                                                   SECOND DIVISION
                                                   FILED: December 26, 2007



No. 1-06-3363

IMC GLOBAL, n/k/a MOSAIC GLOBAL                    )        APPEAL FROM THE
HOLDINGS, INC.,                                    )        CIRCUIT COURT OF
                                                   )        COOK COUNTY
      Plaintiff/Counter-Defendant/                 )
      Appellant,                                   )
                                                   )
v.                                                 )
                                                   )
CONTINENTAL INSURANCE COMPANY,                     )
                                                   )
      Defendant/Third-Party Plaintiff,             )
                                                   )
v.                                                 )
                                                   )
EMPLOYERS MUTUAL LIABILITY INSURANCE               )        02 CH 10271
COMPANY OF WISCONSIN, n/k/a EMPLOYERS              )
INSURANCE COMPANY OF WAUSAU,                       )
                                                   )
      Third-Party Defendant/Counter-               )
      Plaintiff/Appellee,                          )
                                                   )
and                                                )
                                                   )
HARTFORD ACCIDENT & INDEMNITY COMPANY,             )
HOME INDEMNITY COMPANY, INTERNATIONAL              )
INSURANCE COMPANY, LIBERTY MUTUAL                  )
INSURANCE COMPANY, MARYLAND CASUALTY               )
COMPANY, NATIONAL UNION INSURANCE                  )
COMPANY OF PITTSBURGH, PA.,                        )        THE HONORABLE
                                                   )        PETER FLYNN,
      Third-Party Defendants.                      )        JUDGE PRESIDING.

      PRESIDING JUSTICE HOFFMAN delivered the opinion of the court:

      Mosaic    Global    Holdings,   Inc.    (Mosaic),          appeals    from   a

declaratory    judgment    entered    in   favor       of    Employers     Insurance

Company of Wausau (Wausau), finding that Wausau had no duty to

defend or indemnify Mosaic in underlying federal actions involving

claims for personal injury and property damage resulting from

exposure to hazardous chemicals at a fertilizer plant formerly
1-06-3363

operated by Mosaic's predecessor-in-interest.                  For the reasons

which follow, we affirm.

     The essential facts giving rise to this appeal are not in

dispute. Mosaic's predecessor-in-interest, International Minerals

& Chemical Corporation, operated a fertilizer production plant in

Spartanburg, South Carolina from 1910 until 1986.                 In the late

1960s, Wausau's predecessor-in-interest, Employers Mutual Insurance

Company of Wisconsin, issued two comprehensive general liability
policies to International Minerals & Chemical Corporation.                  The

first policy provided coverage from December 1967 until December

1968 (hereinafter the "1967 Policy"), while the second policy

provided    coverage    from    December     1968    through    December   1969

(hereinafter the "1968 Policy").

     As originally written, both policies contained the following

notice provision:

            "9.   Notice to Company.           Written notice of

            occurrences which may be the basis of claim
            shall be given by or on behalf of the insured

            to the company or any of its authorized agents

            as soon as practicable.            Such notice shall

            contain particulars sufficient to identify the

            insured     and     also    reasonably        obtainable

            information respecting the time, place and

            circumstances of the occurrence, the names and

            addresses   of     the   injured   and   of    available




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            witnesses.           If   claim    is    made    or     suit    is

            brought against the insured, the insured shall

            immediately          forward     to     the    company       every

            demand,      notice,        summons     or     other    process

            received by him or his representative."

After the policies were issued, the parties amended the notice

provisions.       With      regard      to    the    1967    Policy,       the   relevant

amendatory endorsement reads as follows:
            "It   is    hereby        understood      and    agreed      that

            condition number 9 of this policy, to which

            this endorsement is made to form a part, is

            amended to read as follows:

                    When an accident occurs, written notice

            shall be given by or on behalf of the insured

            to the company or any of its authorized agents

            as soon as practicable after the accident is

            known      to   the       insurance      division       of     the
            insured's office, Skokie.                Such notice shall

            contain particulars sufficient to identify the

            insured and also reasonable [sic.] obtainable

            information respecting the time, place and

            circumstances of the accident, the names and

            addresses       of    the    injured     and    of     available

            witnesses."



