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THIRD DIVISION
November 14, 2001

JUSTICE WOLFSON delivered the opinion of the court:

Maremont Corporation was held responsible for the cost of cleaning up pollution at six property sites or landfills overa 40-year period. The clean-up cost several million dollars. To recoup, Maremont first sought coverage from its primary insurancecarriers. After the primary policies were disposed of, Maremont then made claims against its excess coverage insurance policies. This case is the product of those claims for excess coverage.

Maremont filed this declaratory judgment action against nineinsurance companies, including Continental Casualty Company(Continental) and Lloyd's of London (London). Maremont allegedthat under its excess coverage insurance policies withContinental and London, the insurers were required to indemnifyit for damages arising out of the settlement of the environmentalpollution suit.

Continental and London filed motions for summary judgment. The trial court granted those motions, adopting a pro rataallocation of damages and a requirement that Maremonthorizontally exhaust its primary coverage before the excess policies were reached. We find there is no evidence Maremont's claims reached any of the defendants' excess policies. For thatreason we affirm the trial court's order granting summaryjudgment.

FACTS

Neither side disputes the underlying facts of the case.

Maremont's operations led to liability for environmentalpollution at plant sites in Easley, South Carolina; Needham,Massachusetts; and City of Industry, California. Maremont alsowas held liable for pollution at landfills in Fort Wayne,Indiana; Hardage, Oklahoma; and Oklahoma City, Oklahoma. Thepollution at each of the sites was ongoing and, in some cases,spanned a period of 40 or more years.

Maremont alleges it incurred "significant" damages for itssettlement of claims and for cleanup of the affected sites.

Continental Policies  

Continental issued eight excess liability insurance policiesto Maremont. The first policy was issued in 1959 and lapsed in1962. Continental issued the second policy in 1968, and Maremontreceived continuing coverage from Continental until 1980, whenthe last policy lapsed.

The first policy issued by Continental, in effect from 1959through 1962, insured Maremont for losses in excess of $200,000. It included the following language:

"[Continental will] indemnify the Insured for all sumswhich the Insured shall be obligated to pay by reason ofliability *** imposed upon the Insured by law *** fordamages, direct or consequential, and expenses, all as morefully defined by the term 'ultimate net loss' *** on accountof *** property damage, caused by or growing out of eachoccurrence.

***

The term 'Occurrence,' wherever used herein, shall meanan unexpected or unintended event, or continuous or repeatedexposure to conditions, which unexpectedly orunintentionally, causes injury, damage, or destructionduring the policy period."

The policies issued by Continental which were in effect from1968 through 1974 insured Maremont for losses over $200,000 andsaid Continental would:

"Indemnify the insured for all sums which theInsured shall be obligated to pay by reason ofliability *** imposed upon the Insured by law *** fordamages, direct or consequential, and expenses, all asdefined by the term 'ultimate net loss' *** on accountof *** Property Damage, caused by or arising out ofeach occurrence.

The term 'Occurrence' means an event or continuousor repeated exposure to conditions, which unexpectedlycauses Personal Injury and/or Property Damage and/orAdvertising Injury during the policy period."

The Continental policies covering Maremont from 1974 through1980 said:

"[Continental] will indemnify the insured for lossin excess of the total applicable limits of liabilityof underlying insurance stated in the schedule. Theprovisions of the immediate underlying policy are, withrespect to Coverage A, incorporated as part of thispolicy except for any obligation to investigate anddefend and pay for costs and expenses incident to anyof the same, the amounts of the limits of liability, an'other insurance' provision, and any other provisionstherein which are inconsistent with this policy.

***

Coverage A - This coverage applies to injury ordestruction which occurs during this policy period inplaces stated in the immediate underlying policy:provided that when the immediate underlying policyinsures occurrence taking place during its policyperiod, instead of injury or destruction taking placeduring the policy period, then this policy applies tooccurrences taking place during this policy period."

These policies insured Maremont for losses in excess of$200,000 until 1976, when the "attachment point" changed to$1,000,000.

London Policies  

Maremont received excess liability coverage under twopolicies from London from 1962 through 1968. These policies saidLondon would be liable for the "ultimate net loss of the excessof *** the limits of the underlying insurances *** only up to afurther sum of [$1,000,000] in all in respect of eachoccurrence."

The policies defined "occurrence" as:

"[A]n accident or a happening or event or acontinuous or repeated exposure to conditions whichunexpectedly and unintentionally results in personalinjury, property damages or advertising liabilityduring the policy period. All such exposure tosubstantially the same general conditions existing ator emanating from one premises location shall be deemedone occurrence."

The London policies also said:

"Subject to the foregoing paragraph and to allother terms and conditions of this policy, in the eventthat *** property damage arising out of an occurrencecovered hereunder is continuing at the time oftermination of this Policy the Company will continue toprotect the Assured for liability in respect of such*** property damage without payment of additionalpremium."

