Appeal from the Circuit Court of Cook County Honorable John K. Madden, Judge Presiding.
The opinion of the court was delivered by: Presiding Justice O'brien
PRESIDING JUSTICE O'BRIEN delivered the opinion of the court:
Plaintiff, the Board of Education of Township High School District No. 211, filed a declaratory judgment action against defendant, International Insurance Company, seeking a determination of coverage under two property insurance policies for asbestos-related property damage in three of plaintiff's high schools. The trial court granted summary judgment for defendant. Plaintiff filed this timely appeal. We reverse and remand.
Defendant sold plaintiff two property insurance policies that provided coverage from April 1, 1981, to March 31, 1986, for "all risks of physical loss or damage" to the five high schools operated by plaintiff. In 1983, plaintiff hired Arcon Associates, an architectural firm, to inspect the schools for the presence of "friable" asbestos, i.e., asbestos that can be crumbled by hand. Richard Kumnick, an employee of Arcon, discovered friable asbestos in three of the schools. Kumnick opined that the asbestos-containing building materials (ACBMs) were releasing harmful fibers into the air and that ordinary activities such as sweeping and dusting were "reentraining," or making airborne again, previously released fibers.
Kumnick further opined that the Asbestos Abatement Act (105 ILCS 105/1 et seq. (West 1994)) required the removal of the ACBMs. The Asbestos Abatement Act provides for "the identification, containment or removal of those asbestos materials that constitute a significant health hazard *** to students, school personnel, parents and visitors to such schools *." 105 ILCS 105/2 (West 1994).
Plaintiff notified Kumnick that it had decided to remove all ACBMs from its schools. According to Kumnick, plaintiff incurred over $2.6 million in asbestos removal and restoration costs between June 1984 and July 1986. To date, plaintiff has incurred about $18 million in asbestos removal and restoration costs.
Plaintiff made claim upon defendant for coverage under the two property insurance policies. Defendant denied the claim.
Plaintiff filed this declaratory judgment action against defendant, seeking a declaration that the policies cover the damage resulting from the presence of friable asbestos and toxic asbestos fibers in its schools. The trial court granted summary judgment for defendant, finding that the presence of asbestos in the school buildings did not constitute property damage covered by the policies. Plaintiff filed this timely appeal.
Summary judgment is appropriate when, viewed in the light most favorable to the nonmoving party, the pleadings, depositions and admissions on file reveal that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law. Ragan v. Columbia Mutual Insurance Co., 183 Ill. 2d 342, 349 (1998).The standard of review in cases involving summary judgment is de novo. Ragan, 183 Ill. 2d at 349.
In determining whether summary judgment for defendant is proper, the two property insurance policies at issue must be construed. The construction of insurance policies is a matter of law subject to de novo review. American States Insurance Co. v. Koloms, 177 Ill. 2d 473, 479-80 (1997). The construction of the policies is to give effect to the intent of the parties as expressed in their agreement. American States, 177 Ill. 2d at 479. If the terms of the policies are unambiguous, they must be given their plain and ordinary meaning. American States, 177 Ill. 2d at 479. If the terms of the policies are capable of more than one meaning, they are construed strictly against the insurer. American States, 177 Ill. 2d at 479.
The two policies provide, in part, that defendant agrees to indemnify plaintiff for "all risks of physical loss or damage to all real or personal property of every kind and description wherever located occurring during the period of this insurance."
Defendant contends that the presence of friable ACBMs and asbestos fibers in plaintiff's schools does not constitute physical loss or damage to property covered under the property insurance policies at issue. In support, defendant cites a New Mexico Supreme Court case, Leafland Group - II, Montgomery Towers Ltd. Partnership v. Insurance Co., 118 N.M. 281, 881 P.2d 26 (1994). Leafland purchased an apartment complex, Montgomery Towers, in 1983. After purchasing the property, Leafland bought a comprehensive insurance policy from Insurance Company of North America (INA) that provided both property coverage and liability coverage for the subject property. Leafland, 118 N.M. at 282, 881 P.2d at 27. Leafland subsequently discovered that asbestos had been used in the construction of Montgomery Towers and that the presence of the asbestos had diminished the value of the property by $1,750,000. Leafland, 118 N.M. at 282, 881 P.2d at 27. Leafland made a claim under the insurance policy, but INA refused to pay for the property's diminished value. Leafland, 118 N.M. at 282, 881 P.2d at 27.
The New Mexico Supreme Court held that the policy, which insured against "direct loss or damage," did not cover the diminution in value of the apartment complex caused by the presence of asbestos installed during construction. The court stated that there was "no event that happened during the time the policy was in effect that caused direct loss or damage" to the property. Leafland, 118 N.M. at 282, 881 P.2d at 28.
Leafland is factually inapposite to the present case because the all - risk policies at issue here contain no language limiting their coverage to "direct loss or damage" to plaintiff's buildings. Further, unlike Leafland, which sought coverage for the diminution in value of the property that occurred prior to the policy period, plaintiff here seeks coverage for the removal of ACBMs in ...