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The amendatory endorsement to the 1968 Policy provides:

            "It    is   hereby     understood   and    agreed   that

            condition number 9 of this policy, to which

            this endorsement is made to form a part, is

            amended to read as follows:

      When an accident occurs, written notice shall be given by or

on behalf of the insured to the company or any of its authorized

agents as soon as practicable after the accident is known to the
insurance division of the insured's office, Skokie.                  Such notice

shall contain particulars sufficient to identify the insured and

also reasonable [sic.] obtainable information respecting the time,

place and circumstances of the accident, the named [sic.] and

addresses of the injured and of available witnesses.                If a claim is

made or suit is brought against the insured, the insured shall

immediately forward to the company every demand, notice, summons or

other process received by him or his representative."

      On April 17, 1999, representatives from                Mosaic met with
residents of the Spartanburg community to discuss issues regarding

the former fertilizer plant.         At the meeting, Grover Hankins, a law

professor at Texas Southern University, demanded that Mosaic pay

$25   million     to    relocate    the    community   and   $150    million   as

compensation to the community for past "injustices."                  Mosaic did

not notify Wausau of Professor Hankins' $175 million demand.

      In a letter dated May 13, 1999, Russell Heald informed Mosaic



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that Professor Hankins and the law firm of Hilliard & Heald

represented most of the residents who lived around the abandoned

fertilizer plant in Spartanburg. Attached to the letter was a list

of   approximately   650   residents    of   the   community   purportedly

represented by Professor Hankins and Hillard & Heald.            During a

phone conversation on February 9, 2000, Bob Hilliard of Hilliard &

Heald informed Mosaic's outside counsel that his clients intended

to file suit against Mosaic within the next 60 to 90 days.        Nothing
in the record indicates that Mosaic provided Wausau with notice of

either the May 13, 1999, letter or the February 9, 2000, phone

conversation.

      On August 31, 2000, approximately 1,200 current and former

residents of Spartanburg brought suit against Mosaic in the United

States District Court for the District of South Carolina, alleging

personal injury and property damage resulting from exposure to

hazardous chemicals released during Mosaic's operation of the

fertilizer plant.    On October 2, 2000, Mosaic hired the law firm of
Hunton & Williams to defend it in the federal lawsuit.

      At the bench trial held in the instant declaratory judgment

action, Richard Cox, the director of risk management at Mosaic,

testified that he was responsible for notifying insurance carriers

of claims against Mosaic when the federal lawsuit was filed.           In

November of 2000, Cox received a copy of the August 31, 2000,

lawsuit.    Mosaic's legal department supplied him with a "stack of




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1-06-3363

papers" containing the letters that Mosaic had previously sent to

approximately 70 primary and excess liability insurers in 1996 to

notify them of "an occurrence resulting in response costs to remedy

unexpected       contamination       by    hazardous   substances"     at   the

Spartanburg plant.        On November 20, 2000, Cox sent notice of the

August 31, 2000, lawsuit to various insurers using the addresses on

the 1996 notification letters.

      Included among the documents Cox received from the legal
department was a 1996 letter referencing the two polices at issue

in this case.       The letter, however, was addressed to "Employers

Mutual" in Des Monies, Iowa, rather than to Wausau.            Accordingly,

Cox did not provide Wausau with notice of the federal lawsuit on

November 20, 2000, but mistakenly sent a notice letter concerning

the two polices to Employers Mutual Casual Company in Des Moines,

Iowa.      On July 10, 2001, Cox sent a second letter to Employers

Mutual in Des Moines, Iowa regarding the two polices.

      The materials that Cox received also contained notice letters
sent to Wausau in 1996 concerning excess coverage policies issued

by Wausau.       Cox, however, admitted that he missed those documents

when he prepared the November 20, 2000, notification letters.

      On January 9, 2001, the individual parties and claims in the

August 31, 2000, federal lawsuit were severed.             On April 5, 2001,

907   of   the    1,200   original    plaintiffs   filed   separate,    albeit

similar, lawsuits in the federal district court.




                                          -6-
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     On October 12, 2001, the law firm of Foley & Lardner, which

Mosaic had retained as its insurance counsel, served Wausau with

copies of the 907 complaints in the underlying federal actions and

tendered the defense of the litigation to Wausau.       By a letter

dated January 7, 2002, Wausau denied coverage for those lawsuits

where the claimants (1) alleged injury as a result of their

exposure during their employment at the fertilizer plant or (2)

alleged they were not exposed to the contaminants until after the
polices had expired.   In that same letter, Wausau agreed to defend

Mosaic in the remainder of the lawsuits under a reservation of

rights.

     In a letter to Wausau dated January 11, 2002,   Foley & Lardner

noted that Mosaic's legal fees and expenses in defending the

underlying suits exceeded $2 million and requested that Wausau

"begin paying its share of these defense costs."         The letter

further stated that, "[w]hile we believe that each insurer with a

duty to defend is responsible for these fees, in the interest of
moving forward, we would like to hear from you to arrange initial

payments of an appropriate share."    By a letter dated January 21,

2002, Wausau reiterated its coverage position and noted that pre-

tender defense costs would not be paid.

