Economy Preferred Ins. Co. v. Grandadam

• Decision Date: 05 October 1995
• Docket Number: No. 3-94-0703,3-94-0703
• Citation: 275 Ill.App.3d 866,656 N.E.2d 787,212 Ill.Dec. 190
• Parties: , 212 Ill.Dec. 190 ECONOMY PREFERRED INSURANCE COMPANY, a corporation, Plaintiff-Appellee, v. Judi A. GRANDADAM, Nathan D. Grandadam, a minor, by his mother and next friend, Judi A. Grandadam, Nicholas W. Grandadam, a minor by his mother and next friend, Judi A. Grandadam, Jaime A. Piano, Robert J. Schofield, a minor by his father and next friend, Jaime A. Piano, and Brandy J. Piano, a minor, by her father and next friend, Jaime A. Piano, Defendants-Appellants (John A. Twardowski and Mary E. Twardowski, Defendants).
• Court: United States Appellate Court of Illinois

Page 787

656 N.E.2d 787

275 Ill.App.3d 866, 212 Ill.Dec. 190

ECONOMY PREFERRED INSURANCE COMPANY, a corporation, Plaintiff-Appellee, v. Judi A. GRANDADAM, Nathan D. Grandadam, a minor, by his

mother and next friend, Judi A. Grandadam, Nicholas W.

Grandadam, a minor by his mother and next friend, Judi A.

Grandadam, Jaime A. Piano, Robert J. Schofield, a minor by

his father and next friend, Jaime A. Piano, and Brandy J.

Piano, a minor, by her father and next friend, Jaime A.

Piano, Defendants-Appellants (John A. Twardowski and Mary E.

Twardowski, Defendants).

No. 3-94-0703.

Appellate Court of Illinois,

Third District.

Oct. 5, 1995.

George Mueller (argued), Hoffman, Mueller & Creedon, P.C., Ottawa, for Judi A. Grandadam, Nathan Grandadam, Nicholas Grandadam, Brandy J. Piano, Jaime A. Piano, and Robert J. Schofield.

Michael T. Reagan (argued), Herbolsheimer, Lannon, Henson, Duncan & Reagan, P.C., Ottawa, for Economy Preferred Insurance Co.

Louis L. Bertrand, Anthony C. Raccuglia & Associates, Peru, for John A. Twardowski and Mary E. Twardowski.

Justice SLATER delivered the opinion of the court:

Plaintiff, Economy Preferred Insurance Company (Economy), brought a declaratory judgment action, seeking a determination that the pollution exclusion clause in a homeowners and personal liability insurance policy precluded coverage for alleged damage to a home and injuries to its occupants caused by mercury being spilled in the home. Plaintiffs and defendants in the underlying suit were joined together as defendants in the declaratory judgment action. After the defendants filed their response, Economy moved for judgment on the pleadings. The circuit court granted the motion, finding that the pollution exclusion unambiguously precluded coverage for the underlying claim. We affirm.

On May 21, 1992, Judi Grandadam and a number of members of her household filed suit against John and Mary Twardowski. Their complaint alleged that on October 11, 1991, the Twardowski's minor son, Tim, removed a container of Mercury from the Twardowski home and brought it to the Grandadam home. The complaint further alleged that "in the course of playing with said mercury, the same became spilled in and scattered about the interior of the residence."

The complaint was in seven counts. The first count alleged property damage to the home; the other six counts were for personal injuries suffered by members of the household. All of the counts alleged various negligent acts on the part of the Twardowskis. The complaint described mercury as being toxic to human beings, and stated that "when unconfined and dispersed, [mercury] is readily transported by air and by touch and it is readily absorbed into the body through the air and through the skin, as a result of touching contaminated objects." The Twardowskis tendered defense of the claim to Economy.

Economy then filed a complaint for declaratory judgment, alleging it had no duty to defend the claim, because of a pollution exclusion clause in the liability policy it issued to the Twardowskis. The exclusion was worded as follows:

"SECTION II--EXCLUSIONS

2. Coverage E--Personal Liability, does not apply to:

. . . . .

g. any:

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

The policy defines a "pollutant" as 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 parties to this appeal agree that mercury is a pollutant. Economy asserted in its complaint that it had no duty to defend because the Grandadams were alleging damage or injury as a proximate result of the discharge, dispersal, release, or escape of a pollutant. After the Twardowskis and Grandadams answered the complaint, Economy moved for judgment on the pleadings.

Following a hearing, the circuit court granted Economy's motion. The judge concluded that the phrasing of the exclusion was unambiguous, and stated that he was not going to read any additional requirements or exceptions into the plain language of the exclusion. The defendants now appeal, claiming that the trial court erred in finding the pollution exclusion applicable to the underlying cause of action.

