Outboard Marine Corp. v. Liberty Mutual Insurance

(Nos. 71761 cons. CORPORATION,

OUTBOARD MARINE Appellant v. LIBERTY MUTUAL INSUR- Cross-Appellee, et al. Mutual Insurance (Liberty ANCE COMPANY Cross-Appellant). Company, Appellee Rehearing Opinion 1992. December filed 1, 1993. February denied MILLER, C.J., HEIPLE, J., joined concurring part

dissenting part. Sr., Peterson, Louis and Leslie A. of Brydges, W. Morris, Miller, Franke of Riseborough, & Brydges, Er- Johnson, Jr., Thomas and Michael G. Waukegan, W. mer, Manella, Beach, California, of Irell & of Newport Kissel, Gardner, & of Douglas, and Richard of Carton and Ma- Chicago, for Outboard appellant cross-appellee rine Corporation. III, Marrkand, P. Kim A. Anthony

James Whitters V. Kobrick, Snow, and of Gaston & of Bongiorno Jeffrey W. Boston, Massachusetts, and Paul S. Chervin and Linda Wildman, Harrold, Dixon, Allen & of E. of Spring, for and Mu- Waukegan, appellee cross-appellant Liberty tual Insurance Co. Kaser, Rivkin, L. of V. Krafsur and

Jay Jeffrey Kremer, & of for Commercial Chicago, appellee Radler Union Insurance Co. Miller, Gorman, Orbon, Clausen, J. of Caf-

Margaret P.C., Paul R. Witous, Chicago, Koepff, & of and frey Fishbein, Altieri, Jr., Mudge, and Aaron F. of John L. Ferdon, York, of New Rose, Guthrie, Alexander & New Amer- York, Insurance of North Company for appellee ica. and Eileen Denefe, Beth S. Hanrahan Audrey

Mary Perrin, and Lorraine Miller, Chicago, N. of Haskell & of & Deutsch Kull, McElroy, of S. Gary and M. Armenti In- for Morristown, appellee New Jewsey, of Mulvaney, Insurance Co. ternational J. Shreffler, Chicago of (Philip &

Gleason, McGuire Philbrick, appel- L. of counsel), Charles McGuire and lee Insurance Co. Northbrook J. III, Michael Creamer, John S. Vishneski

Robert A. Mahin & Zimmerman, Keck, of G. and Todd Hughes for amicus curiae Rust-oleum Corpo- Cate, Chicago, of ration. Thomas J. A. Mathews and Price, Stephanie T.

James Browne, & of Kansas Wilcox, Fane, of Britt Spencer, Katrina Missouri, Kevin M. and Veerhu- Forde City, for amici curiae Illinois Manufacturers’ sen, of Chicago, al. Association et Jr., Graham, Mathias, H. Sulli- Barry L. John

Robert D. van, Schugrue, Thomas C. Buchele and John for amici curiae Block, Peoples Jenner & Chicago, et al. Gas & Coke Co. Light Brunner, B. D. Stephen Robert Bell

Thomas W. Goldman, of Washington, Rein Wiley, Fielding, Susman, & D.C., Saunders, Rose of Saunders Terry for amicus curiae Insurance Envi- Buehler, of Chicago, ronmental Association. Litigation Haarlow,

Lord, Brook, of B. Chicago (John Bissell & I. I. and Diane Schlessinger M. Daniel Stephen Murray, Ross, of Chicago and Peterson & Jennings, counsel), of Frankl, A. Blatt, R. Eaton and Brian (Richard Larry L. amicus curiae of John Richard Ludbrook counsel), Youell. Susman, Saunders & Saunders, of Rose

Terry curiae Bituminous Casu- for amici Buehler, of Chicago, alty Corporation et al. and amici curiae States Western Insurance Co. et al. Churchill,

Martha of Chicago, and R. Ander Eugene son, Jordan S. Stanzler and Michael R. of Magaril, Anderson, Kill, PC, York, Olick & of New New Oshinsky, York, for amicus curiae Mid-America Legal Foundation. Tressler, Soderstrom,

Patrick E. Maloney, Maloney for amici curiae Priess, Mu- Chicago, Lumbermens Co. et al. tual Casualty the

JUSTICE BILANDIC delivered opinion court:

This consolidated involves a appeal dispute Marine between Outboard plaintiff-insured, Corpora- tion and its and excess insurance carri- (CMC), primary ers, Mutual Insurance Mu- Liberty Company (Liberty Union Insurance tual), Company Commercial Insurance of North (Commercial Union), Company (Inter- America International Insurance (INA), Company and Northbrook Insurance national), Company (North- between the brook). coverage dispute parties origi- Environmental Protection nated when United States of Illinois (EPA) (collectively, gov- State Agency actions brought ¿gainst ernmental agencies) separate for the CMC, discharge redress from CMC seeking both into the North of polychlorinated byphenyls (PCBs) Ditch, Harbor, and Lake Waukegan Michigan (underlying of the underlying CMC tendered defense actions). gen- pursuant comprehensive actions to its insurers had insurance which OMC (CGL) policies eral liability insurers, however, insurers. The from the purchased OMC, alleging underlying refused to defend As a under the CGL policies. actions were covered result, gov- forced to defend itself against OMC was de- substantial incurring ernmental agencies’ complaints, into and entered negotiated eventually costs. OMC fense under agencies with the governmental decree a consent to make payments OMC was required terms of which with the the costs associated trust fund for into a of water. of these bodies cleanup it, OMC insti- refusal to defend to its insurers’

Due its insur- against action declaratory judgment tuted this County seeking: (1) the circuit court of Lake ers in had to de- its insurers a duty declaration that primary actions; (2) reimbursement fend in the underlying OMC in defending from insurers of the cоsts it incurred these actions; a declaration underlying (3) itself against OMC; to indemnify (4) of its insurers have a duty that all to all sums it is respect required pay with indemnity water; to the bodies of damage of property because fees for the action declaratory its costs (5) attorney curiae have submit- Several amici us. before presently us. This court ted briefs in of the before support parties from amici Rust- has received briefs in OMC support Gas, Oleum & Coke Com- Peoples Light Corporation, Association, Manufacturers’ and Mid-Amer- Illinois pany, also received amicus ica Foundation. We Legal have others, from, In- among insurers support briefs Association, John Litigation surance Environmental Youell, Casualty Company, Richard Bituminous Insurance States Company, Lumbermens Mutual Western Casualty Insurance and Transamerica Insurance Com- Company, seeking at this juncture only We note OMC pany. contamination from its insurers for has as- and Lake Waukegan Michigan. Harbor for the contamination liability sumed complete entail Therefore, only North Ditch. our discussion will and Lake alleged Waukegan contamination of Harbor OMC now seeks the contamination Michigan: coverage.

After this initiating action, declaratory OMC moved for partial summary judgment against Mutual, Liberty Union, INA, Commercial and its insurers, primary on the issue of their duty defend OMC in the underlying brought actions by governmental con- agencies. OMC tended that these actions were “suits seеking damages” within the coverage language the CGL issued policies these by Mutual, insurers. Liberty Union, Commercial and INA cross-moved for on this summary judgment issue, defend duty that asserting underlying actions were not “suits seeking damages” because they for relief rather than prayed equitable compensatory damages. each defendant insurance

Additionally, company moved for full summary judgment as to its duties to de- fend and OMC. The defendants indemnify argued that coverage was barred clearly exclusion” by “pollution of their provisions CGL respective policies. Alternatively, the defendant insurance carriers contended underlying actions were “known risks” to at the OMC time that their respective policies and, commenced there- fore, were not covered their policies.

