2015 IL App (5th) 140211
Ill. App. Ct.2015Background
- Bible Pork sought regulatory approval, built and operated a large hog facility in 2005–2006; 21 neighbors sued pre‑operation seeking declarations that the facility would be a public and private nuisance and requested “other relief deemed appropriate.”
- Bible Pork notified its longtime insurer, Country Mutual, which denied defense and indemnity under an Agriplus Farm Liability policy and a Farm Umbrella policy for three reasons: (1) the complaint sought declaratory/equitable relief (not damages), (2) no “occurrence” during the policy period, and (3) pollution exclusions applied.
- Plaintiffs’ nuisance claims proceeded to trial; Bible Pork prevailed and this court affirmed the defense verdict on appeal in the underlying case.
- Country Mutual filed a declaratory‑judgment action seeking a ruling that it had no duty to defend or indemnify Bible Pork; both parties moved for summary judgment on the duty‑to‑defend issue.
- The trial court granted Bible Pork’s motion, finding the complaint potentially sought damages, alleged an “occurrence,” and that the pollution exclusions were ambiguous; judgment awarded Bible Pork its defense costs and interest.
- On appeal Country Mutual challenged each of the trial court’s holdings; the Fifth District affirmed, holding Country Mutual owed a duty to defend.
Issues
| Issue | Plaintiff's Argument (Country Mutual) | Defendant's Argument (Bible Pork) | Held |
|---|---|---|---|
| Whether the underlying suit was a “suit for damages” triggering coverage | Complaint only sought declaratory/equitable relief; phrase “other relief deemed appropriate” insufficient to convert to a damages claim | Prayer for “other relief” and counsel statements show plaintiffs could pursue money damages; equitable relief can include damages | Court: Suit potentially sought damages; duty to defend triggered |
| Whether alleged harms constituted an “occurrence” (accident) | Harm alleged was prospective (pre‑operation); no actual bodily injury/property damage during policy period; not an ‘accident’ | Alleged noises, odors, contamination could result from continuous or repeated exposure; insured did not intend resulting injuries | Court: Allegations potentially state an occurrence; expected/intended‑injury exclusion did not apply |
| Whether the expected/intended injury exclusion bars coverage | Exclusion applies regardless of insured’s subjective intent; operation of facility inherently expected to cause impacts | Focus is whether injury was expected or intended, not whether acts were intentional; operation under permits shows no intent to injure | Court: Exclusion inapplicable on these facts; doubts resolved for insured |
| Whether pollution exclusions unambiguously bar defense | Alleged emissions/contamination fall within pollution exclusion language | Exclusions ambiguous as to odors/noises and non‑traditional environmental harms; traditional pollution scope is narrower | Court: Pollution exclusions ambiguous here; do not preclude duty to defend |
Key Cases Cited
- Conway v. Country Casualty Insurance Co., 92 Ill. 2d 388 (insurer cannot refuse defense if complaint potentially falls within coverage)
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (equitable relief may fall within a policy requiring suit seeking damages)
- General Agents Insurance Co. of America, Inc. v. Midwest Sporting Goods Co., 215 Ill. 2d 146 (compare underlying complaint to policy to test duty to defend)
- Erie Insurance Exchange v. Imperial Marble Corp., 957 N.E.2d 1214 (Ill. App. case treating emissions/odor nuisance as potentially within coverage and finding pollution exclusion ambiguous)
- American States Insurance Co. v. Koloms, 177 Ill. 2d 473 (restrict pollution exclusions to traditional environmental contamination)
- Hilltop View, LLC v. Country Mut. Ins. Co., 998 N.E.2d 950 (Ill. App. case with nearly identical factual allegations holding pollution exclusion did not clearly apply)
- Founders Insurance Co. v. Munoz, 237 Ill. 2d 424 (ambiguities in policy construed for insured)