Maxum Indemnity Company v. Gillette

• Court: Appellate Court of Illinois
• Decided: November 22, 2010
• Docket: 3-10-0006 Rel
• Status: Published

Opinion

No. 3-10-0006 ______________________________________________________________________________ Filed November 22, 2010-Correction IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2010 ______________________________________________________________________________

MAXUM INDEMNITY COMPANY, ) Appeal from the Circuit Court ) of the 13th Judicial Circuit Plaintiff-Appellant, ) LaSalle County, Illinois, ) v. ) ) DON AND BETTY GILLETTE d/b/a ) No. 09-MR-113 GILLETTE PARADE PRODUCTS, ) CECILIA KALER and HOWARD ) KALER, ) ) The Honorable Defendants-Appellees. ) Joseph P. Hettel, ) Judge, Presiding. ______________________________________________________________________________

JUSTICE McDADE delivered the opinion of the court: ______________________________________________________________________________

This appeal arises from a declaratory judgment action filed in the circuit court of LaSalle

County to resolve insurance coverage issues. Plaintiff, Maxum Indemnity Company, appeals

arguing that the court erred in determining that it owed a duty to defend defendant, Don & Betty

Gillette, d/b/a Gillette Parade Products. We reverse and remand for further proceedings.

FACTS

Defendant is engaged in the business of preparing, providing and transporting parade

floats for compensation. Plaintiff issued a commercial liability policy (the policy) to defendant

with an effective policy period from October 10, 2007, through October 1, 2008. The policy provides in pertinent part:

“a. We will pay those sums that the Insured becomes legally

obligated to pay as ‘damages’ because of ‘bodily injury’ or

‘property damage’ to which this insurance applies. We will have

the right and duty to defend the Insured against any ‘suit’ seeking

those ‘damages.’ However, we will have no duty to defend the

Insured against any ‘suit’ seeking ‘damages’ for ‘bodily injury’ or

‘property damage’ to which this insurance does not apply.

***

b. This insurance policy applies to ‘bodily injury’ and

‘property damage’ only if:

(1) The ‘bodily injury’ or ‘property damage’

is caused by an ‘occurrence’ that takes place in the

‘coverage territory’; and

(2) The ‘bodily injury’ or ‘property damage’

takes place during the policy period.”

The policy contains an “Aircraft, Auto or Watercraft” exclusion (auto exclusion) which

excludes coverage for:

“ ‘Bodily injury’ or ‘property damage’ arising out of the

ownership maintenance, use or entrustment to others of any

aircraft, ‘auto’ or watercraft owned or operated by or rented or

loaned to any Insured, including the supervision, hiring,

2 employment, training or monitoring of, or failure to warn anyone in

connection with, the ownership, maintenance, use or entrustment to

others of any aircraft, ‘auto’ or watercraft. Use includes operation

and ‘loading or unloading.’ ”

The policy defines “auto” as:

“[A] land motor vehicle, trailer or semi-trailer designed for travel

on public roads, including any attached machinery or equipment.”

On August 3, 2008, Cecilia Kaler was a passenger on a parade float owned and operated

by defendant. The parade float at issue was being pulled by defendant, by way of its agent driver,

on a public road. While being pulled, Kaler was thrown from the float.

On April 24, 2009, Kaler filed a lawsuit against defendant alleging that defendant was

guilty of one or more of the following negligent acts:

“a. Provided a parade float in an unsafe, defective and

dangerous condition in that there were no side rails to prevent

passengers thereon from being thrown from the float,

b. Provided a parade float in an unsafe, defective and

dangerous condition in that there were insufficient hand rails for

passengers to prevent them from being thrown from the float,

c. Permitted and allowed *** KAILER [sic] to sit upon the

defective and unsafe float when they knew or should have known

that the float provided inadequate safety devices to prevent

passengers from being thrown from the float,

3 d. Failed to warn *** KAILER [sic] of the defective and

unsafe condition of the float.

e. Pulled the float on a public way when the float was in an

unsafe condition so as to endanger passengers thereon,

f. Failed to have the float equipped with a retaining device

to prevent passengers from being thrown onto the pavement,

g. Failed to provide a safe and competent driver.”

The complaint also alleged that defendant, by and through their agent driver, was guilty of

one or more of the following negligent acts:

“a. Pulled the float at a speed greater than reasonable,

b. Pulled the float at an excessive speed so that when pulled

over a bump in the road, caused the float to violently lunge and

buck,

c. Failed to decrease the speed at which the float was being

pulled when he saw or should have seen the bumpy nature of the

pavement ahead,

d. Failed to keep a proper look-out ahead for pavement

imperfections that could or might cause the float to lunge and buck,

e. Failed to proceed cautiously when he saw or should have

seen pavement imperfections ahead,

f. Failed to see and observe pavement imperfections ahead,

g. Swerved the float suddenly, when this movement could

4 not be made with reasonable safety to passengers thereon.”

