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FOURTH DIVISION

November 7, 2002

PRESIDING JUSTICE THEIS delivered the opinion of the court:

Plaintiff Michael Robert Pope, through his mother and next friend, Cynthia Lea Pope,appeals from a declaratory judgment in favor of defendant Economy Fire & Casualty Company(Economy). On cross-motions for summary judgment, the trial court held that Economy did notcommit an anticipatory breach of its duty to defend its insured in connection with a lawsuitcommenced by plaintiff for injuries allegedly sustained as the result of his ingestion of lead-based paint or lead dust while renting an apartment from the insured.

On appeal, plaintiff contends that Economy's refusal of coverage before its insured wasserved with a lawsuit was an anticipatory breach of the insurance contract. As a result, plaintiffargues that the insured was relieved of her obligation to tender notice of the underlying lawsuitand that Economy is estopped from asserting any defenses under the policy. Additionally,plaintiff contends that the lead paint exclusion in the policy does not bar coverage for his claimsof negligence arising from the presence of lead dust and violations of the Chicago MunicipalCode. We affirm the judgment of the circuit court.

BACKGROUND

The following undisputed facts were adduced from the parties' cross-motions forsummary judgment. In November 1989, Nancy Basta purchased a 15-unit apartment complexlocated at 3316-24 West Sunnyside Avenue in Chicago. She acquired a business owner's liabilitypolicy for the property which was issued by Hanover Insurance Company. That policy was ineffect from November 22, 1989, until March 8, 1990. Thereafter, she was insured by Economyunder a multi-peril liability policy from March 8, 1990, through March 8, 1994. From January1989 until December 1994, plaintiff and his family rented the first-floor apartment from Basta.

In July 1993, Basta received a letter from the City of Chicago department of health. Theletter referenced the Sunnyside property and stated that the City's "inspection of the above listedpremises has found the presence of lead bearing paint in violation of chapter 7.4 of the MunicipalCode of Chicago." The letter further ordered Basta to immediately abate the lead paintcontamination and instructed her to attend a hearing at the department of health. Thereafter,Basta attended the hearing with her attorney and acknowledges that she was aware of plaintiff'sallegation of lead paint poisoning at that time. She had the lead paint removed from the premisesas required by the City within 30 days. Basta never gave Economy or Hanover notice of thisoccurrence.⁽¹⁾

Almost two years later, on March 1, 1995, plaintiff's attorney sent Basta an attorney's lienletter informing her of plaintiff's claim for injuries from "lead poisoning contracted on thepremises." The letter suggested that Basta notify all present and past insurance carriers of theclaim. The very next day, on March 2, 1995, plaintiff filed a complaint against Basta and others,alleging that he was poisoned by exposure to lead-based paint, dust, and residue at the Sunnysidepremises. The complaint alleged that the property contained a dangerously high level of lead inpaint found on the woodwork and other surfaces, that the presence of lead paint was extremelyhazardous to plaintiff's health and well-being, and that plaintiff ingested lead, by either eating itor by breathing or ingesting the lead-contaminated dust created by crumbling, deteriorating oroxidizing lead-based paint. The complaint further stated that Basta and others had a duty toexercise reasonable care to remedy the danger caused by the presence of lead-based paint in theproperty, and that the painted surfaces were in poor condition and disrepair, with "deterioratedpaint and paint dust." Additionally, plaintiff alleged negligence arising from violations of theChicago Municipal Code.

Thereafter, on March 14, 1995, Basta forwarded plaintiff's notice of lien letter toEconomy. At that time, she had not yet been served with a complaint. On April 12, 1995,Economy responded in writing to Basta. Based upon the attorney's lien letter and the policy,Economy notified her that it would be "unable to indemnify [her] nor provide a defense for [her]in this matter" because the injury to plaintiff was due to the "alleged exposure to lead paint." Economy advised Basta that according to an exclusion in the relevant policy, coverage did notapply to "bodily injury or property damage arising out of actual, threatened or alleged exposure toasbestos, lead paint, fiberglass or radon gas." The letter further provided that Economy "will, ofcourse, be available to you to discuss the position [it has] taken." A copy of the letter was sent toBasta's insurance agent and to plaintiff's counsel. Neither Basta, her agent, nor plaintiff's counselever responded to the denial letter.

Plaintiff served Basta with the complaint on May 8, 1995. Basta never gave Economy notice of the lawsuit. However, she did notify Hanover of the suit. Unlike the Economy policy,the Hanover policy did not include a lead paint exclusion. After receiving notice of theunderlying suit, Hanover investigated the claims against Basta and initially denied coverage forthe underlying suit. Thereafter, Hanover sought a declaratory judgment regarding its obligationsand defended Basta under a reservation of rights.

