Court Opinion

ID: 9781016
Source: CourtListenerOpinion
Date Created: 2023-08-30 15:10:55.015998+00
Date Added: 2024-06-11T12:09:55.495469
License: Public Domain

2023 IL App (1st) 221625
                                                                                         First District
                                                                                       Third Division
                                                                                      August 30, 2023

     No. 1-22-1625
                                                       )
     CONTINENTAL CASUALTY COMPANY,                     )
                                                       )
             Plaintiff-Appellee,                       )
                                                       )
                                                                     Appeal from the Circuit Court
     v.                                                )
                                                                     of Cook County.
                                                       )
     401 NORTH WABASH VENTURE, LLC, d/b/a Trump )
                                                                     No. 2021 CH 03148
     International Hotel & Tower; ACE AMERICAN         )
     INSURANCE COMPANY; ILLINOIS UNION                 )
                                                                     The Honorable
     INSURANCE COMPANY; and QBE INSURANCE              )
                                                                     Michael T. Mullen,
     CORPORATION,                                      )
                                                                     Judge Presiding.
                                                       )
             Defendants                                )
                                                       )
     (401 North Wabash Venture, LLC,                   )
             Defendant-Appellant;                      )
                                                       )
     ACE American Insurance Company, Illinois Union    )
     Insurance Company, and QBE Insurance Corporation, )
             Defendants-Appellees).                    )
                                                       )

          JUSTICE REYES delivered the judgment of the court, with opinion.
          Presiding Justice McBride and Justice D.B. Walker concurred in the judgment and opinion.

                                               OPINION

¶1        In 2018, the State of Illinois filed a lawsuit against defendant, 401 North Wabash Venture,

       LLC d/b/a Trump International Hotel & Tower (401 North Wabash), in connection with the

       allegedly improper operation of a cooling water intake structure at its property located at 401

       North Wabash Avenue in Chicago; several environmental groups also intervened in the action.

       Plaintiff Continental Casualty Company (Continental), one of 401 North Wabash’s insurers,

       filed a declaratory judgment action seeking a declaration that it owed no duty to defend 401
     No. 1-22-1625

        North Wabash in connection with the litigation, ultimately filing a motion for judgment on the

        pleadings on the matter. 401 North Wabash’s other insurers—defendants ACE American

        Insurance Company (ACE), Illinois Union Insurance Company (Illinois Union), and QBE

        Insurance Corporation (QBE)—filed similar motions for judgment on the pleadings, also

        contending that they owed 401 North Wabash no duty to defend. The circuit court granted the

        motions, finding that the conduct alleged by the underlying complaints did not constitute an

        “occurrence” under any of the insurance policies and, in any event, coverage was barred by the

        policies’ pollution exclusion. 401 North Wabash now appeals and, for the reasons set forth

        below, we affirm.

¶2                                          BACKGROUND

¶3                                          Insurance Policies

¶4          Between 2008 and 2020, 401 North Wabash was a named insured on commercial general

        liability insurance policies issued by the four insurers involved in the instant litigation

        (collectively, the insurance policies). The ACE and Illinois Union (collectively, Chubb)

        insurance policies insured 401 North Wabash for three annual periods from May 16, 2008,

        through May 16, 2009 (ACE), and May 16, 2009, through May 16, 2011 (Illinois Union). 1 The

        QBE insurance policy insured 401 North Wabash for four annual periods from May 16, 2011,

        through May 16, 2015. The Continental insurance policy insured 401 North Wabash for five

        annual periods from May 30, 2015, through May 30, 2020.

¶5          All of the insurance policies provided coverage for “property damage” which was caused

        by an “occurrence” during the policy period. An “occurrence” was defined under each policy

            1
             The Chubb policies differ slightly from the other policies, in that Chubb’s obligation does not
        include a duty to defend but is limited to payment of damages in excess of 401 North Wabash’s “Self
        Insured Retention.”
                                                       2
     No. 1-22-1625

        as “an accident, including continuous or repeated exposure to substantially the same general

        harmful conditions.” “Property damage” was defined as (1) “[p]hysical injury to tangible

        property, including all resulting loss of use of that property” or (2) “[l]oss of use of tangible

        property that is not physically injured.”

