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American States Ins. Co. v. Koloms

Supreme Court of Illinois

October 17, 1997, Filed

Docket No. 81289

Opinion

 [*476]  [**73]  [****150]    JUSTICE McMORROW delivered the opinion of the court:

We granted leave to appeal in this case (155 Ill. 2d R. 315) in order to examine the scope of the absolute pollution exclusion provision contained in a commercial general liability (CGL) policy. The dispositive issue for our review is whether that exclusion bars coverage for claims of carbon monoxide poisoning caused by an allegedly defective furnace. For the reasons that follow, we hold it does not.

 [**74]  [****151]   Background

The facts of this case, as taken from the pleadings, are relatively straightforward. On September 17, 1990, a furnace in a two-story commercial building located in Lincolnshire, Illinois, began to emit carbon monoxide and other noxious fumes. Several employees of one of the building's tenants, Sales Consultants, Inc., inhaled the fumes and became ill. Six of those employees eventually filed suit against the beneficial owners of the property, Harvey and Nina Koloms (hereinafter referred to as Koloms). In the complaints, the employees alleged that Koloms had negligently maintained the furnace and had failed to keep it in good working condition. They also claimed that [***3]  Koloms had not properly inspected some repair work which had been performed on the furnace. Each employee sought damages as compensation for his or her injuries.

Koloms, in turn, tendered the complaints to American States Insurance Company (ASI), which had insured the building under a standard-form CGL policy. After reviewing the complaints, ASI agreed to defend Koloms subject to a reservation of rights. Specifically, ASI reserved the right to contest coverage on the basis of the absolute pollution exclusion contained in the policy. That exclusion provided in pertinent part:

"This insurance does not apply to:

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177 Ill. 2d 473 *; 687 N.E.2d 72 **; 1997 Ill. LEXIS 448 ***; 227 Ill. Dec. 149 ****

AMERICAN STATES INSURANCE CO., Appellant, v. HARVEY KOLOMS, et al., Appellees.

Prior History:  [***1]  Appeal from the Circuit Court of Cook County. Hon. John N. Hourihane, Trial Judge. Case Numbers: AC1-95-2057, TR93CH00152.

Disposition: Appellate court judgment affirmed.

CORE TERMS

pollutants, pollution exclusion, coverage, courts, insured, ambiguous, injuries, fumes, carbon monoxide, bodily injury, irritant, contaminant, drafting, furnace, environmental pollution, appellate court, environmental contamination, property damage, dispersal, insurance industry, environmental, unambiguous, chemicals, gaseous, parties, terms, circuit court, deny coverage, pollution-related, standard-form

Insurance Law, Liability & Performance Standards, Good Faith & Fair Dealing, Duty to Defend, Claim, Contract & Practice Issues, Policy Interpretation, General Overview, Ambiguous Terms, Construction Against Insurers, Entire Contract, Ordinary & Usual Meanings, Civil Procedure, Appeals, Standards of Review, De Novo Review, Judicial Review, Exclusions, Pollution, Commercial General Liability Insurance, Pollution, Accidental & Sudden Exception