     In May of 2002, attorneys at Foley & Lardner met with Harold

Moore, the Wausau employee assigned to Mosaic's insurance claims.

On Wausau's behalf, Moore offered to pay 4% of the reasonable




                                -7-
1-06-3363

defense costs.       Moore testified that, at the meeting, one of Foley

& Lardner's attorneys informed him that there were no pre-tender

defense costs because Mosaic had provided notice to Wausau prior to

October 12, 2001.

     In     July    of   2002,     after    an     agreement     as    to    Wausau's

"appropriate" share of the defense costs could not be reached,

Wausau agreed to pay, under a reservation of rights, 100% of

Mosaic's    reasonable       defense   costs       incurred    after     Wausau      was
tendered the defense of the underlying federal actions.                       On July

22, 2002, Mosaic provided Wausau with the billing invoices paid to

date in defense of the underlying actions.

     By letters dated July 15, 2002, and August 13, 2002, Mosaic

reminded Wausau of its agreement to pay 100% of the defense costs

and further        stated   that   Wausau    had    first     received      notice   on

November 20, 2000.          Attached to the August 13, 2002, letter were

copies of the November 20, 2000, and July 21, 2001, letters Cox

sent to Employers Mutual in Des Moines, Iowa concerning the two
polices at issue in this case.

     In an e-mail sent on August 21, 2002, Moore informed Mosaic

that it appeared that the November 2000 and July 2001 notification

letters were sent to Employers Mutual of Iowa, not Wausau.                      Moore

further stated that he had initiated an investigation into whether

an affiliation between the two companies existed.

     According to his testimony, Moore conducted a line-by-line




                                       -8-
1-06-3363

review of the billing invoices submitted on July 22, 2002.            After

he reviewed two months of invoices, Wausau paid $223,101.79 to

Mosaic on August 30, 2002, as reimbursement for the two months of

defense costs.

      Sometime in late August or early September of 2002, Moore was

informed that there was no relationship between Employers Mutual of

Iowa and Wausau.    In a letter authored by Moore and dated September

9, 2002, Wausau denied coverage based upon Mosaic's failure to
provide timely notice of the underlying federal actions.

      On September 13, 2002, Wausau filed a counterclaim against

Mosaic in the instant action brought by another insurance company.

In its counterclaim, Wausau sought, inter alia, a declaration that

it   had   no   obligation   to   defend   or   indemnify   Mosaic   in   the

underlying actions.

      On October 4, 2005, Mosaic filed a motion for partial summary

judgment, arguing, inter alia, that summary judgment should be

granted on Wausau's late notice of suit defense with respect to the
1967 Policy because the amendment to the policy had eliminated the

notice of lawsuit requirement in the policy.           The circuit court

agreed and granted Mosaic's motion.

      On November 1, 2005, Mosaic filed another motion for summary

judgment, arguing, inter alia,         that Wausau was estopped from

asserting policy defense because it failed to either defend Mosaic

in the underlying actions or timely seek a declaratory judgment on




                                     -9-
1-06-3363

its duty to defend.      The circuit court denied this motion.

     Mosaic and Wausau then proceeded to a bench trial on Wausau's

late notice of lawsuit defense under the 1968 Policy.                 Near the end

of the trial, Wausau moved for reconsideration of the circuit

court's decision with regard to the notice of lawsuit provision in

the 1967 Policy.      Shortly before closing arguments were held, the

court granted Wausau's motion to reconsider and vacated the partial

summary   judgment.       Although the circuit court reaffirmed its
earlier ruling that the amendment unambiguously removed the notice

of lawsuit requirement from the 1967 Policy, the court concluded

that the removal of the notice requirement was clearly a mistake.

In making this ruling, the circuit court stated:

                    "What does one do in a situation of that

            sort?       In    my   view,       notwithstanding       the

            objective    theory    of    contract,      it   would    be

            absolutely ridiculous to hold parties to a

            result     that   neither      of    them   demonstrably
            intended based on an unfortunate wording.                The

            cause of action for reformation is one method

            of addressing situations of that kind.               But I

            prefer to get at it more simply than that.