¶6         All of the insurance policies also included pollution exclusions. The Chubb policies

        covering the 2008-09 and 2009-10 policy periods included an “Absolute Pollution Exclusion,”

        which provided that the policy did not apply to “any injury, damage, expense, cost, loss,

        liability or legal obligation arising out of or in any way related to pollution, however caused.”

        The exclusion further provided that “[p]ollution includes the actual, alleged or potential

        presence in or introduction into the environment of any substance if such substance has, or is

        alleged to have, the effect of making the environment impure, harmful, or dangerous.

        Environment includes any air, land, structure or the air therein, watercourse or water, including

        underground water.”

¶7         The 2010-11 Chubb policy, as well as the Continental and QBE policies, included a “Total

        Pollution Exclusion,” which provided that the policy did not apply to “ ‘[b]odily injury’ or

        ‘property damage’ which would not have occurred in whole or in part but for the actual, alleged

        or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ at any

        time.” “Pollutants” was defined under the Continental and Chubb polices as “any solid, liquid,

        gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis,

        chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

        The QBE policy contained a slightly broader definition, defining “pollutants” as “any solid,

        liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids,

                                                     3
       No. 1-22-1625

          alkalis, radiation or radioactive contamination, pathogenic or poisonous biological or chemical

          materials and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

¶8                                            Underlying Litigation

¶9            In 2018, the State, on its own motion and at the request of the Illinois Environmental

          Protection Agency (Illinois EPA), filed a three-count complaint in the circuit court of Cook

          County against 401 North Wabash, alleging violations of Illinois’ Environmental Protection

          Act (Act) (415 ILCS 5/42 (West 2016)). The complaint alleged that 401 North Wabash owned

          a property located at 401 North Wabash (property), alongside the Chicago River. The

          property’s heating, ventilation, and air conditioning (HVAC) system contained a “cooling

          water intake/discharge system,” which withdrew approximately 19.7 million gallons of water

          per day from the Chicago River to use for cooling purposes, then returned the same volume of

          water back into the river in the form of heated effluent. 2 The complaint alleged that the heated

          effluent constituted a contaminant under the Act, such that 401 North Wabash was required to

          obtain a permit 3 prior to discharging it into the river.

¶ 10          According to the complaint, in January 2012, 401 North Wabash submitted a NPDES

          permit application to the Illinois EPA, and the permit was issued in September 2012. In

          October 2012, 401 North Wabash submitted an application to modify the terms of its permit

          based on an error in its initial permit application, and its most recent permit was issued in

          March 2013. The permit expired on August 31, 2017; 401 North Wabash submitted an

              2
                The regulations promulgated pursuant to the Act define “effluent,” in relevant part, as “any
          wastewater discharged, directly or indirectly, to the waters of the State or to any storm sewer.” 35 Ill.
          Adm. Code 301.275 (2023).
              3
                The federal Clean Water Act of 1977 (Clean Water Act) established a national pollution
          discharge elimination system (NPDES) to regulate point sources which discharge pollutants into
          waters, including the issuance of permits for discharge of pollutants. See 33 U.S.C. § 1342 (2018).
          Section 12(f) of the Act prohibits discharge of contaminants into Illinois waters without an NPDES
          permit. 415 ILCS 5/12(f) (West 2016).
                                                            4
       No. 1-22-1625

          application to renew its permit in May 2017, but no such permit had been issued as of the date

          the complaint was filed.

¶ 11          The complaint alleged that, despite the expiration of its NPDES permit, 401 North Wabash

          had continued operating its water intake structures at the property and had continued

          discharging heated effluent into the Chicago River. Accordingly, count I of the complaint

          alleged that 401 North Wabash had violated the Act and its applicable regulations and sought

          an injunction ordering 401 North Wabash to cease and desist from any further violations, along

          with the imposition of civil penalties.

¶ 12          Count II of the complaint alleged that, in seeking NPDES permits, 401 North Wabash had

          failed to comply with application requirements for “new sources,” such as the property.

