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LINDSAY, RAPPAPORT
& POSTEL LLC |
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Joseph P. Postel
Commercial General Liability Coverage Litigation Highlights |
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A. Construction Site Bodily Injury Coverage Litigation
1. Additional Insured Coverage—Duty To Defend—Vicarious
Liability
American Country Ins. Co. v. Turner Constr. Co., No. 1-05-1825 (unpublished) (Ill.App. 1st Dist. 2007)
I represented the defendant-appellant Turner Constr. Co. in this action by an insurer that wanted to avoid defending Turner. Joseph Orth was an electrician employed by G&M on a construction project for which Turner was the general contractor. He fell off a ladder owned by G&M and severely injured his arm. He sued Turner for his injury, alleging that Turner failed to properly control and supervise G&M's work. Turner tendered its defense to American Country, G&M's CGL insurer, which listed Turner as an additional insured. American Country filed a declaratory judgment action, contending that its additional insured coverage was limited to Turner's vicarious liability for G&M's acts and omissions, and that because Orth's complaint contained no allegation that G&M was guilty of any such acts or omissions, and that Turner itself was guilty of such acts or omissions, American Country had no duty to defend Turner. The court granted American Country's motion for summary judgment, and Turner appealed. The Appellate Court reversed, holding that the complaint did not foreclose the possibility that Turner could be vicariously liable for G&M's acts and omissions, and thus, American Country had a duty to defend Turner.
2. Additional Insured Coverage—Blanket Endorsement—No Contract Requiring Coverage
Hughes & Duggan Builders, Inc. v. Best Built Fabricating, Inc., No. 1-04-3235 (unpublished) (Ill.App. 1st Dist. 2006)
I represented the appellee, Liberty Mutual, in this action brought by a general contractor's insurer. That insurer tried to secure additional insured coverage for its policyholder under a subcontractor's policy issued by Liberty Mutual. We contended that the general contractor was not an additional insured because our additional insured endorsement was a blanket endorsement that required the existence of a contract in order to confer additional insured status. The general contractor and its insurer contended that a prior course of dealings between the two contractors satisfied this requirement, but the trial and appellate courts disagreed.
3. Owners And Contractors Protective Liability Policy—Completed Operations Exclusion—CGL Blanket Additional Insured Endorsement—No Contract Requiring Coverage—No Insured Contract Claim Because No Indemnity Judgment
Liberty Mutual Fire Ins. Co. v. St. Paul Fire & Marine Ins. Co., 842 N.E.2d 170 (Ill.App. 1st Dist. 2005)
I represented the appellee, Liberty Mutual, in this action brought by St. Paul to recover $7,000,000 in defense and settlement costs with respect to an underlying elevator accident at a central Illinois power plant that severely injured 21 boilermakers. St. Paul paid these sums on behalf of the power company, which was sued by the injured boilermakers in Madison County. Both St. Paul and Liberty Mutual issued OCP policies to the power company. Liberty Mutual also issued a CGL policy to the elevator constructor. St. Paul contended that the power company was covered under both of the Liberty Mutual policies. I obtained summary judgment for Liberty Mutual with respect to both of its policies, and St. Paul appealed. The Appellate Court affirmed, holding that the "completed operations" exclusion to OCP coverage applied, because the elevator had been put to its intended use, and that the power company was not an additional insured on Liberty Mutual's policy, because the contract between the power company and the elevator constructor did not require such status. Rather, the contract required only that the elevator constructor carry liability insurance for itself. Finally, the court held that no claim was available under the contractual liability coverage of Liberty Mutual's CGL policy absent a judgment for indemnity against the elevator constructor, which was lacking, because that indemnity claim had been determined in the elevator constructor's favor.
4. Equitable Subrogation Available To Excess Insurer—Equitable Contribution Not Available To Insurer That Covered Different Risk
The Home Ins. Co. v. Cincinnati Ins. Co., 821 N.E.2d 269 (Illinois Supreme Court 2004)
I wrote and filed a brief on behalf of amicus curiae Liberty Mutual in this case, in support of appellant the Home Ins. Co. The issue was whether the identity of insured risks element of a claim for equitable contribution is also an element of a claim for equitable subrogation. We contended that it is not. The Supreme Court agreed with us, and reversed the Appellate Court.
5. Exclusion For Injury To An Employee Of The Insured—Insured Contract Exception
Alberici-Eby j.v. v. Liberty Mutual Ins. Co., 5-98-0630 (unpublished) (Ill.App. 5th Dist. 2000)
In this case, an employee of the general contractor sued Liberty Mutual's named insured subcontractor for a construction site injury in Madison County. The subcontractor sued the general contractor for contribution. The general contractor tendered the defense of the contribution claim to Liberty Mutual. The general contractor was an additional insured on Liberty Mutual's CGL policy. Liberty Mutual disclaimed coverage on the basis of its exclusion for injury to an employee of the insured, since the employee was employed by the general contractor that was seeking coverage. The general contractor contended that an exception to that exclusion applied: for liability assumed in an insured contract. Liberty Mutual contended that the exception did not apply, because the contract in this case did not fit the definition of "insured contract." We lost in the circuit court, but I was successful in obtaining a reversal and judgment for Liberty Mutual from the 5th District Appellate Court.