                    Calamari, C-a-l-a-m-a-r-i, and Perillo,

            P-e-r-i-l-l-o, on contracts, third edition,

            section 9-27 at page 387 addresses situations




                                        -10-
1-06-3363

            of unilateral mistake.          The beginning of that

            section reads as follows: 'Until recently the

            common generalization has been that avoidance

            is not available for unilateral mistake except

            where the other party knows or has reason to

            know the mistake.'            I pause to observe that

            this is a situation in which based on the

            testimony of Mr. Cox, I find that [Mosaic]
            knew or had reason to know of the mistake in

            framing the endorsement as is demonstrated by

            the   fact      that    [Mosaic's]       own     personnel

            apparently did not read the endorsement as

            meaning what [Mosaic's] alert counsel have

            subsequently pointed out that in fact it says.

                  Calamari and Perillo go on in the same

            section on page 387 to say if the mistake - I

            quote, 'If the mistake is large enough that it
            should    be    obvious,       then    the     mistake     is

            classified as palpable and relief is easily

            given.'        In this case the mistake in the

            endorsement was to eliminate from a primary

            liability      policy    an    element   of     a   primary

            liability      policy,     which      nobody    has      even

            testified to the point, has ever seen missing




                                       -11-
1-06-3363

            from    such    a        policy    before        and    one    the

            elimination         of   which     makes     a   hash    of    the

            policy.        In    my view, that qualifies as a

            palpable error on any standard.                  Timely notice

            of suit is indeed, as Mr. Cox testified, basic

            to a liability policy.

                                          ***

                   I conclude that the granting of partial
            summary judgment on that point was erroneous,

            and    Wausau's      motion       to    reconsider      on    that

            point is granted.             I will, therefore, for

            purposes of future proceedings assume that

            policy number one means the same thing with

            regard to notice of suit, notice of claim or

            suit, as policy number two."

     At the conclusion of the bench trial, the circuit court

entered an order on February 22, 2006, finding that, under both the
1967 Policy and the 1968 Policy, Mosaic was required to provide

Wausau with timely notice of a claim or suit.                      The court, however,

determined   that     Mosaic's         delay       in   providing     notice      (1)   was

inadvertent, (2) was not inexcusable under the circumstances, and

(3) did not prejudice Wausau; and, therefore, the delay did not

relieve Wausau from its obligations under the policy.                            The court

further found that Mosaic breached its duty of cooperation by




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delaying the transmission of the defense billing invoices in the

underlying    federal   actions   to      Wausau    and   reduced    Wausau's

responsibility    for   those   bills   by   10%.     Finally,      the   court

concluded that Wausau was liable to Mosaic under both policies in

an amount to be determined in the future.

     Thereafter, Wausau filed a motion to reconsider that portion

of the circuit court's February 22, 2006, order that rejected its

late-notice defense.     Mosaic also filed a motion to reconsider the
pre-trial order rejecting its estoppel defense.

     On October 13, 2006, the circuit court denied Mosaic's motion

for reconsideration and reaffirmed its conclusion that Wausau was

not estopped from denying coverage.          On that same date, the court

granted Wausau's motion for reconsideration and concluded that

Mosaic's notice to Wausau was unreasonably and inexcusably late.

As a consequence, the circuit court found that Wausau owed no

coverage to Mosaic under the policies. The October 13, 2006, order

also contained the requisite findings under Supreme Court Rule
304(a) (210 Ill. 2d R. 304(a)) that there was no just reason to

delay enforcement or appeal.      This appeal followed.

     When, as in this case, a challenge is made to a ruling

following a bench trial, the circuit court's judgment will not be

disturbed on appeal unless it is against the manifest weight of the

evidence.    Brody v. Finch University of Health Science/The Chicago

Medical School, 298 Ill. App. 3d 146, 153, 698 N.E.2d 257 (1998).




                                   -13-
1-06-3363

A judgment is against the manifest weight of the evidence only

where the opposite conclusion is clearly evident or where the

factual   findings      upon   which     it        is       based    are    unreasonable,

arbitrary, or not based on the evidence.                      Brody, 298 Ill. App. 3d

at 153.

     On appeal, Mosaic argues that the circuit court erred when it

concluded   that      the   absence    of     the       notice      of     claim      or     suit

requirement in the 1967 Policy was a mistake and sua sponte
reformed the policy to include such a provision.                           We agree.