          Finally, count III of the complaint alleged that 401 North Wabash had failed to comply with

          the regulations promulgated pursuant to the Act. As with count I, counts II and III requested

          an injunction ordering 401 North Wabash to cease and desist from further violations, along

          with civil penalties.

¶ 13          In addition to the State’s complaint, two environmental organizations—the Sierra Club and

          Friends of the Chicago River—filed an intervenor complaint, in which they alleged violations

          of the federal Clean Water Act and common-law public nuisance. The intervenors alleged that,

          when the property was constructed in 2005, it retained the water intake structure which had

          been used by the site’s previous owner but also constructed a new water intake structure. As a

          new structure, it required a NPDES permit, which 401 North Wabash did not obtain until 2012.

          Additionally, pursuant to the terms of the permit, 401 North Wabash was required to submit

          certain information to the Illinois EPA, which it did not do. The intervenors further alleged

          that the property was considered a “new facility” under the Clean Water Act, which required

                                                      5
       No. 1-22-1625

          401 North Wabash to submit certain information and studies prior to the commencement of

          water withdrawals. While some of this information was eventually submitted, the intervenors

          alleged that it was incomplete and did not contain certain required information, such as data

          on the property’s impact on fish and other wildlife. The intervenors also alleged that the

          property had not taken proper steps to minimize the impact of its intake on fish and other

          wildlife, as required.

¶ 14          The intervenors alleged that 401 North Wabash had violated the Clean Water Act by failing

          to comply with the requirements of its NPDES permit and federal regulations concerning

          cooling water intakes at new facilities. 4 The intervenors further alleged that 401 North Wabash

          was liable for causing a public nuisance, as its operation of its water intake structures in

          violation of its permit and federal regulations substantially and unreasonably interfered in the

          intervenors’ right to fish and otherwise recreate in the Chicago River. The intervenors alleged

          that this conduct had injured the intervenors “to a currently unknown degree and in an amount

          to be determined through discovery and at trial and reflective of the extent of harms to aquatic

          life, ecosystems, and economic and other interests in the Chicago River” caused by the

          conduct. The intervenors requested (1) an injunction preventing 401 North Wabash from

          further violating the Clean Water Act and its permit, (2) an order requiring 401 North Wabash

          to complete all actions necessary to ensure compliance with the Clean Water Act, (3) payment

          of a civil penalty to the United States for each violation, (4) payment of the intervenors’ costs

          and attorney fees, (5) an injunction preventing 401 North Wabash “from operating its facility

              4
               According to Continental’s motion for judgment on the pleadings in the instant case, the
          intervenors’ Clean Water Act claim was ultimately dismissed.
                                                          6
       No. 1-22-1625

          so as to create a public nuisance,” and (6) “such other relief as the Court may deem

          appropriate.”

¶ 15         In January 2021, the circuit court granted the State’s motion for judgment on the pleadings

          as to counts I and III of its complaint, finding that 401 North Wabash was liable for violating

          environmental laws and regulations due to its unpermitted discharge into the Chicago River.

          The court further found that the “appropriate civil penalty for the above enumerated violations”

          remained at issue and would be addressed at subsequent hearings.

¶ 16                                         Current Litigation

¶ 17         In June 2021, Continental filed a complaint for declaratory judgment against 401 North

          Wabash and its other insurers, seeking a declaration that it owed no duty to defend or indemnify

          401 North Wabash with respect to the claims alleged in the underlying litigation. Continental

          alleged that there was no coverage under its policies as (1) the underlying complaints did not

          seek “damages” as required by the policies, (2) the underlying complaints did not allege

          “bodily injury” or “property damage” as required by the policies, (3) the underlying complaints

          did not allege an “occurrence” under the policies, (4) 401 North Wabash first became aware of

          any alleged property damage prior to the inception of the policies, (5) 401 North Wabash failed

          to timely notify Continental of any occurrence, claim, or suit as required by the policies, (6) the

          policies’ pollution exclusion precluded any potential coverage, and (7) the policies’ “Expected

          or Intended Injury” exclusion precluded any potential coverage.

