U.S. Fidelity and Guar. Co. v. Wilkin Insulation Co.

• Citation: 550 N.E.2d 1032,140 Ill.Dec. 907,193 Ill.App.3d 1087
• Decision Date: 28 December 1989
• Docket Number: No. 1-87-2684,1-87-2684
• Parties: , 140 Ill.Dec. 907, 58 USLW 2480 UNITED STATES FIDELITY AND GUARANTY COMPANY, Plaintiff-Appellee, v. WILKIN INSULATION CO., Wilkin Properties, Inc., and Architectural Sales, Inc., Defendants-Appellants (Commercial Union Insurance Company, Employers Fire Insurance Company, Argonaut Insurance Company, Argonaut Midwest Insurance Company, Aetna Casualty & Surety Company, and Zurich Insurance Company, Appellees-Intervening Plaintiffs).
• Court: United States Appellate Court of Illinois

Page 1032

550 N.E.2d 1032

193 Ill.App.3d 1087, 140 Ill.Dec. 907,

58 USLW 2480

UNITED STATES FIDELITY AND GUARANTY COMPANY, Plaintiff-Appellee, v. WILKIN INSULATION CO., Wilkin Properties, Inc., and Architectural Sales, Inc., Defendants-Appellants (Commercial Union Insurance Company, Employers Fire Insurance Company Argonaut Insurance Company, Argonaut Midwest Insurance Company, Aetna Casualty & Surety Company, and Zurich Insurance Company, Appellees-Intervening Plaintiffs).

No. 1-87-2684.

Appellate Court of Illinois First District, Fourth Division.

Dec. 28, 1989.

Rehearing Denied Feb. 28, 1990.

William C. Murphy, Craig S. Mielke, Gerald K. Hodge, Murphy, Hupp, Foote, Mielke & Kinnally, Aurora, for defendants-appellants.

Robert L. Kiesler, Cynthia A. Meister, Kiesler & Berman, Chicago, for plaintiff-appellee.

Williams & Montgomery, Chicago (James K. Horstman, Barry L. Kroll, Anthony P. Katauskas, Lloyd E. Williams, Jr., of counsel), for intervening plaintiffs-appellees Commercial Union Ins. Co. and Employers' Fire Ins. Co.

Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago (D. Kendall Griffith, Thomas M. Hamilton, Fritz K. Huszagh, Katherine S. Derick, of counsel), for intervening plaintiffs-appellees Argonaut Ins. Co. and Argonaut Midwest Ins. Co.

Rivkin, Radler, Dunne & Bayh, Chicago (Barbara B. Guibord, Steven R. Merican, Mark R. Sargis, of counsel), for intervening plaintiff-appellee Aetna Cas. & Sur. Co.

Phelan, Pope & John, Chicago (Peter C. John, Matthew J. Gehringer, of counsel), for intervening plaintiff-appellee Zurich Ins. Co.

Neil F. Hartigan, Atty. Gen., State of Illinois, Shawn W. Denney, Sol. Gen., Chicago (Donna Dagnall, G. Michael Taylor, Asst. Attys. Gen.), amicus curiae.

Arthur G. Leisten, Christopher J. McElroy, U.S. Gypsum Co., Chicago. James T. Otis, Robert A. Creamer, Robert C. Gislason, Patty J. Dyer, Jeanine M. Jiganti, Keck, Mahin & Cate, Chicago, amicus curiae for U.S. Gypsum Co.

Don E. Glickman, Rudnick & Wolfe, Chicago (Thomas W. Brunner, Laura A. Foggan Frank Winston, Jr., Wiley, Rein & Fielding, Washington, D.C., of counsel), amicus curiae for Ins. Environmental Litigation Ass'n.

Wilson M. Brown III, Stewart Dalzell, Stephen P. Chawaga, Cynthia M. Lighty, Drinker Biddle & Reath, Philadelphia, Pa., Richard L. Sandler, McDermott, Will & Emery, Chicago, amicus curiae for American Motorists Ins. Co., American Mfrs. Mut. Ins. Co., Lumbermens Mut. Cas. Co.

Justice JOHNSON delivered the opinion of the court:

Defendants, Wilkin Insulation Co., Wilkin Properties, Inc., and Architectural Sales, Inc., appeal from an order of the circuit court of Cook County granting the summary judgment motions of plaintiff, United States Fidelity and Guaranty Company, and intervening plaintiffs, Commercial Union Insurance Company (hereinafter Commercial Union), Employers Fire Insurance Company (hereinafter Employers), Argonaut Insurance Company and Argonaut Midwest Insurance Company (hereinafter Argonaut), and Zurich Insurance Company (hereinafter Zurich), and denying defendants' cross summary judgment motion. Aetna Casualty & Surety Company (hereinafter Aetna), did not file a summary judgment motion but agreed to be bound by the trial court's decision. The trial court found that defendants were not entitled to insurance coverage under the various comprehensive general liability policies, issued by plaintiff and intervening plaintiffs, for asbestos-related complaints filed against defendants by several school districts and building owners.

The following issues are presented for review: (1) whether the trial court properly found that no potential for coverage exists since the complaints filed against defendants did not allege "property damage" as defined in the various policies; (2) whether the trial court properly found that no potential for coverage exists since the complaints filed against defendants did not allege an "occurrence" as defined in the policies; (3) whether the trial court correctly found that coverage was precluded because of various exclusionary provisions contained within the policies.

