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AMCO Insurance Co. v. Swagat Group

January 21, 2010

AMCO INSURANCE COMPANY, PLAINTIFF,
v.
SWAGAT GROUP, LLC, D/B/A COMFORT INN OF LINCOLN, ET AL, DEFENDANTS.



The opinion of the court was delivered by: Jeanne E. Scott United States District Judge

ENTER: January 20, 2010

OPINION

JEANNE E. SCOTT, U.S. District Judge

This matter is before the Court on Plaintiff Amco Insurance Company's Motion for Summary Judgment Based Upon the Fungi or Bacterial Exclusion (d/e 49) (Motion for Summary Judgment). In the instant case, Amco seeks a declaratory judgment that it does not owe a defense or indemnification for claims asserted by Defendants Marjorie Braucher and Bonnie Leiser against Amco's insured, Defendant Swagat Group LLC. In an Opinion (d/e 34), dated February 9, 2009, this Court granted judgment on the pleadings in favor of Amco against Defendants Choice Hotels International and Vasant Patel. Amco now asks the Court to enter summary judgment in its favor against the three remaining Defendants, Swagat Group, Braucher, and Leiser. Braucher and Leiser filed a joint response opposing Amco's Motion. Defendants', Marjorie Braucher and Bonnie Leiser, Response to Amco's Motion for Summary Judgment (d/e 47) (Braucher and Leiser Response). Swagat Group has also filed a response opposing summary judgment Defendant Swagat's Response to Amco's Motion for Summary Judgment (d/e 50) (Swagat Group Response). For the reasons set forth below, the Motion for Summary Judgment is allowed.

BACKGROUND

Swagat Group, Choice Hotels International, and Vasant Patel were owners and operators of the Comfort Inn of Lincoln, Illinois, d/b/a the Best Western of Lincoln, Illinois (the Hotel). Amco insured Swagat under a Commercial General Liability Policy, No. ACP BPM 7101708089, and an Umbrella Liability Policy, No. ACP CAA 7101708089, (collectively, the Swagat Policies) for the period from February 21, 2005, to February 21, 2006. The instant declaratory judgment action relates to underlying lawsuits filed by Braucher and Leiser, which allege that the swimming pool and hot tub at the Hotel were infested with Legionella bacteria. See, e.g., Braucher v. Swagat Group, LLC, et al., Cent. Dist. Ill. Case No. 07-3253, Second Amended Complaint at Law (d/e 64), ¶ 14; Leiser v. Swagat Group, LLC, et al., Cent. Dist. Ill. Case No. 07- 3254, Second Amended Complaint at Law (d/e 69), ¶ 16. Braucher alleges that from February 11, 2006, to February 13, 2006, Georgia Braucher, a member of her family, stayed at the Hotel and came within the vicinity of the pool and hot tub. From contact with the Legionella bacteria, she alleges, Georgia Braucher contracted Legionnaire's disease and died. Leiser alleges that, on January 14, 2006, she stayed at the Hotel, used the pool and hot tub, and came into contact with the Legionella bacteria. Leiser alleges that, as a result of her contact with the Legionella bacteria, she contracted Legionnaire's disease and sustained permanent injuries and damages.

Amco filed the instant action in December 2007, asserting that the claims alleged in the Braucher and Leiser lawsuits were outside the scope of coverage of the Swagat Policies. After all Defendants answered the Complaint (d/e 1), Amco filed a Motion for Judgment on the Pleadings (d/e 20), arguing that several expressly identified policy exclusions excluded the Braucher and Leiser lawsuits from coverage. Among other arguments, Amco asserted that coverage was excluded under the fungi or bacteria exclusions in the Swagat Policies. According to Amco, the General Liability Policy included the following exclusion:

This insurance, including any duty we have to defend "suits", does not apply to: Fungi or Bacteria

a. "Bodily injury" or "property damage" which would not have occurred, in whole or in part, but for:

1) The actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of, any "fungi" or bacteria on or within a building or structure, including its contents; or

2) The failure to warn or to disclose the presence of "fungi" or bacteria; regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury or damage.

Complaint, Exhibit B.2, General Liability Policy, at page 46 of d/e 1-3. According to Amco, the Umbrella Liability Policy contained the following exclusion:

Any liability which would not have occurred, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of, any "fungi" or bacteria on or within a building or structure, including its contents, regardless of whether any other cause, event, ...


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