In an unpublished decision, the Illinois Appellate Court determined that claims against the insured painting contractor had to be defended by the CGL carrier. Owners Ins. Co. v. Precision Painting & Decorating Corp., 2019 Ill. App. Unpub. LEXIS 2425 (Ill. App. Ct. Dec. 31, 2019).
The homeowners hired Precision to paint the exterior of their home. Portions of the home were pointed with lead-based paint. Prior to the work, there were no visible paint chips or dust on the interior or exterior of the property.
The contract required that all preparation work be done according to EPA regulations for lead-based paint. The regulations required Precision to take special care to contain lead dust while working on the home. The underlying complaint alleged that Precision failed to abide by the safety requirements. Precision did not clean up lead-based paint dust and debris on and around the home at the end of the work day.
Testing after completion of the scrapping job showed interior dust in 16 of 20 samples exceeded the limits for lead in dust set by the Illinois Department of Public Health. Even the land around the home showed lead in the soil that exceeded the Department of Health limits. Consequently, the homeowners were required to pay for contamination clean-up.
The homeowners sued Precision, who tendered the defense to Owners. Owners then filed a complaint for declaratory judgment seeking a declaration that it had no duty to defend because no property damage caused by an occurred was alleged in the underlying complaint. Precision counter-claimed for breach of contract. The parties filed cross-motions for judgment on the pleadings.
The circuit court granted Owners’ motion, finding no duty to defend. There was no “occurrence” because the contract specifically contemplated that there would be lead in the paint and provided for various EPA-required precautions that Precision would take. Precision’s failure to properly contain the lead, resulting in the contamination, was thus not an “accident.”
The appellate court noted that instead of focusing on the foreseeability of the event (the release of lead-based particles), or even generally the damages (lead contamination), the case law instructed the focus be on what, specifically, was damaged, and whether the remediation of that damage fit within the general purpose of a CGL policy. When the underlying lawsuit alleged damages beyond repair and replacement, and beyond damage to other parties of the same project over which the contractor was responsible, those additional damages were deemed to be the result of an “accident.”
There was no question that the allegations here constituted an “accident” and thus an “occurrence.” Precision was hired to work on the exterior of the home. The “work product” – the scope of Precision’s project – was the exterior of the house. The underlying complaint alleged that Precision’s negligence caused damage well beyond that. In great detail, the homeowners alleged that the lead dust infiltrated the interior of their home, as well as the surrounding land. The homeowners were not claiming that the exterior walls were painted defectively and must be repaired or repainted; they alleged other parties of their property – the interior and surround land- were damaged. Therefore, the underlying complaint alleged damages caused by an “occurrence.” Owners was not entitled to judgment on the pleadings on this ground.
The case law also held that damage to property that extended beyond the work product of the contractor was “property damage.” The underlying complaint alleged damage beyond the exterior of the home, to which Precision’s work product was limited. The underlying complaint alleged damage to the interior of the home and its surrounding land These allegations constituted “property damage” under the policy.
Therefore, Owners had a duty to defend.