American Guarantee and Liability Insurance Company v. EXP US Services

2023 IL App (1st) 210821-U
CourtAppellate Court of Illinois
DecidedFebruary 10, 2023
Docket1-21-0821
StatusUnpublished

This text of 2023 IL App (1st) 210821-U (American Guarantee and Liability Insurance Company v. EXP US Services) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Guarantee and Liability Insurance Company v. EXP US Services, 2023 IL App (1st) 210821-U (Ill. Ct. App. 2023).

Opinion

2023 IL App (1st) 210821-U No. 1- 21-0821 Order filed February 10, 2023 Sixth Division NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________ AMERICAN GUARANTEE AND LIABILITY ) Appeal from the Circuit Court INSURANCE COMPANY, ) of Cook County, Illinois ) Plaintiff-Appellee, ) No. 2019 CH 1639 ) v. ) The Honorable EXP US SERVICES, ) Allen P. Walker ) Judge Presiding ) Defendant-Appellant.

JUSTICE C.A. WALKER delivered the judgment of the court. Presiding Justice Mikva and Justice Oden Johnson concurred in the judgment.

ORDER

Held: The grant of summary judgment in favor of insurer is affirmed where insurer was an excess insurer that did not owe a duty to defend until all primary coverage was exhausted.

¶1 Plaintiff American Guarantee and Liability Insurance Company (AGLIC) filed a complaint

for declaratory judgment against Defendant EXP US-Services (EXP). AGLIC and EXP filed cross-

motions for summary judgment (735 ILCS 5/2-1005 (West 2018)). The circuit court granted No. 1- 21-0821

AGLIC’s motion for summary judgment and denied EXP’s motion to reconsider. EXP appeals

arguing the circuit court erred in granting summary judgment in favor of AGLIC. For the following

reasons we affirm.

¶2 I. BACKGROUND

¶3 The Illinois Department of Transportation engaged F.H. Paschen, S.N. Nielsen &

Associates, LLC (Paschen) as a general contractor and EXP as an engineering firm for construction

work on the Algonquin Bypass Project in Algonquin, Illinois. Paschen entered into a subcontract

with Arrow Road Construction Company (Arrow Road). The subcontract between Paschen and

Arrow Road provided in part:

“Insurance to be Provided * * *

2) Commercial General Liability Insurance

Commercial General Liability Insurance with a single limit of not less than

$2,000,000.00 per occurrence and $2,000,000 in the aggregate. Such insurance

shall include a designated construction project general aggregate limit

endorsement. Such insurance shall provide coverage for bodily injury, personal

injury, property damage, premises and operations, explosion, collapse and

underground hazards, products and completed operations, contractual liability,

independent contractors, broad form property damage (including products and

completed operations). F.H. Paschen, S.N. Nielsen & Associates LLC and its

related entities, The Illinois Department of Transportation, EXP. shall be included

as additional insured, with coverage no more restrictive than Insurance Services

Office (ISO) Form Number CG 20 10 10 01 and CG 20 37 10 01. Coverage

-2- No. 1- 21-0821

provided the additional insured shall be on a primary, non-contributory basis for

any liability arising directly or indirectly from the work of the Subcontractor. If

subcontractor has work within 50 feet of the railroad, subcontractor shall obtain

endorsement CG 24 17 10 01 Contractual Liability Railroads, to obtain coverage

under its General Liability Policy for work within 50 feet of railroad tracks. The

insurance carrier shall provide a waiver of subrogation for all above listed

additional insureds. Products/Completed Operations shall extend for two years after

Final Completion. ***

4) Professional Liability

When any architects, engineers or consulting firms perform work in connection

with the subcontract, Professional Liability Insurance shall be maintained with

limits of $5,000,000. The policy shall have an extended reporting period of two

years. When policies are renewed or replaced, the policy retroactive date must

coincide with or precede start of work pursuant to the contract. ***

8) Umbrella Liability Insurance

This coverage is to follow the form of all primary coverage requirements as outlined

above and shall be provided in an amount not less than ($5,000,000) each

occurrence and annual aggregate on a per project basis excess of the underlying

policy limits. Subcontractor must have its Umbrella/Excess insurance endorsed to

include as an additional insured F.H. Paschen, S.N. Nielsen & Associates LLC and

its related entities, The Illinois Department of Transportation, EXP.”

-3- No. 1- 21-0821

¶4 Arrow Road was required to maintain commercial general liability (CGL) insurance in the

amount of $2 million per occurrence and in the aggregate for Paschen, IDOT, and EXP as

additional insureds. Arrow Road procured the primary CGL insurance policy from BITCO General

Insurance Corporation (BITCO), effective from March 1, 2014, to March 1, 2015. Arrow Road

was also required to maintain umbrella liability insurance, with a minimum of $5,000,000 of

coverage, to follow the form of all primary coverage requirements. AGLIC issued the $5,000,000

commercial umbrella policy to Arrow Road for the effective period of March 31, 2014 to March

1, 2015.

¶5 On June 3, 2014, Paul Sitz was injured when his motorcycle struck a raised manhole in the

Algonquin Bypass construction zone. Sitz subsequently filed an action against Paschen, Arrow

Road, and EXP, among other defendants. In the first amended complaint, Sitz alleged, inter alia

negligence on the part of the named defendants. Arrow Road settled with Sitz for $225,000.

¶6 EXP was the insured on a CGL policy issued by XL Catlin (Catlin). EXP sought coverage

under the policy, but Catlin denied coverage based on a professional services exclusion.

Additionally, EXP had a claims-made professional liability insurance policy issued by "Lloyd's

Syndicate - Beazley Furlonge Group (Syndicate AFB623-2623)" (Beazley). Beazley did not

dispute coverage relating to the claims made against EXP in the Sitz lawsuit.

¶7 EXP contended that it was an additional insured under the BITCO policy because of an

endorsement entitled “Transportation Contractors Extended Liability Coverage,” that allowed

additional insureds to qualify under the policy if Arrow Road was required to declare the entity as

an additional insured. BITCO disputed EXP’s coverage under the policy and initiated a declaratory

action regarding its obligation to defend or indemnify EXP and Paschen. The issue was later

-4- No. 1- 21-0821

resolved in a settlement. Bitco General Ins. Corp. v. Exp Us Services, Inc., No. 2016 CH 15119,

2017 (Ill.Cir.Ct. Oct. 24, 2017). As a result of the settlement, BITCO paid $125,000 to EXP for

the Sitz settlement.

¶8 EXP also sought coverage from the AGLIC policy because the AGLIC policy identified

the BITCO policy as underlying insurance in an endorsement. EXP claimed that, because it was

an insured on the BITCO policy, it also qualified as an insured on the AGLIC policy. EXP sent

multiple letters to AGLIC seeking indemnification and defense in the Sitz lawsuit prior to the

settlement with Sitz. After the settlement with Sitz and BITCO, EXP sought the remaining $2.45

million from AGLIC. AGLIC denied coverage for the Sitz lawsuit on October 11, 2018.

¶9 On February 7, 2019, AGLIC filed a complaint for declaratory judgment against EXP and

sought a declaration that AGLIC did not owe EXP any amount in connection with the Sitz action.

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2023 IL App (1st) 210821-U, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-guarantee-and-liability-insurance-company-v-exp-us-services-illappct-2023.