Amicus curiae briefs were filed by United States Gypsum Company and the Attorney General of the State of Illinois which support defendants' position. An amicus curiae brief was also filed by Insurance Environmental Litigation Association, and a joint amicus curiae brief was filed by American Motorists Insurance Company, American Manufacturers Mutual Insurance Company, and Lumbermens Mutual Casualty Company which support the position of plaintiff and intervening plaintiffs.

We reverse.

Defendants are engaged, primarily, in the contract installation of thermal insulation. Various lawsuits were brought against defendants to recover damages arising from the alleged installation of asbestos-containing materials in a number of schools and other public buildings. Defendants sought defense and indemnification against these asbestos-related suits from plaintiff and intervening plaintiff insurers. Defendants note that although Wilkin Insulation Company is the only named defendant in the underlying suits brought by the various schools and building owners, Wilkin Properties, Inc. and Architectural Sales, Inc. are parties by virtue of being named insureds under the various comprehensive general liability policies.

All of the insurers, with the exception of plaintiff, agreed to defend defendants under a reservation of rights. Plaintiff, instead, brought an action against defendants for a declaratory judgment that there was no duty to defend or provide indemnity since the damages that were alleged were not covered under its policy. The other insurers then filed intervening petitions also seeking such declarations. Defendants subsequently filed a declaratory judgment action against all of its insurers seeking a declaration of the rights and obligations of the parties under the various policies. All of the parties, with the exception of Aetna, then filed cross summary judgment motions.

In ruling on the summary judgment motions, the trial court found that no "property damage" caused by an "occurrence," as defined in the policies, was alleged in any of the complaints filed against defendants. The court reasoned that the damages claimed were pure economic losses which fell outside of insurance coverage and, therefore, there was no duty to defend or indemnify defendants. Furthermore, the court found that even assuming, arguendo, that "property damage" was alleged, various exclusions in the policies would preclude coverage for the damages claimed in the underlying suits. This appeal followed.

Summary judgment is granted when the pleadings, affidavits and depositions on file reveal that there is no genuine issue of material fact and that the movant is entitled to a judgment as a matter of law. (Western Casualty & Surety Co. v. Adams County (1989), 179 Ill.App.3d 752, 755-56, 128 Ill.Dec. 621, 534 N.E.2d 1066; Ill.Rev.Stat.1985, ch. 110, par. 2-1005(c).) The right to summary judgment must be clear beyond question and an order granting summary judgment must be reversed if a reviewing court determines that questions of material fact exist or that judgment for the movant was incorrect as a matter of law. International Amphitheater Co. v. Vanguard Underwriters Insurance Co. (1988), 177 Ill.App.3d 555, 571, 126 Ill.Dec. 808, 532 N.E.2d 493.

The allegations in the underlying complaint in the context of relevant policy provisions determine whether an insurer owes a duty to defend an action brought against an insured. (United States Fidelity & Guaranty Co. v. Specialty Coatings Co. (1989), 180 Ill.App.3d 378, 383-84, 129 Ill.Dec. 306, 535 N.E.2d 1071.) If the complaint alleges facts potentially within the coverage of the policy, the duty to defend has been established. (Maryland Casualty Co. v. Peppers (1976), 64 Ill.2d 187, 193, 355 N.E.2d 24.) "At the duty to defend stage * * * the court [cannot] adjudicate disputed facts. That is the genesis of the rule that the court must look only to the complaint to see if the allegations show that the insured's conduct is potentially within coverage." State Farm Fire & Casualty Co. v. Shelton (1988), 176 Ill.App.3d 858, 866, 126 Ill.Dec. 286, 531 N.E.2d 913.

The court in Western Casualty & Surety Co. v. Adams County (1989), 179 Ill.App.3d 752, 128 Ill.Dec. 621, 534 N.E.2d 1066, defined potential coverage as follows:

" 'Potentially covered' means that the insurer's duty to defend its insured arises whenever the allegations in a complaint state a cause of action that gives rise to the possibility of a recovery under the policy. * * *. [Citation.] The complaint need not allege or use language affirmatively bringing the claims within the scope of the policy, as the question of coverage should not hinge exclusively on the draftsmanship skills or whims of the plaintiff in the underlying action. [Citation.]" (Western Casualty, 179 Ill.App.3d at 756, 128 Ill.Dec. 621, 534 N.E.2d 1066.)

The threshold that a complaint must meet to present a claim for potential coverage is low. Doubt as to coverage must be resolved in favor of the insured. La Rotunda v. Royal Globe Insurance Co. (1980), 87 Ill.App.3d 446, 451, 42 Ill.Dec. 219, 408 N.E.2d 928.

The operative language in each of the basic insuring clauses of the various policies is essentially the same in that coverage will be provided for "property damage" that has been sustained as a result of an "occurrence." The insurers argue that the underlying complaints do not allege "property damage" as defined within policies. The trial court found that only economic loss was claimed since the parties in the underlying suits were asking for costs and repair and replacement. This decision was based, in part, upon another circuit court memorandum opinion, Board of Education of Chicago v. A, C & S, Inc. (Cir. Ct. Cook Co. February 26, 1986), Nos. 85-CH-00811, 85-CH-00812, 85-CH-03905 (hereinafter No. 85-CH-00811). This...