American States Ins. Co. v. Koloms

• Decision Date: 16 May 1996
• Docket Number: No. 1-95-2057,1-95-2057
• Citation: 666 N.E.2d 699,281 Ill.App.3d 725
• Parties: , 217 Ill.Dec. 30 AMERICAN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. Harvey KOLOMS; Nina Koloms; Doug Nielsen; Charles Hollinger; Caroline Wright; Gene Woodmansee; the Trane, an Illinois Corporation, Prairie View Electric, Air Conditioning & Heating, Ltd., American Engineering, Inc., Norbert Lewakowski, Sales Consultants of Lincolnshire, and Hartford Insurance Co., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 699

666 N.E.2d 699

281 Ill.App.3d 725, 217 Ill.Dec. 30

AMERICAN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. Harvey KOLOMS; Nina Koloms; Doug Nielsen; Charles Hollinger; Caroline Wright; Gene Woodmansee; the Trane an Illinois Corporation, Prairie View Electric, Air Conditioning & Heating, Ltd., American Engineering, Inc. Norbert Lewakowski, Sales Consultants of Lincolnshire, and Hartford Insurance Co., Defendants-Appellees.

No. 1-95-2057.

Appellate Court of Illinois First District, Fourth Division.

May 16, 1996.

Bingham Summers Welsh & Spilman, Indiana (Dennis F. Cantrell & James M. Hinshaw, of counsel), McKenna Storer Rowe White & Farrug, Chicago (Richard M. Clark & James P. DeNardo, of counsel), for appellant.

Schiff Hardin & Waite, Chicago (Jill B. Berkeley & Kevin L. Kolton, of counsel), for appellees.

Presiding Justice HOFFMAN delivered the opinion of the court:

The plaintiff, American States Insurance Company (American), appeals from a grant of summary judgment in favor of defendants, Harvey and Nina Koloms, and from the denial of its cross-motion for summary judgment. We exercise jurisdiction pursuant to Supreme Court Rule 304(a). 134 Ill.2d R. 304(a).

American issued a commercial general liability insurance policy (policy) covering a two-story commercial structure located in Lincolnshire, Illinois (building). The building contained stores on the first floor and business offices on the second floor. The Kolomses were the beneficial owners of the building and were named as additional insureds in the policy.

A number of individuals employed by Sales Consultants of Lincolnshire, a tenant in the building, asserted claims against the Kolomses and others for injuries allegedly sustained on September 18, 1990, when they inhaled carbon monoxide and other noxious fumes and gases emitted from a faulty furnace in the building. The Kolomses sought coverage under the policy for the claims asserted against them. Acting under a reservation of rights, American provided the Kolomses with a defense to the liability claims. The reservation of rights was based upon a pollution exclusion clause contained in the policy which reads in pertinent part as follows:

"This insurance does not apply to:

* * * * * *

f. (1) 'Bodily injury' or 'property damage' arising out of the actual, alleged, or threatened discharge, dispersal, release, or escape of pollutants:

(a) At or from premises you own, rent, or occupy;

* * * * * *

Pollutants mean any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned, or reclaimed."

The policy also contained an amendment providing that subparagraph (a) of paragraph (1) of the pollution exclusion clause did "not apply to 'bodily injury' or 'property damage' caused by heat, smoke or fumes from a hostile fire." The amendment defined a hostile fire as "one which becomes uncontrollable or breaks out from where it was intended to be."

Relying on the pollution exclusion clause, American subsequently filed the instant declaratory judgment action asserting, inter alia, that it owed no duty to defend or indemnify the Kolomses in connection with the claims asserted against them. American and the Kolomses filed cross-motions for summary judgment. The trial court granted the Koloms' motion, denied American States' motion, and inserted Rule 304(a) findings in its order. This appeal followed.

Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 1994); Carruthers v. B.C. Christopher & Co., 57 Ill.2d 376, 313 N.E.2d 457 (1974). Since the issue presented in a summary judgment proceeding is one of law, we apply a de novo standard of review. In re Estate of Hoover, 155 Ill.2d 402, 185 Ill.Dec. 866, 615 N.E.2d 736 (1993). By filing cross-motions for summary judgment, the parties invite the court to decide the issues presented in the action as questions of law. Allen v. Meyer, 14 Ill.2d 284, 152 N.E.2d 576 (1958). However, the mere filing of cross-motions cannot confer upon the court the power to grant a summary judgment to one of the parties where genuine issues remain precluding summary judgment in favor of either party. Perlman v. Time, Inc., 64 Ill.App.3d 190, 20 Ill.Dec. 831, 380 N.E.2d 1040 (1978).

