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October 26, 2017 by Tom

Illinois – Duty to Defend – Absence Of Allegations – Error to Grant Summary Judgment

Appellate Court of Illinois,
First District,

SECOND DIVISION.

HASTINGS MUTUAL INSURANCE COMPANY,
Plaintiff-Appellee,

v.

BLINDERMAN CONSTRUCTION COMPANY, INC., and THE ESTATE OF
ROBERT WOODS by Cynthia Sosnowski of the Estate and Person of Robert Woods, (BLINDERMAN CONSTRUCTION COMPANY, INC., Defendant-Appellant.)

No. 1-16-2234

October 24, 2017

OPINION

PRESIDING JUSTICE NEVILLE delivered the judgment of the court,
with opinion.

*1 ¶ 1 This case
raises the question of whether a subcontractor’s insurer has a duty to defend
the general contractor, an additional insured under its policy, in a lawsuit
brought by an injured employee of the subcontractor. In the underlying lawsuit,
the Estate of Robert Woods, the injured employee of the subcontractor, JM
Polcurr, Inc., sued the general contractor, Blinderman Construction Company, Inc., for negligence. The complaint included no allegations
about the acts of Polcurr. Polcurr’s insurer, Hastings Mutual Insurance Company, filed a separate lawsuit for a judgment
declaring that it had no duty to defend Blinderman in the underlying lawsuit. The circuit
court granted a motion for summary judgment in favor of Hastings on its complaint.

¶ 2 In this appeal, we
hold that the absence of allegations about Polcurr in the underlying complaint
does not suffice to meet Hastings’s burden of proving that the injury occurred through no
fault of Polcurr. Accordingly, we reverse the judgment and remand for further
proceedings.

¶ 3 BACKGROUND

¶ 4 The Public
Building Commission of Chicago hired Blinderman to serve as general contractor for
a construction project at
Sauganash Elementary School. On June 22, 2010, Blinderman hired Polcurr to do the electrical work
for the project. Blinderman’s contract with
Polcurr required Polcurr to purchase insurance naming Blinderman as an additional insured for Polcurr’s
work on the project. Polcurr purchased the required insurance from Hastings.

¶ 5 On July 19, 2011,
Robert Woods suffered a severe injury at work on the project. He regained
consciousness in the hospital about one month later. He has not worked since
the accident. A court appointed Woods’s daughter, Cynthia Sosnowski, to serve
as plenary guardian for Woods and Woods’s estate.

¶ 6 The Underlying
Lawsuit: Estate of Woods v. Blinderman

¶ 7 In February 2014,
the Estate of Woods filed a complaint against Blinderman, alleging that Woods fell from a ladder while
working at Sauganash for Polcurr. The estate alleged that Blinderman

“a. Failed to provide a safe and suitable
support and platform for the work;

b. Failed to properly supervise, coordinate,
inspect, manage, control and schedule the work;

c. Failed to provide a safe place of work; and

d. Failed to warn of the dangerous condition
then and there existing, when Defendants knew, or should have known, that
warning was necessary to avoid injury to Plaintiff.”

¶ 8 Blinderman tendered defense of the lawsuit to Hastings. Hastings rejected the tender, citing, as a basis for the rejection,
the following clause in its insurance policy:

“With respect to the insurance afforded to
these additional insureds, the following exclusions apply:

***

*** liability arising out of the sole
negligence of the additional insured or by those acting on behalf of the
additional insured.”

¶ 9 Blinderman filed a third-party complaint against
Polcurr, arguing that Polcurr should pay a share of any liability assessed
against Blinderman because Polcurr
failed to inspect the premises, improperly maintained Woods’s work area, failed
to warn Woods of dangerous conditions, and permitted Woods to use an unstable
ladder without appropriate safety equipment.

¶ 10 Hastings’s Complaint

*2 ¶ 11 In
November 2014, Hastings filed the
complaint that initiated the case now on appeal. Hastings sought a judgment declaring that it had
no duty to defend or indemnify Blinderman for its potential liability in Estate of
Woods v. Blinderman. Blinderman and Hastings both filed motions for summary judgment in the declaratory
judgment action.

¶ 12 Blinderman supported its motion for summary
judgment with its third-party complaint against Polcurr and depositions of two
Polcurr employees. According to the employees, Blinderman gave no directions to Polcurr employees
about their work. Polcurr employees, including Woods, used only Polcurr
equipment. Blinderman had a safety
program and a safety inspector at the worksite. At times, Blinderman’s inspector directed workers for the
subcontractors to take specific measures for their safety.

¶ 13 The circuit court
held that the court could not consider the allegations of the third-party
complaint when determining whether Hastings had a duty to defend Blinderman. The circuit court held that the exclusion for
liability arising from Blinderman’s sole negligence applied, and Hastings had no duty to defend Blinderman because the underlying complaint did not
allege or suggest that Polcurr acted negligently. Blinderman now appeals.

¶ 14 ANALYSIS

¶ 15 We review de
novo
 the order granting Hastings’s motion for summary judgment. Travelers
Insurance Co. v. Eljer Manufacturing, Inc.
, 197 Ill. 2d 278, 292 (2001).
Our supreme court set out the basic principles applicable here:

“If the underlying complaints allege facts ***
potentially within policy coverage, the insurer is obliged to defend its
insured ***. An insurer may not justifiably refuse to defend an action against
its insured unless it is clear from the face of the underlying complaints that
the allegations fail to state facts which bring the case *** potentially
within[ ] the policy’s coverage. ***

The underlying complaints and the insurance
policies must be liberally construed in favor of the insured. *** All doubts
and ambiguities must be resolved in favor of the insured.” (Emphases
omitted.) United States Fidelity & Guaranty Co. v. Wilkin
Insulation Co.
, 144 Ill. 2d 64, 73-74 (1991).

