{ "id": 2881360, "name": "DEL POSING, d/b/a Del's Pest Control, Plaintiff-Appellee, v. MERIT INSURANCE COMPANY, Defendant-Appellant (James Forrester et al., Defendants)", "name_abbreviation": "Posing v. Merit Insurance", "decision_date": "1994-02-25", "docket_number": "No. 3-93-0640", "first_page": "827", "last_page": "835", "citations": [ { "type": "official", "cite": "258 Ill. App. 3d 827" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "466 N.E.2d 1091", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "pin_cites": [ { "page": "1096" } ], "opinion_index": 0 }, { "cite": "126 Ill. App. 3d 150", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3596668 ], "weight": 2, "pin_cites": [ { "page": "157" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/126/0150-01" ] }, { "cite": "134 N.J. 1", "category": "reporters:state", "reporter": "N.J.", "case_ids": [ 330789 ], "weight": 2, "pin_cites": [ { "page": "27" }, { "page": "846" } ], "opinion_index": 0, "case_paths": [ "/nj/134/0001-01" ] }, { "cite": "474 N.E.2d 953", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "130 Ill. App. 3d 694", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3494471 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/130/0694-01" ] }, { "cite": "501 N.E.2d 817", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1985, "opinion_index": 0 }, { "cite": "150 Ill. App. 3d 479", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3503056 ], "year": 1985, "opinion_index": 0, "case_paths": [ "/ill-app-3d/150/0479-01" ] }, { "cite": "514 N.E.2d 479", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1986, "opinion_index": 0 }, { "cite": "161 Ill. App. 3d 452", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3466102 ], "year": 1986, "pin_cites": [ { "page": "464" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/161/0452-01" ] }, { "cite": "294 N.E.2d 7", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "10 Ill. App. 3d 115", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5393223 ], "pin_cites": [ { "page": "121" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/10/0115-01" ] }, { "cite": "355 N.E.2d 24", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "64 Ill. 2d 187", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5429542 ], "opinion_index": 0, "case_paths": [ "/ill-2d/64/0187-01" ] }, { "cite": "442 N.E.2d 245", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1976, "opinion_index": 0 }, { "cite": "92 Ill. 2d 388", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3098596 ], "year": 1976, "opinion_index": 0, "case_paths": [ "/ill-2d/92/0388-01" ] }, { "cite": "384 N.E.2d 335", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "74 Ill. 2d 132", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2994842 ], "opinion_index": 0, "case_paths": [ "/ill-2d/74/0132-01" ] }, { "cite": "578 N.E.2d 926", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 4, "pin_cites": [ { "page": "930" }, { "page": "931, 932" }, { "page": "932" }, { "page": "930" } ], "opinion_index": 0 }, { "cite": "144 Ill. 2d 64", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5592135 ], "weight": 5, "pin_cites": [ { "page": "73" }, { "page": "73-74" }, { "page": "75, 76" }, { "page": "77" }, { "page": "73" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/144/0064-01" ] } ], "analysis": { "cardinality": 894, "char_count": 21032, "ocr_confidence": 0.793, "pagerank": { "raw": 1.4930155716677502e-07, "percentile": 0.6633908000041702 }, "sha256": "623cb3b3d5a05377190e3860dacd4a9cbf936408a8953426e465c368551e0671", "simhash": "1:1aacb34633a984c4", "word_count": 3240 }, "last_updated": "2023-07-14T22:48:59.357066+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "DEL POSING, d/b/a Del\u2019s Pest Control, Plaintiff-Appellee, v. MERIT INSURANCE COMPANY, Defendant-Appellant (James Forrester et al., Defendants)." ], "opinions": [ { "text": "JUSTICE BARRY\ndelivered the opinion of the court:\nPlaintiff, Del Posing, doing business as Del\u2019s Pest Control (Posing), brought an action in the circuit court of Kankakee County for declaratory judgment against Merit Insurance Company (Merit) and the owners of three buildings for which plaintiff had conducted termite inspections and/or performed pest control services, seeking to have the court determine plaintiff\u2019s liability insurance coverage under a policy issued by Merit. The case was heard and taken under advisement. On July 16, 1993, the court entered judgment for plaintiff and ordered Merit to reimburse plaintiff for defense costs incurred theretofore, to assume plaintiff\u2019s defense in suits brought by the property owners and to indemnify plaintiff in the event judgment was entered against him in those suits. Merit appeals.\nMerit claims that the trial court\u2019s ruling was erroneous in four respects: (1) that the court erroneously determined that the provisions, definitions and exclusions in Merit\u2019s comprehensive general liability policy were not clear and unambiguous; (2) that the court erroneously concluded that the property owners\u2019 claims were not excluded from coverage as intangible economic losses; (3) that the court erroneously concluded that the policy\u2019s exclusion for intentional acts of the insured did not preclude coverage for the damages claimed in the underlying lawsuits; and (4) that the court\u2019s determination of Merit\u2019s duty to indemnify plaintiff in the property owners\u2019 suits was premature.