No. 2--96--0701
________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
_________________________________________________________________
MASSACHUSETTS BAY INSURANCE ) Appeal from the Circuit Court
COMPANY, ) of Du Page County.
)
Plaintiff-Appellant, )
) No. 95--MR--0209
v. )
UNIQUE PRESORT SERVICES, INC.; )
BRIGITTE PESCIA, Adm'x of the )
Estate of Frederick Pescia, )
Deceased; BRIGITTE PESCIA, Indiv.; )
DANIELLE PESCIA, a Minor, by )
Mother and Next Friend, Brigitte )
Pescia; LAURELINE PESCIA, a )
Minor, by her Mother and Next )
Friend, Brigitte Pescia; MARIANNE )
PESCIA, a Minor, by her Mother )
and Next Friend, Brigitte Pescia; )
JEAN-MARC LEPILLEZ, Indiv.; )
WANDA LEPILLEZ, Indiv.; KARINE )
LEPILLEZ, a Minor, by her Mother )
and Next Friend, Wanda Lepillez; )
MELINDA LEPILLEZ, a Minor, by her )
Mother and Next Friend, Wanda )
Lepillez; and ANNE-CHRISTINE )
and Next Friend, Wanda Lepillez, ) Honorable
) Bonnie M. Wheaton,
Defendants-Appellees. ) Judge, Presiding.
___________________________________________________________________
JUSTICE COLWELL delivered the opinion of the court:
Plaintiff, Massachusetts Bay Insurance Company (MBI), appeals
the trial court's ruling in a declaratory judgment action that MBI
has a duty both to defend and to indemnify its insured, Unique
Presort Services, Inc. (Unique Presort), in a tort action. MBI
contends that the trial court erred in finding that the allegations
of the underlying complaint trigger a duty for MBI; erred in
relying on unpublished Rule 23 orders in making its ruling; erred
in ruling against MBI in its motion for judgment on the pleadings
by failing to follow established Illinois precedent; and erred in
finding both a duty to defend and a duty to indemnify. We
reverse.
This action arises out of an underlying tort action in which
the insured, Unique Presort, was sued by members of two families
who were involved in a motor vehicle collision with a truck owned
by Unique Presort and operated by a driver employed by Unique
Presort. The families' complaint alleges that the truck driver was
under the influence of cannabis at the time of the collision. The
complaint alleged in count XXVII that Unique Presort was liable to
the families because it failed to conduct federally mandated drug
tests of the truck driver. See 49 C.F.R. §5391.83(a) (1993). The
question on appeal is whether count XXVII triggers MBI's duty to
defend under its policy with Unique Presort.
The insurance policy, a commercial general liability policy,
carried an express automobile accident exclusion provision. When
Unique Presort was served with notice of the underlying action, it
tendered requests for defense to both its vehicle insurer and to
MBI. MBI filed the instant action seeking a declaratory judgment
pursuant to the section 2--701 of the Code of Civil Procedure (735
ILCS 5/2--701 (West 1992)) that it owed no duty to defend or
indemnify Unique Presort in the underlying action because it arose
out of an automobile collision. Unique Presort argued in response
that the count alleging liability under the federal drug-testing
statute was not automatically excluded by the auto accident
provision and thus, at a minimum, triggered MBI's duty to defend.
MBI filed a motion for judgment on the pleadings. At the
hearing on the motion, MBI presented pertinent appellate authority
supporting its position, and Unique Presort endeavored to
distinguish that authority.
The court stated that it had knowledge of certain Rule 23
orders which disclosed this court's position on the legal issue
raised in the motion and entered an order denying the motion for
judgment on the pleadings.
At the hearing on a motion to reconsider, MBI argued the
impropriety of the court relying on Rule 23 orders in denying the
motion for judgment on the pleadings.
Counsel for MBI then asked the court to cite for the record
the particular decisions upon which it relied. The court
responded: "I can't give you the cases right off the top of my
head, but I think that is the state of the law."