On June 3, 2009, plaintiff filed a declaratory judgment action seeking a determination that

it was not required to defend and/or indemnify defendant Gillette in the Kaler lawsuit. In lieu of

answering plaintiff’s complaint, defendant filed a motion for judgment on the pleadings. Upon

hearing argument, the circuit court denied defendant’s motion as to the duty to indemnify, finding

that the issue was premature. The court, however, granted defendant’s motion in part, finding

that plaintiff owed a duty to defend defendant. Specifically, the court found that Kaler’s

complaint involved a parade float, not an auto. The court also noted that Kaler’s complaint

contained separate allegations pertaining to how the float was built, which did not relate in any

way to an auto. Thus, the court concluded that the auto exclusion found in the policy did not

apply. Plaintiff now appeals the court’s finding that it owes a duty to defend defendant.

ANALYSIS

Plaintiff argues that the circuit court erred in finding that it owed a duty to defend

defendant. Plaintiff presents two specific arguments in support of this claim. First, plaintiff

contends that the “parade float clearly falls within the definition of an ‘auto,’ as *** defined by the

policy.” Plaintiff also contends that “Kaler’s allegations that [defendant] provided the parade float

in an alleged unsafe and defective condition, failed to warn of the unsafe conditions, and failed to

provide a safe and competent driver to pull the float, are merely a rephrasing of the fact that the

claimant’s injuries arose out of the insured’s use of the‘auto’ [pulling the float], and thus, are not

wholly independent of the negligent operation of the ‘auto.’ ”

The supreme court in Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.

2d 384, 620 N.E.2d 1073 (1993), explained the principles courts of review should apply when

5 called to interpret an insurance policy and determine whether an insurer owes a duty to defend its

insured its terms. Specifically, the court stated:

“The construction of an insurance policy and a

determination of the rights and obligations thereunder are questions

of law for the court ***. [Citations.] In construing an insurance

policy, the primary function of the court is to ascertain and enforce

the intentions of the parties as expressed in the agreement.

[Citations.] To ascertain the intent of the parties and the meaning

of the words used in the insurance policy, the court must construe

the policy as a whole, taking into account the type of insurance for

which the parties have contracted, the risks undertaken and

purchased, the subject matter that is insured and the purposes of the

entire contract. [Citations.] If the words in the policy are plain and

unambiguous, the court will afford them their plain, ordinary

meaning and will apply them as written. [Citation.] The court will

not search for ambiguity where there is none. [Citation.]

* * * [I]n determining whether an insurer has a duty to

defend its insured, the court must look to allegations in the

underlying complaint and compare these allegations to the relevant

coverage provisions of the insurance policy. [Citation.] If the facts

alleged in the underlying complaint fall within, or potentially within,

6 the policy’s coverage provisions, then the insurer has a duty to

defend the insured in the underlying action. [Citation.] The

insurer’s duty to defend is much broader than its duty to indemnify

its insured.” Crum, 156 Ill. 2d at 391-94, 620 N.E.2d at 1077-79.

Initially, we examine plaintiff’s claim that the “parade float clearly falls within the

definition of an ‘auto,’ as *** defined by the policy.” Specifically, plaintiff argues that “at an

absolute minimum, a parade float, which is pulled by a vehicle, would be categorized as a trailer,

and thus would fall squarely within the definition of ‘auto.’ ” We agree.

Again, the policy defines “auto” as “a land motor vehicle, trailer or semi-trailer designed

for travel on public roads.” (Emphasis added.) Because the policy does not define the term

“trailer,” we must give it its plain, ordinary and popular meaning. Outboard Marine Corp. v.

Liberty Mutual Insurance Co., 154 Ill. 2d 90, 115, 607 N.E.2d 1204, 1215 (1992). “ ‘ “Usual and

ordinary meaning” has been stated variously to be that meaning which the particular language

conveys to the popular mind, to most people, to the average, ordinary, normal [person], to a

reasonable [person], to persons with usual and ordinary understanding, to a business[person], or

to a lay[person].’ ” Outboard Marine, 154 Ill. 2d at 115, 607 N.E.2d at 1216, quoting 2 Couch

on Insurance 2d §15:18 (rev. ed. 1984).