The primary issue on appeal is whether the claims asserted against the Kolomses for injuries caused by fumes emitted from the building furnace fall unambiguously within the pollution exclusion clause of the policy. The law in this State relating to the construction of insurance policies is well settled. Our supreme court in Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1992), held:

"The construction of an insurance policy's provisions is a question of law. [Citations.] In construing an insurance policy, the court must ascertain the intent of the parties to the contract. [Citations.] To ascertain the meaning of the policy's words and the intent of the parties, the court must construe the policy as a whole [citations], with due regard to the risk undertaken, the subject matter that is insured and the purposes of the entire contract [citation]. If the words in the policy are unambiguous, a court must afford them their plain, ordinary, and popular meaning. [Citations.] However, if the words in the policy are susceptible to more than one reasonable interpretation, they are ambiguous [citation] and will be construed in favor of the insured and against the insurer who drafted the policy [citations]." (Emphasis in original.) 154 Ill.2d at 108-109, 180 Ill.Dec. 691, 607 N.E.2d 1204.

American argues that the plain and ordinary meaning of its pollution exclusion clause unambiguously bars coverage for injuries arising out of the escape of carbon monoxide fumes. As indicated, the policy excludes coverage for injuries arising out of the "discharge, dispersal, release, or escape of pollutants." Pollutants are defined in the policy to include any gaseous irritant or contaminant, including fumes. American contends that carbon monoxide is a gaseous irritant and thus, injuries caused by exposure to its fumes are excluded from coverage under the policy. The Kolomses contend that carbon monoxide leaking into the building from a faulty furnace is not an "irritant" or "contaminant" within the plain and ordinary meaning of those terms as used in the policy. They argue that this conclusion is supported by the nature and purpose of the insurance policy in issue and by the type of property insured.

Since a literal reading of the clause at issue supports the interpretation favored by American, our first task is to determine if the clause is ambiguous. In that regard, we find no need to recount the history and purpose of pollution exclusion clauses in liability insurance policies, a task painstakingly undertaken in West American Ins. Co. v. Tufco Flooring East, Inc., 104 N.C.App. 312, 409 S.E.2d 692 (1991). We do think it important, however, to point out that our research revealed a multitude of judicial interpretations of the very policy language at issue here. Several courts have ruled the clause ambiguous due to its breadth and lack of precision in defining "pollutants." See Minerva Enterprises v. Bituminous Casualty Corp., 312 Ark. 128, 851 S.W.2d 403 (1993); Westchester Fire Ins. Co. v. Pittsburg, 794 F.Supp. 353 (D.Kan.1992), aff'd sub nom. Pennsylvania National Mutual Casualty Ins. Co. v. Pittsburg, 987 F.2d 1516 (10th Cir.1993). Others have ruled that the clause applies only to active industrial polluters (see Thompson v. Temple, 580 So.2d 1133 (La.App.1991), the improper disposal or containment of hazardous waste (see Atlantic Mutual Insurance Co. v. McFadden, 413 Mass. 90, 595 N.E.2d 762 (1992)), or the discharge of pollutants into the environment (see West American Ins. Co., 104 N.C.App. 312, 409 S.E.2d 692). Still others have found the clause to be wholly unambiguous and have enforced it in circumstances involving the unintended or unanticipated release of substances falling within the definition of a pollutant as contained within the clause. See American States Insurance Co. v. Zippro Construction Co., 216 Ga.App. 499, 455 S.E.2d 133 (1995); Essex Insurance Co. v. Tri-Town Corp., 863 F.Supp. 38 (D.Mass.1994); American States Insurance Co. v. F.H.S., Inc., 843 F.Supp. 187 (S.D.Miss.1994).

In addition to the above cases, the parties have relied upon several decisions from other jurisdictions in cases presenting circumstances almost identical to those in the case at bar, and involving the interpretation of pollution exclusion clauses with terms similar to those used in the clause in this case. American has cited Bernhardt v. Hartford Fire Ins. Co., 102 Md.App. 45, 648 A.2d 1047 (1994), cert. granted, 337 Md. 641, 655 A.2d 400 (1995). The Kolomses have cited Stoney Run Co. v. Prudential-LMI Commercial Ins. Co., 47 F.3d 34 (2nd Cir.1995) and Regional Bank v. St. Paul Fire & Marine Ins. Co., 35 F.3d 494 (10th Cir.1994). Needless to say, each of the parties has either criticized or attempted to distinguish the cases relied upon by the other.

The Bernhardt court found that carbon monoxide was a "gaseous irritant" or "contaminant" within the clear language of the policy, and went on to hold "[w]e are unable to say a person of ordinary intelligence reading the language of this absolute pollution exclusion would conclude that it did not apply to the facts of this case." Bernhardt, 102 Md.App. at 55, 648 A.2d 1047. On the other hand, in Stoney Run and Regional Bank, the courts found the exclusion clause to be ambiguous when applied to carbon monoxide emitted from a faulty furnace, reasoning that a person of ordinary intelligence might well understand it to be a pollutant when discharged in an industrial...