On appeal, MBI contends that the trial court erred in finding
that the insurance contract at issue made MBI liable for coverage
with regard to the underlying complaint; erred in failing to follow
established Illinois precedent in denying MBI's motion for judgment
on the pleadings; erred in relying on unpublished orders in
rendering its judgment; erred in finding MBI liable to defend and
indemnify Unique Presort; and erred in finding MBI liable to
indemnify Unique Presort because the issue of the duty to indemnify
was "premature" until liability was adjudicated in the underlying
action.
A motion for judgment on the pleadings is brought pursuant to
section 2--615(e) of the Code of Civil Procedure (735 ILCS 5/2-
615(e) (West 1992)). On a motion for judgment on the pleadings, if
the pleadings put in issue one or more material facts, evidence
must be taken to resolve such issues, and judgment may not be
entered on the pleadings. In re Estate of Davis, 225 Ill. App. 3d
998, 1000 (1992). On review, the court must determine whether any
genuine issue of material fact exists and, if not, whether the
moving party was indeed entitled to judgment as a matter of law.
State Farm Fire & Casualty Co. v. Kleckner, 194 Ill. App. 3d 371,
375 (1990). Our review of motions brought pursuant to section 2--
615 of the Code of Civil Procedure is de novo. Kedzie & 103rd
Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116 (1993).
As both parties correctly note, an insurer's duty to defend
arises if the complaint alleges facts that fall within, or
potentially within, the policy's coverage. Oakley Transport, Inc.
v. Zurich Insurance Co., 271 Ill. App. 3d 716, 719 (1995). It is
well settled that the allegations of the complaint are dispositive
of the insurer's duty to defend, and not the findings of the
underlying litigation. Oakley, 271 Ill. App. 3d at 719. However,
the suggestion made by Unique Presort that the trial court may
consider only the facial allegations and may not consider the
intent of the statute under which the count is brought is an
overstatement. See Oakley, 271 Ill. App. 3d at 719 n.2; Fidelity
& Casualty Co. v. Envirodyne Engineers, Inc., 122 Ill. App. 3d 301
(1983). An insurance policy is not intended to be interpreted in
a factual vacuum and without regard to the purpose for which the
insurance policy was written. Oakley, 271 Ill. App. 3d at 726.
Rather, the court must determine whether any genuine issue of
material fact is in question. State Farm, 194 Ill. App. 3d at 375.
If a review of the allegations in the complaint and the provisions
of the insurance policy disclose that all of the claims are beyond
coverage, an insurer is justified in refusing to defend. Oakley,
271 Ill. App. 3d at 721.
In this case MBI relies heavily on Oakley, a first district
case, and we agree that it is directly on point with regard to
several of the pertinent issues. In Oakley, an action was brought
against the insured by a third party on a theory of negligent
supervision of its employee, who caused a motor vehicle accident
while in the course of his employment. The insured tendered a
request for defense to Zurich Insurance Company, the issuer of its
commercial general liability policy, and also to its truck
transport insurer. Zurich rejected coverage, citing the automobile
exclusion in the parties' commercial general liability policy
agreement. The insured and the truck transport insurance carrier
sought a declaratory judgment that Zurich had a duty to defend
based on the fact that at least one of the allegations of the
complaint, that alleging negligent supervision, was arguably
unrelated to the automobile exclusion. Oakley, 271 Ill. App. 3d at
718-19. The court found that the allegedly negligent supervision
of the employee was derivative of, and dependent upon, the
underlying negligent use of the vehicle. In legal terms, the court
said, the negligent use of the vehicle by the employee was the very
nexus between the supervisor and the supervisee. Oakley, 271 Ill.
App. 3d at 726-27.
