2013 IL App (1st) 120112
Ill. App. Ct.2013Background
- Village Crestwood and former mayor Chester Stranczek filed a declaratory judgment seeking insurers’ duties to defend/indemnify against at least 25 lawsuits alleging the Village knowingly mixed contaminated well water into the municipal supply.
- Insurers Westport, United National, and Ironshore moved for summary judgment on the basis of absolute pollution exclusions in eight policies.
- Underlying complaints allege long‑standing contamination from a groundwater well with solvents (PCE) and other pollutants, with the Village allegedly mixing contaminated water with Lake Michigan water and distributing it for decades.
- IEPA notified the Village of contamination; the well was shut in 2007 after regulators found elevated contaminants; the Village reported falsely about water sources in consumer confidence reports.
- The circuit court ruled the exclusions apply to all claims; the Village appealed arguing limits to traditional environmental pollution or to CERCLA-type clean‑ups; Ninth, the court considered collateral estoppel but preserved the state action.
- The court reviews policy exclusions de novo and affirms the circuit court’s grant of summary judgment for the insurers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether absolute pollution exclusions preclude coverage for the Village’s claims. | Village argues exclusions apply only to traditional environmental pollution. | Insurers argue exclusions are absolute and apply regardless of theory. | Exclusions preclude coverage; not limited to CERCLA or traditional pollution. |
| Whether Koloms governs the scope of the exclusion and limits to traditional pollution. | Village relies on Koloms to limit to traditional pollution. | Seeks broader application of exclusion beyond traditional pollution. | Koloms guides; exclusion applies to pollution discharges into water, not limited. |
| Whether the “central business activity” concept affects coverage here. | Village relies on central business activity to expand coverage. | Do not adopt central business activity as governing principle here. | Not adopted; central business activity not controlling in this context. |
Key Cases Cited
- Koloms v. City of Lincolnshire, 177 Ill. 2d 473 (Illinois Supreme Court 1997) (absolute pollution exclusion covers discharges into environment)
- Kim v. State Farm Fire & Casualty Co., 312 Ill. App. 3d 770 (Ill. App. 3d 2000) (pollution exclusion applied to escaped solvent contaminating soil)
- Grandadam v. Economy Preferred Insurance Co., 275 Ill. App. 3d 866 (Ill. App. 1995) (traditional environmental pollution defined by discharge into land/water)
- Doerr v. Mobil Oil Corp., 774 So. 2d 119 (La. 2000) (total pollution exclusion analysis favored; not controlling in Illinois)
- Scottsdale Indemnity Co. v. Village of Crestwood, 673 F.3d 715 (7th Cir. 2012) ( Seventh Circuit on collateral estoppel and pollution exclusions)
- Rich v. Principal Life Insurance Co., 226 Ill. 2d 359 (Illinois Supreme Court 2007) (insurance policy exclusions interpreted de novo)
- Koloms v. City of Lincolnshire, 177 Ill. 2d 473 (Illinois Supreme Court 1997) (established traditional pollution exclusion scope)