¶ 18         In November 2021, QBE filed an answer and counterclaim, in which it alleged that it had

          agreed to defend 401 North Wabash in the underlying litigation, subject to a full reservation

          of rights. In its counterclaim, however, QBE sought a declaration that it owed no duty to defend

          or indemnify 401 North Wabash under its policies as (1) the underlying complaints did not

                                                        7
       No. 1-22-1625

          allege “bodily injury” or “property damage” as required by the policies, (2) the underlying

          complaints did not allege an “occurrence” under the policies, (3) 401 North Wabash had

          knowledge of the alleged conduct prior to the inception of the polices, (4) 401 North Wabash

          did not timely inform QBE of the underlying litigation, (5) the policies’ “Expected or Intended

          Injury” exclusion precluded any potential coverage, (6) the policies’ “Damage to Impaired

          Property or Property not Physically Injured” exclusion precluded any potential coverage, and

          (7) the policies’ pollution exclusion precluded any potential coverage.

¶ 19         In January 2022, Chubb also filed an answer and counterclaim, alleging that it owed no

          coverage under its policies for similar reasons as the other insurers. Specifically, Chubb alleged

          that no coverage was available as (1) the underlying complaints did not seek to recover

          damages for bodily injury or property damage, (2) the underlying complaints did not allege an

          occurrence under the policies, (3) the underlying complaints did not allege bodily injury or

          property damage occurring during the policy periods, (4) the underlying complaints did not

          allege any personal or advertising injuries, (5) the actions alleged in the underlying complaints

          were barred by the policies’ pollution exclusions, (6) to the extent that the underlying

          complaints alleged property damage, coverage was precluded by the policies’ “expected-or-

          intended injury” exclusion, and (7) the policies did not provide coverage for claims seeking

          equitable, declaratory, or injunctive relief. Chubb also alleged that, to the extent that coverage

          might otherwise exist, it had no obligation to pay any expenses until the policies’ self-insured

          retentions were satisfied and further alleged that 401 North Wabash had forfeited any coverage

          by failing to timely notify Chubb and by voluntarily making payments without Chubb’s written

          consent.

                                                        8
       No. 1-22-1625

¶ 20          In May 2022, all of the insurers separately filed motions for judgment on the pleadings,

          pursuant to section 2-615(e) of the Code of Civil Procedure (Code) (735 ILCS 5/2-615(e)

          (West 2020)). The insurers limited their motions to three claims: (1) there was no alleged

          “occurrence” under the policies, (2) the underlying complaints did not seek to recover damages

          for “property damage,” and (3) even if coverage requirements were otherwise satisfied, the

          pollution exclusions precluded coverage.

¶ 21          First, the insurers claimed that there was no alleged “occurrence” under the policy, as

          “occurrence” was defined as an “accident,” and the intentional discharge of thermal process

          wastewater without a necessary permit could not be considered to be an accident. Next, the

          insurers claimed that the underlying complaints did not seek recovery of damages due to

          “property damage” but instead sought only declaratory and injunctive relief, as well as civil

          penalties. Finally, the insurers contended that coverage was barred by the pollution exclusions

          in the policies, as the discharge of heated effluent was a pollutant under the policies.

¶ 22          In response, 401 North Wabash filed a cross-motion for judgment on the pleadings,

          contending that the allegations of the underlying complaints fell within the policies’ coverage.

          401 North Wabash claimed that the insurers focused solely on the allegations concerning the

          discharge of heated effluent and ignored the other parts of the underlying complaint, which

          focused on the damage to fish and other wildlife during the water intake process. 5 401 North

          Wabash maintained that there was no indication that injury to such wildlife was intentional,

          that such injury was considered “property damage” under the policies, and that the intake of

              5
                According to 401 North Wabash’s motion, there are two types of potential damage to aquatic life
          at issue: entrainment and impingement. Entrainment involves river life being damaged in the process
          of being drawn into the water intake system, while impingement occurs when organisms too large to
          pass through the screens of the water intake system are trapped against the screens by the force of the
          flowing river water being drawn into the system. See also 40 C.F.R. § 125.83 (2022) (defining
          entrainment and impingement under the federal Clean Water Act).
                                                          9
       No. 1-22-1625

          water was not considered a “pollutant” under the policies. 401 North Wabash further noted

          that the underlying complaints also requested “other relief,” which it claimed could constitute

          monetary damages.