The trial court found the continuing pollution required itto apply a "continuous trigger" in determining coverage for asingle occurrence. Because Maremont could not prove the amountof damages that occurred during the years that Continental andLondon insured it, the court allocated damages to the variouspolicies in proportion to the period of time each was on therisk. The trial court further found Maremont was required tohorizontally exhaust all primary insurance before it could reachthe Continental and London excess policies. Because the prorated damages never exceeded the liability amounts of the primarypolicies, the trial court ruled Continental and London could notbe held liable, and granted their motions for summary judgment.

DECISION

Standard of Review

Review of the trial court's ruling on a motion for summaryjudgment is de novo. Lajato v. AT&T, Inc., 283 Ill. App. 3d 126,135, 669 N.E.2d 645 (1996). Summary judgment is proper when thepleadings, depositions, and affidavits on file, construed in thelight most favorable to the nonmoving party, establish there isno genuine issue of material fact and the moving party isentitled to judgment as a matter of law. Lajato, 283 Ill. App.3d at 135. The purpose of summary judgment is not to decide thefacts but to ascertain whether a factual dispute exists. Barber-Colman Co. v. A&K Midwest Insulation Co., 236 Ill. App. 3d1065, 1070-71, 603 N.E.2d 1215 (1992).

Applicable principles of insurance policy construction

The general rules we use to construe insurance contracts are firmly established. We use the rules that apply to other kindsof contracts. DeFoor v. Northbrook Excess & Surplus InsuranceCo., 128 Ill. App. 3d 929, 934, 471 N.E.2d 938 (1984). The construction of an insurance policy's provisions is a question oflaw. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 108, 607 N.E.2d 1204 (1992).

When we construe a policy, our primary task is to ascertain the intent of the parties to the contract. To do that, weconstrue the policy as a whole, with due regard to the risk undertaken, the subject matter that is insured, and the purposeof the entire contract. Outboard Marine, 154 Ill. 2d at 108.

If the words of the policy are unambiguous, we give them their plain, ordinary, and popular meaning. United States Fidelity &Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 74, 578N.E.2d 926 (1991). But if the words in the policy aresusceptible to more than one reasonable interpretation, they areambiguous and will be construed in favor of the insured andagainst the insurer that drafted the policy. Outboard Marine,154 Ill. 2d at 108-09.

Scope of coverage

Difficulty of proof hovers over this case like a dark cloud. As we observed in Benoy Motor Sales v. Universal Underwriters, 287 Ill. App. 3d 942, 948, 679 N.E.2d 414 (1997):

"Environmental pollution does not stop and start indiscrete time periods. When pollutants are released ordischarged the damage is immediate. There is a continuingprocess. If we were to pour black ink into white milk wecould not find a time when the coloring process did notoccur."

The policies in this case are third-party, occurrence-basedliability policies. They provide that the insurer will pay "allsums" the insured has to pay because of property damage "causedby or arising out of" (or "growing out of") an occurrence.

These policies anticipate the continuing nature of pollution damage. They define "occurrence" as a "continuous or repeatedexposure to conditions, which unexpectedly or unintentionally, causes injury, damage, or destruction during the policy period."

The policies, then, create a continuing trigger of coverage. As the continuing process of pollution takes place, a policy existing at that period of time is triggered.

We have held that under a continuing trigger analysisproperty damage will have "occurred" continuously for a fixedperiod " *** and every insurer on the risk at any time during thetrigger period is jointly and severally liable to the extent oftheir policy limits." United States Gypsum Co. v. AdmiralInsurance Co., 268 Ill. App. 3d 598, 644, 643 N.E.2d 1226 (1991).

U.S. Gypsum applied the reasoning of Zurich Insurance Co. v.Raymark Industries Inc., 118 Ill. 2d 23, 514 N.E.2d 150 (1987). Zurich dealt with bodily injury incurred by people who inhaledasbestos fibers. The supreme court said:

"'Bodily injury' takes place at or shortly after thetime a claimant was exposed to asbestos and continuesthroughout a claimant's exposure to asbestos. Thus, aninsurer that was on the risk during the time the claimantwas exposed to asbestos must provide coverage." Zurich, 118Ill. 2d at 47.

We conclude Maremont is correct when it says the phrase "during the policy period" contained in the various "occurrence"definitions defines what has to happen to trigger the policies and is not a limitation on the insurance companies' promises topay "all sums."

In support of our conclusion we note the London policies provide that "property damage arising out of an occurrencecovered hereunder is continuing at the time of the termination of this Policy and the Company will continue to protect the Assuredfor liability in respect of such *** property damage without payment of additional premium."

Our conclusion best reflects the contract entered into by the parties. That is, "during the policy period" is not alimitation on the scope of coverage.

Outcome determinative questions remain.

Allocation of policy coverage

Maremont dumped and spilled off and on at the various locations for more than 40 years. In the trial court Maremontmade no effort to establish when a dump or spill took place withrelation to a particular policy at a specific site. Theinsurance companies quite rightly complain that Maremont seeks torequire reimbursement for acts which might have taken place aftera policy period expired. How, then, the insurers ask, can acourt determine how much property damage took place during anydiscrete period of time?