The circuit court granted partial OMC’s motion on the summary judgment issue Lib- “damages” against In motion, Mutual. on this the circuit erty ruling court found that the technical difference between equity law was outdated and that the term am- “damages” was Therefore, the circuit court biguous. construed strictly this term the insurers and in against favor coverage. addition, In granted circuit court all insurers’ mo- tions for on their summary judgment respective based The policies’ exclusion” circuit “pollution provisions. granted judgment court also INA’s motion for summary on the basis of the “known ‍​​​‌‌​‌​‌‌​​‌‌​​​​‌​‌​​​​‌‌​​​​‌​​​​​​‌​​​​​​‌​‌‍risk” doctrine denied the but other insurers’ motions on this principle. based summary court’s the circuit The appealed parties Liberty to them. adverse which were rulings judgment in favor ruling the circuit court’s appealed Mutual ap- issue. OMC damages” seeking on the “suits OMC of the defend- rulings court’s favor the circuit pealed “pollution respective their policies’ ant-insurers based on addition, and Commercial exclusion” provisions. rulings regarding circuit court’s appealed Union “known risk” doctrine. af court consolidated the appeals appellate OMC’s motion circuit court’s ruling granting

firmed the Mutual on judgment against Liberty for partial summary Ill. seeking damages” (212 App. the “suits issue. affirmed the circuit court’s grant It

238-43.) also on motions for summary judgment premised insurers' Ill. 3d (212 exclusion” provisions. App. their “pollution however, con court, did not 243-49.) at The appellate rulings regard of the circuit court’s sider the propriety 3d at 251. App. the “known risk” Ill. ing principle. for leave to ap We allowed Mutual’s Liberty petition 315.) court, 2d Before this Mu (134 Liberty Ill. R. peal. from court’s that the ruling tual the appeals appellate damages” seeking actions constitute “suits underlying thereby trigger of its CGL language policies, within to defend OMC. ing duty Mutual’s Liberty to for leave appeal. also allowed OMC’s petition We court’s appellate Ill. 2d R. OMC contests (134 315.) exclusion” provisions holding “pollution to the facts al respective policies apply defendants’ CGL actiоns, thereby negating any the underlying leged have arisen. otherwise may address the this court to urge all Additionally, parties risk” the “known regarding princi- circuit court’s rulings ple.

OPINION we note that Initially, procedural posture each contested was either ruling of a grant denial mo tion for In summary judgment. from appeals summary rulings, we conduct a de novo review. (See judgment Schmolke v. Highland Butterfield, Inc. (1984), 128 Ill. 710, 712-13; Fuller v. Justice (1983), 117 Ill. 3d App. 933, App. 938.) Summary judgment appropriate when there are no genuine issues of material fact and the moving is entitled to party judgment as a matter of v. Hess (Purtill law. (1986), 111 Ill. 2d 240.) Sum is a mary judgment drastic measure and should be only if granted movant’s right judgment is clear and free from (Purtill, doubt. 111 Ill. 2d at 240.) Where a reasonable could person divergent draw inferences from facts, undisputed should be denied. summary judgment v. Witmer Pyne Ill. 2d 358.

I. LOSS KNOWN court appellate failed consider the circuit court’s on INA and rulings Commercial Union’s motions on the summary judgment based known loss doc (This trine. has been referred to as “known principle risk,” “loss in and “known loss.” Because we progress,” feel that “known loss” most describes adequately doctrine, addition, we will refer to it as known loss.) no has this court for party petitioned leave this appeal However, issue. both insurers and CMC have made briefs, reference to these in rulings their vari requesting court, ous forms of relief from this as are entitled they to do pursuant Supreme (134 Court Rule 318. Ill. 2d R. 318 seek relief warranted (any co-party may any the record without a for leave to filing separate petition

103 interest Therefore, or a separate appeal).) appeal court’s consider the circuit we of will economy, judicial loss doctrine. on the known rulings nature, is based fundamentally insurance its very

By not occur. (See contingent risks or may may on Co. Insurance Cir. v. Appalachian (1st Bartholomew risk, not a against 29 insures 27, (insurer 655 F.2d 1981), North v. Insurance Co. Keene Corp. a certainty); 1041 1981), 1034, (insurance 667 F.2d America (D.C. Cir. or the possibility loss contract is on uncertain based defines “insur- liability).) dictionary One incurring legal to indem- undertakes ance” as contract one whereby “[a] loss, arising against damage, liability another nify contingent from an unknown or event is applicable or act to occur contingency to some [the] future.” only (5th 721 ed. added.) (Black’s Dictionary Law (Emphasis know, If knows or has reason to the insured 1979).) is it a CGL that there a substan- when purchases policy, it suffered already tial that will suffer or has probability a loss, contingent the risk ceases to be becomes Commer- Prudential —LMI or known loss. probable (See v. Court 674, 3d Superior cial Insurance 51 Cal. (1990), 387, 1230, 1246-47, 403-04.) 274 Cal. 699, Rptr. P.2d loss has of a when probable Where the insured evidence it is under a CGL loss uninsurable purchases policy, contract) be- (unless otherwise parties (Ap- unknown.” longer cause “risk of no liability Insurance palachiаn Liberty Insurance Co. v. Mutual v. Harris Co. Summers 63; 56, Cir. 676 F.2d (3d 1982), 869, cannot in- (homeowner 573 F.2d (5th 1978), Cir. flood waters already sure flood when against damage In- Commercial Prudential —LMI front flooding yard); 674, 695 & Superior surance Court 51 Cal. 387, n.7, & 274 Cal. n.7, Rptr. 1243-44 P.2d Keene at 1048. Corp., n.7; 667 F.2d 400-01 cf. Johnstown, Stand- New York v. Bankers City But see ard Insurance (2d Co. Cir. 1989), 1146, 877 F.2d 1153.) Therefore, the insurer has no to defend duty or indem- the insured with nify to the known loss respect initio, ab unless the intended the parties known loss to be covered. (See LMI, 51 Cal. 3d at 798 P.2d at Prudential — 1246-47, 274 403-04; Cal. at Rptr. v. Northwest Vyn Ca- Co. sualty 89, 92-93, 47 Cal. 2d 301 P.2d 871; 6B J. & Appleman J. Insurance Appleman, Law §4265, Practice at 97 In (1979).) case, the instant the in- surers contend that the PCB contamination which occa- sioned the actions constitutes underlying a known loss because, assert, they OMC knew it was releasing waste material into the environment as 1959. early as

There is no test to determine bright-line whether and at what in time the insured point knew had reason to know of the substantial of the loss at issue. probability The extent of the insured’s knowledge the loss must be determined on a case-by-case basis. a motion for the court summary judgment, must determine whether factual exist with to the any questions respect insured’s at the knowledge time it each If the court bought policy. finds that no fact exist in this the issue questions regard, is one of for the law court to decide. As with all appeals from we summary judgment, review de novo the circuit court’s on the insurers’ motions for rulings summary judgment based on known loss. bar, that,

In the case аt court circuit determined of an order from the EPA in upon receipt administrative 1976, OMC had as a matter of law February knowledge that it contami- would suffer loss due to PCB probable nation of and Lake The ad- Waukegan Michigan. Harbor ministrative order relevant provided, part: *** presents “The an immi- discharge of PCB’s [OMC] danger nent and to the health and welfare of substantial the waters of persons living adjacent utilizing to and Michigan persons Lake and threatens the livelihood Michigan Lake for commercial the waters of utilizing agricul- aquacultural fishing or other non-commercial added.) (Emphasis purposes.” tural law, that, any pol- as a matter of court found circuit ad- February 1976 receipt after OMC’s icy issued for the not provide ministrative order would Lake Mich- Harbor and Waukegan of PCB contamination the in March commenced policy Since INA’s igan. judgment motion for summary its granted circuit court However, the loss doctrine. on the of known basis motions on the other insurers’ circuit court denied is- disputed it found that known loss because principle respective poli- to their existed with respect sues of fact cies. court, that, argue although this the insurers

Before sum- INA’s motion for granted the circuit court properly it er- doctrine, loss on known mary judgment based con- These parties the others’ motions. denied roneously found, as a have tend that the circuit court should it that law, matter that have known of OMC should Har- Waukegan loss would suffer probable polluting than when Lake much earlier in time Michigan bor and in February it the EPA’s administrative order received to the insurers argument, 1976. In of their support point knowl- which reveal that OMC had various documents it waste effluent into Wauke- edge discharging that was of the EPA’s February to the issuance gan prior Harbor 1976 order. hand, it be on other that cannot argues,

OMC to of knew or had reason said as a matter law that it that it probability was know that there a substantial of loss due to PCB contamination Wauke- would suffer a date, re- this OMC 1976. On gan prior August Harbor actually that confirming EPA ceived a letter from the Harbor sediments were Waukegan Ditch and North facility. from PCBs OMC’s contaminated severely that, August 1976, OMC contends whenever it prior became of the that it possibility aware have been may Harbor, into it discharging any pollutants Waukegan took to divert and such steps remedy so any problem that a loss or not arise. would OMC also liability argues that, time during the the Illinois En- period question, vironmental Protection was Agency publicly commending OMC for its diligence with environmental complying that, asserts if it regulations. OMC even had knowledge a risk of this liability prior August knowledge cannot be with of a loss. equated knowledge probable us,

After careful review record before we con- found, clude that circuit court as a matter properly law, February administrative order EPA from the of a gave knowledge substantial that claims would be made it for PCB probability against We, and Lake pollution Waukegan Michigan. Harbor therefore, affirm the circuit court’s of INA’s mo- grant tion for on the loss judgment based known summary doctrine since its commenced in March 1976. doctrine, Based on this we find that INA had no to duty defend or the underlying OMC indemnify against actions.