     Contrary to the circuit court's assertions that it was not

reforming   the      policy,   it   cited      to       a    section       of    a    treatise

discussing rescission, (see J. Calamari & J. Perillo, Contracts,

§9-27, at 386-88 (3rd ed. 1987)), and then appeared to have

reformed the 1967 Policy by including a notice of claim or suit

requirement in the policy.            See Schaffner v. 514 W. Grant Place

Condominium Ass'n, 324 Ill. App. 3d 1033, 1044, 756 N.E.2d 854

(2001) (reformation allows a contract to be amended to reflect the
true agreement between the parties). Wausua, however, never sought

reformation     in   its    complaint,       nor    did       it    seek    to       amend    its

pleadings to conform with the proofs on this issue.

     The issues in controversy and the theories upon which recovery

is sought are fixed in the complaint.                   Kincaid v. Ames Department

Stores,   283   Ill.    App.   3d     555,    568,          670    N.E.2d    1103      (1996).

Accordingly, the circuit court lacks jurisdiction to adjudicate an




                                        -14-
1-06-3363

issue not presented through proper pleadings. William J. Templeman

Co. v. Liberty Mutual Insurance Co., 316 Ill. App. 3d 379, 388, 735

N.E.2d 669 (2000).      Because Wausau never raised the issue of

reformation in its complaint or sought to conform its pleadings to

the proofs asserting reformation, we disagree with the basis upon

which the circuit court concluded that the 1967 Policy required

Mosaic to provide Wausau with notice of a claim or suit.        However,

as this court may affirm the judgment of the circuit court on any
basis in the record (Liberty Mutual Insurance Co. v. American Home

Assurance Co., 368 Ill. App. 3d 948, 955, 858 N.E.2d 530 (2006)),

our analysis continues.

     Wausau   argues   that   the    circuit   court   misconstrued   the

amendatory endorsement to the 1967 Policy.        It contends that the

endorsement only modified the occurrence notice portion of the 1967

Policy and did not affect the requirement that notice be given to

the insurer if a claim or suit is brought against the insured.

Wausau further contends that the absence of a notice of claim or
suit provision would be absurd, as a key component of the policy

would be eliminated.   Mosaic disagrees, maintaining that, because

the sentence requiring notice of a claim or suit is not included in

the endorsement, this condition was eliminated from            the 1967

Policy.

     When construing the language of an insurance policy, our

primary function is to give effect to the intention of the parties




                                    -15-
1-06-3363

as expressed by the words of the policy.               Central Illinois Light

Co. v. Home Insurance Co., 213 Ill. 2d 141, 153, 821 N.E.2d 206

(2004). An insurance policy is construed as a whole, giving effect

to every provision.         Central Illinois Light Co., 213 Ill. 2d at

153. Where the language of the policy is clear and unambiguous, it

must be given its plain, ordinary, and popular meaning.                  Rich v.

Principal Life Insurance Co., 226 Ill. 2d 359, 371, 875 N.E.2d 1082

(2007).     If the words used in the policy are susceptible to more
than one reasonable interpretation, the ambiguity must be resolved

in favor of coverage.           Rich, 226 Ill. 2d at 371.

     As originally written, condition number 9 of the 1967 Policy

required that:

            "Written notice of occurrences which may be

            the basis of claim shall be given by or on

            behalf of the insured to the company or any of

            its authorized agents as soon as practicable.

            Such      notice      shall      contain    particulars
            sufficient to identify the insured and also

            reasonably obtainable information respecting

            the    time,    place      and   circumstances    of   the

            occurrence, the names and addresses of the

            injured and of available witnesses.              If claim

            is     made    or   suit    is   brought   against     the

            insured, the insured shall immediately forward




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            to the company every demand, notice, summons

            or    other      process     received    by    him   or    his

            representative."

The parties then entered into an amendatory endorsement, which

provided:

            "It    is    hereby      understood     and   agreed      that

            condition number 9 of this policy, to which

            this endorsement is made to form a part, is
            amended to read as follows:

                    When an accident occurs, written notice

            shall be given by or on behalf of the insured

            to the company or any of its authorized agents

            as soon as practicable after the accident is

            known       to   the     insurance     division      of    the

            insured's office, Skokie.              Such notice shall

            contain particulars sufficient to identify the

            insured and also reasonable [sic.] obtainable
            information respecting the time, place and

            circumstances of the accident, the names and

            addresses        of    the   injured   and    of   available

            witnesses."