\nAccording to the record on appeal, plaintiff purchased a comprehensive general liability (CGL) policy issued by Merit for his extermination business through the John W. Slater Insurance Agency in August of 1986. Plaintiff periodically renewed the policy, paying yearly premiums in excess of $3,000, through August 1989. Plaintiff\u2019s renewal policy for the period August 11, 1987, to August 11, 1988, was admitted into evidence as plaintiff\u2019s exhibit 1.\nBy its terms, the policy\u2019s property liability coverage is limited to $50,000 per occurrence. Under \"Description of Hazards,\u201d the policy describes plaintiffs business as \"exterminators \u2014 including termite control \u2014 excluding the use of gas of any kind including completed operations.\u201d The preprinted policy provides the following definitions relevant to this appeal: \" 'incidental contract\u2019 means any written 1) lease of premises, 2) easement agreement, except in connection with construction or demolition operations on or adjacent to a railroad, 3) undertaking to indemnify a municipality required by municipal ordinance, except in connection with work for the municipality, 4) sidetrack agreement, or 5) elevator maintenance agreement; *** 'occurrence\u2019 means an accident, including continuous or repeated exposure to conditions, neither expected nor intended from the standpoint of the insured which results in bodily injury or property damage; *** 'property damage\u2019 means 1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or 2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.\u201d Under \"exclusions,\u201d the policy provides, \"This insurance does not apply: a) to liability assumed by the insured under any contract or agreement except an incidental contract; but with respect to bodily injury or property damage occurring while work performed by the named insured is in progress, this exclusion does not apply to a warranty that such work will be done in a workmanlike manner.\u201d Appended to the policy is Merit\u2019s form \"ME \u2014 36 (4-87)\u201d endorsement modifying the policy in the following relevant respect: \"2) Exclusion (a) is deleted and replaced by: a) liability assumed by the insured under any contract or agreement except an incidental contract.\u201d\nThe record also contains copies of complaints filed in the circuit court of Kankakee County by the three property owners, which plaintiff forwarded to Merit. The first was filed in seven counts by Dean and Dana Goselin on January 20, 1988, against Posing and the seller of the subject residential real estate, Donna Wood. Count VII, the only one against Posing, charges that Posing \"conducted his [termite] inspection in a negligent manner,\u201d that \"[i]t was the negligently rendered opinion upon which [the Goselins] proceeded to purchase the property,\u201d and that, as a result, the Goselins \"purchased a house with a diminished value which requires great inconveniences and costs to repair with said damages amounting therefrom being in excess of $15,000.00.\u201d\nThe second complaint was filed by Morning Star Missionary Baptist Church on October 17, 1988, in two counts and subsequently-amended to add count III. The complaint, as amended, charges in count I that Posing and the church entered into a contractual agreement for the extermination of subterranean termites on the church\u2019s premises in May 1984; that Posing \"failed to fulfill the contract *** in that he failed to apply the necessary additional treatment to the premises as required by the written Agreement\u201d; and that \"as a direct consequence of [Posing\u2019s] breach of said written Agreement, the building on the [church\u2019s] premises was infested with termites and [the church] has been damaged in the amount of *** $46,000.00, said sum representing the cost of repairing the structural damages to the walls, floorboards and supporting arc beams of said building.\u201d Count II charges that Posing breached an express warranty \"that subterranean termites would be controlled on the [church\u2019s] premises during the period of the Agreement.\u201d Count III charges negligence in that Posing \"failed to properly exterminate termites on the subject premises; [and] *** failed to inspect and notify the [church] of the infestation of termites in a timely manner.\u201d\nThe third complaint was filed by James Forrester in six counts on March 16, 1990, against Posing and Sis Spurger Realty and Leda Tatro, the real estate broker and seller, respectively, of residential property purchased by Forrester. Counts I through V pertain to Posing. In count I, Forrester charges that all named defendants \"failed to use due care in obtaining and communicating information regarding the condition of the *** property,\u201d and that Forrester \"suffered damages, proximately caused by the Defendants\u2019 negligent misrepresentation, in excess of $50,000.00, for necessary repairs discovered in May, 1989, in an amount in excess of the purchase price.