We further conclude that the circuit court properly that material of fact existed with determined questions at the time that it knowledge to OMC’s level respect defendants, the CGL from other purchased policies the whose Febru- policy periods predated receipt 1976 order. Because factual exist ary disputed questions time it purchased OMC’s at the concerning knowledge sum- these other which cannot be determined policies of the other we affirm the circuit court’s denial marily, on defendant motions for summary judgment insurers’ known loss grounds. of the case to the circuit

We remand this portion factual the level surrounding court to resolve the issues to deter- times knowledge at the relevant of OMC’s to other any apply known loss principles mine whether insurers need on that the note remand carriers. We of the ex- to know knew or had reason that OMC prove PCB the loss or that the extent of PCB act nature and to occur, as appears certain loss or was liаbility Surety Co. Condict Casualty Aetna argue. (But cf. Rather, the F. 73.) (S.D. 1976), Supp. Miss. if the insurers dem- be invoked may known loss doctrine know, at the or had reason to onstrate that OMC knew there was a sub- time the CGL policy, it purchased or ensue due liability that loss would stantial probability it seeking cover- PCB contamination it knew was dis- age. The is not whether OMC question environment, as insur- a into charging pollutant ers and their amici argue. Rather, the relevant question had reason to know that a is whether OMC knew or loss occur due to the PCB would probable liability alleged underlying complaints. contamination it Whether the insured knew was environ- polluting addressing ment is more when appropriately-addressed the “occurrence” or exclusion” provisions “pollution Johnstown, v. Bank- City New York CGL See policies. ers F.2d Insurance Co. Cir. 877. Standard (2d 1989), 1146.

II. SEEKING DAMAGES” “SUITS Mu- turn Mutual’s Liberty appeal. Liberty We now tual contends that it is not to defend OMC obligated against brought govern- actions underlying of its To policies. mental under the terms CGL agencies to defend the determine whether the insurer has duty insured, look to the in allegations court must allegations these underlying complaint compare 108

the relevant (See, e.g., of the insurance provisions policy. Fidelity Guaranty United States & Co. v. Wilkin Insu lation Co. v. 64, 73; Conway Country (1991), 144 Ill. 2d Casualty Insurance Co. 388, 92 If (1982), 393.) Ill. 2d within, in the alleged facts fall underlying complaint within, the insurer’s potentially policy’s coverage, Wilkin, (See, e.g., to defend arisеs. 144 Ill. 2d at duty 73; Weiss v. Bituminous Casualty Corp. (1974), 59 Ill. 165, 2d Refusal to defend is unless it 169.) unjustifiable is clear from the face of the underlying complaint the facts do not fall within the alleged potentially pol e.g., Wilkin, Con See, 73; 144 Ill. icy’s coverage. 2d at way, 92 Ill. 2d at 393.

The construction of an insurance policy’s provisions v. (See, e.g., Maryland Casualty Co. law. question Chicago Transportation & North Western Co. (1984), Rivota v. 150, 49 Kaplan 155; (1977), 126 Ill. 3d App. Ill. 3d an insurance App. 914.) construing policy, the court the intent of the to the must ascertain parties International Minerals Chemical (See, e.g., & contract. v. Mutual Insurance Co. Ill. Corp. Liberty (1988), 361, 370; Rivota, To 915.) 3d 49 Ill. 3d at as App. App. certain the of the words and the intent meaning policy’s as a the court must construe parties, policy In Zurich Insurance Co. (see, e.g., Raymark whole dustries, Inc. Western Casu 23, 50; 118 Ill. 2d (1987), v. Brochu 486, 493), alty Surety Co. 105 Ill. 2d (1985), undertaken, mat the risk regard subject with due of the entire con ter that is insured and the purposes v. Indiana Insurance Co. Township Dora tract (see are Ill. If the words 378). or plain, their a court must afford them (cid:127)unambiguous, Wilkin, 144 Ill. meaning. (See, e.g., dinary, popular 74; Weiss, However, if the 170-71.) 59 Ill. 2d at 2d at one rea are to more than susceptible words the policy (Wilkin, are ambiguous sonable interpretation, they in in and will construed favor 74) Ill. 2d at be the policy the insurer who drafted against sured and 74; Brochu, 105 Ill. 2d at Wilkin, 144 Ill. 2d at (see, e.g., Township, Dora 379). Ill. 2d at 495; Mu- case, Liberty this each issued by CGL contained, part, in relevant and OMC by tual purchased the following provision: of the insured all pay will on

“[Liberty behalf Mutual] to pay as obligated sums the insured shall which become *** which this damages damage to property because of occurrence, and the by company caused an policy applies, right against suits duty any shall and to defend have damages property account such seeking the insured on n damage***.” the appellate In this Mutual that Liberty argues appeal, that the word erroneously “damages” court determined is Mutual asserts that ambiguous. “damages” Liberty technical, has a and the ‍​​​‌‌​‌​‌‌​​‌‌​​​​‌​‌​​​​‌‌​​​​‌​​​​​​‌​​​​​​‌​‌‍“suits meaning phrase accepted at only for “actions seeking damages” provides coverage seek legal damages. Liberty law” which compensatory, is and phrase unambiguous Mutual contends that this include for suits coverage seeking cannot be construed to Therefore, relief. Mutual Liberty equitable injunctive held contends court that erroneously appellate had a in the under- Mutual defend OMC Liberty duty actions. lying before this court whether question presented actions, which seek primarily equitable underlying

relief, afforded by fall within the potentially “suits seek- Mutual’s CGL insurance Liberty policies Liberty duty Mutual’s ing damages,” thereby triggering issue, it is Before this neces- resolving defend OMC. instant underlying to set forth some of facts sary litigation. a of outboard motors. large

OMC is manufacturer 1940s, die-casting facility Since the OMC has operated Illinois, near From Waukegan, Waukegan ap- Harbor. fluid, 1959 to OMC used a proximately hydraulic manufac- die-casting its was Pydraul, process. Pydraul contained (Monsanto) tured Monsanto Company During die-casting process, frequently PCBs. it spills Pydraul leaks and experienced heavy collection This through system. routed its wastewater from was routed to a PCB-laden effluent OMC’s facility on known as the North Ditch and property ditch OMC’s into Waukegan found its Harbor eventually way Lake Michigan.

This action involves several judgment declaratory EPA one of 1978, actions. In March the filed underlying in the instant case the actions at issue underlying in the District Court for the OMC United States against Illinois. EPA of In this the Northern District complaint, that, 1972, discharged from 1959 until OMC had alleged Harbor, Lake Ditch, into the North and Waukegan PCBs the sediments contaminating bottom Michigan, severely that, alleged of these of water. The be- complaint bodies to discharge not authorized by permit cause OMC was water, conduct violated into these bodies of OMC’s PCBs (33 the and Act of 1899 U.S.C. Rivers Harbors §407 Pollution Control Act (33 and the Federal Water (1988)) agency sought injunctions U.S.C. The §1311(a) (1988)). these bodies contaminating OMC from further enjoining the North (1) dredge of and OMC to: requiring water the Ditch; an on safest study undertake (2) expedited and of the contaminated method for removal disposal Harbor; and remove and dis- (3) of Waukegan sediments addition, EPA for In the prayed of these sediments. pose and the OMC against the assessment of civil penalties costs of the action. also filed a com- 1978,

In the State of Illinois August district court. in the same Federal OMC plaint against as allegations the same factual Containing basically Ill alleged State’s complaint EPA complaint, Pollution the Federal Water conduct violated OMC’s act Rev. Act, (Ill. the Illinois nuisance public Control the Illinois Envi seq.), et 1977, 100½, ch. par. Stat. 111½, 1977, ch. Act Rev. Stat. (Ill. ronmental Protection of common law seq.), et Federal State and par. 1001 Like law nuisance, trespass. and the State common to enter the district court EPA, the State requested future from engaging any OMC injunctions enjoining a (1) to: conduct OMC discharge requiring PCB remove, and dredge, dispose of methods to study remove and (2) sediments and dispose contaminated these of water from bodies the contaminated sediments own as soil on its land. well as contaminated that the court civil impose also district requested State on OMC. costs of penalties litigation 1978, third-party complaint In OMC filed a November in the Monsanto, Pydraul, the manufacturer against The EPA then its complaint join EPA action. amended its against- as a action Monsanto party-defendant filed a In Monsanto cross-claim September OMC. indemnification and/or contri- against OMC praying it incur as a might from for any liability bution filed the EPA January of the EPA action. result against added counts second-amended complaint of 106(a) Monsanto for violations of section OMC and Response, Compensation, Environmental Comprehensive §9606(a) 1980 U.S.C. (CERCLA) (42 Act of Liability and re- The EPA also for additional (1988)). prayed injunctive a bypass and Monsanto to construct lief OMC requiring and Ditch and an alternative piping system the North sys- to wells and treatment groundwater purge install underneath tem remove from groundwater to PCBs 1985, the governmental In property. February OMC’s dis- dismissal, which the moved for agencies voluntary re- Both granted agencies trict court without prejudice. to section served their costs under right response 107(a)(4)(A) (42 §9607(a)(4)(A) of CERCLA U.S.C. (1988)).