¶ 23         On September 30, 2022, the circuit court granted the insurers’ motions for judgment on the

          pleadings, finding that there was no “occurrence” under the policies. The court further found

          that, even if 401 North Wabash had prevailed on the other two issues, the pollution exclusion

          would bar coverage. 401 North Wabash timely filed a notice of appeal, and this appeal follows.

¶ 24                                           ANALYSIS

¶ 25         On appeal, 401 North Wabash contends that the circuit court erred in granting the insurers’

          motions for judgment on the pleadings. Like a motion for summary judgment, a motion for

          judgment on the pleadings is limited to the pleadings. Pekin Insurance Co. v. Wilson, 237 Ill.

          2d 446, 455 (2010). Judgment on the pleadings is appropriate only where there is no genuine

          issue of material fact and the moving party is entitled to judgment as a matter of law. Hooker

          v. Illinois State Board of Elections, 2016 IL 121077, ¶ 21. When ruling on such a motion, “a

          court may consider only those facts appearing on the face of the pleadings, matters subject to

          judicial notice, and any judicial admissions in the record,” and all well-pleaded facts and

          reasonable inferences based on those facts are taken as true. Id. The grant of a motion for

          judgment on the pleadings is reviewed de novo. Id.; Wilson, 237 Ill. 2d at 455. De novo review

          is also appropriate here, as the construction of the provisions of an insurance policy is a

          question of law, which is reviewed de novo. Wilson, 237 Ill. 2d at 455.

¶ 26         In a declaratory judgment such as the one at issue here, where the question is whether the

          insurer has a duty to defend, a court ordinarily looks to the allegations of the underlying

          complaint and compares them to the relevant provisions of the insurance policy. Id.; Outboard

                                                      10
       No. 1-22-1625

          Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 107-08 (1992). This principle

          has been referred to as the “eight corners rule.” Country Mutual Insurance Co. v. Dahms, 2016

          IL App (1st) 141392, ¶ 37; see also Farmers Automobile Insurance Ass’n v. Country Mutual

          Insurance Co., 309 Ill. App. 3d 694, 698 (2000). “If the facts alleged in the underlying

          complaint fall within, or potentially within, the policy’s coverage, the insurer’s duty to defend

          arises.” Outboard Marine Corp., 154 Ill. 2d at 108. If it is clear from the face of the complaint

          that the allegations fail to state facts that bring the case within, or potentially within, the

          policy’s coverage, however, an insurer may properly refuse to defend. 6 State Farm Fire &

          Casualty Co. v. Hatherley, 250 Ill. App. 3d 333, 336 (1993) (citing United States Fidelity &

          Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 73 (1991)).

¶ 27          The basis for the circuit court’s decision in the instant case was its finding that the

          underlying complaints had not alleged an “occurrence” under the policies. As noted, all of the

          insurance policies provided coverage for property damage which was caused by an

          “occurrence” during the policy period. An “occurrence” was defined under each policy as “an

          accident, including continuous or repeated exposure to substantially the same general harmful

          conditions.” While the policies do not define “accident,” our courts have generally interpreted

          the term as meaning “an unforeseen occurrence, usually of an untoward or disastrous character

          or an undesigned sudden or unexpected event of an inflictive or unfortunate character.”

          (Internal quotation marks omitted.) Korte & Luitjohan Contractors, Inc. v. Erie Insurance

          Exchange, 2022 IL App (5th) 210254, ¶ 21; see also Stoneridge Development Co. v. Essex

          Insurance Co., 382 Ill. App. 3d 731, 749 (2008) (collecting cases). Moreover, “ ‘[t]he natural

              6
                We note that the Chubb policies include only a duty to indemnify, not a duty to defend. In
          Illinois, the duties to defend and to indemnify are not coextensive, with the obligation to defend being
          broader than the obligation to pay. International Minerals & Chemical Corp. v. Liberty Mutual
          Insurance Co., 168 Ill. App. 3d 361, 366 (1988).
                                                          11
       No. 1-22-1625

          and ordinary consequences of an act do not constitute an accident.’ ” State Farm Fire &

          Casualty Co. v. Watters, 268 Ill. App. 3d 501, 506 (1994) (quoting Aetna Casualty & Surety

          Co. v. Freyer, 89 Ill. App. 3d 617, 619 (1980)); see also Stoneridge Development Co., 382 Ill.