See also Outboard
Marine Corp. v. Liberty 
Mutual Insurance Co., 154 Ill. 2d 90, 107-08 (1992).

¶ 16 The Wilkin court
held that the insurer in that case had a duty to defend because the policy
exclusions “d[id] not preclude potential coverage under the policy.” Wilkin,
144 Ill. 2d at 81.

¶ 17 The circuit court
here held that the policy exclusion for liability arising from Blinderman’s sole negligence established that Hastings had no duty to defend Blinderman. “[T]he insurer bears the burden of
establishing that a claim falls within a provision of the policy that limits or
excludes coverage.” Old Second National Bank v. Indiana Insurance Co.,
2015 IL App (1st) 140265, ¶ 22; see Addison Insurance Co. v. Fay,
232 Ill. 2d 446, 453-54 (2009). Thus, Hastings had the burden of showing that Blinderman’s liability arose out of the sole
negligence of Blinderman or those acting
on Blinderman’s behalf, and not
from the negligent acts or omissions of Polcurr.

¶ 18 The circuit court
focused on the absence of allegations about Polcurr in the complaint the Estate
of Woods filed against Blinderman. By adopting that focus, the circuit court ignored the context
in which the Estate filed its complaint. In Pekin Insurance Co. v.
Centex Homes
, 2017 IL App (1st) 153601, the court said:

*3 “[T]he allegations of the underlying
complaint must be read with the understanding that the employer may be the
negligent actor even where the complaint does not include allegations against
that employer. [Citation.]

***

*** ‘[S]ilen[ce] as to any acts or omissions’
by the named insured must be understood as the possible result of tort immunity
for employers under the workers’ compensation laws and should not be a basis
for refusing to defend an additional insured.” Centex Homes, 2017
IL App (1st) 153601 ¶¶ 36-38 (quoting Ramara, Inc. v. Westfield
Insurance Co.
, 814 F.3d 660, 677 (3d Cir. 2016)).

¶ 19 The Estate of
Woods in its complaint did not specifically allege that Polcurr’s acts or
omissions caused the injury. But the Estate did not expect to recover damages
from Polcurr and had no reason to include allegations about the acts or omissions
of Polcurr. The complaint’s silence concerning Polcurr’s acts or omissions does
not suffice to meet Hastings’s burden of
showing that Polcurr’s acts or omissions did not contribute to causing the
injury.

¶ 20 Hastings cites Pekin Insurance Co. v. Roszak/ADC,
LLC
, 402 Ill. App. 3d 1055 (2010), for the proposition that “without any
allegations in the complaint suggesting” that the subcontractor acted
negligently and caused the injury, the subcontractor’s insurer had no duty to
defend the general contractor. Roszak, 402 Ill. App. 3d at 1064;
see American Country Insurance Co. v. Cline, 309 Ill. App. 3d 501,
512 (1999) (subcontractor’s insurer has no duty to defend additional insured
where underlying complaint does not suggest that subcontractor’s negligent acts
caused injury). In Roszak, the policy provided:

“ ‘Who is An Additional Insured *** is amended
to include as an insured any person or organization for whom you are performing
operations when you and such person or organization have agreed in writing in a
contract or agreement that such person or organization be added as an
additional insured on your policy. Such person or organization is an additional
insured only with respect to liability incurred solely as a result of some act
or omission of the named insured and not for its own independent negligence or
statutory violation.’ ” Roszak, 402 Ill. App. 3d at 1058.

¶ 21 The additional
insured in Roszak bore the burden of proving that the limiting
language did not apply because the limiting language appeared in the coverage
grant and not in a separate exclusionary clause. Because the limiting language
the circuit court relied on here appeared in a separate exclusion, we have no
basis for shifting the burden of proof from the insurer to the insured. The
insurer must meet the burden of proving that its exclusions apply and preclude
coverage. Addison Insurance, 232 Ill. 2d at 454.

¶ 22 We note
that Blinderman’s third-party
complaint against Polcurr includes allegations consistent with the Estate’s
complaint, showing how Polcurr’s acts or omissions might have contributed to
causing Woods’s injury. However, Blinderman would need to use those pleadings only
if it bore the burden of proving that Polcurr’s acts or omissions might have
contributed to causing Woods’s injury. Because the Estate’s complaints include
no allegations about Polcurr’s acts or omissions, and Hastings has presented no evidence concerning
Polcurr’s acts or omissions, Hastings has not met its burden of proving that Blinderman’s liability in the underlying case arose
out of Blinderman’s “sole
negligence.” Thus, we need not address Blinderman’s argument that the court should have
considered the allegations of the third-party complaint Blinderman filed against Polcurr to help the court
determine whether the injury resulted from the sole negligence of Blinderman. We also need not address Blinderman’s argument that Hastings knew true but unpleaded facts that
showed Polcurr might owe Blinderman compensation for Polcurr’s role in causing the injury. We
reverse the summary judgment entered in favor of Hastings and remand for proceedings in accord
with this opinion.

¶ 23 CONCLUSION

*4 ¶ 24 In the
underlying complaint that the Estate of Woods filed against Blinderman, the estate alleged that Woods sustained an
injury while working for Polcurr but included no other allegations about
Polcurr’s conduct. We hold that, because Polcurr’s insurer, Hastings, presented no evidence concerning Polcurr’s
conduct, Hastings has not met its
burden of proving that Polcurr’s conduct did not in any way contribute to
causing the injury Woods sustained. Therefore, we reverse the judgment entered
in favor of Hastings and remand for
further proceedings in accord with this opinion.

¶ 25 Reversed and
remanded.




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