began to leak from the storage containers into the soil and water.
217. The Mathis Marble Top Site was proposed as a national priority list site
for environmental remediation in 1987 and listed as a national priority site in 1989.
218. Velsicol was first ordered by the United States EPA to remediate the
Mathis Marble Top Site (the “Marble Top Claim”).
219. Since the EPA’s original Record of Decision, Velsicol’s remediation
obligations have been modified and expanded.
220. Velsicol gave notice of the Marble Top Claim to its insurers including
International.
221. All of the underlying primary comprehensive general liability insurance
coverage applicable to Velsicol’s claim relating to the Marble Top Claim, including its
coverage under the Transportation Policy I and Transportation Policy II, has been
exhausted.
222. The Marble Top Claim is a property damage claim falling within the
coverage of the International Policy.
223. The Marble Top Claim is a claim for an occurrence within the coverage
period encompassed by the International Policy.
224. International has failed to accept Velsicol’s Marble Top Claim.
225. As a consequence of International’s failure to respond to Velsicol’s tender
of the Marble Top Claim, Velsicol has incurred approximately $2.5 million in defense
costs in connection with the Marble Top Claim.
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226. As a consequence of International’s failure to respond to Velsicol’s tender
of the Marble Top Claim, Velsicol has incurred approximately $9.8 million to remediate
the environmental conditions at the Marble Top Site.
227. Velsicol has performed its obligations under its contract with International
with respect to the claim related to the Marble Top Site.
228. International has failed to reimburse Velsicol for any of the expenses or
costs associated with VelsicoPs defense or settlement of the Marble Top Claim.
229. Through its silence in response to VelsicoPs tender of VelsicoPs Marble
Top Claim arising from the Marble Top Site, International has disavowed legal
responsibility for funding the remediation of the Marble Top Site.
230. International has breached its contractual obligations under the insurance
policy that Velsicol purchased from International in connection with the Marble Top
Claim.
WHEREFORE, Velsicol asks for judgment in its favor and against International
for the damages that Velsicol proves at trial and for such other relief as this Court deems
just.
Count XI
Breach Of Contract: Memphis Site
231. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
as if fully set forth herein as the allegations of this paragraph 231.
232. Velsicol owns an 83 acre site in Memphis, Tennessee at which it
manufactured pesticides from the 1950 until 1997 (the “Memphis Site”).
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233. State and federal regulators have determined that the ground water and
soil at and emanating from the Memphis Site are contaminated and are causing damage to
property beyond the boundaries of the Memphis Plant.
234. State and federal regulators have ordered that Velsicol remediate the
environmental conditions at and beyond the boundaries of the Memphis Site (the
“Memphis Claim”).
235. In particular, state and federal regulators have determined that Velsicol’s
manufacturing operations at the Memphis Site have resulted in property damage beyond
the boundaries of the Memphis Site.
236. State and federal regulators have ordered that Velsicol fund the
remediation of the property damage resulting from Velsicol’s operations at the Memphis
Site.
237. Velsicol gave notice of the Memphis Claim to its insurers including
International.
238. All of the underlying primary comprehensive general liability insurance
coverage applicable to Velsicol’s Memphis Claim, including its coverage under the
Transportation Policy I and Transportation Policy II, has been exhausted.
239. The Memphis Claim falls within the coverage of the International Policy.
240. The Memphis Claim pertains to an occurrence within the policy period
encompassed by the International Policy.
241. Velsicol has incurred in excess of $4. 7 million in defense costs to date in
34
connection with the Memphis Claim.
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242. Velsicol has incurred in excess of $ 11 million in connection with the
remediation of the property damage alleged in the Memphis Claim.
243. International has failed to reimburse Velsicol for any of the expenses or
costs associated with Velsicol’s defense or settlement of the Memphis Claim.
244. Through its silence in response to Velsicol’s tender of the Memphis
Claim, International has disavowed legal responsibility for funding the Memphis Claim.
245. Velsicol performed its obligations under the terms of the International
Policy in connection with the Memphis Claim.
246. Velsicol has been damaged by International’s failure to reimburse Velsicol
for the defense costs and remediation expenses incurred by Velsicol in connection with
the Memphis Claim.
247. International has breached its contractual obligations to Velsicol in
connection with the Memphis Claim.
WHEREFORE, Velsicol asks for judgment in its favor and against International
for the damages that Velsicol proves at trial and for such other relief as this Court deems
just.
Count XII
Declaratory Judgment: Arlington Blending Site
248. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
and 112 through 130 as if fully set forth herein as the allegations of this paragraph 248.
249. Velsicol has been obligated to contribute substantial funding on an
ongoing basis, through the current date and into the future, to remediate the
environmental conditions attributed to it at the Arlington Blending Site.
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250. Velsicol remains obligated to fond the remediation of the Arlington
Blending Site.