          App. 3d at 749-50 (collecting cases).

¶ 28         Here, the parties have a fundamental disagreement as to the actions which constitute the

          purported “occurrence.” 401 North Wabash contends that the relevant inquiry is whether it

          expected or intended for its withdrawal of river water to cause harm to fish and other aquatic

          life. The insurers, by contrast, maintain that the proper focus is on the property’s intentional

          operation of its water intake structure in the absence of a valid NPDES permit. We agree with

          the insurers that the conduct at issue is the property’s operation of its system generally, not the

          ultimate results of that operation.

¶ 29         The underlying complaints both exclusively state causes of action arising from the

          operation of the system in violation of the applicable statutory and regulatory requirements. In

          the State’s complaint, count I alleged that 401 North Wabash had violated the Act and its

          applicable regulations by continuing to operate its water intake structures at the property and

          discharging heated effluent into the Chicago River, despite its lack of a valid NPDES permit.

          Count II alleged that, in seeking NPDES permits, 401 North Wabash had failed to comply with

          application requirements for “new sources” such as the property. Finally, count III alleged that

          401 North Wabash had failed to comply with the regulations promulgated by the Pollution

          Control Board pursuant to the Act.

¶ 30         In the intervenors’ complaint, count I alleged that 401 North Wabash had violated the Clean

          Water Act by failing to comply with the requirements of its NPDES permit and federal

          regulations concerning cooling water intakes at new facilities. Count II alleged that 401 North

                                                        12
       No. 1-22-1625

          Wabash was liable for causing a public nuisance, as its operation of its water intake structures

          in violation of its permit and federal regulations substantially and unreasonably interfered in

          the intervenors’ right to fish and otherwise recreate in the Chicago River. The intervenors

          alleged that this conduct had injured the intervenors “to a currently unknown degree and in an

          amount to be determined through discovery and at trial and reflective of the extent of harms to

          aquatic life, ecosystems, and economic and other interests in the Chicago River” caused by the

          conduct.

¶ 31          Both complaints make clear that the challenged conduct is the failure to comply with the

          Act and its regulations. While the impact of the water intake structures on fish and other aquatic

          wildlife is certainly an issue, especially in the intervenors’ complaint, it is only relevant in the

          larger context of statutory and regulatory compliance. In other words, 401 North Wabash is

          not being sued for endangering the local fish population—it is being sued for failing to comply

          with regulations which, in part, require it to study and minimize the impacts of its cooling

          operations on fish. To be sure, 401 North Wabash challenges the merits of these claims in the

          underlying litigation, and we do not express any opinion as to the outcome of that litigation. 7

          The fact remains, however, that the issues revolve around 401 North Wabash’s compliance

          with statutory and regulatory requirements. We cannot find that this alleged conduct constitutes

          an “occurrence” under the terms of the insurance policies.

¶ 32          Moreover, even if the property’s impact on fish and wildlife was the relevant focus, it still

          would not be considered an “occurrence” under the policies. “ ‘The natural and ordinary

              7
               We note that, in its answer to the State’s complaint in the underlying litigation, 401 North
          Wabash admitted to operating without a valid permit but raised a number of affirmative defenses to
          the State’s claims. As noted, the circuit court ultimately entered judgment on the pleadings in favor of
          the State as to count I and part of count III, finding that 401 North Wabash is liable for violations of
          the Act and its regulations.
                                                          13
No. 1-22-1625

   consequences of an act do not constitute an accident.’ ” Watters, 268 Ill. App. 3d at 506

   (quoting Freyer, 89 Ill. App. 3d at 619). 401 North Wabash makes much of the fact that the

   consideration of whether an injury was expected or intended is viewed from the standpoint of

   the insured. See id. It is clear, however, that 401 North Wabash was aware that impingement

   and entrainment were “natural and ordinary consequences” (internal quotation marks omitted)

