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Tower Insurance Company of New York v. Pima Lansing, LLC

United States District Court, N.D. Illinois, Eastern Division

June 16, 2015



THOMAS M. DURKIN, District Judge.

Plaintiff Tower Insurance Company of New York ("Tower") has filed a complaint against its insured, defendant Pima Lansing, LLC ("Pima"), seeking a declaration that it has no duty to defend or indemnify Pima in connection with a state court complaint filed by residents of an apartment complex that Pima owned and operated. See Terrell v. Pima Lansing, LLC, No. 2014 L 000803 (Ill. Cir. Ct. 2014);[1] see also R 1-1 at 9. Tower and Pima dispute whether an exclusion in the parties' policy for losses attributable to "fungi" and "bacteria" applies to the plaintiffs' claims in the underlying suit. Tower's and Pima's cross-motions for summary judgment are currently before the Court. For the following reasons, the Court grants Tower's motion and denies Pima's motion.


Tower issued insurance Policy No. CPP XXXXXXX-XX to Pima, a property management company, effective May 1, 2013 to May 1, 2014 ("the Policy"). R. 42-2. Among other things, the Policy covers "Bodily Injury and Property Damage Liability" ("Coverage A") and "Personal and Advertising Injury Liability" ("Coverage B"). Id. at 97, 102. Both Coverage A and Coverage B contain the following coverage exclusion for bodily injury and property damage caused by fungi and bacteria:

[t]his insurance does not apply to bodily injury or "property damage" 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, material or product contributed concurrently or in any sequence to such injury or damage.

R. 42-2 at 121. The Policy defines "fungi" as "any type or form of fungus, including mold or mildew and any mycotoxins, spores, scents or byproducts produced or released by fungi." Id. It does not define "bacteria."

On January 24, 2014, three families who rented property from Pima sued Pima in the Circuit Court of Cook County. See R. 42-1 ("Complaint at Law") at 1; see also id. at ¶¶ 3-5. The plaintiffs' complaint asserts claims for negligence and nuisance based upon Pima's alleged failure to maintain the property in a "fit and habitable condition." Id. at ¶ 12. Specifically, the plaintiffs claim that they were injured by "constant exposure" to "mold, mildew, fungi and other microorganisms and/or toxic airborne pathogens." See, e.g., id. at ¶¶ 9, 11(h) ("Count I - Negligence - Terrell Family"); id. at ¶ 5 ("Count II - Nuisance - Terrell Family").[2] Tower and Pima have filed cross-motions for summary judgment addressing whether the Policy's fungi/bacteria exclusion applies to the underlying complaint.


Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The Court considers the entire evidentiary record and must view all of the evidence and draw all reasonable inferences from that evidence in the light most favorable to the nonmovant. Ball v. Kotter, 723 F.3d 813, 821 (7th Cir. 2013). To defeat summary judgment, a nonmovant must produce more than "a mere scintilla of evidence" and come forward with "specific facts showing that there is a genuine issue for trial." Harris N.A. v. Hershey, 711 F.3d 794, 798 (7th Cir. 2013). Ultimately, summary judgment is warranted only if a reasonable jury could not return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).


"Illinois courts determine an insurer's duty to defend by comparing the allegations in the underlying complaint to the relevant provisions of the insurance policy." Health Care Indus. Liab. Ins. Program v. Momence Meadows Nursing Ctr., Inc., 566 F.3d 689, 694 (7th Cir. 2009). Insurance policies are governed by the general rules applicable to other types of contracts. See Wehrle v. Cincinnati Ins. Co., 719 F.3d 840, 842 (7th Cir. 2013) ("Under Illinois law, [a]n insurance policy is a contract, and the general rules governing the interpretation of other types of contracts also govern the interpretation of insurance policies.'" (quoting Hobbs v. Hartford Ins. Co. of the Midwest, 823 N.E.2d 561, 564 (Ill. 2005))). As such, "Illinois courts interpret the policy as a whole, giving effect to every provision, if possible, because it must be assumed that every provision was intended to serve a purpose.'" Id. (quoting Cent. Ill. Light Co. v. Home Ins. Co., 821 N.E.2d 206, 213 (Ill. 2005)). An insurer may refuse to defend its insured only if "it is clear from the face of the underlying complaint that the allegations set forth in the complaint fail to state facts that bring the case within, or potentially within, the coverage of the policy." Health Care Indus., 566 F.3d at 694 (emphasis added). Because the duty to defend is broader than the duty to indemnify, a finding that the insurer has no duty to defend "necessarily precludes a finding of a duty to indemnify." Id. at 693.

Pima argues that the underlying complaint is potentially within the scope of the Policy's coverage because the plaintiffs' injuries may have been caused by "other microorganisms and/or toxic airborne pathogens, " whereas the exclusion only applies to fungi" (including mold and mildew) and "bacteria." R. 58 at 5. The Court disagrees. First, the Policy term "bacteria" would appear to encompass "other microorganisms" and "toxic airborne pathogens." Merriam-Webster defines "bacterium, " the singular form of "bacteria, " as follows:

any of a domain (Bacteria) of prokaryotic round, spiral, or rod-shaped single-celled microorganisms that may lack cell walls or are gram-positive or gram-negative if they have cell walls, that are often aggregated into colonies or motile by means of flagella, that typically live in soil, water, organic matter, or the bodies of plants and animals, that are usually autotrophic, saprophytic, or parasitic in nutrition, and that are noted for their biochemical effects and pathogenicity.

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