When determining an insurer's duty to defend, a reviewing court must look to the underlying complaint and the policy of insurance; if the underlying complaint alleges facts within or potentially within policy coverage, the insurer is obliged to defend its insured even if the allegations are groundless, false, or fraudulent. (Posing v. Merit Insurance Co. (1994), 258 Ill.App.3d 827, 196 Ill.Dec. 335, 629 N.E.2d 1179.) An insurer may justifiably refuse to defend only where it is apparent that the allegations fail to state any claim within, or potentially within, the scope of policy coverage. (International Minerals & Chemical Corp. v. Liberty Mutual Insurance Co. (1988), 168 Ill.App.3d 361, 119 Ill.Dec. 96, 522 N.E.2d 758.) Where an exclusionary clause is relied upon to deny coverage, its applicability must be clear and free from doubt because any doubts as to coverage will be resolved in favor of the insured. Trovillion v. United States Fidelity & Guaranty Co. (1985), 130 Ill.App.3d 694, 86 Ill.Dec. 39, 474 N.E.2d 953.

We begin our discussion by noting that this case involves the so-called "absolute pollution exclusion." It is referred to as "absolute" because it no longer contains an exception for releases of pollutants that are sudden and accidental. To date, no Illinois court has construed the absolute pollution exclusion. Previous Illinois cases involving pollution exclusion clauses have considered clauses with the "sudden and accidental" exception. (See Outboard Marine Corp. v. Liberty Mutual Insurance Co. (1992), 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204; United States Fidelity & Guaranty Co. v. Wilkin Insulation Co. (1991), 144 Ill.2d 64, 161 Ill.Dec. 280, 578 N.E.2d 926; Central Illinois Public Service Co. v. Allianz Underwriters Insurance Co. (1992), 240 Ill.App.3d 598, 181 Ill.Dec. 82, 608 N.E.2d 155; United States Fidelity & Guaranty Co. v. Specialty Coatings Co. (1989), 180 Ill.App.3d 378, 129 Ill.Dec. 306, 535 N.E.2d 1071; International Minerals & Chemical Corp. v. Liberty Mutual Insurance Co. (1988), 168 Ill.App.3d 361, 119 Ill.Dec. 96, 522 N.E.2d 758; Reliance Insurance Co. v. Martin (1984), 126 Ill.App.3d 94, 81 Ill.Dec. 587, 467 N.E.2d 287.) In Outboard, our supreme court, following the lead of several other courts, found the term "sudden" as used in the pollution exclusion clause to be ambiguous. (See Outboard, 154 Ill.2d at 120-21, 180 Ill.Dec. at 705, 607 N.E.2d at 1218.) One court has explained the reaction of the insurance industry to such interpretations as follows:

"Formerly, the standard pollution exclusion permitted coverage for damages resulting from the discharge, dispersal, release or escape of contaminants or pollutants when "sudden and accidental." Commentators have suggested that the quoted language, from the perspective of the insurance industry, was too frequently construed in a strained or tortured fashion, in a manner which distorted the terminology and thereby "frustrated" the intent of the industry. In addition, claims experience demonstrated enormous expense and exposure resulting from the "explosion" of environmental litigation. [Citation.] As a result, the insurance industry structured an absolute exclusion." Vantage Development Corp. v. American Environment Technologies Corp. (1991), 251 N.J.Super. 516, 525, 598 A.2d 948, 952-53.

We are now faced with construing such an exclusion. If a provision of an insurance policy can reasonably be said to be ambiguous, it will be construed in favor of the insured. (Dora Township v. Indiana Insurance Co. (1980) 78 Ill.2d 376, 36 Ill.Dec. 341, 400 N.E.2d 921.) However, words in a policy should be given their plain and ordinary meaning, and the court should not search for an ambiguity where there is none. (United States Fire Insurance Co. v. Schnackenberg (1981), 88 Ill.2d 1, 57 Ill.Dec. 840, 429 N.E.2d 1203.) When an exclusion clause is relied on to deny coverage, its applicability must be clear and free from doubt. (Gibraltar Casualty Co. v. Sargent & Lundy (1990), 214 Ill.App.3d 768, 158 Ill.Dec. 551, 574 N.E.2d 664.) Our courts will enforce clearly drawn exclusions. General Insurance Co. v. Robert B. McManus, Inc. (1995), 272 Ill.App.3d 510, 209 Ill.Dec. 107, 650 N.E.2d 1080.

The vast majority of courts that have examined "absolute pollution exclusions" have found them to be clear and unambiguous. (See National Union Fire Insurance Co. v. CBI Industries, Inc. (1995), 907 S.W.2d 517, 522 and cases cited therein at note 8.) In Alcolac Inc. v. California Union Insurance Co. (U.S.Dist.Ct.D.Md.1989), 716 F.Supp. 1546, 1549, the court stated "This pollution exclusion is just what it purports to be--absolute * * *." Defendants try to avoid the application of the exclusion to this case under several theories, all of which we reject.

Defendants first argue that the Grandadams underlying complaint against the Twardowskis is based in negligence, a risk covered by the Economy policy. The defendants claim that this is a case involving "a covered risk (negligence) resulting in an excluded event (release of a pollutant)." As authority, defendants cite Jussim v. Massachusetts Bay Insurance Co. (1993), 415 Mass. 24, 610 N.E.2d 954, in which the court used such an analysis to find that a pollution exclusion clause in a homeowner's policy did not apply to a case in which heating oil from a neighboring property seeped onto the insured's property. However, Economy points out that the Jussim court stated in a footnote that the case did not involve the absolute pollution exclusion clause that had recently been broadened by the insurance industry. The...