Illinois Court Holds Broad Request for Relief Triggered Duty to Defend

In Country Mut. Ins. Co. v. Bible Pork, Inc., 2015 IL App (5th) 140211, the Fifth District of the Illinois Appellate Court had occasion to consider whether a pleading seeking “such other relief as deemed appropriate” constitutes a claim for potentially covered damages such that the insurer’s duty to defend is implicated.

Bible Pork constructed a hog factory facility in Clay County, Illinois. During construction, 21 plaintiffs filed suit against Bible Pork seeking to have the facility declared a nuisance before it became operational (“the Underlying Lawsuit”). The plaintiffs amended their complaint twice in the Underlying Lawsuit. In all three complaints, the plaintiffs sought not only declarations that the facility constituted a public and a private nuisance, but also “such other relief as deemed appropriate.” Bible Pork tendered the claim to Country Mutual seeking coverage under a primary Agriplus Farm Liability Policy and a Farm Umbrella Liability Policy.

Country Mutual denied coverage for the Underlying Lawsuit under both policies, asserting that the complaints sought only declaratory relief and did not seek personal injury or property damage as required by the policies. Country Mutual also took the position that the policies’ pollution exclusions barred coverage.

Bible Pork continued to defend the Underlying Lawsuit and provided information concerning the status of that matter to Country Mutual. Bible Pork advised Country Mutual that plaintiffs’ attorney in the Underlying Lawsuit stated that he was seeking both monetary damages and injunctive relief. Country Mutual maintained its denial of coverage after receiving this information and thereafter commenced a declaratory judgment action against Bible Pork. The trial court ruled that Country Mutual breached its defense obligation and ordered that it reimburse Bible Pork $2,026,098.63 in defense costs plus interest in the amount of $480,068.96. Country Mutual appealed.

The Fifth District, relying on B.H. Smith, Inc. v. Zurich Insurance Co., 676 N.E.2d 221 (Ill. App. Ct. 1996) and Outboard Marine Corp. v. Liberty Mutual Insurance Co., 607 N.E.2d 1204 (Ill. 1992), affirmed the trial court’s ruling. The court cited to the ruling in B.H. Smith in which the First District Court of Appeals found that a claim for injunctive relief along with “such other and further relief as [the] Court may deem just and proper” was broad enough to create the potential that the claimant would be awarded monetary relief in addition to injunctive relief. The court in B.H. Smith held that the claims asserted in the underlying suit created the potential for an award of money damages in lieu of an equitable remedy, which implicated the insurer’s duty to defend. Similarly, the court in Outboard Marine held that a suit seeking either or both equitable relief and compensatory damages requires an insurer to defend its insured.

The Fifth District ruled that the claim against Bible Pork created the potential for an award of monetary damages in lieu of equitable relief, which was evidenced by the demand in the complaints for “such other relief as deemed appropriate.” Further, the court held that even if the complaints did not seek recovery for monetary damages, Country Mutual was advised by its insured that the plaintiffs were seeking monetary damages in the Underlying Lawsuit. That extrinsic evidence was sufficient to trigger Country Mutual’s defense obligation.

The court also rejected Country Mutual’s argument that the pollution exclusion applied. The court acknowledged that Illinois law restricts application of that exclusion to traditional environmental pollution. The court held that the claims relating to noises, odors and smells do not fall within the traditional understanding of what constitutes a pollution claim. The court therefore affirmed the trial court’s ruling.