In the EPA filed a new complaint October in States District Court for the OMC the United against factual alle- Northern District of Illinois which contained to those made in its initial On gations complaint. similar com- the State of Illinois also filed a new day, the same its initial com- OMC which was similar to against plaint for complaints prayed response Both these plaint. for to natural resources damages pur- costs and injuries (42 to of CERCLA U.S.C. suant section 107 §9607 district court of and approved (1988)). April en- was and negotiated entered a consent decree which EPA, the State of Illinois. OMC, tered into decree, was required Pursuant to the consent OMC for the costs associated make into a trust fund payments Harbor, Ditch, Waukegan of the North with the cleanup Michigаn. and Lake (cid:127) that the governmental Mutual asserts initially Liberty this appeal are involved agencies’ complaints in- whether the determining considered and cannot be However, it is clear to defend OMC. surers had a duty were before complaints from the record that the 1988 on motion partial the trial court when it ruled OMC’s the rec- are, therefore, part judgment summary com- are the only The 1988 complaints ord on appeal. costs and for response specifically pray plaints There- to section 107 of CERCLA. damages pursuant constitute “suits fore, complaints clearly these these respect with damages.” Accordingly, seeking that, applicable pol- an we hold absent 1988 complaints, had a defend exclusion, duty Mutual Liberty icy in this regard. court appellate and we affirm dis- not necessarily does However, our determination had a duty Mutual Liberty of the issue of whether pose

113 the against underlying complaints to defend 1988 the of the filing dismissed prior were voluntarily com- these prior the 1988 complaints, Unlike complaints. form of for relief” in the solely “equitable plaints prayed of civil penalties, assessment mandatory injunctions, of the litigation. and costs that, since these pre-1988 Mutual contends

Liberty of mone for relief in the form did complaints pray compen as injured party to an third tary damages paid no for coverage injury, sation for its its policies provided argument, these actions. In its underlying support on Ladd Construction Mutual relies Liberty primarily Co. v. Co. North America 73 Ill. Insurance (1979), wherein the Ladd court, a simi 3d App. addressing to mean interpreted “damages” lar word argument, the Ladd court Therefore, legal damages. compensatory, that, only found since the underlying complaint prayed relief, coverage for there was no under the equitable had its in duty CGL and insurer no defend sured. bar, however, at the circuit and the the case both Ladd. Instead, courts declined to both follow

appellate & Guar Fidelity on United States these relied courts Ill. App. anty Specialty Coatings Co. Co. “dam 378. court found that term The appellate have jurisdictions that numerous ages” ambiguous, was law, distinction rejected equity the outdated between on common their right rely that insureds have Therefore, “damages.” sense of the word interpretation to in “damages” court the term appellate construed in mandatory with clude the insured’s cost of complying issue pro and held that the CGL at junctions policies complaints, thereby vided underlying (212 Mutual’s to defend OMC. Liberty triggering duty Co., Specialty Coatings 238-43; Ill. 3d at see App.

Ill. App. 390-92.) Although holding 3d at we affirm the court, we on do so different appellate grounds. has noting

We our that this issue begin analysis by in and State been nationwide both Federal litigated courts. courts the word Some have determined that in is “damages” similаr CGL policies ambiguous it (See, e.g., have construed favor of insured. 96, v. Cir. 930 F.2d Hays Corp. (1st 1991), Mobil Oil 100-01; 51 Superior (1990), AIU Insurance Co. v. Court 1278, 807, 841, 1253, 3d 799 Cal. Rptr. Cal. P.2d 274 820, 845; v. Corp. County San Mateo Aerojet-General 216, 226, 258 (1989), 211 Cal. 3d Superior App. Court 684; Fidelity Co. Rptr. Guaranty Cal. United States & 378, v. 180 Ill. 3d Specialty Coatings (1989), App. Co. 391-94; Fidelity v. United States & Paper Hazen Co. 689, 700, Mass. 555 N.E.2d (1990), Co. 407 Guaranty 576, found that this term is un Other courts have 583.) cost of with and excludes the ambiguous compliance sought pur and/or costs injunctions response mandatory Insurance Co. (See, suant to Cincinnati e.g., CERCLA. 979, 981; 857 F.2d (4th 1988), v. & Co. Cir. Milliken v. Cir. (4th Mraz Canadian Universal Insurance Co. 1325, 1329; Surety Aetna & 1986), Casualty 804 F.2d 503; 499, 224 F.2d Conti Co. v. Hanna Cir. (5th 1955), Co. v. Pharmaceutical & nental Insurance Northeastern 977, (en F.2d 985-87 Cir. (8th 1988), Chemical Cos. (1954), Co. banc); Casualty Desrochers New York 196, 198; School District 129, 131, N.H. 106 A.2d cf. 170 Wis. Cos. (1992), Shorewood v. Wausau Insurance courts 347, 82, 88-91.) Still other 365-74, 488 N.W.2d that its unambiguous and “damages” is have found compliance the costs of meaning includes ordinary, plain (See, costs. response and/or injunctions with mandatory Pollution v. United Co. States e.g., Indemnity National 765, 766- Control, F. 1989), 717 (W.D. Supp. Inc. Okla. Services, Inc. v. & Casu 67; Realty Fidelity Broadwell 76, A.2d 516, 526, 528 Co. 218 N.J. alty (1987), Super. Co. Casualty Surety v. Aetna (1990), 82; Boeing Co. 869, 877-81, 511-13.) 784 P.2d We 113 Wash. 2d third of courts. group with this agree the instant construing policy purpose Our primary Ini intent of the parties. ascertain the is to provision at issue and the the nature of the policy we look to tially, before us policies insurer. by risks undertaken liability comprehensive general policies. insurance are whereby a very liability policy Such a broad Dora Town (See a wide risks. scope insurer assumes v. Indiana Insurance Co. 78 Ill. 2d 378- ship case, Mutual intended offer In the instant 79.) Liberty to purchase comprehensive protection and OMC intended an damage caused occur against liability property rence. mind, this in turn to the of interpretation

With we in the the term term is defined “damages.” pol This Therefore, this term afford by icies. we must interpret (Cana plain, popular meaning. it its ordinary, ing Indemnity dian Radium Uranium Insurance Corp. America As Co. North 325, 332.) 411 Ill. one (1952), on has authority insurance law written: “ meaning’ stated ordinary ‘Usual and. has been vari- language ously meaning particular to be which mind, conveys to most to aver- popular people, to [person], to a age, ordinary, normal reasonable [person], ordinary understanding, to a persons to with usual and (2 or to on Insur- lay[person].” a Couch businessfperson], (rev. 1984).) ance 2d ed. §15:18 “the “damages” defines as esti- dictionary

Webster’s injury mated in for detriment or sus- reparation money or law for by tained: satisfaction compensation imposed legal a violation of a wrong right.” a or caused injury by Dictionary Third New International (Webster’s le- definition does not between (1986).) distinguish This the costs of complying or damages gal compensatory It indicates that merely injunction. a mandatory with ex to be money required for the stands “damages” mind, To the wrong. popular in order to a right pended con “damages” to ordinary laypersons, to most people, an injury to expend remedy one must notes money of whether irrespective he or she is responsible, in the a court of law by is compelled that expenditure or a court of damages equity form of compensatory (See mandatory injunctions. with compliance the form Superior Mateo County v. San Corp. Aerojet-General 216, 226, Rptr. 258 Cal. 211 Cal. 3d App. Court and con- the money 684,__) expends Whether the govern- money or pays itself cleanup ducts the gov- representative ment as the injured public’s In little consequence. is of cleanup conducts the ernment rem- money case, expend would have either CMC For pre- it has caused. damage the environmental edy purchasing insured itself by CMC this cisely purpose, CGL policies. the remedy whether it is of little consequence

