2013 IL App (4th) 130124
Ill. App. Ct.2013Background
- This case involves Country Mutual Insurance Company's dispute with Hilltop View, LLC and Professional Swine Management, LLC over defense obligations under a farm umbrella and pollution policy in a nuisance/negligence action arising from odors from a confinement hog farm.
- The neighbors filed nuisance and negligence claims against Hilltop, PSM, and Foglesongs alleging odors from hog farming and manure spreading.
- Country issued a reservation of rights and initially defended, then later sought to rescind the pollution policy, and ultimately denied umbrella coverage for the odors.
- The trial court denied Country's motion for partial summary judgment on the pollution exclusion and granted the insureds' cross-motions to the extent Country would defend, with a Rule 304(a) finding.
- Country appealed arguing the pollution exclusion barred coverage and that other, unresolved coverage defenses remained; the appellate court affirmed in part, reversed in part, and remanded.
- On appeal, the court held the pollution exclusion did not apply to odors under the facts, but that other defenses remained unresolved and Country could continue its declaratory judgment action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the umbrella policy's pollution exclusion apply to the odors claim? | Country; pollution exclusion bars coverage | Hilltop/PSM; exclusion is inapplicable to odors | Pollution exclusion does not apply to these odor claims under Koloms-based guidance |
| Is Country obligated to defend Hilltop and PSM under the umbrella policy given other unresolved defenses? | Country should defend if any defenses remain unresolved | Hilltop/PSM entitled to defense | Partial reversal: not required to defend under umbrella due to remaining defenses; remand for resolution of other defenses |
| Are the other coverage defenses properly pending and truly unresolved? | Yes, defenses remain in declaratory judgment action | Not all defenses have been ruled on; allocation of defense costs premature | Affirms that unresolved defenses preclude forcing defense under umbrella; remand for further proceedings |
Key Cases Cited
- Koloms v. American National Insurance Co., 177 Ill. 2d 473 (Ill. 1997) (pollution exclusion interpreted to apply only to traditional environmental pollution; odors not necessarily traditional)
- Kim v. State Farm Fire & Casualty Co., 312 Ill. App. 3d 770 (Ill. App. 2000) (defines traditional environmental pollution (hazardous materials) as a context for exclusion)
- Connecticut Specialty Ins. Co. v. Loop Paper Recycling, Inc., 356 Ill. App. 3d 67 (Ill. App. 2005) (odor/pollution questions in environmental context)
- Village of Crestwood v. Ironshore Specialty Insurance Co., 2013 IL App (1st) 120112 (Ill. App. 2013) (odor/pollution issues inEnvironmental context)
- Grinnell Mutual Reinsurance Co. v. Hubbs, 2013 IL App (3d) 110861 (Ill. App. 2013) (insurer may defend under reservation of rights; impact on coverage actions)