     Generally, when the parties declare that a provision to a

contract shall be "amended to read as follows," the new provision

is substituted for the old one, and all portions omitted from the




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new provision are deleted.       See Goodall v. Illinois, 123 Ill. 389,

394, 15 N.E. 171 (1888).      This rule, however, is not absolute and

will not be applied when it is contrary to the intention of the

parties. See Gerdts v. Gerdts, 196 Minn. 599, 601-02, 265 N.W. 811

(1936); State ex rel. Board of Regents of Normal Schools v. Donald,

163 Wis. 145, 148, 157 N.W. 782 (1916).

     Based on the facts of this case, it is clear that the purpose

of the endorsement to the 1967 Policy was to amend only Mosaic's
duty to provide notice of an occurrence by allowing this duty to be

triggered when Mosaic's insurance division became aware of an

accident;   nothing in the endorsement amended that portion of

condition number 9 requiring notice of a claim or suit.             Under the

provisions of the 1967 Policy, Wausau is required to "defend any

suit against the insured alleging *** injury, sickness, disease or

destruction [within the scope of the policy] and seeking damages on

account   thereof,   even   if   such   suit    is    groundless,   false   or

fraudulent;   but    the    company     may    make    such   investigation,
negotiation and settlement of any claim or suit as it deems

expedient."   Without timely notice of a pending claim or lawsuit,

Wausau could not fulfill its obligations under the policy to defend

its insured or exercise its rights to investigate, negotiate, or

settle a claim or suit.      The very purpose of a notice of claim or

suit provision is to afford the insurer the opportunity to conduct

a timely and thorough investigation of the insured’s claim, as well




                                    -18-
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as, the opportunity to locate and participate in the defense of the

insured.      Northbrook Property & Casualty Co. v. Applied Systems,

Inc.,   313    Ill.    App.     3d    457,    464-65,       729   N.E.2d    915   (2000).

Furthermore, both Cox and Moore testified that they had never

observed a comprehensive general liability insurance policy that

did not contain a provision requiring notice of a claim or suit.

As a consequence, we do not believe that the parties intended the

amendatory endorsement to wholly supplant condition number 9 in the
1967 Policy and eliminate the notice of claim or suit requirement.

     Whenever       possible,        the   main     body    of    the   policy    must   be

construed     in    conjunction        with     the    endorsements        in    order   to

determine     the     meaning    and       effect     of   the    insurance      contract.

Protective Insurance Co. v. Coleman, 144 Ill. App. 3d 682, 695, 494

N.E.2d 1241 (1986).             Only where an endorsement irreconcilably

conflicts with a provision in the body of the policy, will the

terms of the endorsement control.                   Vole v. Atlanta International

Insurance Co., 172 Ill. App. 3d 480, 483, 526 N.E.2d 653 (1988).
Because    there      is   no   provision       in    the    amendatory     endorsement

concerning notice of claim or suit, there is no conflict, and the

provision in the body of the 1967 Policy requiring such notice was

not eliminated.            Consequently, we affirm the circuit court’s

finding that Mosaic was required to provide Wausau with notice of

a claim or suit under both policies at issue.

     Next, Mosaic argues that the circuit court erred in accepting




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Wausau’s late notice-defense.       Mosaic contends that its delay in

notifying Wausau of the underlying federal actions was reasonable

under the circumstances of this case.            We disagree.

       According to the policies at issue in this case, when a claim

or suit is brought against Mosaic, it must "immediately forward to

the company every demand, notice, summons or other process received

by him or his representative."        Under Illinois law, a provision

calling for an insured to provide notice "immediately" requires
notification within a reasonable time.             Zurich Insurance Co. v.

Walsh Construction Co. of Illinois, 352 Ill. App. 3d 504, 512, 816

N.E.2d 801 (2004).       Whether reasonable notice was given by the

insured depends on the facts and circumstances of the particular

case.   Northbrook Property & Casualty Insurance Co., 313 Ill. App.

3d at 465.    In determining whether reasonable notice was provided,

courts consider several factors, including the language of the

policy, the sophistication of the insured, the insured's awareness

that    a   suit   was   pending,   and    the    insured's     diligence   in
ascertaining whether policy coverage was available.                  Northern

Insurance Co. of New York v. City of Chicago, 325 Ill. App. 3d

1086, 1092, 759 N.E.2d 144 (2001).         Prejudice to the insurer is an

additional factor to be considered when determining whether an

insured has fulfilled a policy condition requiring reasonable

notice.     Country Mutual Insurance Co. v. Livorsi Marine, 222 Ill.

2d 303, 317, 856 N.E.2d 338 (2006).        However, an insured’s failure




                                    -20-
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to   provide     reasonable    notice     relieves       the    insurer    of   its

obligations to provide coverage regardless of whether the insurer

was prejudiced.       Country Mutual Insurance Co., 222 Ill. 2d at 317.

