Summary Judgment – No Duty To Defend Or Indemnify Municipality Against Polluted Drinking Water Lawsuit

Attorney Joe Postel won summary judgment for the Illinois Municipal League Risk Management Association (“the Association”) in a coverage dispute involving the absolute pollution exclusion.

Sauk Village was a member of the Association’s self-insurance risk pool for Illinois municipalities between 2005 and 2010. During that time, according to a complaint filed in Cook County by Kenneth Shaw (“Shaw”) and Mary Crosby, Shaw was continuously exposed to vinyl chloride in Sauk Village’s drinking water, resulting in a diagnosis of cancer of the nasopharynx in 2009. He sued Sauk Village for negligently distributing drinking water polluted with a carcinogen, and failing to properly test and monitor its drinking water. Sauk Village sought coverage form the Association for Shaw’s suit.

The Association filed a declaratory judgment action in Sangamon County, seeking a finding and declaration that any coverage it provided was eliminated by the “absolute pollution exclusion” in its coverage grants. On cross-motions for summary judgment, Sauk Village argued that the distribution of the polluted drinking water did not constitute “traditional environmental pollution” (the Supreme Court’s standard for applying the exclusion), because (1) the suit alleged negligent, not intentional pollution, (2) the pollution levels were within amounts permitted by EPA regulations, and (3) Sauk Village had a permit to distribute water from the polluted source.

On March 2, 2015, Sangamon County Judge Christopher Perrin issued his Order rejecting Sauk Village’s arguments, denying the Village’s cross-motion for summary judgment, granting the Association’s motion for summary judgment, and finding and declaring that (1) the absolute pollution exclusion “is unqualified and absolute and entirely precludes coverage for bodily injuries arising out of the discharge, dispersal, release or escape of pollutants[,]” and (2) accordingly, the Association has no duty to defend or indemnify Sauk Village with respect to the Shaw suit.

Illinois Municipal League Risk Management Association v. Village of Sauk Village, Circuit Court of Sangamon County case no. 2013-MR-395.