Plaintiff's lawsuit was eventually dismissed in accordance with a settlement agreementbetween Basta, plaintiff, and Hanover. Under the terms of the settlement, Hanover agreed to payplaintiff a lump sum of $60,000. Additionally, Basta agreed to assign to plaintiff all of herclaims against Economy. Plaintiff was to be paid $2 million to be collected from Economysolely through the assignment. Neither Basta nor Hanover ever notified Economy of thesettlement agreement.

In March 2000, plaintiff filed a complaint as the assignee of the rights of the insuredseeking a declaration that Economy breached its duty to defend Basta in the underlying action. On cross-motions for summary judgment, plaintiff argued that Economy's denial of its duty todefend before Basta received notice of the lawsuit was an anticipatory breach of the insurancecontract. The trial court found that there was no breach of Economy's duty to defend where thefactual allegations in the underlying suit, when compared to the lead paint exclusion in thepolicy, did not give rise to a potential for coverage. Plaintiff filed a timely appeal. We grantedleave to the Complex Insurance Claims Litigation Association to file an amicus curiae brief insupport of Economy's position.

ANALYSIS

Plaintiff contends that the trial court erred in granting Economy's motion for summaryjudgment and that he was entitled to summary judgment as a matter of law. A motion forsummary judgment is properly granted when, viewed in the light most favorable to thenonmoving party, the pleadings, depositions, admissions, and affidavits establish that no genuineissue as to any material fact exists and the moving party is entitled to a judgment as a matter oflaw. 735 ILCS 5/2-1005(c) (West 2000); Ragan v. Columbia Mutual Insurance Co., 183 Ill. 2d342, 349, 701 N.E.2d 493, 496 (1998). The standard of review in cases involving summaryjudgment is de novo. Ragan, 183 Ill. 2d at 349, 701 N.E.2d at 496.

Plaintiff initially argues that Economy's denial of coverage to Basta before she was servedwith the complaint in the underlying lawsuit was an anticipatory breach of Economy's duty todefend under the insurance contract. The concept of anticipatory breach of a contractual duty todefend under a liability insurance policy has never specifically been addressed in Illinois norhave we found any other jurisdictions that have considered the issue in this context. Thus, wefind it necessary to first consider the application of the doctrine in light of the nature of thecontract before us. Generally, the doctrine has been applied in Illinois primarily to bilateralexecutory contracts for the sale of goods and services or real estate where there is a definite dutyto perform some act in the future. See, e.g., Wilmette Partners v. Hamel, 230 Ill. App. 3d 248,594 N.E.2d 1177 (1992) (anticipatory breach of a duty to perform on an excavation contract);First National Bank & Trust Company of Evanston v. First National Bank of Skokie, 178 Ill.App. 3d 180, 533 N.E.2d 8 (1988) (anticipatory breach of a duty to perform on a real estate salescontract); Student Transit Corp. v. Board of Education of the City of Chicago, 76 Ill. App. 3d366, 395 N.E.2d 69 (1979) (anticipatory breach of a duty to perform on a contract fortransportation services).

Here, among the contractual duties Economy owed its insured under the present contractwas a duty to defend any suit seeking damages for covered bodily injury. However, unlikecontracts where there is a definite duty to perform some act in the future, the duty presented hereis contingent upon the facts alleged in an underlying complaint if and when a complaint is filedby a third party to the insurance contract. When the underlying complaint alleges facts that arewithin or potentially within the scope of the policy coverage, the insurer has a duty to eitherdefend the insured under a reservation of rights or seek a declaratory judgment of its rights andresponsibilities or risk being found in breach of its duty to defend. Employers Insurance ofWausau v. Ehlco Liquidating Trust, 186 Ill. 2d 127, 153, 708 N.E.2d 1122, 1135 (1999). Thus,the nature of Economy's duty to defend under its contract with Basta would be contingent uponreceipt of a potentially covered complaint from a third party.

With an understanding of the nature of the contract before us, we now turn to ourconsideration of whether plaintiff can maintain an action for anticipatory breach. To do so, wefind that we must consider the following issues: (1) whether there was a repudiation of thecontract; (2) whether the conditions of the contract could be fulfilled had the contract not beenallegedly repudiated; and (3) whether damages resulted from the alleged repudiation.