In this case, the fact that the injuries occurred in an
automobile accident is the nexus between the plaintiffs' (in the
underlying action) cause of action for personal injuries and the
federal drug-testing regulations. In the instant case, Unique
Presort argues that the allegations in count XXVII, which allege
negligence for the failure to comply with the federal drug-testing
regulations, do not relate to the "ownership, maintenance, use or
entrustment to others" of any "auto." MBI responds with a lengthy
exposition about the legislative intent of the federal regulations
governing transportation. 49 C.F.R. §5391.83(a) (1993). MBI
argues that the regulations are intended to remedy the evil of
intoxicated drivers of transport vehicles upon the public roadways.
Thus, the underlying plaintiffs cannot bring a cause of action
under a transportation regulation and simultaneously argue that the
regulation merely relates to an employer's duty to conduct drug
testing and is not subject to the automobile exclusion in the MBI
policy. We agree with MBI's analysis.
In this case, the underlying plaintiffs' count XXVII is
specifically dependent upon the fact that their injuries occurred
in a vehicle accident. This drug-testing regulation would not
apply to the underlying plaintiffs' negligence action if their
injuries had been caused by some instrumentality other than a
vehicle. Thus, the nexus of the negligence alleged in count XXVII
is inextricably intertwined with the policy's excluded
instrumentality, namely, the vehicle. See Oakley, 271 Ill. App. 3d
at 726-27.
We note that this court has found that restating the facts of
an occurrence in terms other than those expressly excluded in the
policy does not automatically trigger coverage. In Allstate
Insurance Co. v. Smiley, 276 Ill. App. 3d 971, 978-79 (1995), we
said that the plaintiff's characterization of the defendant's
negligence as "personal" did not negate the fact that the alleged
negligence arose out of the defendant's business activity, which
was expressly excluded under the insurance policy in question. In
Allstate, we distinguished United States Fidelity & Guaranty Co. v.
State Farm Mutual Automobile Insurance Co., 107 Ill. App. 3d 190
(1982) (USF&G I), and United States Fidelity & Guaranty Co. v.
State Farm Mutual Automobile Insurance Co., 152 Ill. App. 3d 46
(1987) (USF&G II) (collectively, USF&G). In USF&G, a commercial
general liability carrier was found liable to defend and indemnify
its insured, a day-care center, on a personal injury claim. The
injured child fell out of a car owned by the day-care center. The
plaintiffs sought recovery against the day-care center on several
theories, including negligent supervision of the children and
negligent supervision of the employees. The USF&G court found that
the child's injuries were the result of two separate proximate
causes: the negligence of the day-care center in supervising the
children and the negligence of the employees in operating the
vehicle. The court said:
" 'If a proximate cause of an injury is within the included
coverage of an insurance policy, the included coverage is not
voided merely because an additional proximate cause of the
injury is a cause which is excluded under the policy. Thus,
in order for an injury to be excluded from coverage under an
insurance policy, the injury must have been caused solely by
a proximate cause which is excluded under the policy.' "
Allstate, 276 Ill. App. 3d at 981, quoting USF&G II, 152 Ill.
App. 3d at 48.
However, the Allstate court noted that USF&G could only be
properly understood when read in context with Allstate Insurance
Co. v. Pruitt, 177 Ill. App. 3d 407 (1988). In Pruitt, the
insured's minor son injured the plaintiff when he ran into him
while riding a motorbike. The plaintiff sued the son for the
negligent operation of the motorbike and sued the father for the
negligent supervision of the son. The father's homeowner's
insurance policy carrier rejected the tender of defense, citing the
automobile exclusion in the homeowner's policy. The Pruitts argued
that " 'the separate and distinct allegation of failure to
supervise may be covered even in a case where negligent operation
is also alleged and excluded.' " Pruitt, 177 Ill. App. 3d at 410.
The court found that the insurer had no duty to defend or indemnify
the Pruitts. The court distinguished USF&G as a case in which "the
underlying complaint described acts of alleged negligence and
theories of recovery wholly independent from those relating to the
allegedly negligent operation of the automobile," whereas the claim
of negligent supervision against the senior Pruitt was "based
solely on the minor's ownership and operation of the minibike."
