Stuart and Maurie had tried over the fifteen years of their friendship to meet every third Wednesday for lunch. The luncheons were one of the few constants in their lives which had seen the usual parade of changes - marriages, births, partnerships, dissolutions, new clients, old clients, trials, and settlements. Since Thanksgiving, however, one or both of them had been busy and they had not had time for lunch. Friday afternoon, Stuart phoned Maurie and they agreed to meet the following Wednesday at an old favorite of theirs.
Ho Wah Restaurant is located in the basement of the Genesee Building, less than two blocks from the Lake County Courthouse in Waukegan, Illinois. The restaurant is reached by entering a simple storefront doorway and then descending a spiraling stairway. The walls in the entry way are painted a bright lime green, a color which enhances the appetites according to Chinese lore. The proprietors, Jean and Betty, have been serving delicious Cantonese fare since Stuart was a teenager.
Betty greeted Stuart and Maurie and seated them in a booth along the left side of the restaurant which consists of a single large room bedecked with Chinese lanterns and trimmed in fluorescent pink. Stuart ordered the sweet and sour chicken while Maurie ordered the beef and broccoli special. Before they had exchanged news of their friends and families, Jean had placed a pot of tea, egg rolls, and two egg drop soups on the table. Their conversation turned to law before their entrees had arrived.
"So, what's new in the environmental law biz?" asked Maurie.
"Tanks are hot." replied Stuart. "Insurance coverage litigation is hot. And insurance coverage litigation concerning releases from underground storage tanks is red hot."
"Really?" responded Maurie. "Red hot?"
"Red hot."
"Explain." said Maurie.
"Gladly." said Stuart. And so he began.
"You remember Fred Geiger?"
"Of course I remember Fred. He was Chief Judge of the Nineteenth Judicial Circuit until ten or so years ago when he was appointed a Justice for the Appellate Court of Illinois, Second District. I still see him at Lake County Bar Association functions. What's Fred got to do with this?"
"Fred wrote an opinion last summer that has the insurance industry and insurance defense firms up in arms."
"Oh yeah, that "pollution exclusion" case!" exclaimed Maurie. "What was that all about?" Miller Mutual Insurance Association Of Illinois v. Graham Oil Company and Eugene Graham, 282 Ill.App.3d 129, 668 N.E.2d 223 (July 1996).
"The insurance industry has been including "pollution exclusion" clauses in their standard Comprehensive General Liability (CGL) for years." explained Stuart "During the past decade, the industry has tightened up the language of the pollution exclusion clauses and insureds have found it next to impossible to get insurers to cover them for pollution related losses, though an insured can occasionally get an insurer to defend a third-party claim."
He continued, "You can bet that counsel for the insurer, Miller Mutual, thought they would succeed when they brought a declaratory action seeking a determination that it was not obligated to defend or indemnify Graham Oil Company in connection with a lawsuit brought by neighbors of Graham Oil for damages arising out of the escape of gasoline from underground storage tanks located on business premises owned by Graham. After all, the court in Economy Preferred Insurance Co. v. Grandadam, 275 Ill.App. 3d 866, 870, 212 Ill.Dec. 190, 656 N.E. 2d 787 (1995) had described the pollution exclusion as "absolute," excluding from coverage any and all damage or injury resulting from environmental contamination."
"Justice Geiger found coverage?"
"He found coverage."
"How?"
"As follows." instructed Stuart. "He identified three questions that required resolution: (1) whether gasoline was a "pollutant" within the meaning of the pollution exclusion; (2) whether the pollution exclusion operated to deny coverage for any damages resulting from the release of gasoline from underground storage tanks on Graham Oil's business premises; and (3) whether the underlying complaint's allegations of environmental contamination, brought under theories of trespass and nuisance, were sufficient to bring the complaint within, or potentially within, the policies' coverage for "personal injury."
"How did he answer those questions?"
"No court in Illinois had ever determined whether gasoline constitutes a pollutant within the meaning of an insurance policy's pollution exclusion. Remember, if gasoline is a pollutant, then the damages are probably excluded from coverage, and the insurer will likely prevail on its Motion For Judgment On The Pleadings."
"Graham Oil argued gamely that the policy does not specifically identify gasoline as a pollutant, that gasoline is a "useful product," and, that damages arising from a release of gasoline should not fall within the "pollution exclusion." A solid argument, but not a winner. Justice Geiger concluded that gasoline is a pollutant within the meaning of the policies' pollution exclusions. If you're a betting man, your betting on a denial of coverage."
"But he finds coverage?"
"He finds coverage."
"How?"
"Watch carefully." intoned Stuart. The insurance company contends that, although the pollution exclusion is contained only within the terms of the policies' coverage for "Bodily Injury and Property Damage Liability," its applicability should extend to the "Personal and Advertising Injury Liability" section of the policies. The insurance industry argues that to interpret the personal injury section as providing coverage for environmental damage renders the pollution exclusion a nullity, violating the court's duty to give effect to each term in the policy and to read the policy as a whole." Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1995).