\u201d In count II Forrester complains that the several defendants made misrepresentations with knowledge of their falsity, and he claims punitive damages of $100,000. In count III, Forrester complains that the several defendants \"intentionally concealed material facts regarding the condition of the property\u201d and made other material and untrue statements knowing them untrue or \"in culpable ignorance of the truth or falsity of the statements,\u201d upon which Forrester detrimentally relied, and again claims both compensatory and punitive damages. Counts IV and V complain that Sis Spurger and Posing violated section 2 of the Illinois Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1991, ch. 121\u00bd, par. 261) and section 1 of the Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1991, ch. 121\u00bd, par. 311).\nPlaintiff\u2019s exhibits 2, 3 and 4 are cover letters from Merit returning to plaintiff the complaints filed by the Goselins, Forrester and the Morning Star Baptist Church, respectively, and refusing to defend the actions under plaintiff\u2019s policy of insurance. In the Goselin case the letter recites, \"There is no allegation in the complaint that the property damage was caused by an occurrence or accident but simply alleges that the damage was already present and you negligently failed to discover it. There is no allegation that your negligence caused physical injury to tangible property during the policy period.\u201d In the Morning Star Baptist Church case the letter from Merit states, inter alia, \"Your policy with this company contains following [s\u00edc] exclusion, 'this insurance does not apply to liability assumed by the insured under any contract or agreement except an incidental contract.\u2019 The contract in question does not fall under the definition of 'incidental contract.\u2019 \u201d And, in the Forrester case Merit\u2019s letter recites, \"It is our position that there is no occurrence or accident complained of in the complaint. In addition, any intentional acts complained of are not covered. It is also our position that there is no allegation of property damage because there is no allegation of physical injury to or destruction of tangible property as a result of any occurrence. *** The payment of punitive damages is excluded by endorsement ME \u2014 36.\u201d\nThe standard for determining an insurer\u2019s duty to defend requires our review of the underlying complaints and our construction of the policy of insurance. (United States Fidelity & Guaranty Co. v. Wilkin Insulation Co. (1991), 144 Ill. 2d 64, 73, 578 N.E.2d 926, 930.) The law applicable to our review was cogently expressed by Justice Bilandic in Wilkin:\n\"If the underlying complaints allege facts within or potentially within policy coverage, the insurer is obliged to defend its insured even if the allegations are groundless, false, or fraudulent. (Thornton v. Paul (1978), 74 Ill. 2d 132[, 384 N.E.2d 335].) An insurer may not justifiably refuse to defend an action against its insured unless it is clear from the face of the underlying complaints that the allegations fail to state facts which bring the case within, or potentially within, the policy\u2019s coverage. (Conway v. Country Casualty Insurance Co. (1982), 92 Ill. 2d 388[, 442 N.E.2d 245].) Moreover, if the underlying complaints allege several theories of recovery against the insured, the duty to defend arises even if only one such theory is within the potential coverage of the policy. Maryland Casualty Co. v. Peppers (1976), 64 Ill. 2d 187[, 355 N.E.2d 24],\nThe underlying complaints and the insurance policies must be liberally construed in favor of the insured. Where a policy provision is clear and unambiguous, its language must be taken in its 'plain, ordinary and popular sense.\u2019 (Hartford Accident & Indemnity Co. v. Case Foundation Co. (1973), 10 Ill. App. 3d 115, 121[, 294 N.E.2d 7].) A provision is ambiguous if it is subject to more than one reasonable interpretation. (Marathon Plastics, Inc. v. International Insurance Co. (1987), 161 Ill. App. 3d 452, 464[, 514 N.E.2d 479].) All doubts and ambiguities must be resolved in favor of the insured. Northbrook Property & Casualty Insurance Co. v. United States Fidelity & Guaranty Co. (1986), 150 Ill. App. 3d 479[, 501 N.E.2d 817]; Trovillion v. United States Fidelity & Guaranty Co. (1985), 130 Ill. App. 3d 694[, 474 N.E.2d 953].\u201d (Emphasis in original.) 144 Ill. 2d at 73-74.