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Coverage Issues Stemming from Dry Cleaner Contamination Suits

By Chet A. Kronenberg

In recent years, there has been a growing number of dry cleaners claiming to be “organic,” “green,” or “eco-friendly.” While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical. As a result of past disposal practices and spills of perc, many current and former dry cleaning sites are contaminated. By some estimates, 75% of dry cleaner facilities operated in past decades have caused environmental contamination. Cleanup costs range from tens of thousands of dollars to several million dollars.

Forest Park National Bank & Trust v. Ditchfield, 10 CV 3166 (N.D. Ill. May 21, 2010), presents a typical “dry cleaner contamination” fact pattern. In that case, a bank foreclosed on an Illinois residence, and then filed a lawsuit in federal court against the owners and operators of an adjacent strip mall and its dry cleaning tenant. The bank contends that after acquiring the residence, it learned that perc from the dry cleaner had leached into the soil and groundwater under the residence. Even though the residence is located on a block targeted by the city for a big redevelopment project, the bank claims that it has not been able to sell the property because of the perc contamination. The bank sought compensatory damages in excess of $100,000. Certain defendants filed a third-party complaint against their insurer alleging that it failed to provide defense and indemnity against the underlying suit.

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