An anticipatory repudiation has been defined as a manifestation by one party to a contractof an intent not to perform its contractual duty when the time fixed in the contract has arrived. Inre Marriage of Olsen, 124 Ill. 2d 19, 24, 528 N.E.2d 684, 686 (1988); Podolsky & AssociatesL.P. v. Discipio, 297 Ill. App. 3d 1014, 1023, 697 N.E.2d 840, 846 (1998); See also YaleDevelopment Co. v. Aurora Pizza Hut, Inc., 95 Ill. App. 3d 523, 526, 420 N.E.2d 823, 825(1981). The party's manifestation must clearly and unequivocally be that it will not render thepromised performance when it becomes due. In re Marriage of Olsen, 124 Ill. 2d at 24, 528N.E.2d at 686.

Prior to the triggering of Economy's duty to defend, and before Basta had been servedwith plaintiff's complaint, Basta forwarded plaintiff's attorney's lien letter to Economy. Inresponse, Economy denied coverage in its April 12 letter and specifically denied any duty todefend Basta based upon the lead paint exclusion in the policy. At that time, the onlyinformation Economy had before it was that the claim involved "lead poisoning" and thatplaintiff had a lawyer. Thus, based upon the modicum of information before it, knowing that itwas likely that a lawsuit would ensue, and before it had an opportunity to determine whetherthere was a complaint alleging facts potentially within the scope of coverage, it denied its duty todefend under its lead paint exclusion. Thus, by its April 12 letter, Economy could be said to haverepudiated the contract by prematurely and unequivocally stating that it would not defend itsinsured even against a potentially covered claim in the event a lawsuit was filed.

Nevertheless, to recover plaintiff must also prove that the conditions in the contract couldhave been fulfilled had the contract not been repudiated. On this element, we find the case ofYale Development Co. v. Aurora Pizza Hut, Inc., 95 Ill. App. 3d 523, 420 N.E.2d 823 (1981) tobe instructive. There, the parties executed a real estate sales contract in which the defendantagreed to pay $90,000 in exchange for certain property in Du Page County. The sale was madecontingent upon plaintiff being able to obtain a zoning change and liquor license to operate arestaurant. After the zoning board denied plaintiff's petition for rezoning, he filed a complaintseeking a declaratory judgment that the existing zoning was void and that the intended use of thepremises be permitted. Before the court issued its decision, defendant sent plaintiff a letterpurporting to terminate the contract due to the inability to obtain the proper zoning of theproperty. Subsequently, the court denied the rezoning of the property. Plaintiff then filed anaction alleging that defendant had repudiated the contract prior to the time performance was due. Yale Development Co., 95 Ill. App. 3d at 524-25, 420 N.E.2d at 824-25.

The appellate court held that even assuming the defendant's letter was regarded as ananticipatory repudiation of the contract, the plaintiff could not maintain an action on the contractdue to his subsequent inability to fulfill the condition of obtaining the rezoning. YaleDevelopment Co., 95 Ill. App. 3d at 526, 420 N.E.2d at 825. While the court recognized that itwas not necessary for the plaintiff to actually tender performance because the non-repudiatingparty would be excused from further performance on the contract, the court held that the plaintiffmust still show an ability to perform the conditions of the contract had the repudiation notoccurred. Yale Development Co., 95 Ill. App. 3d at 526-27, 420 N.E.2d at 826. The courtfurther reasoned that the plaintiff should not be allowed to put itself in a better position by suingimmediately on an anticipatory breach instead of waiting to maintain an action for breach at thetime when the defendant's performance was due. Yale Development Co., 95 Ill. App. 3d at 526-27, 420 N.E.2d at 826.

We find this analysis to be applicable to the present case. Just as the seller's duty wasmade contingent upon the buyer being able to obtain a zoning change and liquor license tooperate a restaurant, Economy's duty to defend was made contingent upon there being a potentialfor coverage. While in Yale Development Co., the buyer, as the non-repudiating party, wasrelieved of its obligation to actually tender its performance on the contract, it was still obligatedto show its ability to fulfill the contingency of obtaining the rezoning had the contract not beenrepudiated. Similarly, here, while Basta may have been relieved of her obligation to actuallytender performance on the contract, i.e., provide notice of the underlying lawsuit, plaintiff muststill prove that the contingency in the insurance contract, the potential for coverage, could havebeen fulfilled had the contract not been repudiated.

That inquiry necessarily involves comparing the allegations of the complaint to thelanguage of the policy to determine whether there was indeed a potential for coverage. Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill. 2d 520, 532, 655 N.E.2d 842,847 (1995). The policy excludes coverage for "'bodily injury' or 'property damage' arising out ofactual, threatened or alleged exposure to asbestos, lead paint, fiberglass or radon gas." Whencomparing the allegations of the complaint to the language of the policy, it is evident that theallegations do not give rise to a potential for coverage. The complaint is replete with referencesto lead paint and states that plaintiff ingested lead by either eating it or by breathing or ingestingthe lead-contaminated dust created by "crumbling, deteriorating or oxidizing lead-based paint."

