Traveler's Ins. Co. v. Eljer Mfg.

Traveler's Ins. Co. v. Eljer Mfg.

Opinion

 [*282]   [**485]   [****796]  JUSTICE McMORROW delivered the opinion of the court:

We are asked in this consolidated appeal to determine when indemnity coverage for "property damage" under excess comprehensive general liability insurance policies, issued between 1979 and 1990 by various insurance companies ¹ (the insurers) to Eljer Manufacturing, Inc., Eljer  [*283]  Industries, Inc., United States Brass Corporation and Household International, Inc. (the policyholders), is triggered. The insurers filed four declaratory judgment actions in the  [**486]  circuit court of Cook County, seeking a declaration with respect to the insurers' obligations to indemnify the policyholders in thousands of underlying product liability claims filed by individuals alleging property damage arising out of the failure of the  [****797]  "Qest Qick/Sert II" (Qest) residential circuit court of Cook County, seeking a declaration with respect to the insurers' obligations to indemnify the policyholders in thousands of underlying product liability claims filed by individuals alleging property damage arising out of the failure of the "Qest Qick/Sert II" (Qest) residential plumbing system. The Qest system was manufactured and sold by the policyholders, [***2]  and was installed in buildings throughout the country during the policy periods. The circuit court of Cook County consolidated the insurers' declaratory judgment actions, and the parties thereafter filed cross-motions for partial summary judgment on the trigger-of-coverage issue. The circuit court granted summary judgment in favor of the insurers, and denied the cross-motion for summary judgment brought by the policyholders. The circuit court ruled, as a matter of law, that the insurers' duty to indemnify the policyholders for underlying "property damage" claims is triggered only when an actual leak in a Qest plumbing system occurs during the policy period. The circuit court explicitly rejected the argument advanced by the policyholders that "property damage" covered under the insurers' policies occurred during the policy period in which the Qest plumbing system was installed into a residence.

 [***3]  The appellate court reversed the circuit court's grant of summary judgment as to those insurance policies governed by New York law and issued prior to 1982, holding that the policy language did not require a leak to trigger coverage. With respect to those policies governed by Illinois law and issued after 1981, the appellate court determined that the circuit court correctly denied the policyholders' motion for summary judgment. However, the appellate court also found that the circuit court erred in granting summary judgment to the insurers with respect to the post-1981 policies. The appellate court  [*284]  concluded that the circuit court incorrectly held that "property damage" occurs, and coverage is therefore triggered, only at the time that a Qest system develops a leak. 307 Ill. App. 3d 872, 718 N.E.2d 1032, 241 Ill. Dec. 179. We granted the policyholders' petitions for leave to appeal (177 Ill. 2d R. 315(a)), and consolidated these cases. For the reasons that follow, we affirm in part, reverse in part, and remand this cause to the circuit court for further proceedings.

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