   (id.) of operating its cooling water intake structure. Its 2013 permit required 401 North Wabash

   to submit “a summary of historical 316(b)[8] related intake impingement and/or entrainment

   studies, if any, as well as current impingement mortality and/or entrainment characterization

   data” within six months of the permit’s effective date, and a 2017 letter from its environmental

   consultant to the Illinois EPA specifically referenced these requirements in seeking an

   extension of time “to determine the best options for complying with impingement and

   entrainment requirements.” The fact that 401 North Wabash may not have known the extent

   of any such impingement or entrainment, due to its lack of study on the issue, does not mean

   that 401 North Wabash was unaware that operation of its cooling water intake structure would

   have some impact on the fish and other wildlife in the river. Again, 401 North Wabash disputes

   whether it was complying with the applicable requirements in the underlying litigation, and we

   do not express any opinion on the issue here. There can be no dispute, however, that

   impingement and entrainment are concerns for any cooling water intake structure, whether

   operating according to the law or not. We therefore cannot find that such impingement and

   entrainment constitutes an “occurrence” under the insurance policies.

       Section 316(b) of the Clean Water Act, now codified in section 1326(b), requires that cooling
       8

   water intake structures “reflect the best technology available for minimizing adverse environmental
   impact.” 33 U.S.C. § 1326(b).
                                                  14
       No. 1-22-1625

¶ 33         We find unpersuasive 401 North Wabash’s reliance on Erie Insurance Exchange v.

          Imperial Marble Corp., 2011 IL App (3d) 100380. In that case, the Third District found that

          the underlying complaint alleged an “occurrence” where it alleged that the emissions from a

          manufacturing plant harmed nearby neighbors through an “ ‘ongoing, continuous, repeated,

          regular and uninterrupted’ invasion of the complainants’ persons and property by ‘odors and

          air contaminants.’ ” Id. ¶ 17. The appellate court rejected the insurer’s argument that, since the

          emissions were intentionally discharged, they did not constitute an accident and therefore were

          not an “occurrence.” Id. ¶ 18. Instead, the court found that “[b]ecause the alleged bodily injury

          and property damage were unexpected results of [the manufacturing plant’s] intended

          emissions, they constitute an accident under the policy.” Id. In the case at bar, however, to the

          extent that damage to fish and wildlife is considered property damage (an issue we need not

          reach), it cannot be said that such damage was unexpected, as explained above. Accordingly,

          we affirm the circuit court’s grant of the insurers’ motions for judgment on the pleadings, as

          the underlying complaints did not allege an “occurrence” under the insurance policies.

¶ 34         As we agree with the circuit court’s conclusion that the allegations of the underlying

          complaint do not allege an “occurrence” under the insurance policies, we need not consider the

          insurers’ alternate arguments as to whether they allege “property damage” or the applicability

          of the pollution exclusion.

¶ 35                                          CONCLUSION

¶ 36         For the reasons set forth above, the circuit court’s grant of the insurers’ motions for

          judgment on the pleadings is affirmed, as the conduct alleged in the underlying complaints did

          not constitute an “occurrence” under the insurance policies.

¶ 37         Affirmed.

                                                       15
No. 1-22-1625

  Continental Casualty Co. v. 401 North Wabash Venture, LLC, 2023 IL App (1st) 221625

Decision Under Review:      Appeal from the Circuit Court of Cook County, No. 2021-CH-
                            03148; the Hon. Michael T. Mullen, Judge, presiding.

Attorneys                   John F. Shonkwiler, of Leland Grove Law LLC, of Chicago, and
for                         Evan S. Schwartz, of Schwartz Conroy & Hack PC, of New
Appellant:                  York, New York, for appellant.

Attorneys                   Michael P. Baniak and Dora Lee, of Litchfield Cavo LLP, Scott
for                         E. Turner, of CAN, and Christoper A. Wadley and Eric D.
Appellee:                   Blanchard, of Walker Wilcox Matousek LLP, all of Chicago,
                            and Edward J. Tafe, of CNA, of San Francisco, California, for
                            appellees.

                                          16