MASONIC MEDICAL CTR. v. Turegum Ins. Co.

522 N.E.2d 611, 168 Ill. App. 3d 158
CourtAppellate Court of Illinois
DecidedMay 6, 1988
Docket87-3332
StatusPublished
Cited by48 cases

This text of 522 N.E.2d 611 (MASONIC MEDICAL CTR. v. Turegum Ins. Co.) 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
MASONIC MEDICAL CTR. v. Turegum Ins. Co., 522 N.E.2d 611, 168 Ill. App. 3d 158 (Ill. Ct. App. 1988).

Opinion

JUSTICE SULLIVAN

delivered the opinion of the court:

This is an interlocutory appeal from the entry of a preliminary mandatory injunction in a declaratory judgment action.

On June 19, 1985, Yeong Shin filed a medical malpractice complaint (the Shin action) against Jose Salazar, M.D., and Hlinois Masonic Medical Center (the Hospital) alleging that defendants provided neurological treatment to her, including the performance of various neurosurgical procedures, during three separate periods of hospitalization: November 3 through November 12, 1977, January 17 and 18, 1978, and January 19, 1978, through February 26, 1979; and that as a result of defendants’ negligence during one or more of those hospitalizations, she sustained permanent brain damage.

On January 30, 1987, the Hospital filed an amended complaint for declaratory judgment, injunctive relief, attorney fees and costs, alleging that prior to and until December 1, 1977, there was in force a policy of professional liability insurance issued by Turegum providing coverage for damages arising from the Hospital’s negligence in rendering medical services; that upon receipt of proper service of summons it forwarded a copy of the Shin complaint to Turegum; that in a letter dated October 7, 1985, counsel from the law firm retained by Turegum acknowledged coverage under the policy for the period between November 11 and December 1, 1977, but further stated that it “would not be liable to defend or pay any claims on behalf of the Hospital for any liability arising from the hospitalizations of [Shin] after the policy termination date of December 1, 1977.” Counsel also advised the Hospital that “[w]e have appeared for the Hospital generally, and we are currently defending all claims as a courtesy, pending clarification as to whether [the Hospital] wishes separate counsel to be involved for those claims which are not covered by the Underwriters.” In similar letters dated November 22 and December 2, 1985, counsel for Turegum reiterated that “no coverage is afforded for the hospitalizations which began after December 1, 1977, and the Underwriters cannot be responsible for the continued defense of all the allegations. While we will be happy to work as co-counsel with the attorneys designated to defend the Hospital for the period of coverage beginning December 1, 1977 and thereafter, we again ask that you advise us who will be defending the Hospital for the allegations arising after the Underwriter's period of coverage.” The complaint further alleged that a demand was made that Turegum’s attorneys relinquish control of the case to counsel chosen by the Hospital but that Turegum refused.

On April 3, 1987, Turegum filed a motion to dismiss, which was denied on May 29, 1987. On August 19, 1987, the Hospital filed a motion requesting that the trial court issue a preliminary injunction directing Turegum to relinquish control of the defense of the Shin action to counsel retained by it and to reimburse it for the reasonable costs incurred in that litigation. In support thereof, the Hospital argued, as it does on appeal, that the above-stated facts demonstrate the existence of a conflict of interest between it and Turegum, syllogizing that: Turegum has a legal duty arising out of the insurance contract to defend all claims actually or potentially within the coverage provided by the policy; that aside from a finding of no negligence — and, hence, no liability — Turegum’s interests would be best served by a finding that the negligence occurred after the expiration of the policy so as to shift any liability from itself to the Hospital and, therefore, by less than vigorously defending those allegations involving occurrences after December 1, 1977; and that in view thereof it (the Hospital) is entitled to be defended by counsel of its own choosing and, by reason of Turegum’s duty to furnish a defense, to reimbursement by Turegum of the reasonable costs thereof.

On October 2, 1987, the trial court granted the Hospital’s motion, denied Turegum’s motion for a stay, and this appeal followed.

Opinion

The general rule in Illinois is that an insurer is obligated to defend an action against an insured where the complaint contains allegations which bring the claim actually or potentially within the policy (Clemmons v. Travelers Insurance Co. (1981), 88 Ill. 2d 469, 430 N.E.2d 1104; Murphy v. Urso (1981), 88 Ill. 2d 444, 430 N.E.2d 1079; Thornton v. Paul (1978), 74 Ill. 2d 132, 384 N.E.2d 335; Maryland Casualty Co. v. Peppers (1976), 64 Ill. 2d 187, 355 N.E.2d 24; Pepper Construction Co. v. Casualty Insurance Co. (1986), 145 Ill. App. 3d 516, 495 N.E.2d 1183; Nandorf Inc. v. CNA Insurance Cos. (1985), 134 Ill. App. 3d 134, 479 N.E.2d 988), even if the allegations are known to be groundless, false or fraudulent (Thornton, 74 Ill. 2d 132, 384 N.E.2d 335); and because an insurer’s duty to defend is broader than its duty to indemnify, it may be obligated to defend against causes of action and theories of recovery which are not in fact covered by the policy (Conway v. Country Casualty Insurance Co. (1982), 92 Ill. 2d 388, 442 N.E.2d 245). In those circumstances, the insurer may choose to defend under a reservation of rights or seek a declaratory judgment that there is no coverage; otherwise, it will be estopped from raising the defense of noncoverage in a subsequent action between it and the insured. Murphy v. Urso (1981), 88 Ill. 2d 444, 430 N.E.2d 1079; Sims v. Illinois National Casualty Co. (1963), 43 Ill. App. 2d 184,193 N.E.2d 123.

Ordinarily, the duty to defend includes the right to control the defense so as to allow insurers to protect their financial interest in the outcome of the litigation and to minimize unwarranted liability claims (Nandorf, Inc. v. CNA Insurance Cos. (1985), 134 Ill. App. 3d 134, 479 N.E.2d 988). At the same time, the attorney retained by the insurer also owes a fiduciary duty and has the same professional obligations to the insured as would exist had he or she been personally retained by the insured. (Nandorf, Inc., 134 Ill. App. 3d 134, 479 N.E.2d 988.) It has been recognized, however, that, realistically, the insurer’s attorney may have closer ties to the insurer than to the insured and a more compelling interest in protecting the insurer’s position, by reason of which there arises a conflict of interests. (Nandorf, Inc., 134 Ill. App. 3d 134, 479 N.E.2d 988

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Cite This Page — Counsel Stack

Bluebook (online)
522 N.E.2d 611, 168 Ill. App. 3d 158, Counsel Stack Legal Research, https://law.counselstack.com/opinion/masonic-medical-ctr-v-turegum-ins-co-illappct-1988.