251. A justiciable controversy exists between Velsicol and International
concerning International’s obligations to Velsicol under the International Policy with
respect to the Arlington Blending Site including its duty to pay for Velsicol’s defense on
a going forward basis as well as to indemnify it in connection with the settlement
agreement negotiated in the Arlington Blending Site.
WHEREFORE, Velsicol asks that the Court enter judgment in its favor and
against International declaring that International is obligated to pay Velsicol’s defense
expenses incurred in the Arlington Blending Site as those expenses are incurred and that
it indemnify Velsicol for the ongoing expenses associated with the remediation of the
Arlington Blending Site.
Count XIII
Declaratory Judgment: Cypress Creek Claim
252. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
and 151 through 175 as if folly set forth herein as the allegations of this paragraph 252.
253. A justiciable controversy exists between Velsicol and International
concerning International’s obligations to Velsicol under the International Policy with
respect to the Cypress Creek Claim including its duty to pay for Velsicol’s defense and
remediation of property damages related to the Cypress Creek Claim on a going forward
basis.
WHEREFORE, Velsicol asks that the Court enter judgment in its favor and
against International declaring that International is obligated to pay Velsicol’s defense
expenses as they are incurred in connection with the Cypress Creek Claim and that
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International indemnify Velsicol for the ongoing expenses to remediate the property
damage attributed to Velsicol in connection with the Cypress Creek Claim.
Count XIV
Declaratory Judgment: Chattanooga Site
254. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
and 113-149 as if fully set forth herein as the allegations of this paragraph 254.
255. Velsicol has been obligated to contribute substantial funding on an
ongoing basis, through the current date and into the future, to remediate the
environmental conditions including those beyond the borders of the Chattanooga Plant
attributed to Velsicol arising from Velsicol’s operations at the Chattanooga Plant.
256. Velsicol remains obligated to fund the remediation of the property damage
alleged to have been caused by Velsicol’s manufacturing operations at the Chattanooga
Plant.
257. A justiciable controversy exists between Velsicol and International
concerning International’s obligations to Velsicol under the International Policy with
respect to the Chattanooga Plant including its duty to pay for Velsicol’s defense on a
going forward basis as well as to indemnify it in connection with the settlement
agreement negotiated in connection with the Chattanooga Claim.
WHEREFORE, Velsicol asks that the Court enter judgment in its favor and
against International declaring that International is obligated to pay Velsicol’s defense
expenses incurred in the Chattanooga Claim as those expenses are incurred and that it
indemnify Velsicol for the ongoing expenses associated with the remediation of the
property damage attributed to Velsicol in connection with the Chattanooga Claim.
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Count XV
Declaratory Judgment: Marble Top Site
258. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
and 214 through 230 as if fully set forth herein as the allegations of this paragraph 258.
259. Since the EPA’s original Record of Decision, VelsicoFs remediation
obligations have been modified and expanded.
260. Velsicol’s remediation obligations with respect to the Marble Top Site
continue and are anticipated to continue at least through 2027.
261. Velsicol has been obligated to contribute substantial funding on an
ongoing basis, through the current date and into the future, to remediate the
environmental conditions attributed to it at the Marble Top Site.
262. Velsicol remains obligated to fund the remediation of the Marble Top Site.
263. A justiciable controversy exists between Velsicol and International
concerning International’s obligations to Velsicol under the International Policy with
respect to the Marble Top Claim including its duty to pay for Velsicol’s defense on a
going forward basis as well as to indemnify it in connection with the remediation of the
Marble Top Site on a going forward basis.
WHEREFORE, Velsicol asks that the Court enter judgment in its favor and
against International declaring that International is obligated to pay Velsicol’s defense
expenses incurred in responding to the Marble Top Claim as those expenses are incurred
and that it indemnify Velsicol for the ongoing expenses associated with the remediation
of the Marble Top Site.
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Count XVI
Declaratory Judgment: Memphis Site
264. Velsicol repeats and realleges the allegations of paragraphs 1 through 33
and 232 through 247 as if fully set forth herein as the allegations of this paragraph 264.
265. Velsicol will continue to incur defense costs and remediation costs in
connection with the Memphis Claim on a going forward basis.
266. A justiciable controversy exists between Velsicol and International
concerning International’s obligations to Velsicol under the International Policy with
respect to the Memphis Claim including its duty to pay for Velsicol’s defense on a going
forward basis as well as to indemnify it in connection with the remediation required in
connection with the Memphis Claim on a going forward basis.
WHEREFORE, Velsicol asks that the Court enter judgment in its favor and
against International declaring that International is obligated to pay Velsicol’s defense
expenses incurred in responding to the Memphis Claim as those expenses are incurred
and that it indemnify Velsicol for the ongoing expenses associated with the remediation
required to be funded by Velsicol in connection with the Memphis Claim.

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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