"That argument sounds like a winner. How did the court get around it?" asked Maurie.
"In a majority of jurisdictions, that argument is a winner, and insureds don't get around it.
The minority view, however, holds that the language of the pollution exclusion refers only to "bodily injury" (defined as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time") and "property damage" (defined as either physical injury to tangible property, including all resulting loss of us of that property, or loss of use of tangible property that is not physically injured), and not to the personal injury provisions. Justice Geiger concluded that "the minority position is the better-reasoned one."
He wrote as follows, "Bound as we are to construe exclusions strictly against the insurer and in favor of coverage (see Outboard Marine, 154 Ill.2d at 119), we cannot see how we can broaden the pollution exclusion's express terms to deny coverage for personal injuries cased by pollution. To adopt the construction urged by [the insurer] would also conflate the distinction between damage sustained by property from the discharge of pollution and damage sustained by those personal rights incidental to the ownership of property."
"So what's he saying?" asked Maurie. "That a person doesn't have to get sick and die to suffer a personal injury but can suffer personal injury if they sustain damages to personal rights incidental to ownership?"
"Precisely."
"But what kind of personal rights incidental to ownership of property can be damaged by gasoline spills? And more importantly, which of these rights are enumerated in a standard CGL policy?"
"Well, the CGL policies at issue defined "Personal injury" as "Injury, other than 'bodily injury,' arising out of one or more of the following offenses including wrongful entry into, or eviction of a person from, a room, dwelling or premises that the person occupies."
"The migration of gasoline onto a third persons property is not an eviction of a person from a room, dwelling or premises. So what is it, a wrongful entry?"
"Right again, old bean. The question of whether allegations of trespass or nuisance constitute 'wrongful entry' within the meaning of a liability policy's coverage for personal injury was one of first impression in Illinois. Other jurisdictions had split on the issue. Certain courts have reasoned that, in light of the intentional torts enumerated in the definition of "personal injury," such coverage was intended to encompass only intentional and purposeful torts not otherwise excluded. Other courts have construed 'eviction,' 'wrongful entry,' or 'invasion of the right of private occupancy' to be limited to claims relating to the usurpation of a possessory interest in property. Still others, though a minority of jurisdictions, had found wrongful entry to be substantially analogous to trespass so as to fall within the personal injury coverage."
"Let me guess, Justice Geiger adopted the minority view?" speculated Maurie.
"You are on fire, my friend! Yes he did. Citing cases from 1857 and 1866, Justice Geiger wrote, "We find, therefore, that the policies' use of 'wrongful entry' was at least ambiguous, requiring construction in favor of the insured. Accordingly, we conclude that the facts alleged at bar, detailing the unauthorized seepage and migration of gasoline onto the property of an adjoining neighbor, were sufficient to bring the underlying complaint within the personal injury coverage of the policies. Thus, the trial court's denial of [the insurer's] motion for judgment on the pleadings was proper."
"Amazing." marveled Maurie. "And the insurance industry is steamed?"
"'An End Run On The Absolute Pollution Exclusion: Personal Injury Coverage For Property Damage' was the banner headline in the nationally distributed, February 12, 1997 issue of the Toxics Law Reporter." related Stuart.
"Sour grapes. That's what you would expect to hear from the insurance defense bar. What do you think of the decision?"
"I think the decision arrives at an equitable result and the court reaches the result in an intellectually honest way. What more can you ask for from an appellate court?" replied Stuart.
"You should note, however, the appellate court remanded the matter for further proceedings concerning the issue of whether Graham Oil provided reasonable notice to the insurer. Graham Oil may have won the battle but has not won the war. On November 6, 1996, however, the Illinois Supreme Court denied petitioner's motion for leave to file a motion for reconsideration of the order denying petition for leave to appeal. So the Supreme Court must have some confidence in the ruling by the Court of Appeals."
Stuart and Maurie paused to finish their tea. By now the table had been cleared and all that remained were two fortune cookies. Stuart removed his from its cellophane wrapper and broke it in two. His fortune read, "You enjoy riddles and conversation." "True enough." he opined. Maurie cracked his cookie with equal ceremony finding inside the following pronouncement, "Good friends and good food lead to a long life." "Let's hope so." he observed and downed the last of his tea.
Back street side, the friends paused before parting. They peered into the now vacant theater. They saw the faded red carpeting and the twin staircases which lead majestically to the balcony. They imagined for a moment the theater's opening night when Genesee Street was the center of the vaudevillian universe and Jack Benny dressed backstage for the theater's premier.
Their reverie lasted only a moment and then was gone. Stuart and Maurie turned, bent into the wind, and walked west on Clayton to County Street, a few minutes late for their 1:30 calls.