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Travelers Insurance Co. v. Eljer Manufacturing12/1/2000
Agenda 17-September 2000.
This appeal arises out of four actions for declaratory judgment filed in the circuit court of Cook County by numerous insurance companies against Eljer Manufacturing, Inc., U.S. Brass Corporation, and Household International, Inc. (the policyholders). After the cases were consolidated, both the insurers and the policyholders moved for partial summary judgment. The circuit court granted the insurers' motion and denied the policyholders' motion. The appellate court reversed the summary judgment entered in favor of the insurers. 307 Ill. App. 3d 872. We granted leave to appeal.
BACKGROUND
From 1979 to 1990, the policyholders manufactured and sold a residential plumbing system known as Qest, which was installed in homes throughout the country. After the systems were installed, thousands of homeowners filed claims in various jurisdictions against the policyholders and other defendants involved in the manufacturing process, alleging that leaks in the systems caused extensive damage to their homes. Many of these claims have been settled. In addition, some homeowners whose systems did not leak filed claims seeking reimbursement for the cost of replacing the systems and the resulting diminution in the value of their homes.
Several insurers filed the instant actions in Illinois seeking a declaration of their duty to indemnify the policyholders for damage caused by the plumbing systems. The circuit court consolidated the suits. The insurers moved for partial summary judgment, contending that they have no duty to indemnify the policyholders for claims by homeowners whose systems did not leak during the policy period. The policyholders moved for summary judgment on this issue as well, contending that property damage covered under the insurers' policies occurred at the time the systems were installed. The circuit court granted the insurers' motion and denied the policyholders' motion, ruling that property damage for purposes of coverage under the insurers' policies does not occur until a system leaks.
On appeal, the appellate court noted that the insurers issued two different types of policies at different times to the policyholders. 307 Ill. App. 3d at 877. The court held that for the policies governed by New York law and issued before 1982, no leak was required to trigger coverage, but for the policies governed by Illinois law and issued after 1981, coverage was triggered only when a system actually leaked or when a homeowner caused damage to his property in the process of removing a nonleaking system. 307 Ill. App. 3d at 880-87. The appellate court accordingly reversed the trial court's entry of summary judgment for the insurers. 307 Ill. App. 3d at 887.
ANALYSIS
The facts relevant to our analysis are uncontested by the parties. The insurers issued various policies of excess liability coverage to the policyholders from 1979 to 1990, the years in which the policyholders manufactured the Qest plumbing system. All of the policies provide coverage for "property damage" occurring during the policy period. The policies issued for periods before 1982 are governed by New York law and define "property damage" as "injury to tangible property." The policies issued for periods after 1981 are governed by Illinois law and define "property damage" as "physical injury to or destruction of tangible property."
The construction of an insurance policy is a question of law. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 108 (1992). In construing the policy, the court must ascertain the intent of the parties to the contract. Outboard Marine, 154 Ill. 2d at 108. If the words in the policy are
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