Pipefitters Welfare Educational Fund v. Westchester Fire Ins. Co.

• Decision Date: 21 January 1993
• Docket Number: No. 91-3285,91-3285
• Citation: 976 F.2d 1037
• Parties: PIPEFITTERS WELFARE EDUCATIONAL FUND, a Missouri employee benefits fund, Plaintiff-Appellant, v. WESTCHESTER FIRE INSURANCE COMPANY, a New York corporation, and International Insurance Company, an Illinois corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1037

976 F.2d 1037

PIPEFITTERS WELFARE EDUCATIONAL FUND, a Missouri employee benefits fund, Plaintiff-Appellant, v. WESTCHESTER FIRE INSURANCE COMPANY, a New York corporation and International Insurance Company, an Illinois corporation, Defendants-Appellees.

No. 91-3285.

United States Court of Appeals Seventh Circuit.

Argued April 29, 1992.

Decided Sept. 28, 1992.

Rehearing and Rehearing En Banc

Denied Jan. 21, 1993.

David Herndon, Charles V. Marshall, Lakin & Herndon, Wood River, Ill., John H. Goffstein, Bartley & Goffstein, Clayton, Mo., and Thomas J. Wilcox, James T. Price (argued), and Mark A. Thornhill, Spencer, Fane, Britt & Browne, Kansas City, Mo., for plaintiff-appellant.

John S. Sandberg, Rodney M. Sharp, Sandberg, Phoenix & Vongontard, St. Louis, Mo., and Lawrence M. McHeffey (argued), and Margaret F. Catalano, McElroy, Deutsch & Mulvaney, Morristown, N.J., for defendants-appellees.

Thomas W. Brunner, Robert B. Bell, and Nancy J. Lemay, Wiley, Rein & Fielding, Washington, D.C., for amicus curiae.

Before FLAUM and KANNE, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.

FLAUM, Circuit Judge.

Pipefitters Welfare Educational Fund (Pipefitters) brought this diversity suit seeking, among other things, a declaration of its rights under two liability insurance policies purchased from International Insurance Company (International) and Westchester Fire Insurance Company (Westchester). The district court, on the parties' cross motions for summary judgment, ruled that the insurers had no duty to defend or indemnify Pipefitters for any losses arising out of a lawsuit filed by Sidney S. Arst Company (Arst). Pipefitters appeals. We affirm as to the International policy, but reverse the court's ruling regarding Westchester's duty to defend, and remand for further proceedings.

I.

Pipefitters, an employee benefits fund, purchased an electrical transformer in 1968 for use at its garage in St. Louis, Missouri. The transformer was disconnected in 1976, and remained on the premises until February 1988, when Pipefitters sold it to Arst, a scrap metal processor and dealer located in Madison, Illinois. Shortly thereafter, an Arst employee cut the transformer open with a blow torch while preparing it for resale as scrap. Unbeknownst to him, the transformer contained approximately 80 gallons of oil laden with polychlorinated biphenyls (PCBs), all of which spilled onto the premises.

Arst blamed Pipefitters for the mishap, and brought suit under federal and state environmental statutes and state common law. Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, No. 89-5029 (S.D.Ill.). Arst's suit alleges that Pipefitters unlawfully disposed of the transformer by failing to warn Arst--as required under state and federal law--that the transformer contained PCBs. Arst seeks relief for damages arising from consequences of the spill, including cleanup costs it incurred to comply with federal and state environmental law, diminution of property value, the imposition of an environmental reclamation lien on the property by the Illinois Environmental Protection Agency (IEPA), and its restricted access to the site following IEPA's placement of a "seal order" thereon.

Pipefitters timely notified the insurers of the suit, and requested a defense and indemnification, seeking coverage under two separate provisions of each policy. The first provision, contained in the general liability section of each policy, covers liability arising from property damage. The second, contained in endorsements to the main policies, covers liability arising from personal injury. The insurers denied Pipefitters' request for coverage on the ground that Arst's suit falls within the purview of a pollution exclusion clause included in both policies. In the event we find that the pollution exclusion clause applies only to property damage coverage and not personal coverage, the insurers contend that Arst's suit does not allege that Pipefitters committed a "personal injury" offense as the term is defined by the policies. The district court agreed with both of the insurers' contentions. We review de novo the court's grant of summary judgment to the insurers. La Preferida, Inc. v. Cerveceria Modelo, S.A. de C.V., 914 F.2d 900, 905 (7th Cir.1990), as well as its construction of the insurance provisions at issue. Community State Bank v. Hartford Ins. Co., 187 Ill.App.3d 110, 134 Ill.Dec. 810, 812, 542 N.E.2d 1317, 1319 (1989). ¹

II.

