American States Insurance Co. v. Koloms

Harvey and Nina Koloms (defendants) were the beneficial owners of a building in Lincolnshire, Illinois. On September 17, 1990, a furnace in the building emitted carbon monoxide and other fumes. As a result of inhaling these fumes, several employees of one of the building’s tenants, Sales Consultants, Inc., became sick. Six of those employees sued the Kolomses, alleging that the Kolomses had negligently maintained the furnace, had failed to keep the furnace in working order, and had failed to make sure work done on the furnace was performed properly. The Kolomses tendered the complaints to American States Insurance Co. (ASIC) (plaintiff), through which the Kolomses had a standard-form commercial general-liability (CGL) insurance policy. ASIC agreed to indemnify the Kolomses but reserved the right to contest coverage based on an absolute pollution exclusion in the CGL policy. That exclusion excluded coverage for bodily injury arising from “actual, alleged or threatened discharge, dispersal, release or escape of pollutants.” Pollutants were defined under the pollution exclusion as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” ASIC subsequently sued the Kolomses, seeking a declaration that it was not required to indemnify or defend the Kolomses, since carbon monoxide constituted a “pollutant” in accordance with the plain and unambiguous meaning of that term under the policy’s pollution exclusion and injuries arising from such a pollutant were thus excluded from coverage. The Kolomses argued that the pollution exclusion did not apply to carbon-monoxide emissions from a furnace because the pollutant exclusion existed to limit coverage for injuries resulting from industrial or large-scale pollution. The Kolomses further alleged that the exclusion was ambiguous because a reasonable person in their position would not expect carbon monoxide to be classified as a pollutant. The Supreme Court of Illinois granted leave to appeal.