We reject plaintiff's assertion that the complaint alleges additional facts that potentiallyfall within the coverage provided by Economy. Plaintiff's argument raises an issue of firstimpression in Illinois: whether the lead paint exclusion precludes coverage for plaintiff'sexposure to lead dust where the exclusionary provision contains no express reference to leaddust. When an insurer relies upon an exclusionary clause in an insurance policy to denycoverage, the applicability of the clause must be clear and without doubt because any doubts as tocoverage will be resolved in favor of the insured. Yamada Corp. v. Yasuda Fire & MarineInsurance Co., 305 Ill. App. 3d 362, 371, 712 N.E.2d 926, 933 (1999). However, courts shouldnot torture the language of a policy to find coverage where it is clear that none exists. CohenFurniture Co. v. St. Paul Insurance Co., 214 Ill. App. 3d 408, 411, 573 N.E.2d 851, 852 (1991).

As stated previously, the policy's lead paint exclusion barred coverage for "'bodily injury'or 'property damage' arising out of the actual, threatened or alleged exposure to asbestos, leadpaint, fiberglass or radon gas." There is no requirement in Illinois that a policy exclusion bedrafted to include limiting rather than general terms. That the exclusion contains no expressreference to lead dust does not necessarily mean that lead dust falls outside the purview of theexclusion. Rather, the relevant inquiry must be whether the language of the lead paint exclusionnevertheless unambiguously applies to lead dust in the context of this specific set of facts. When the exclusionary language is viewed in light of the complaint, it is evident that leaddust unambiguously falls within the lead paint exclusion in this case. The complaint allegesinjuries arising from the ingestion or inhalation of lead dust created by "crumbling, deterioratingor oxidizing lead-based paint." The complaint does not refer to lead dust created by any othersource. While we recognize the possibility that other lead dust hazards might create a potentialfor coverage (see, e.g., American Alliance Insurance Co. v. Jencraft Corp., 21 F. Supp. 2d 485(D.N.J. 1998) (suit alleged that the insured's lead-stabilized mini-blinds were releasing hazardouslead dust)), that is not the case here. We also note that neither party presented any scientificevidence to support its contentions. Here, the reasonable interpretation, taken in the context ofthe allegations of this complaint, is that the exclusion for bodily injury arising from lead-basedpaint precludes coverage for injuries arising from lead paint dust.

Plaintiff additionally directs our attention to the allegations of negligence arising out ofviolations of the Chicago Municipal Code. Plaintiff alleges that Basta failed to maintain theproperty in fit and habitable condition and failed to maintain the floors, interior walls, andceilings free of peeling, chipped, or loose paint and plaster. However, these allegations arepremised upon exposure to lead-based paint and lead paint dust, which resulted in leadpoisoning. As stated in the complaint, "[t]he condition of the Property during the time of MinorPlaintiff's residence exposed Minor Plaintiff to lead-based paint, dust and residue." Theallegations are not based on any other condition of habitation and are therefore encompassed bythe exclusion in the policy.

Accordingly, we find the allegations are not sufficient as a matter of law to have created thepotential for coverage. Consequently, because plaintiff cannot establish that the condition of thecontract could have been fulfilled had the contract not been repudiated, he cannot maintain anaction for anticipatory breach.

Moreover, as in any breach of contract action, the plaintiff must prove that damagesresulted from the repudiation of the contract. Action Construction and Restoration, Inc. v. WestBend Mutual Insurance Co., 322 Ill. App. 3d 181, 182, 748 N.E.2d 824, 826 (2001). The propermeasure of damages is the amount of money that will place the injured party in as satisfactory aposition as he or she would have been in had the contract been performed. Equity InsuranceManagers of Illinois, LLC v. McNichols, 324 Ill. App. 3d 830, 837, 755 N.E.2d 75, 80 (2001);Student Transit Corp., 76 Ill. App. 3d at 369, 395 N.E.2d at 71 (1979). The injured party shouldnot be placed in a better position or provided with a windfall recovery. Wilmette Partners, 230Ill. App. 3d at 261, 594 N.E.2d at 1187. Thus, as stated in Yale Development Co., 95 Ill. App.3d at 526-27, 420 N.E.2d at 826, the remedies for an anticipatory breach cannot be greater thanthe remedies that would be available to the nonbreaching party at the time the breaching party'sperformance was due. To allow plaintiff to recover damages here would be to place him in abetter position than he would have been at the time when Economy's performance on the contractwas due. Where Economy's duty was never triggered, it could not have breached its duty todefend Basta.