     Mosaic had a duty to notify Wausau when the initial federal

lawsuit was filed on August 31, 2000, and again when the subsequent

907 individual lawsuits were filed on April 5, 2001.                      Although

somewhat unclear, it appears from the record that Wausau first

became   aware   of    the   initial    lawsuit    and    the    subsequent     907
individual lawsuits when notified by Mosaic on October 12, 2001.

This would constitute a delay of 13 months for the initial suit and

6 months for the subsequent 907 lawsuits.

     We agree with the circuit court that Mosaic's 13- and 6-month

delay in notifying Wausau was unreasonable.               Similar periods have

been held to be unreasonable as a matter of law.               See Equity General

Insurance Co. v. Patis, 119 Ill. App. 3d 232, 237-38, 456 N.E.2d 348

(1983) (five months); Illinois Valley Minerals Corp. v. Royal-Globe

Insurance Co., 70 Ill. App. 3d 296, 301, 388 N.E.2d 253 (1979) (six
months).    The only reason offered by Mosaic for its delay in

providing notice was that Cox, its director of risk management,

inadvertently sent notification to the wrong insurer.                Contrary to

Mosaic's assertion, an insured's own negligence will not excuse a

lengthy delay in providing notice.            American Country Insurance Co.

v. Bruhn, 289 Ill. App. 3d 241, 248, 682 N.E.2d 366 (1997).

Consequently, mistakenly notifying the wrong insurance company is




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not a sufficient excuse for failing to provide the correct insurer

with timely notice.    See Ross v. Mayflower Drug Stores, Inc., 338

Pa. 211, 214, 12 A.2d 569, 570 (Pa. 1940); Reina v. United States

Casualty Co., 228 A.D. 108, 110, 239 N.Y.S. 196, 198 (N.Y. 1930).1

Based on the record before us, we conclude the circuit court's

finding that Mosaic's delay in notifying Wausau was unreasonable and

inexcusable is not against the manifest weight of the evidence.

     Alternatively, Mosaic argues that, even if its notice was
untimely, the circuit court erred in finding that Wausau was not

estopped from raising a late-notice defense.        Again, we disagree.

     Under   the   estoppel   doctrine,   an   insurer   which   takes   the

position that a complaint alleging actions that potentially fall

within the coverage offered is not covered under a policy that



     1
     Mosaic cites to Universal Underwriters Insurance Co. v.
Patriot Ambulette, Inc., 149 A.D.2d 500, 539 N.Y.S.2d 981 (N.Y.
1989) (Patriot Ambulette) for the proposition that sending notice
to the wrong insurer is a legitimate excuse for an insured's
delay in providing notice. In Patriot Ambulette, the Appellate
Division of the Supreme Court of New York found that a five-month
delay in providing notice was not unreasonably late where the
insured's broker originally sent notice to the wrong insurance
company and the uncontradicted evidence showed that the correct
insurer had actual notice of the underlying claim and had
dispatched an investigator three months after the accident.
Patriot Ambulette, 149 A.D.2d at 500-01, 539 N.Y.S.2d at 981-982.
Subsequent New York decisions, however, have limited Patriot
Ambulette to the specific facts of the case and have concluded
that a lengthy delay was not excused where the incorrect
insurance company was mistakenly notified. See Gershow Recycling
Corp. v. Transcontinental Insurance Co., 22 A.D.3d 460, 462, 801
N.Y.S.2d 832, 833-34 (N.Y. 2005); M.Z. Discount Clothing Corp. v.
Meyninger, 23 F. Supp. 2d 270, 272 (E.D.N.Y. 1998) (applying New
York law).



                                   -22-
1-06-3363

includes a duty to defend may not simply refuse to defend the

insured. Employers Insurance of Wausau v. Ehlco Liquidating Trust,

186 Ill. 2d 127, 150, 708 N.E.2d 1122 (1999) (Ehlco).                 Rather, the

insurer   must    either     (1)    defend    the    underlying    suit     under    a

reservation of rights or (2) seek a declaratory judgment that no

coverage exists.     Ehlco, 186 Ill. 2d at 150.             An insurer that fails

to take either of these steps and is subsequently found to have

wrongfully denied coverage will be estopped from raising defenses
to coverage, including a late-notice defense. Ehlco 186 Ill. 2d at

150-51.

     Mosaic      contends    that    Wausau    did    not    defend   it    under    a

reservation of rights or timely file a declaratory judgment action

seeking a ruling of no coverage.               With regard to its argument

regarding Wausau's defense under a reservation of rights, Mosaic

asserts that Wausau did not actually provide a defense in the

underlying federal actions.           It maintains that Wausau's offer to

participate in the defense at a rate of 4% and subsequent payment
of only $223,101.79 did not satisfy its duty to defend.                    See Ehlco

186 Ill. 2d at 157 (finding that an insurer did not provide a

defense by merely offering to pay 9% of the defense costs incurred).