\nInitially, Merit contends that the trial court erred in finding that the CGL policy here at issue, its definitions, endorsements and exclusions were not clear and unambiguous. While it may be true that terms of the policy, its coverages and exceptions, are clear and unambiguous to a sophisticated reader of insurance policies, we believe that the public policy of this State, as demonstrated by the court\u2019s opinion in Wilkin, requires that insurance contracts be construed and enforced to accord with the objectively reasonable expectations of the insured. (See, e.g., Morton International, Inc. v. General Accident Insurance Co. (1993), 134 N.J. 1, 27, 629 A.2d 831, 846 (applying \"reasonable expectation\u201d test in context of pollution-exclusion clause of CGL policy).) In our opinion, the several definitions and exclusions and exceptions within exclusions cross-referenced throughout the policy in this case render the determination of its coverage virtually indecipherable to an average reader. Moreover, we believe that it would be quite a shock to any insured in Posing\u2019s position to learn that the CGL insurance he has paid over $3,000 a year for provides no coverage and no duty to defend against the underlying suits in this case. Accordingly, we find no error in the trial court\u2019s conclusion that the policy did not clearly, and unambiguously exculpate Merit from defending Posing.\nNext, as in Wilkin, we are asked to determine whether, given applicable rules of construction, the underlying complaints allege potentially covered \"property damage\u201d caused by an \"occurrence\u201d that is not excluded by the subject CGL insurance policy.\nIn Wilkin, Wilkin was a small, family operation in the business of subcontracting for the installation of insulation products in buildings under construction. During part of the period covered by various CGL policies, Wilkin used a fireproofing product containing asbestos. When the health hazards of asbestos fibers were exposed and governmental regulations were enacted mandating that public building owners take corrective measures, class action lawsuits were spawned to recover damages from the \"asbestos industry.\u201d As a member of a 60-defendant named class, Wilkin turned to its CGL insurers and sought their defense within the limits of the policies. One of the insurers, USF&G, denied all coverage, refused to defend and sued for declaratory judgment. Other insurers intervened, seeking the same declarations as USF&G, i.e., that they had no duty to defend or indemnify in the underlying lawsuits. The trial court granted summary judgment for the insurers, holding that their various exclusions precluded coverage and the duty to defend. On appeal, the appellate court reversed, holding that the underlying suits sufficiently alleged \"property damage\u201d caused by an \"occurrence\u201d to fall within the policies\u2019 coverage. Our supreme court affirmed that holding.\nIn Wilkin, the court construed the following standard form insurance policy coverage definitions:\nProperty damage \u2014 \"physical injury to or destruction of tangible property, which occurs during the policy period, including the loss of use thereof at any time resulting therefrom\u201d; and Occurrence \u2014 \"an accident, including continuous or repeated exposure to conditions which result in property damage *** neither expected nor intended from the standpoint of the insured.\u201d (144 Ill. 2d at 75, 76, 578 N.E.2d at 931, 932.)\nAs here, the insurers argued that the injuries alleged by the public building owners in the underlying suits were not physical damage to tangible property, but only intangible economic loss measured by diminution in market values of the buildings. They further posited, as here, that the contamination complained of was not an \"occurrence\u201d because there was no event or accident giving rise to property damage, and the damage was allegedly expected or intended by the insured. The supreme court rejected the former argument on the ground that it was illogical. Asbestos contamination of a building and its contents, requiring corrective measures, was damage to the building \u2014 ergo, by logical extension, physical injury to tangible property. Similarly, the court determined that, inasmuch as an \"accident\u201d included \"continuous or repeated exposure to conditions which result in property damage,\u201d the asbestos contamination by continuous release of fibers qualified as such and was, therefore, an occurrence within the policy definition. 144 Ill. 2d at 77, 578 N.E.2d at 932.\nFinally, the Wilkin court rejected the insurers\u2019 argument that the damages complained of by the building owners were not within the coverage of the CGL policies because of allegations that Wilkin intentionally installed the insulation with knowledge of potential health hazards. The court repeated that the duty to defend arises \"if any theory of recovery alleges coverage.\u201d Since each of the underlying complaints included a negligence count alleging Wilkin \"knew or should have known\u201d of the potential health hazard posed by the material he used, the court liberally construed the policies and the complaints and concluded that they did not allege Wilkin \"expected or intended to contaminate\u201d the property. Ergo, coverage and the insurers\u2019 duty to defend could not be denied on this basis.