Trump’s Chicago Hotel Can’t Stick Insurer With Pollution Bill

Insurers of Chicago’s Trump International Hotel & Tower have no legal obligation to pay insurance claims in connection with the hotel’s allegedly improper use of Chicago River water for its cooling system, an Illinois appellate court said on Wednesday.

Chubb Ltd., Continental Casualty Co., and QBE Insurance Group Ltd. each sought a court-issued declaration that they owed no duty to defend the hotel from an Illinois Environmental Protection Agency lawsuit, asserting their policies provided to the hotel insurance coverage for “property damage” from an “occurrence.”

“We cannot find that this alleged conduct constitutes an ‘occurrence’ under the terms of the insurance policies,” Justice Jesse Gregory Reyes wrote for a unanimous three-justice panel of the Illinois Court of Appeals for the First District.

The justice wrote that because of the lack of an occurrence, the court didn’t have to consider the insurers’ alternate arguments: the hotel was not covered because no “property damage” occurred and that they weren’t liable to pay because the hotel’s actions triggered policy exclusions concerning polluting activities.

Kim Biggs, an Illinois Environmental Protection Agency spokeswoman, didn’t immediately respond to a request for comment.

John Shonkwiler of Leland Grove Law LLC and Evan Schwartz of Schwartz Conroy & Hack PC represent the hotel and also didn’t immediately respond to requests for comment.

Policy Terms

In August 2018, the Illinois attorney general’s office, at the behest of the Illinois Environmental Protection Agency, filed a three-count complaint against the hotel.

Allegedly, the hotel pulled nearly 20 million gallons of water without a permit from the Chicago River each day to cool its ventilation system, in violation of state environmental laws that protect fish and other aquatic life. The intake system for the hotel, which sits on the northern bank of the Chicago River, withdrew the river water and then released it back into the Chicago River as hot wastewater.

The complaint said the released water qualified as a contaminant under the state’s Environmental Protection Act, which required the hotel to obtain an environmental permit before discharging it back into the river. The hotel’s permits expired in 2017 and weren’t renewed, the opinion said.

The state’s circuit court also found the conduct alleged by the EPA didn’t constitute an “occurrence” under the insurance policies, which all contained a pollution exclusion.

The case is Continental Casualty Co. v. 401 North Wabash Venture LLC, Ill. App. Ct., 1st Dist., No. 1-22-1625, opinion 8/30/23