Mosaic's argument, however, is not well taken.

     Generally,      where    an    insurer     agrees      to   defend    under    a

reservation of rights, it will not be barred from pursuing policy

defenses in a subsequently filed declaratory judgment action.                      See




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1-06-3363

Hartford Fire Insurance Co. v. Whitehall Convalescent & Nursing

Home, Inc., 321 Ill. App. 3d 879, 888, 748 N.E.2d 674 (2001).

However, if the insurer fails to act reasonably in providing a

defense, it may still be estopped from raising defenses to coverage.

See Central Mutual Insurance Co. v. Kammerling, 212 Ill. App. 3d

744, 749-50, 571 N.E.2d 806 (1991).    We believe that an insurer may

discharge its contractual obligations to defend by reimbursing the

insured for the reasonable cost of hiring independent counsel.   See
Stevenson v. State Farm Fire & Casualty Co., 257 Ill. App. 3d 179,

186, 628 N.E.2d 810 (1993) (where a conflict of interest arises

between an insurer and its insured, the insurer fulfills its

obligation to defend by reimbursing the insured for the cost of

independent counsel).

     On January 7, 2002, three months after first receiving notice

of the underlying federal actions on October 12, 2001, Wausau agreed

to defend Mosaic under a reservation of rights.    In a letter dated

January 11, 2002, Mosaic requested that Wausau begin paying its
"appropriate share" of the defense costs incurred.   At a subsequent

meeting held in May of 2002, Wausau offered to pay 4% of the defense

costs.

     In July of 2002, after an agreement as to Wausau's "appropriate

share" of the defense costs could not be reached, Wausau agreed to

pay 100% of Mosaic's "reasonable" defense costs, again under a

reservation of rights.   Wausau was first provided with the defense




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1-06-3363

billing invoices on July 22, 2002.      According to his testimony,

Moore conducted a line-by-line review of the billing invoices and,

by August 30, 2002, had reviewed two months of invoices.     On that

date, Wausau paid Mosaic $223,101.79, as reimbursement for the two

months of defense costs.    Based on these facts, the circuit court

concluded that Wausau honored its duty to defend.   In light of the

record before us, we cannot find that the court's   decision in this

regard is against the manifest weight of the evidence.
     Shortly after paying the $223,101.79, for two months of defense

costs, Moore determined that, contrary to Mosaic's representations,

Wausau had not received notice of the underlying actions prior to

October 12, 2001.    On September 9, 2002, Wausau denied coverage

based on Mosaic's failure to provide timely notice.       Four days

later, on September 13, 2002, Wausau filed a declaratory judgment

action, thereby suspending its obligations to defend Mosaic.     See

Certain Underwriters at Lloyd's v. Professional Underwriters Agency,

Inc., 364 Ill. App. 3d 975, 983-84, 848 N.E.2d 597 (2006).
     Based on the record, we find that a trier of fact could

rationally conclude that Wausau acted reasonably in defending Mosaic

under a reservation of rights.   At Mosaic's request that Wausau pay

its appropriate share of the defense costs, Wausau originally

offered to pay 4%.   Shortly thereafter, when an agreement could not

be reached as to Wausau's "appropriate share" of the defense costs,

Wausau agreed to pay 100% of Mosaic's reasonable defense costs and,




                                 -25-
1-06-3363

within five weeks of receiving the billing invoices, reviewed two

months of invoices and paid Mosaic $223,101.79, as reimbursement for

two months' worth of costs. Within the next 14 days, Wausau learned

that it had not received notice of the underlying actions prior to

October   12,   2001,   denied   coverage,   and   brought   a   declaratory

judgment action.    Having found that a rational trier of fact could

have concluded that Wausau reasonably provided Mosaic with a defense

subject to a reservation of rights, it follows that the circuit
court's decision finding that Wausau was not estopped from asserting

a late-notice defense is not against the manifest weight of the

evidence.

     For the foregoing reasons, we affirm the circuit court's

October 13, 2006, order, finding that Wausau owed no coverage to

Mosaic under both the 1967 Policy and the 1968 Policy.           In light of

our conclusion, we need not address Wausau's alternative arguments

for affirmance.

     Affirmed.

     SOUTH and KARNEZIS, JJ., concur.




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