\nIn this case Merit argues that its policy\u2019s definitions of \"property damage\u201d and \"occurrence\u201d are clear and unambiguous and justify its denials of coverage and the duty to defend in the complaints brought against Posing. In our opinion, the court\u2019s findings in Wilkin are dispositive of Merit\u2019s arguments. Factually, each of the underlying complaints alleges \"property damage\u201d in that the subject real estate was partially destroyed by pest infestation allegedly resulting from Posing\u2019s faulty inspection or treatment. As in Wilkin, we find that this damage is a tangible, physical injury to property within the policy\u2019s definition of \"property damage.\u201d Likewise, insofar as the policy includes as an \"occurrence\u201d or \"accident\u201d \"continuous or repeated exposure to conditions resulting in property damage,\u201d we find that the pest infestation complained of in the underlying complaints constitutes an \"occurrence\u201d within the coverage of the policy.\nFurther, we find that Wilkin controls to the extent that it liberally construed allegations of negligence in favor of the insured in determining that the insured\u2019s intentional performance of business pursuits (here, termite inspections and pest control) does not exculpate the insurer from its duty to defend against the alleged consequences of the insured\u2019s negligence. In this case, as in Wilkin, at least one count in each of the underlying lawsuits alleges negligent conduct without alleging that Posing \"expected\u201d or \"intended\u201d the pest infestation complained of. In our opinion, the bases for liability recited by the plaintiffs in the underlying lawsuits are precisely the kinds of \"occurrences\u201d Posing expected to be insured against when he purchased and periodically renewed the CGL policy for his pest control business.\nNext, we do not read Merit\u2019s \"ME \u2014 36\u201d endorsement, excluding from coverage \"liability assumed by the insured under any contract except an incidental contract,\u201d as broadly as Merit urges in this appeal. The fact that Posing contracted with his clients for his services does not convert his service contracts into general guarantees or assumptions of liability for damages caused by pest infestation. In fact, a copy of Posing\u2019s agreement with Morning Star Baptist Church specifically disclaims Posing\u2019s assumption of liability for such damages. Under the heading, \"Subterranean Termite Control Guaranty,\u201d in capital letters is the following proviso: \"The purchaser further understands that Del Posing\u2019s liability under this agreement is limited to retreatment only and in no way, implied or otherwise, is responsible for damages or repairs to the structure or contents.\u201d Accordingly, we affirm the trial court\u2019s findings that the terms of the policy in question cannot be construed so as to shield Merit from its duty to defend Posing in the three lawsuits in question.\nIn its final argument to this court, Merit points out that, as in Wilkin, since the insured\u2019s liability has not been determined in the underlying lawsuits, the circuit court\u2019s determination of Merit\u2019s duty to indemnify is premature. (See Wilkin, 144 Ill. 2d at 73, 578 N.E.2d at 930, citing Maryland Casualty Co. v. Chicago & North Western Transportation Co. (1984), 126 Ill. App. 3d 150, 466 N.E.2d 1091.) We agree. As explained in Maryland Casualty, \"an untimely determination in the declaratory judgment action could subsequently prejudice a party in the underlying action through application of collateral estoppel. In the case sub judice, circumstances could arise which would permit [the insurer] to contest its duty to pay.\u201d (Maryland Casualty, 126 Ill. App. 3d at 157, 466 N.E.2d at 1096.) Accordingly, to avoid prejudice to the insurer, we reverse that portion of the trial court\u2019s judgment ordering Merit to indemnify its insured in the event judgments are entered against Posing.\nFor the foregoing reasons, we affirm the judgment of the circuit court of Kankakee County as to Merit\u2019s duty to defend and reimburse Posing for defense costs incurred in the underlying lawsuits. We reverse the judgment of the court to the extent that it prematurely determined Merit\u2019s duty to indemnify.\nAffirmed in part; reversed in part and remanded.\nSLATER, P.J., and BRESLIN, J., concur.", "type": "majority", "author": "JUSTICE BARRY" } ], "attorneys": [ "Stern & Rotheiser, of Chicago (Robert D. Shearer, of counsel), for appellant.", "Blanke, Norden, Barmann, Kramer & Bohlen, P.C., of Kankakee (Christopher W. Bohlen, of counsel), for appellee." ], "corrections": "", "head_matter": "DEL POSING, d/b/a Del\u2019s Pest Control, Plaintiff-Appellee, v. MERIT INSURANCE COMPANY, Defendant-Appellant (James Forrester et al., Defendants).\nThird District\nNo. 3 \u2014 93\u20140640\nOpinion filed February 25, 1994.\nAppeal from the Circuit Court of Kankakee County; the Hon. Patrick M. Burns, Judge, presiding.\nStern & Rotheiser, of Chicago (Robert D. Shearer, of counsel), for appellant.\nBlanke, Norden, Barmann, Kramer & Bohlen, P.C., of Kankakee (Christopher W. Bohlen, of counsel), for appellee." }, "file_name": "0827-01", "first_page_order": 847, "last_page_order": 855 }