We first consider coverage under the Westchester policy. The legal rules governing the interpretation of insurance contracts are well settled. In determining whether Westchester owes Pipefitters a duty to defend, we look to the allegations in Arst's complaint. If the complaint states a claim that is within, or even potentially or arguably within, the scope of coverage provided by the policy, Westchester must provide a defense. United States Fidelity & Guar. Co. v. Wilkin Insulation Co., 144 Ill.2d 64, 161 Ill.Dec. 280, 284, 578 N.E.2d 926, 930 (1991); Butters v. City of Independence, 513 S.W.2d 418, 424 (Mo.1974). In comparing the complaint with the policy terms, we look not to the particular legal theories pursued by Arst, but to the allegedly tortious conduct underlying its suit. Colton v. Swain, 527 F.2d 296, 303-04 (7th Cir.1975); Western Casualty & Sur. Co. v. Adams County, 179 Ill.App.3d 752, 128 Ill.Dec. 621, 623, 534 N.E.2d 1066, 1068 (1989); Zipkin v. Freeman, 436 S.W.2d 753, 754 (Mo.1968) (en banc). Westchester may refuse to defend only if it is clear from the face of Arst's complaint that the allegations therein are not covered. Conway v. Country Casualty Ins. Co., 92 Ill.2d 388, 65 Ill.Dec. 934, 936, 442 N.E.2d 245, 247 (1982); Spaete v. Automobile Club Inter-Insurance Exch., 736 S.W.2d 480, 482-83 (Mo.App.1987). Moreover, because Arst's suit alleges several theories of recovery, Westchester must provide a defense if any portion of the complaint falls within the terms of the policy. Maryland Casualty Co. v. Peppers, 64 Ill.2d 187, 355 N.E.2d 24, 28 (1976); Harold S. Schwartz & Assoc., Inc. v. Continental Casualty Co., 705 S.W.2d 494, 497 (Mo.App.1985). We must give policy language its plain and ordinary meaning, Wilkin Insulation, 161 Ill.Dec. at 284, 578 N.E.2d at 930; Maryland Casualty Co. v. Huger, 728 S.W.2d 574, 579 (Mo.App.1987), and resolve any ambiguities or equivocal expressions in favor of Pipefitters, Wilkin Insulation, 161 Ill.Dec. at 284, 578 N.E.2d at 930; Howard v. Russell Stover Candies, Inc., 649 F.2d 620, 624 (8th Cir.1981) (Missouri law), but not create any ambiguities where none exist. Economy Fire & Casualty Co. v. Bassett, 170 Ill.App.3d 765, 121 Ill.Dec. 481, 483, 525 N.E.2d 539, 541 (1988).

A.

The Westchester policy defines "personal injury," in pertinent part, as an

injury arising out of one or more of the following offenses committed during the policy period:

(1) false arrest, detention, imprisonment, or malicious prosecution;

(2) wrongful entry or eviction or other invasion of the right to private occupancy;

(3) a publication or utterance [constituting a libel, slander, or invasion of privacy].

Pipefitters maintains that Arst's suit alleges an offense sounding in "wrongful entry or eviction or other invasion of the right to private occupancy." Westchester disagrees, and contends that this particular category of personal injury encompasses only conduct that is (1) undertaken by one claiming an interest in property, and (2) intended to deprive "the injured party of its right to privately occupy" that property. Def.'s Br. at 8. The policy, Westchester adds, does not cover intrusions that only have an incidental effect upon occupancy. The parties agree that Arst's complaint does not allege that Pipefitters intended to deprive Arst of its right of occupancy, or to take possession of the premises for itself. Their disagreement, then, is limited to whether the restrictive gloss Westchester places on "wrongful entry or eviction or other invasion of the right to private occupancy" provision of its policy is correct.

Westchester is on solid ground regarding the term "eviction." There are two variants of eviction, actual and constructive. Both, in their plain and ordinary meaning, denote actions taken by landlords with the intent to deprive tenants of their right to occupy or enjoy leased premises. Zion Indus., Inc. v. Loy, 46 Ill.App.3d 902, 5 Ill.Dec. 282, 285, 361 N.E.2d 605, 608 (1977); Goldberg v. Cosmopolitan Nat'l Bank, 33 Ill.App.2d 83, 178 N.E.2d 647, 649 (1961); Dolph v. Barry, 165 Mo.App. 659, 148 S.W. 196, 198 (1912). The catch-all phrase "other invasion of the right to private occupancy," however, has a less precise meaning. At first glance, nothing in the phrase seems to require that the "invader" bear any intent to deprive the occupant of possession. Viewed in this light, the term clearly encompasses the tortious conduct alleged in Arst's complaint. Pipefitters' negligent failure to provide a warning that the transformer contained PCBs (Arst alleges) led to the imposition on the Madison site of both a seal order, which restricted Arst's access thereto, and an environmental reclamation lien, which clouded its title. A reasonable policyholder would surely believe that Pipefitters, as a consequence of its alleged negligence, impaired Arst's right to occupy its property. See Titan Holdings Syndicate, Inc. v. City of Keene, 898 F.2d 265, 272-73 (1st Cir.1990) (Fairchild, J.) (New Hampshire law).

But we cannot reach such a conclusion so quickly. Although the term "other invasion of the right to private occupancy" is fairly general and elastic, it does not stand alone; it is part of a more complete definition of "personal injury," directly following two more specific terms, "eviction" and "wrongful entry." The principle of ejusdem generis--a principle the parties in Titan Holdings apparently did not raise--provides that where a general term follows a series of specific...