(Article from Insurance Law Alert, December 2015)
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An Illinois appellate court ruled that an insurer was obligated to defend its insured in an underlying nuisance suit. Country Mut. Ins. Co. v. Bible Pork, Inc., 2015 WL 7424845 (Ill. App. Ct. Nov. 20, 2015).
Bible Pork, operator of a hog factory facility, was sued by a group of property owners. Plaintiffs alleged that the facility was a source of “disagreeable noises, odors, dust particles, surface water contamination, and loss of property values which would interfere with their lives and render the facility a public and private nuisance.” Bible Pork provided notice of the suit to its insurer, Country Mutual, which denied coverage. In ensuing litigation, an Illinois trial court ruled that Country Mutual was obligated to defend the suit. An appellate court affirmed on the basis of several significant holdings relating to an insurer’s duty to defend nuisance suits.
First, the appellate court ruled that the nuisance suit sought “damages” as required by the policies. Country Mutual argued that the suit did not seek damages because it requested only equitable relief in the form of a declaratory judgment. The court disagreed, explaining that the suit could be construed to seek damages because, in addition to equitable relief, it asked for “other relief deemed appropriate.” According to the court, this phrase was sufficient to establish a claim for damages. Second, the court concluded that the complaint alleged an “occurrence” and that the “expected or intended injury” exclusion did not apply. The court reasoned that the focus of the occurrence inquiry is whether the insured intended the resulting injury, not whether the insured’s acts were performed intentionally. Here, because Bible Pork sought and was granted regulatory approval prior to construction of the hog factory, the court held that it could not be considered to have expected or intended to cause injury to the underlying plaintiffs. Finally, the court ruled that the pollution exclusion did not relieve Country Mutual of its duty to defend because it was ambiguous as to whether it applied to non-traditional pollution emissions. In so ruling, the court relied on Country Mut. Ins. Co. v. Hilltop View, LLC, 998 N.E.2d 950 (Ill. App. Ct. 2013) (discussed in our December 2013 Alert), in which an Illinois appellate court ruled that a pollution exclusion did not bar coverage for nuisance claims based on the emanation of foul odors from a hog farm.