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Nicor11/29/2005
The $10 million question in this case is whether mercury spills during 17 years of insurance coverage were a single occurrence or separate occurrences.
Nicor, Inc., and Northern Illinois Gas Co., d/b/a Nicor Gas Co. (Nicor), seek coverage from their general liability insurers for costs associated with the investigation and cleanup of mercury in customers' residences during a 17-year period. The mercury contamination was the result of Nicor's removal of mercury-containing gas meter regulators. In 0.5% of the removals, mercury was spilled.
The trial court entered partial summary judgment for Nicor, finding Nicor's "systematic failure to consistently remove the mercury regulators in a safe manner resulted in a single `occurrence' under [the policies]." On appeal, the defendants (London Insurers) contend each of the spills that resulted in mercury contamination was a separate "occurrence" under the policies, requiring Nicor to pay separate self- insured retentions (SIR's). We reverse and remand.
FACTS
Nicor supplies natural gas to residential and commercial properties throughout Northern Illinois and Chicago . As part of its service, Nicor installs gas meters to measure the amount of natural gas being supplied to the properties. The meters include a regulator that controls the flow of gas into a residence. Prior to the mid-1950's, Nicor installed regulators inside customers' homes. The regulators contained a small amount (approximately 1.5 to 4 fluid ounces) of mercury. Beginning in 1961, Nicor began using temperature-compensating or mechanical-relief meters that could be installed on the outside of customers' homes. Those meters did not contain mercury.
In 1961, Nicor began removing the mercury-containing regulators. When service crews visited a home to perform maintenance or repair work, they would remove a mercury-containing meter from inside a residence and replace it with a temperature-compensating meter outside the residence. Nicor used written materials and videotapes to train its employees in the proper removal procedures. When removing the regulators from customers' homes, Nicor's technicians occasionally tilted or dropped the regulators and spilled the mercury.
By early 2000, Nicor had received isolated claims of mercury contamination in the homes of some customers. On September 5, 2000, the Illinois Attorney General and the state's attorneys of Cook, DuPage, and Will counties filed a lawsuit against Nicor demanding that Nicor investigate the extent of mercury contamination in all potentially impacted homes and clean all homes where mercury contamination was detected above an established threshold.
On September 12, 2000, the circuit court entered an agreed preliminary injunction in the attorney general's action. The court ordered Nicor to begin the identification, investigation, and cleanup of homes contaminated by mercury spills from regulators. The order codified the removal procedures for regulators as well as the procedures to be followed in case of a spill during removal. Nicor admits the order provided for the same general procedures for the removal of mercury-containing regulators as were set forth in Nicor's Safety Program guidelines promulgated in 2000.
Pursuant to the court's order, Nicor inspected about 200,000 residences. Of those inspected, approximately 1,070 homes tested positive for the presence of mercury at levels above those mandated by the court. Those residences represented about 0.5% of all inspected residences. Nicor incurred approximately $90 million in connection with the investigation and cleanup of the mercury contamination. According to the appellants' brief, mercury s
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