That true relief is especially legal equitable in the form aof CGL protective purposes of the broad in the context of little utility would be Such policy. insurance or falls rises if its its purchaser protecting and whether underlying plaintiff the whim upon or equitable for legal prayed underlying complaint 242; Aerojet-General at 212 Ill. App. (See relief. at__) Rptr. 258 Cal. at 211 Cal. Corp., App. governmental that, although we note this regard, to brought pursuant were complaints initial agencies’ to add amended were later CERCLA, complaints these de was violations. CERCLA CERCLA counts alleging in flexibility agencies governmental to allow signed our protect would they which the method by choosing statute. the Federal enforce and natural environment 117 agen allows the CERCLA 242.) Ill. 3d at (See App. 212 several forms in from choosing to exercise discretion cies or response mandatory injunctions, including of relief re to natural for costs, damages injury and cleanup The utility §§9606, (1988).) (See U.S.C. sources. if its coverage questionable be of a CGL would policy governmental of a according to the discretion varied it enforce method would the which agency choosing by it and of relief type requested. CERCLA the coverage that the intended parties We cannot find so to be general liability policy of comprehensive this that, light of On the we find precarious. contrary, mean- popular of this type broad scope these policies intended “damages,” ing parties an occur- caused liability damage cover property liability equitable rence of whether that regardless Mining Minnesota in nature. legal (Accord Manufac- turing Indemnity Co. Travelers Co. (Minn. 1990), to re- If the had desired 181-82.) N.W.2d insurer seeking legal, strict those only compen- suits included its damages, among it could have satory easily to the an exclusion exclusionary provisions pertaining costs of complying injunctions. with mandatory that, therefore affirm the court hold appellate

We case, the facts this actions were underlying under Mutu- seeking damages” triggered Liberty “suits al’s to defend OMC. duty

III. POLLUTION EXCLUSIONS above, As stated appeal. now address OMC’s We all as to both insurers moved for summary judgment actions against their to defend OMC duty underlying it has in- and their OMC for liabilities duty indemnify insurers’ curred because of the PCB contamination. on, for motions summary judgment were based inter alia, the exclusion in their pollution provisions respective exclusions, on the the policies. Relying pollution circuit for granted court these motions on summary judgment the issues both the insurers’ to defend OMC and duty their OMC. Since these motions ad duty indemnify (see, dress two different issues v. e.g., Conway Country 388, 394), Co. 92 Ill. 2d Casualty Insurance we on will consider the each issue rulings separately. terms we are called construe within Initially, upon the insurers’ pollution provisions poli- exclusion (whose cies. With the of International exception all policies will be discussed the insurers’ separately), which contained exclusion clauses pollution provide part: *** bodily apply injury

“This insurance does not or arising discharge, dispersal, out of property damage fumes, smoke, soot, acids, vapors, release or al- escape kalis, chemicals, or or liquids gases, toxic waste materials irritants, into or upon or pollutants other contaminants land, body оf any watercourse or wa- atmosphere ter; discharge, this if such apply but exclusion does and accidental.” dispersal, escape release or sudden (Emphasis added.) contains standard exclusion two

This pollution provision excludes for release (1) coverage insurer parts: of our part toxic materials into any of environmentally makes an (2) excep environment and the insurer natural releases this exclusion for toxic which tion from broad Fidelity States (See are sudden and accidental. United Ill. (1991), 144 Co. v. Wilkin Insulation Co. Guaranty & exclusion words, pollution excep 79.) other are toxic sud for releases coverage tion reinstates case, has alleg In the instant and accidental. den and Lake Harbor released into Waukegan PCBs edly part the first Therefore, it appears Michigan. whether, this court is The issue before exclusion applies. of PCBs case, OMC’s releases of this the facts under accidental,” thereby triggering were “sudden recreating exception exclusion pollution OMC. in an insur the terms above, construing

As stated the intent of the must ascertain the court ance policy, North Casualty Chicago Co. (See Maryland parties. 150, Co. 126 Ill. 3d Transportation Western (1984), App. unambigu clear and in the are policy If the terms 153.) ordinary, pop them their ous, give plain, the court must If a term in the (Wilkin, 74.) 144 Ill. 2d at ular meaning. interpreta to morе than one reasonable is subject it is ambigu in which it appears, tion within the context are terms (Wilkin, 74.) Ambiguous 144 Ill. 2d at ous. and in the drafter of the policy construed strictly against at Maryland 74; coverage. (Wilkin, 144 Ill. 2d favor of Co., at This is Casualty 152.) especially 126 Ill. 3d App. In (Reliance true clauses. respect exclusionary with 94, 96; 3d surance Co. v. Martin 126 Ill. (1984), App. Wilkin, 144 Ill. 2d at there is This is so because 80.) see in the insurance contract little or no involved bargaining v. In Corp. Radium & Uranium ing process (Canadian 411 Ill. Insurance Co. North America demnity (1952), drafting control in the process, the insurer has 335), coverage overall ‍​​​‌‌​‌​‌‌​​‌‌​​​​‌​‌​​​​‌‌​​​​‌​​​​​​‌​​​​​​‌​‌‍is to purpose provide policy’s Co. Guaranty Fidelity United States the insured (see Co. 180 Ill. 3d Specialty Coatings App. 384). found that

In the case sub judice, court appellate it to term, construing an unambiguous “sudden” was in its element temporal mean with a “abrupt” quick, alleged the underlying complaints connotation. Since Har- into Waukegan PCBs releasing that OMC had been the appellate years, Lake for several Michigan bor and alleged complaints court concluded that the underlying could not con OMC which be “continuous” polluting court Therefore, granted the appellate “abrupt.” sidered that had insurers, finding they judgment summary the broad OMC because indemnify to defend or no duty to exclude in their policies applied exclusions pollution 212 Ill. case. the facts of this for OMC under at 243-49. App. court, appellate argues

Before this OMC “sudden.” the term in its construction of erred court term and an ambiguous contends that “sudden” its amici urge OMC and in its favor. should be construed or to mean unexpected “sudden” court to construe this as used term “sudden” find that the We unintended. in these “oc- contained exclusion exception the pollution and that the is ambiguous policies currence-based” CGL in this regard. erred court appellate happening “sudden” as define Numerous dictionaries or unforeseen. warning, notice without unexpectedly, as abrupt, “sudden” also define same dictionaries These Interna- Third New Webster’s (See, e.g., or swift. rapid, Dic- Heritage American (1986); Dictionary tional 1981); ed. 1286 (10th Language of the English tionary 1990).) ed. Courts (6th 1432 Law Dictionary Black’s meaning are divided on the country throughout e.g., (Compare, context. the instant “sudden” within v. Fire Co. Star Guaranty & Fidelity United States is 31, (“sudden” F.2d 34 Coals, 856 1988), Inc. Cir. (6th Lum- “abrupt”); to mean and is construed unambiguous Industries, Co. v. Belleville Casualty Mutual bermens 568, 572 2d 680-81, 555 N.E. 675, 407 Mass. (1990), Inc. Co. Insurance Hampshire v. New Co. (same); Upjohn 392, (same); 397 197, 207, 476 N.W.2d Mich. 438 (1991), Insur- Carolinas, v. Peerless Inc. Management Waste 374, 381- S.E.2d 688, 693, 340 N.C. 315 (1986), ance Co. Insurance Hampshire v. New Mining Hecla Co. 83, with is (“sudden” 1083, P.2d 1091-92 811 1991), (Colo. Co. 121 or unex to mean unintended and construed ambiguous Surety Co. Casualty v. Aetna & Claussen pected); 686, 335, (same); S.E.2d 688 333, 380 259 Ga. (1989), Services, Casualty v. Fidelity Inc. Realty Broadwell 76, A.2d 83- 516, 531-35, 528 Co. 218 Super. N.J. (1987), West Co. v. Van’s Insurance United 86 (same); Pacific 714-15, 664 Union, 708, lake Inc. (1983), App. Wash. of the Illinois ap (same).) panels Even P.2d (Compare Spe on this issue. court are divided pellate In Co., 180 Ill. 384-88, at with 3d cialty Coatings App. 168 Ill. 3d Corp., ternational Minerals & Chemical App. of “sud conclude that the two definitions 376-80.) at We interpretations den” set forth above are both reasonable in it There appears. of this term in the context in is, minimum, as used fore, ambiguous at a “sudden” in in Illinois, and doubts ambiguities these policies. insured, es in favor of the surance are resolved policies (See, in clauses. exclusionary those that pecially appear Insurance Co. Dora Indiana (1980), e.g., Township Co., 180 Ill. 3d Coatings Specialty 376, 379; App. Ill. 2d context, con in this we particular at 384.) Consequently, mean un and find it to strue “sudden” favor OMC or unintended. expected and their amici argue that the rule of insurers ambigui the court to construe

construction which directs in the in of the insured should not apply ties favor rule of construction was stant case. assert that this They is insured who unsophisti to aid developed unwary it The insurers argue cated in insurance matters. is a large corpora here should because apply matters. in insurance tion, and counseled sophisticated industry this contention. The insurance We with disagree the CGL knit. As evidenced by powerful closely are standard- case, most policies in the instant policies Zurich Insurance form, (see very similarly are worded Industries, Inc. v. Raymark 118 Ill. Co.