Plaintiff argues that Basta was damaged by the alleged anticipatory breach when shedetrimentally changed her position in reliance on Economy's repudiation by being forced todefend herself and by incurring attorney fees and by paying "out of her own pocket" insettlement. While plaintiff is correct that where there has been an anticipatory breach, the non-repudiating party may detrimentally change its position in reliance on the repudiation (BuildersConcrete Co. of Morton v. Fred Faubel & Sons, Inc., 58 Ill. App. 3d 100, 373 N.E.2d 863(1978)), plaintiff's contentions have no merit in light of the facts presented. The undisputedrecord reveals that Basta had been aware since 1993, well before the denial of coverage letter onApril 12, 1995, that plaintiff's claims of lead poisoning arose as a result of his exposure to lead-based paint on her premises. Moreover, she did not defend herself. Rather, she tendered thenotice of suit to Hanover, whose policy lacked a lead paint exclusion. Hanover provided adefense on her behalf in the underlying lawsuit and settled with plaintiff for $60,000. Accordingly, because plaintiff cannot establish a right to damages, he cannot maintain an actionfor anticipatory breach of the insurance contract.

While plaintiff relies on Bituminous Casualty Corp. v. Commercial Union Insurance Co.,273 Ill. App. 3d 923, 652 N.E.2d 1192 (1995), to support its theory of anticipatory breach of theinsurance contract, we find the case distinguishable both on the facts and the law. Initially, inBituminous, the nature of the contract was different. There, the insurer was an excess carrier andamong the issues before the court was whether it committed an anticipatory breach of its duty toindemnify its insureds. Unlike the duty to defend, the duty to indemnify is triggered when (1) theinsured becomes legally obligated to pay damages in the underlying action and (2) the actiongives rise to a claim under the policy. Bituminous, 273 Ill. App. 3d at 927, 652 N.E.2d at 1195. In Bituminous, the insureds became legally obligated to pay damages in a wrongful death action. They argued that the excess carrier breached its contract by aniticipatory repudiation when itwrote two letters stating that it would not reimburse the insureds until the primary insurer paidout its entire general liability policy and the self-insured retention was exhausted. Bituminous,273 Ill. App. 3d at 927, 652 N.E.2d at 1195. The parties agreed that the self-insured retentionhad indeed been exhausted and the court further found that under the excess policy, there was noobligation that the insured had to seek payment from any other insurer before the coverage underthe excess policy was triggered. Once the insureds paid any amount for an employer liabilityclaim and defense costs, the excess insurer was obligated to reimburse them. Bituminous, 273Ill. App. 3d at 929, 652 N.E.2d at 1196-97. Thus, in Bituminous, the excess insurer's duty toindemnify had already been triggered at the time the contract was repudiated. In the present case,the duty to defend never arose.

Since plaintiff cannot maintain an action for anticipatory breach, we reject his argumentthat Economy is estopped from raising policy defenses. Plaintiff is correct that if the insurer failsto defend under a reservation of rights or seek a declaratory judgment, the insurer may beestopped from raising policy defenses. Ehlco, 186 Ill. 2d at 150-51, 708 N.E.2d at 1134-35. However, estoppel will apply only if the insurer is later found to have wrongfully deniedcoverage under the policy. Ehlco, 186 Ill. 2d at 150-51, 708 N.E.2d at 1135. Therefore, if theinsurer had no duty to defend or its duty to defend was not properly triggered, estoppel cannot beapplied against the insurer. Ehlco, 186 Ill. 2d at 151, 708 N.E.2d at 1135. Such is the case wherethe insurer was given no opportunity to defend or participate in the underlying suit, where therewas no insurance policy in existence, and where, when the policy and the complaint arecompared, there clearly was no coverage or potential for coverage. Ehlco, 186 Ill. 2d at 151, 708N.E.2d at 1135. Here, we recognize that by not defending under a reservation of rights or filing adeclaratory judgment action Economy risked being found in breach of its duty to defend. However, as explained above, where Economy's duty was never triggered, it cannot be estoppedfrom raising coverage defenses, including the lead paint exclusion. Accordingly, becauseEconomy was entitled to judgment as a matter of law, the circuit court properly ruled on thecross-motions for summary judgment.

For the foregoing reasons, we affirm the judgment of the circuit court.

Affirmed.

HARTMAN and KARNEZIS, J.J., concur.

1. While the issue of late notice of occurrence was raised by Economy to support itsmotion for summary judgment, the issue was not raised by Economy on appeal. Accordingly,this issue is waived. 188 Ill. 2d Rs. 341(e)(7), (f).