6. Equitable Contribution—Subcontractor's Insurer Waived Right To Challenge Reasonableness Of Settlement—"Arising Out Of" Condition
Liberty Mutual Ins. Co. v. Westfield Ins. Co., 703 N.E.2d 439 (Ill.App. 1st Dist. 1998)
I filed this action against a subcontractor's insurer to recover payments Liberty Mutual made to defend and settle a bodily injury suit by the subcontractor's employee against Liberty Mutual's named insured, the general contractor. The general contractor was an additional insured on the subcontractor's CGL policy. The coverage, written on the standard form, conditioned coverage on the additional insured's liability arising out of the named insured's work. The subcontractor's insurer made a fact-specific argument as to why it thought the liability did not arise out of the named insured's work, but I succeeded in the trial court on a motion for summary judgment, and on appeal, I persuaded the Appellate Court to hold that where the claimant is employed by the named insured, the additional insured's liability arises out of the named insured's work as a matter of law.
7. Additional Insured Coverage—"Arising Out Of" Condition Satisfied By Plaintiff's Employment With Named Insured
American States Ins. Co. v. Liberty Mutual Ins. Co., 683 N.E.2d 510 (Ill.App. 1st Dist. 1997)
Liberty Mutual insured the general contractor, Turner Constr. Co., which was being sued by an injured employee of a subcontractor that was insured by American States. Turner was an additional insured on American States' policy. American States agreed to defend and indemnify Turner, but claimed that those duties were equally owed by Liberty Mutual. Liberty Mutual contended that an excess other insurance clause in its policy rendered its coverage excess over American States'. American States argued that Liberty Mutual's excess clause operated only with respect to those theories of recovery against Turner that were within American States' coverage, and that Liberty Mutual furnished the sole coverage with respect to other theories. The circuit and appellate courts held that all of the injured plaintiff's claim fell within American States' coverage, and therefore, American States had the sole duty to defend and indemnify Turner.
B. Construction Defect (Property Damage) Coverage Litigation
1. Mold—Defective Flood Remediation Work—No Duty To Defend
Acuity Ins. Co. v. Action Cleaners Restoration, Circuit Court of McHenry County, No. 04 MR 248 (Decision July 12, 2007)
I represented Acuity in this case. Acuity's policyholder, ACR, provided mold and flood remediation service. One of its customers, RPS Products, suffered flood damage from a burst water pipe, and hired ACR to clean up the damage. Several months later, RPS noticed that several of its office employees were getting sick. RPS discovered that mold was growing behind wall panels where ACR had performed its flood remediation work. RPS sued ACR for the cost of remediating the mold damage, and ACR tendered the suit to its insurer, Acuity. Acuity filed a declaratory judgment action, seeking a determination that it was under no duty to defend ACR. I moved for summary judgment on the grounds that no occurrence, as defined by the policy, had taken place, no covered property damage had occurred, and that the "business risk" exclusions applied. The trial judge granted summary judgment to Acuity.
2. Trigger Of Coverage—Damage Occurred After Policy Lapsed
Argonaut Ins. Co. / EWC Contractors v. Liberty Mutual Ins. Co., Circuit Court of Cook County, No. 96 CH 10794 (Decision September 24, 1999)
This insurance coverage dispute arose out of the construction of an upscale residential high-rise apartment building in the fashionable Streeterville District of Chicago, at 401 East Ontario Street. The construction was completed in 1989. In 1995, according to a complaint filed by the building's owner, it was discovered that defective concrete was falling off the building. A complaint was filed against the general contractor, E.W.C., seeking damages of $15,000,000. The most recent settlement demand from the owner was $9,750,000. EWC sought coverage under various CGL policies issued by various insurers between 1987 and 1995, both to E.W.C., and to its subcontractors (EWC was an additional insured on the subcontractors' policies). My client, Liberty Mutual, issued policies between 1987 and 1989 to Adjustable Forms, which fabricated the wooden forms into which the structural concrete for the building was poured. EWC was an additional insured on the Liberty policies. Liberty moved for summary judgment on the grounds that the occurrence triggering coverage did not take place during the periods of policy coverage. The court determined that the underlying complaint alleged a sudden and calamitous concrete failure occurring on or around February 24, 1995, and that therefore, any policies that lapsed before that time were not triggered. This included the policies issued by Liberty Mutual. Accordingly, summary judgment was entered in favor of Liberty Mutual.
3. Additional Insured Coverage For Architect Under Contractor's CGL Policy Falls Within Professional Services Exclusion
Prisco Serena Sturm Architects, Ltd. v. Liberty Mutual Ins. Co., 126 F.3d 886 (7th Cir. 1997)
This was a construction defect suit by a school against the architect and general contractor. The architect was defended by its professional liability insurer, which filed a declaratory judgment action seeking to shift the coverage to Liberty Mutual, which issued a CGL policy to the general contractor and which added several endorsements making the architect an additional insured. Liberty Mutual contended that coverage was negated by the policy's definition of occurrence, by the business risk exclusions, and by the professional services exclusion. The district court disagreed, and entered judgment against Liberty Mutual, as well as bad faith damages. The 7th Circuit reversed and held that there was no coverage, and no bad faith, because the professional services exclusion clearly applied.
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