122 (Aetna and on 33), are offered a take-it-or-leave-it basis Co. Casualty Surety & v. Condiet (S.D. 1976), Miss. 417 insured, F. 63, 73). whether Supp. Any large sophis not, ticated or must enter into a with the in contract surer which is written to the insurer’s according plea v. Superior AIU Insurance Co. sure insurer. by (See Court 822, 1253, 807, 51 Cal. 3d 799 P.2d 1264- (1990), Realty Broadwell Ser 65, 820, 831-32; 274 Cal. Rptr. vices, Inc. & Fidelity Surety Co. 218 N.J. (1987), Su 516, 524, 76, A.2d since 80.) 528 little per. Generally, no occurs in negotiation this the insurer has to process, tal control of the terms of the contract. drafting Co., 822, at (AIU Insurance 51 3d at 799 P.2d 1264- Cal. Services, Realty Broadwell 65, 831-32; 274 Cal. at Rptr. Inc., at This 524, 80.) 218 528 A.2d at rule Super. N.J. alia, inter facets of the recognizes, construction these Co., Insurance contracting process. (AIU 51 insurance 822, 1264-65, at Rptr. Cal. 3d at 799 P.2d at 274 Cal. Services, Inc., 218 N.J. Broadwell Realty 831-32; Super, 524, insured, is 80.) at 528 A.2d at Like CMC enti any the court has determined tled its where application v. Aetna ambiguous. (See Boeing Co. that policy 869, 882, Co. 113 Casualty Surety Wash. Co., 51 Insurance see AIU But Cal. 507, 784 P.2d 514. 1265, 832.) P.2d at 274 Cal. at After 3d at Rptr. all, the chose the used in policy. insurer words Cf. Claussen, at Ga. at 380 S.E.2d 688. the insurers and their amici addition, argue it renders mere

this of “sudden” interpretation court’s Illinois of construc- rules contrary other surplusage, construe poli- assert that courts must tion. These parties having sig- whole, as a with each part cies meaning. an individual having nificance and each word insurers’ argu- was court appellate persuaded that “sudden” had and found regard ments this would be with surplusage mean or this term “abrupt” exclu in the pollution to the term “accidental” respect 244-46.) The insurers App. Ill. 3d at exception. (212 sion a A court must strive law, point. to state the correctly so unless to do meaning each term in the policy to give inconsistent or inher or policy render the clause would Hogan Insurance v. (See Sentry contradictory. ently Co., 811 638, 640; Ill. Hecla Mining 111 App. mean view, “sudden” to construing In 1092.) P.2d at our this contradiction within particular creates a “abrupt” a clause and the as whole. are “occurrence-based” policies

These CGL policies for coverage These provide property insurance. policies The at issue policies caused an “occurrence.” damage by “occurrence” as: define accident, including repeated exposure or “an continuous *** nei- conditions, property damage results in

to which in- standpoint from the of the expected ther nor intended (Emphasis added.) sured.” for retriggers coverage

The exclusion pollution exception and accidental.” toxic releases are “sudden which “continuous or re define “accident” include policies 2d at to conditions.” Ill. exposure (Wilkin, peated or view, discharge In our an accidental release 77.) include, a release gradual according policy, would “sud To cоnstrue or a “continuous or release. repeated” contradiction if one to mean results in a “abrupt” den” of the term “acci the insurers’ own definition accepts Co., P.2d at Such a 1092.) (See Mining dent.” Hecla ex result in the exclusion construction would pollution for releases toxic retriggering coverage clause ception re or “continuous or gradual are “abrupt” this under such construction Clearly, releases. peated” Co., 811 Mining absurd. (Hecla clause would be rendered if means However, unexpected “sudden” 1092.) P.2d at dictionaries, unintended, it is defined numerous or as or unin- unexpected the clause retriggers tended releases which are of uncertain- exactly type or risks insured ties that an would want insure above, In argument of the the insurers’ against. light must fail. addition, view, in our it is coincidental that one or definitions of “sudden” is unin- unexpected

tended and that an element of the occurrence policies’ or definitions unintended dam- unexpected property that, in the age. recognize provision, We occurrence it is or that must be unin- property damage unexpected tended, exception whereas in the exclusion it is pollution the toxic must unin- unexpected release which be However, related: one tended. these clauses are closely to the the while the damage refers source of property Generally, other refers to the itself. an property damage release or result unex- unintended would unexpected find that, or unintended We property damage. pected whole, the as a these clauses work when is viewed policy to intent of the that the the together convey parties pol- from unex- coverage would the insured icy’s protect releases, those that or including may unintended pected have been continuous.

Further, the insurers’ argu- we are not persuaded by its OMC and amici ments As concerning surplusage. filled note, insurance are words over- policies with within the each other. For complement example, lap itself, read: the policies exclusion pollution provision smoke, vapors, of or “discharge, dispersal, escape release chemicals, alkalis, soot, acids, liquids toxic or fumes, irritants, contaminants, or other gases, waste materials added.) (Emphasis ***.” pollutants concept to of a all contours the general These words add It an toxic environmentally pollutant. release of in this for to appear policies uncommon provisions find the insur- fact, common we fashion. Faced with this merit. to be without ers’ surplusage argument

125 in the the term we find that “sudden” In summary, is am CGL policies of these exclusion pollution exception insured to it in favor of the construe biguous and we the appel or unintended. We find that mean unexpected in its of the term. Both late erred construction court con on erroneous courts relied this appellate circuit and in favor the insurers “sudden” in of ruling struction of as to their du judgment on their motions summary on their pollu ties to OMC based indemnify defend tion Because different standards provisions. exclusion to to to defend and the duty with apply respect duty Johns- City 394; Ill. at indemnify (see Conway, 92 town, York v. Insurance Co. New Bankers Standard (2d Cir. F.2d we shall address 1989), 1148), to with each rulings respect duty separately.

A. Defend Duty much An insurer’s to defend its insured is duty indemnify. (Conway, than its 92 Ill. 2d at duty broader 394; Keene v. Insurance Co. North America Corp. deter (D.C. 1034, 1050.) In order to 1981), Cir. F.2d arisen, mine the insurer’s to defend has duty whether must compare allegations underlying court Wilkin, language. (See, e.g., complaint Industries, at Raymark Inc., 73; Ill. 118 Ill. 2d 2d at must 41.) The in the be allegations underlying complaint the (Wilkin, construed favor of insured. liberally Ill. If the these 74.) allega 2d at court determines that within, within, potentially or the cov policy’s tions fall the insurer a to defend the insured erage, duty has Wilkin, 144 Ill. 2d at against the underlying complaint. Industries, Inc., 73; 118 Ill. 2d at 52. Raymark of the courts in favor The circuit ruled appellate on their duty pollu- insurers on the to defend issue based tion exclusion to mean provisions. Construing “sudden” these determined that the abrupt, underlying courts alleged that CMC had released PCBs over a complaints several found that the period years. They underlying of continuous release of PCBs which complaints alleged a Therefore, could not considered these “abrupt.” be that, of policies’ pollution courts held because the CGL of exclusion OMC’s release PCBs did fall provisions, the policies’ coverage. Consequently, within potentially no to these courts held that the insurers had defend duty OMC. have, however, determined that the circuit and

We in their the term courts erred construction of appellate term in favor of and we have construed this “sudden” Therefore, mean or unintended. unexpected OMC to to the exception policies’ pollution sudden and accidental and unintended unexpected exclusion provision applies coverage for such re- recreating releases of pollutants, leases. turn a mind, compari- this construction we

With with son of the allegations underlying complaints case, In the of the instant language policies. that OMC dis- complaints allege merely underlying Harbor and Lake Michi- Waukegan PCBs into charged in these several Nowhere years. over gan period or that OMC intended allegation is there complaints any Waukegan PCBs into Harbor release expected an allegation, Lake the absence of such Michigan. fall allege potentially facts complaints underlying Co., Mining policies. (Hecla within Johnstown, York, New City 1088; 811 P.2d at cf. com- the underlying at face of 1149.) Looking F.2d at could, have been PCBs release of alleged OMC’s plaints, unintended, these alle- bringing thereby unexpected accidental” the “sudden and within gations potentially v. Martin Insurance Co. (See Reliance exception.