Merriam-Webster’s Online dictionary (Merriam) defines the term “trailer” as a

“nonautomotive vehicle designed to be hauled by road as *** a vehicle for transporting

something.” Merriam-Webster Online Dictionary 2010, available at

www.merriam-webster.com/dictionary/trailer. Here, we find the float constitutes a “trailer” as

7 contemplated by the policy due to the fact that it was a nonautomotive vehicle being pulled on a

public road by an automobile while transporting passengers and displays. We believe this fact also

supports the conclusion that the float was designed “for travel on public roads” as contemplated

by the policy. The trial court itself recognized that trailers used for travel on public roads are

frequently converted to parade floats. To the popular mind, to most people, to ordinary

laypersons, “trailer” connotes a parade float. Thus, we find the float falls within the definition of

an “auto” as defined by the policy. This determination, however, does not end our inquiry as we

are still left with the question of whether the underlying complaint’s defective condition claims fall

within the scope of the auto exclusion.

We begin with the principle that if the underlying complaint alleges several theories of

recovery against the insured, the duty to defend arises even if only one such theory is within the

potential coverage of the policy. See National Union Fire Insurance Co. of Pittsburgh v.

Glenview Park District, 158 Ill. 2d 116, 124, 632 N.E.2d 1039, 1042-43 (1994). Clearly, Kaler’s

claims regarding negligent operation of the “auto”/float fall within the scope of the auto exclusion.

Both the trial court and defendant, however, believe that plaintiff still owes a duty to defend due

to the fact that Kaler’s defective condition claims do not allege bodily injury arising “out of the

ownership maintenance, use or entrustment to others” of the “auto”/float. We disagree.

We find the recent holding in State Farm § Fire Casualty Co. v. Perez, 387 Ill. App. 3d

549, 899 N.E.2d 1231 (2008), to be instructive. The insurer in Perez sought a declaratory

judgment that a homeowner’s policy did not provide coverage for a civil action arising from a

traffic accident. The driver was an insured under the homeowner’s policy, but the policy excluded

coverage for claims arising out of the use of a motor vehicle. The passenger filed a complaint

8 against the driver alleging that the driver: (1) negligently operated the vehicle, and (2) negligently

modified the vehicle’s seats and restraint system, leading to the passenger’s injuries in the

accident. On appeal, the passenger argued that the motor vehicle exclusion found in the

homeowner’s policy was inapplicable because the negligent modification claim did not allege

bodily injury arising out of the ownership, maintenance, use, loading or unloading of the driver’s

vehicle. Specifically, the passenger alleged that the negligent modification allegations were

“wholly independent” from the allegation that the driver negligently operated the vehicle. In

rejecting the passenger’s argument the court stated:

“Here, [the passenger’s] negligent modification claim

against [the driver] arose from injuries she sustained while the car

was being used in a manner consistent with its customary use. The

alleged problem with the modified seats and safety restraint system,

and [the driver’s] alleged failure to warn [the passenger] about

these alterations, only created a risk to [the passenger], as was the

case here, when the car was in motion and used as a mode of

transportation -- an actual legitimate purpose of the car

contemplated by the parties to the insurance contract. Because the

exclusion in the homeowner’s policy did not define the term ‘use,’

we must give it its plain, ordinary and popular meaning. We thus

construe it in light of the reasonable person standard and note that a

reasonable person would find the phrase ‘use of a motor vehicle’ to

mean driving and operating a vehicle. We cannot think of a more

9 inherent activity one may do with a car than to drive it. [Citation.]

*** [The driver] was driving the car at the time of the accident, an

activity that squarely falls under the ‘use of a motor vehicle’

language in the exclusion and was an actual legitimate purpose of

the car. *** [A] causal relation existed here between [the

passenger’s] injuries and [the driver’s] use of the car, causing her

injuries to come within the policy’s exclusion because the

involvement of the car was not incidental to [the passenger’s]

injuries, it was the cause of her injuries. Further, the negligent

modification claim was only a rephrasing of the fact that [the

passenger’s] injuries arose out of [the driver’s] use of the car and,

thus, was not wholly independent of the negligent operation of the

car. Therefore, we hold that the exclusion applies and [the insurer]

has no duty to defend [the driver] in the underlying lawsuit.”

Perez, 387 Ill. App. 3d at 556-57, 899 N.E.2d at 1238.

Here, Kaler’s defective condition claims arose from injuries she sustained while the

“auto”/float was being used in a manner consistent with its customary use. Kaler’s entire

complaint revolves around her being “thrown from the float” while the float was being “pulled.”

In light of these alleged facts, we find the alleged defective condition only created a risk to her

when the float was in motion. Clearly, a causal relation exists between Kaler’s injuries and the

use of the “auto”/float. We therefore find that the defective condition claims are not wholly

independent of the alleged negligent operation or use of the float. Accordingly, we hold that the

10 auto exclusion applies and plaintiff has no duty to defend defendant in the underlying lawsuit.

For the foregoing reasons, we reverse the judgment of the circuit court of LaSalle County

and remand for further proceedings.

Reversed and remanded.

CARTER and SCHMIDT, JJ., concur.