Pruitt, 177 Ill. App. 3d at 411. Thus, the Allstate court said,
because the father could be found negligent only if the son were
found negligent, the excluded cause predominated, and the claim was
not covered. Allstate, 276 Ill. App. 3d at 982. Put another way,
the USF&G defendants might have been successfully sued for
negligent supervision whether the child was injured falling out of
a car or falling out of a tree.
In the case sub judice, count XXVII of the underlying
complaint alleging the federal drug regulation is actionable only
because the underlying plaintiffs were injured in a vehicle
collision, since the statute at issue is designed solely to remedy
the problem of intoxicated commercial drivers on the public
roadways. See 49 C.F.R. §5391.83(a) (1993) ("This subpart applies
to motor carriers and persons who operate a commercial motor
vehicle as defined in this subpart in interstate commerce"). Thus,
as was the case in Pruitt, the excluded cause (the automobile
accident exclusion) predominates over the claim in count XXVII that
Unique Presort failed to comply with the Code Federal Regulations
as it relates to drug testing of its drivers.
We note that Unique Presort apparently argued the construction
of the term "auto" in the policy before the trial court, but it
does not repeat that argument on appeal, and we therefore will not
consider the construction of the term. In any event, we would be
bound by the principles of contract construction to give the term
the meaning intended by the parties. See International Minerals &
Chemical Corp. v. Liberty Mutual Insurance Co., 168 Ill. App. 3d
361, 370 (1988) ("The paramount objective [in construing a policy]
is to give effect to the intent of the parties as expressed by the
terms of the agreement"). Because this is a commercial general
liability policy and was clearly not intended to provide any sort
of vehicle liability insurance coverage, we would conclude that the
exclusion encompasses any vehicle designed to be driven upon the
public roadways.
We note the well-settled principle that an insurer's duty to
defend is much broader than the duty to indemnify. Great West
Steel Industries, Ltd. v. Northbrook Insurance Co., 138 Ill. App.
3d 84, 96 (1985). As MBI notes in its brief, a carrier may owe a
duty to defend, yet, depending on the proofs at trial, may
ultimately be found to have no duty to indemnify. See Murphy v.
Urso, 88 Ill. 2d 444 (1981). Thus, even if the trial court had
correctly concluded that MBI had a duty to defend Unique Presort in
this case, it was premature for the court to also find a duty to
indemnify. That determination could only be made after a trial on
the merits of the underlying cause of action.
Lastly we address MBI's contention that the trial court abused
its discretion in allegedly relying upon unpublished Rule 23 orders
in rendering judgment in this case. We note that Unique Presort
argues that the trial court did not rely on Rule 23 orders in its
decision, but only referred to them in passing while relying on
published law. However, the trial court cited no published
opinions in its ruling, nor does Unique Presort offer any in its
brief. We also find nothing in the record to indicate specific
Illinois case law upon which the court may have relied.
We therefore reiterate the widely known principle that Rule 23
orders are not precedential and have no binding force except in the
case in which they were issued. See Official Reports Advance Sheet
No. 15 (July 20, 1994), R. 23, eff. July 1, 1994; Schlenz v.
Castle, 115 Ill. 2d 135 (1986).
We conclude that count XXVII of the underlying complaint
alleges no facts that would remove it from the scope of the
automobile accident exclusion provision of the MBI policy. We find
that MBI was entitled to judgment on the pleadings and that it has
no duty to defend Unique Presort in the underlying action.
For the foregoing reasons, the judgment of the circuit court
of Du Page County is reversed, and MBI's motion for judgment on the
pleadings is granted pursuant to this court's authority under Rule
366(a)(5) (155 Ill. 2d R. 366(a)(5)).
Judgment reversed; motion granted.
GEIGER, P.J., and BOWMAN, J., concur.