127 Co. v. Leasing Willett Truck 97-98; 94, Ill. 126 3d App. 88 Ill. 3d Insurance Co. (1980), App. Liberty Mutual Co., at There Mining Hecla 1092.) 811 P.2d 133, 139; forth standard set the to defend fore, duty under broad erred in affirm find the court above, appellate we their for insurers on the based summary judgment ing to issue of respect with pollution provisions exclusion reverse the Accordingly, to OMC. we their defend duty in favor of summary grant judgment court’s appellate with respect on exclusion grounds the insurers pollution to to their defend OMC. duty

B. to Duty Indemnify the insurers’ motions summary We now consider to their OMC based judgment concerning duty indemnify earlier, appel- on the exclusions. As stated pollution court’s grant summary late court circuit upheld of the on these motions. in favor insurers judgment An to is narrower than its duty indemnify insurer’s Ill. Conway, 92 2d e.g., (See, to defend its insured. duty v. Corp. International Minerals & Chemical Lib 394; at erty Mutual Insurance Co. 168 Ill. 3d App. “ ‘will not be defined until 366.) duty indemnify action which adjudication very [the insurer] ” Co. v. Chi (Maryland Casualty should have defended.’ Transportation & North Western Co. (1984), 126 cago Centennial Insurance Co. 150, 156, Ill. 3d App. quoting Inc. Applied Systems, Health Care 1983), Cir. 710 (7th Wilkin, n.6; 73.) 144 Ill. 2d at F.2d see words, has a other of whether the insurer question liability the insured for a particular duty indemnify if the has in already for consideration insured only ripe it. (See, claim liability against curred the underlying Industries, Inc., Wilkin, Raymark 73; Ill. at e.g., 52; Minerals, 118 Ill. 2d at International 168 Ill. App. so, If if in 366.) 3d at arises duty indemnify sured’s and the loss or actu activity resulting damage fall within the CGL Willett ally policy’s coverage. Cf. Co., 139; Ill. at Man Truck Waste Leasing App. Carolinas, Inc. v. Peerless Insurance ‍​​​‌‌​‌​‌‌​​‌‌​​​​‌​‌​​​​‌‌​​​​‌​​​​​​‌​​​​​​‌​‌‍Co. agement of 688, 690, 340 S.E.2d 377. (1986), 315 N.C. bar, governmental agen-

In the case at OMC and the into a consent decree requiring cies have entered already million to a trust OMC to contribute approximately $19 the clean and up Waukegan fund for' costs to Harbor of Lake OMC has incurred liabil- part Michigan. Clearly, water. There- for PCBs into these bodies of ity releasing with fore, the issue is whether OMC’s presented activity, falls actually to the exclusion respect pollution exception, release of within the Was OMC’s policies’ covérage: and unintended? In cases of multiple PCBs unexpected must examined insurers and this be policies, question time particular per- with to each and its respect iod. that case, argue the insurers and their amici this from its waste materials discharging

OMC knew it was if that, These assert as as 1959. facility early parties waste materi- intended or to release expected any OMC it als, no that is irrelevant coverage. argue there is They it should have known was releas- whether OMC knew or ef- it was some releasing PCBs so as OMC knew ing long turned out to con- material which later fluent or waste it could not have that responds tain PCBs. OMC Waukegan of PCBs into or intended the release expected a waste treatment It that it constructed argues Harbor. the effluent to North which it routed its through system Harbor. Waukegan in to avoid polluting Ditch order that the it not even know also asserts that did in- PCBs until contained using, Pydraul, it was product in Monsanto 1970. formed of this fact by in its analysis is correct entirely party Neither many These have policies here. at issue CGL policies cover- the of their limiting scope and defining provisions ac- the and us concern The motions before “sudden age. are insurers exception. cidental” exclusion pollution it the release this is that, provision, particular correct must be unex- activity, which discharge, polluting However, insurers are and unintended. pected release or intended arguing expected correct this provi- application waste material bars any of some types sion. OMC’s release contrary, On intended, and but material was not only expected waste and permitted governmental was authorized expressly here The relevant consideration is whether agencies. discharge particu- expected insured and intended it alleged discharged lar toxic have If of PCBs into it now seeks release coverage. OMC’s Michigan expected Harbor and Lake wаs Waukegan intended, the “sudden and accidental” to exception clause not and OMC’s apply exclusion would pollution not loss would be covered. in determining

Another consideration important OMC is duty indemnify whether the insurers have a to case, this claim for coverage. of OMC’s scope costs of is for the claiming cleanup OMC indemnity OMC is not claim- Michigan. and Lake Waukegan Harbor Ditch. Intended ing with to North indemnity respect Ditch of waste into North discharges and expected to Waukegan would not with indemnity respect preclude Harbor. us, it is clear that there are

From record before material to the resolu numerous issues of fact disputed is judgment inappropriate tion of this issue. Summary v. Witmer Pyne when material fact exist. (See questions Therefore, 351, 357-58.) 129 Ill. 2d we reverse on of the insurers court’s favor appellate ruling their motions for summary judgment based on pollution exclusion with to their grounds respect to indem- duty OMC for the costs of nify cleaning Harbor up Waukegan and Lake remand Michigan. We this issue to the circuit remand, court for further proceedings. On the trier of fact must determine and, so, whether if at what point time OMC expected and intended the release of PCBs for which it now seeks If the trier that coverage. finds release, and intended this expected sudden and accidental is not issued exception triggered policies If thereafter would not the trier finds provide coverage. that some of these releases were and unin- unexpected tended, the sudden and accidental exception par- ticular in force at that time and the policy would apply insurer’s OMC would arise. duty indemnify

IV. INTERNATIONAL turn to consider the court’s appellate rulings We now on International’s motions for based summary judgment The appel- on its exclusion policy’s pollution provision. late court to International granted summary judgment as to its to defend and its duty duty indemnify both OMC, its exclusion finding pollution CGL policy’s in this barred for OMC provision particular in International’s case. The exclusion pollution provision is different from the standard exclusion pollution policy International’s provides discussed above. provision policy in pertinent part: liability

“It agreed apply this shall land, water, or pollution air real or contamination damages resulting or personal property any injuries or therefrom caused an occurrence.

It that for the of this en- agreed purpose is further repeated or dorsement ‘occurrence’ means a continuous and uninten- exposure unexpectedly to conditions which dur- tangible property or tionally injury persons causes arising out of such ex- damages All period. the ing shall substantially general the same conditions posure (Empha- arising out of one occurrence.” considered as be added.) sis con- previously the exclusion provision

Unlike pollution provi- exclusion above, International’s pollution sidered damage resulting for coverage property sion excludes i.e., to pollutants, or repeated exposure from continuous More- events. it coverage gradual polluting excludes not contain International’s exclusion does over, pollution In the an for sudden and accidental releases. exception courts noted bar, appellate case at the circuit and both that OMC had alleged the underlying that complaints from a continu- damage property caused environmental Therefore, these courts ous, release of PCBs. long-term exclusion pollution determined that International’s of granted barred for OMC’s release PCBs and to International on this basis. summary judgment court, appellate Before this that argues Interna- granting court erred in summary judgment concerning issues of fact exist tional because disputed its release of PCBs was continuous alleged whether that it submitted counteraffi- OMC contends repeated. davits with its to International’s motions response release or reveal a factual over the nature dispute the release or releases releases and possibility have could occurred abruptly. if granted

A motion for will be summary judgment affidavits, and admissions on pleadings, depositions, file fact exists reveal that no issue material genuine is entitled to as a matter moving party judgment (Kolakowski Voris 388, 398.) 83 Ill. 2d law. a motion for considering summary judgment, admis court must construe the pleadings, depositions, sions, moving party and affidavits strictly against 132 in liberally favor of the nonmovant. Kolakowski, 83

Ill. 2d at 398.

Pursuant to Court Supreme Rule all affidavits in of and in support opposition a motion for summary judgment must be made upon personal knowledge affiant, must set forth with the facts particularity which the claim upon or defense made, and must set forth facts in admissible evidence to affiant, which the if called to testify, could competently thereto. testify (134 Ill. 2d R. 191(a).) Statements in an affidavit which are based on information and belief or which are unsup ported conclusions, opinions, speculation are insuffi cient to raise a issue of genuine material fact. (See Anderson Rail “Safeway” Guard Corp. Champaign Asphalt Co. Patterson (1971), 924, 928; Ill. 2d App. v. Stern 88 Ill. Moreover, App. 404.) mere that material allegation factual disputes exist does not create a triable issue of fact. Anderson Corp., Ill. 2d at 927. App.