Maremont contends that doesn't matter at this point in the proceedings. Maremont contends that once any one of itstriggered excess policies is reached, that policy has to pay outup to its limits. The trial court did not agree with Maremont,holding with the insurance companies that they can be responsibleonly for a proportionate share of damages based on the yearstheir policies insured Maremont. That is, a pro rata,time-on-the-risk allocation.

The insurers rely on Outboard Marine Corp. v. Liberty Mutual Insurance Co., 283 Ill. App. 3d 630, 670 N.E.2d 740 (1996)and later decisions grounded in Outboard Marine. See Roman Catholic Diocese v. Lee, 292 Ill. App. 3d 447, 685 N.E.2d932 (1997) (pro rata allocation is the only way to measure amount of damagecaused by sexual molestations during a given policy period); Missouri Pacific Railroad Company, 288 Ill. App. 3d 69, 679N.E.2d 801 (1997) (If noise-induced hearing loss cannot bemeasured and allocated to particular policy periods, a pro rata, time-on-the-risk allocation of damages should be used.) See alsoIllinois Central Railroad Co. v. Accident and Casualty Co., 317Ill. App. 3d 737, 739 N.E.2d 1049 (2000) (Where claimants couldnot prove when injury from separate acts of hiring discriminationoccurred, damages were properly allocated to the policy in effectwhen the employment application was made).

Outboard Marine is the only Illinois case that decides how damages are to be apportioned among insurers in an environmentalpollution coverage case. The court held with U.S. Gypsum on the application of a continuous trigger, single occurrence theory. Then it held "the trial court correctly concluded that a pro rata, time-on-the risk allocation of damages should be applied"for periods of Outboard Marine's no insurance or self-insurance. While Outboard Marine seems to rely at least in part on U.S.Gypsum for its pro rata allocation holding, we note that specificissue was not before the U.S. Gypsum court.

Maremont contends Outboard Marine and the decisions that follow it run afoul of Zurich. In Zurich, the supreme courtrejected a pro rata allocation of defense and indemnity obligations among policies triggered by a claimant's exposure toasbestos during a policy period. The court did not see anythingin the policy language that permitted proration. Zurich, 118Ill. 2d at 57. The Zurich court did not have to contend with themurkiness of proof that marks this and other environmentalpollution cases.

Whether Zurich's no pro rata holding applies to the kind ofcase before us is an issue that awaits another day.

Vertical vs. horizontal exhaustion

The question that drives this case is when, if ever, Continental's or London's excess policies were reached. Thetrial judge, when granting summary judgment, ruled Maremont must exhaust all available primary insurance, including theperiods it was uninsured or self-insured, before the excess policies could come into play. The trial judge was describinghorizontal exhaustion.

Maremont argues for vertical exhaustion, saying the express language of the policies provides coverage in excess of aspecific, scheduled underlying policy in a given policy year. 

The issue was resolved in U.S. Gypsum, and then in Outboard Marine, Roman Catholic Diocese, Missouri Pacific RR, and IllinoisCentral Railroad. In those cases, as here, the insurancepolicies contained "other insurance" clauses. Each case held theinsured must first exhaust all available primary insurancecoverage, including uninsured periods and self-insured periods,before an excess policy could be reached.

Supportive reasoning was supplied by U.S. Gypsum:

"Adopting Gypsum's position permitting 'verticalexhaustion' would allow Gypsum to effectively manipulate thesource of its recovery, avoiding difficulties encountered asa result of its purchase of fronting insurance and theliquidation of some of its insurers. This would permitGypsum to pursue coverage from certain excess insurers atthe exclusion of others. Such a practice would blur thedistinction between primary and excess insurance [cite] andwould allow certain primary insurers to escape unscathedwhen they would otherwise bear the initial burden ofproviding indemnification. Likewise, certain co-excess insurers could avoid contributing to the indemnification ofthe insured when they would otherwise be responsible for anyamount up to the limit of the policy it issued. [Cite]."U.S. Gypsum, 268 Ill. App. 3d at 598.

No Illinois case speaks in favor of the vertical exhaustion theory urged on us by Maremont. U.S. Gypsum specifically rejectsthe notion that exhaustion of a specific, scheduled primary policy is sufficient to reach the excess policy containing thatschedule.

Maremont provided no evidence in the trial court toestablish how much property damage occurred at the six sitesduring specific policy years. It had ample opportunity to do so,if it could. We note the record before us consists of 70 volumes developed over a period of 7 years of litigation.

When Continental and London moved for summary judgment,Maremont was not required to establish its case as it would attrial, but it had to present some factual basis that wouldarguably entitle it to judgment. West v. John Deere & Co., 145Ill. 2d 177, 182, 582 N.E.2d 685 (1991). Failure to provide thetrial court with sufficient facts to support the claim that anexcess policy was reached was a fatal omission.

Maremont's failure to create a factual claim that exhaustion of all of its available primary insurance allows it to seekexcess coverage defeats its case. The trial judge correctly entered summary judgment on behalf of Continental and London.

CONCLUSION

For the reasons stated, we affirm the trial court's grant of summary judgment on behalf of the defendant insurers.

Affirmed.

HALL, P.J., and SOUTH, J., concur.