Travelers Ins. Co. v. Eljer Mfg.

Travelers Ins. Co. v. Eljer Mfg.

Opinion

 [*875]   [****181]   [**1035]  PRESIDING JUSTICE HOFFMAN delivered the opinion of the court:

In these consolidated cases, Eljer Industries, Inc., Eljer Manufacturing, Inc., United States Brass Corporation, and Household  [*876]  International, Inc. appeal from orders of the circuit court of Cook County denying their motions for summary judgment and granting summary judgments determining certain insurance coverage issues in favor of: National Surety Corporation; Hartford Accident & Indemnity Company; First State Insurance Company; Old Republic Insurance Company; Travelers Casualty & Surety Company, formerly known as Aetna Casualty & Surety Company; Allstate Insurance Company, successor in interest to Northbrook Excess and Surplus Insurance Company, formerly known as Northbrook Insurance Company; Century Indemnity Company, successor to CIGNA Specialty Insurance Company,  [***2]  formerly known as California Union Insurance Company; Constitution State Insurance Company; Continental Insurance Company, successor in interest to certain policies of insurance issued by Harbor Insurance Company; Employers Mutual Casualty Company; Federal Insurance Company; Gibraltar Casualty Company; Granite State Insurance Company; Insurance Company of North America; International Insurance Company; Lexington Insurance Company; National Union Fire Insurance Company of Pittsburgh, PA.; The North River Insurance Company; Royal Insurance Company; Stonewall Insurance Company; and Zurich International, Ltd. (hereinafter collectively referred to as the "Carriers"). For the reasons which follow, we affirm in part, reverse in part, and remand this cause to the circuit court for further proceedings.

These appeals arise from four declaratory judgment actions filed in the circuit court to resolve insurance coverage issues spawned by continuing claims surrounding a certain polybutylene plumbing system, known as Qest Quick/Sert II (Qest System), which was manufactured and sold by United States Brass Corporation (Brass) from 1979 through 1990. For purposes of this appeal, certain relevant facts [***3]  giving rise to these consolidated actions are not in dispute.

From 1979 through 1990, hundreds of thousands of the Qest Systems were installed in homes, apartment buildings, condominiums, mobile homes, and manufactured housing. These plumbing systems were almost always installed behind walls, under floors, or above ceilings. Brass ceased to manufacture and market the Qest System for residential site-built installation on December 31, 1986, but continued to market the system for mobile homes and prefabricated housing through 1990. As a result of certain alleged defects in the Qest System, claims have been  [**1036]   [****182]  made against Brass and its parent corporations by homeowners, homeowner associations, developers, builders, and plumbing contractors. Based on approximately 61,300 claims received by the end of 1993, Brass estimated that approximately 4.6% of the Qest Systems installed for the period from 1979 through 1990 were  [*877]  the subject of claims. According to the affidavit of one of Brass's attorneys, the majority of the claims involve leaks in the system. These claims generally seek recovery for: the cost of past repairs to the plumbing system, the building in which the system was installed and [***4]  the building's contents; the cost of any unrepaired damage caused by the leaks; the cost of replacing the plumbing system; and the diminution in the value of the building into which the Qest system was installed resulting from the presence of the defective plumbing system. A minority of the claims involve buildings in which the Qest System was installed but which have not yet experienced leaks (Pre-Leak Claims). Claims within this group seek recovery for the cost of replacing the plumbing systems and the diminution in the value of the buildings into which they were installed. All of the claimants assert that the Qest System is a defective product because it is subject to leaking well before a reasonably designed and installed plumbing system. According to documents filed by Brass with the United States Bankruptcy Court for the Eastern Division of Texas, 108 lawsuits covering approximately 30,000 claims involving the Qest System remained pending as of March 31, 1994. The affidavit of another of Brass's attorneys asserts that "liabilities, in excess of $ 1 billion, have been alleged against U.S. Brass as a result of the Qest Quick/Sert II plumbing system."

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