In the case sub judice, OMC submitted counteraffi- davits from various affiants in to Internation- opposition al’s motions for In these summary judgment. counteraffi- davits, the affiants set forth possible which the ways release of PCBs into Waukegan Harbor could have been For abrupt. Hanson, Alfred example, OMC’s corporate environmental control specialist, states in his counteraffi- davit that the release of into Pydraul Waukegan Harbor could have resulted from a mechanical or electrical fail- ure of However, OMC’s pumping system. OMC did not submit documents any indicating that mechanical or any electrical failure of the occurred pumping system during the time period Likewise, question. submitted Crawford, counteraffidavit from John a chemical engi- neer in OMC’s counteraffidavit, his Crawford employ. states that the contamination could have resulted from an abrupt and of water unexpected surge through some breaking Pydraul away treatment system, waste into Waukegan it sweeping interceptors from the oil Harbor. are insufficient counteraffidavits find that these

We do not set forth material issue of fact. They create a of the af- knowledge the personal facts within particular at testify the affiants could competently fiants which mere speculation contain trial. These counteraffidavits scenarios various concerning hypothetical PCBs could have occurred release of alleged OMC’s to raise material such, they As are insufficient abruptly. whole, as con- issues of fact. Based on the record we Har- Waukegan clude that OMC’s release of PCBs into Therefore, Inter- bor was either continuous repeated. for coverage exclusion provision national’s bars pollution affirm the OMC under its court’s appellate We policy. of International with re- grant to summary judgment to indem- duty to its to defend and its spect duty both nify.

V.

CONCLUSION grant In affirm the circuit court’s summary, we to its to respect duty INA with summary judgment on the known loss doc- indemnify defend and OMC based other the circuit court’s denial trine. We affirm on for based summary judgment carriers’ motions circuit court and this issue to the known loss we remand this opinion. in accordance with for further proceedings summary of partial affirm the court’s grant We appellate issue, hold- “damages” on the to OMC based judgment dam- seeking “suits actions are ing underlying afforded coverage which fall within the ages” addition, appellate In we reverse CGL policies. insurers, ex- grant summary judgment court’s eluding International, based on the pollution exclusion clauses of their respective and policies we remand this issue to the circuit court for further in proceedings ac- cordance with this opinion. we affirm Finally, the appel- late court’s grant of summary judgment International based on its policy’s pollution exclusion clause. judgment appellate court is in affirmed

part and reversed in part, the judgment of the circuit court is affirmed in part reversed in part, and the cause is remanded to the circuit court for further pro- ceedings.

Appellate court in part affirmed and reversed in part; circuit court in part affirmed and reversed in part; cause remanded. CHIEF MILLER, JUSTICE in concurring part dissenting part:

I do not with the agree conclusion majority’s that the language used the standard exclusion pollution clauses ambiguous. view, my the clauses exclude clearly the series of occurrences at issue here. With one exception, the exclusion pollution clauses in the appearing comprehensive general liability (CGL) policies involved in this as appeal provide follows: ***

“This insurance apply bodily does not to injury or property damage arising out of the discharge, dispersal, escape smoke, soot, fumes, acids, release or of vapors, al- kalis, chemicals, toxic liquids gases, or waste or materials irritants, other contaminants or pollutants into or upon land, the atmosphere or any body watercourse of wa- ter; but this exclusion does not if such apply discharge, dispersal, release or escape is sudden and accidental.” will be for Coverage provided environmental mishaps otherwise excluded under the if the incident is

135 out, points As majority the and accidental.” “sudden meaning the regarding exists disagreement substantial the here is whether The question of word “sudden.” the exclusion pollution it used in the “sudden,” as is word issue, unex- only at means of the CGL policies clauses has unforeseen, temрoral it also a or whether pected and context, in this term, as it is used Finding the quality. ambig- definitions and hence alternative susceptible be in- the uous, adopts favoring a construction majority matters be may sured concludes that present this policies containing phraseology. the CGL covered I do agree. for li- coverage exclusion bars pollution generally The ex- pollutants. discharge from

ability arising coverage, reinstates but to the exclusion ception accidental.” if discharge both “sudden only intended to preclude Clearly, parties gradual discharges pollutants. Accordingly, here, sense in “sudden” is used the term clearly dimension, referring has a temporal abruptness See, the event. Insurance Co. v. Aard- e.g., Northern Associates, 942 F.2d 189 (3d 1991), (apply- vark Inc. Cir. Guar- law); ing Pennsylvania Fidelity United States Coals, (6th 1988), Fire Cir. 856 anty Co. v. Star Inc. Lumbermens Mutual Kentucky law); F.2d (applying Industries, Inc. Casualty (1990), v. Belleville Co. 568; Hamp-

Mass. Co. New Upjohn N.E.2d 197, 476 N.W.2d shire Insurance 438 Mich. (1991), Co. Carolinas, Inc. v. Peerless 392; Waste Management of 688, 340 S.E.2d 374. (1986), Insurance Co. 315 N.C. ele

Indeed, temporal “sudden” without defining term “acciden ment redundant the companion renders that is signifies something unexpected tal.” “Accidental” Hancock Mutual (See Taylor or unintended. v. John Life those 230.) 11 Ill. 2d Applying Insurance Co. 136 “sudden,” does,

same senses to as the makes majority “accidental” mere As one court has surplusage. stated: significant the ‘sudden’ to any pur-

“For word have in pose, surplusage generally and not to be when used ‘accidental,’ conjunction with the word it must have a temporal aspect meaning, just to its and not the sense of Casualty something unexpected.” Lumbermens Mutual Industries, 675, (1990), 407 Mass. Co. v. Belleville Inc. 568, 555 N.E.2d 572. The dismisses this concern as majority inconsequen tial, that insurance contracts are declaring generally 124.) filled with terms. Ill. 2d at What overlapping (154 however, the is that “sudden” is ignores, joined majority “and,” the dis conjunction “accidental” by “or.” The intended that the cir parties clearly junction ex cumstances to the triggering exception pollution “accidental”; an clusion would be both “sudden” must both pollution satisfy requirements incident See Paxon v. United Township to exist. Lower 383 Pa. Super. Co. Fidelity Guaranty States of the words 558, 577, 557 A.2d use (“The very a added) (emphasis ‘sudden and accidental’ reveal[s] two differently, stating clear intent to define the words separate requirements”). also that “sudden” construing

The believes majority contradict in sense of would temporal “abrupt” 123- Ill. 2d at (See of “occurrence.” definition policy however, view, adopting 24.) majority’s Contrary not give of the term does the insurers’ interpretation as whole. rise to an within inconsistency damages; relates ‍​​​‌‌​‌​‌‌​​‌‌​​​​‌​‌​​​​‌‌​​​​‌​​​​​​‌​​​​​​‌​‌‍to property definition of “occurrence” the man contrast, relates to exclusion, the pollution release, discharge, dispersal, the polluting nеr no reason to believe occurs. There is escape terms, in parallel intended to be defined were provisions occurrence is a restatement or that the exclusion Casualty Co. v. Lumbermens Mutual (See definition. Industries, Inc. 675, 679, Belleville (1990), 407 Mass. Casualty Aetna Claussen 568, 571; 555 N.E.2d Surety 333, 334, Co. S.E.2d 259 Ga. Liability and the Environmental Abraham, 687-88; Insurance, 942, 962-64 Limits of Colum. L. Rev. one court has ob- Discussing question, the same (1988).) served: the two We reconciling provisions. no difficulty

“We have that definition results in a the ‘occurrence’ believe coverage repeated exposure provides for continuous those in- damages except in all cases causing conditions those situ- coverage is limited to volving pollution, where ” discharge accidental.’ was ‘sudden and ations where Fidelity & Guar- original.) (United States (Emphasis Coals, (6th 1988), Cir. 856 F.2d anty v. Star Fire Inc. Co. Kentucky law).) (applying more It is remarkable that “occurrence” defined not trader the pollution than the reinstated broadly discharges. sudden accidental exclusion for if is con- matter, As final even the term “sudden” incidents at sidered I do believe ambiguous, fall to the issue here can be said to within exception existence of alternative Granting exclusion. pollution term, one definitions of including adopted continuing I fail to how occurrences majority, see more under than a decade be considered “sudden” may reasonable of that any reading word. HEIPLE in this concurrence joins partial

JUSTICE and partial dissent.

Case Details

Case Name: Outboard Marine Corp. v. Liberty Mutual Insurance

Court Name: Illinois Supreme Court

Date Published: Dec 4, 1992

Citation: 607 N.E.2d 1204

Docket Number: 71753, 71761 cons.

Court Abbreviation: Ill.