2015 IL App (3d) 140290
Opinion filed September 2, 2015 _____________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2015
PEKIN INSURANCE COMPANY, ) Appeal from the Circuit Court ) of the 12th Judicial Circuit, Plaintiff-Appellee, ) Will County, Illinois. ) v. ) Appeal No. 3-14-0290 ) Circuit No. 12-MR-531 MARTIN CEMENT COMPANY, ) ) The Honorable Defendant-Appellant. ) Barbara Petrungaro, ) Judge, presiding. _____________________________________________________________________________
JUSTICE O’BRIEN delivered the judgment of the court, with opinion. Justices Lytton and Wright concurred in the judgment and opinion. _____________________________________________________________________________
OPINION
¶1 The defendant, Martin Cement Company, appealed from a circuit court order granting the
motion of the plaintiff insurer, Pekin Insurance Company, for summary judgment and denying
Martin’s cross-motion for summary judgment, and finding that Pekin owed no duty to defend
Martin as an additional insured in a personal injury construction accident lawsuit.
¶2 FACTS
¶3 This case involves injuries sustained by Jake Swartz on or about July 14, 2010. As
alleged in the underlying complaint, Swartz was employed on that date by Platinum Steel, Inc., (Platinum) and was working on a construction project. The underlying complaint named The
Frederick Quinn Corporation (FQC) and Martin Cement Co. (Martin) as defendants. The
underlying complaint alleged that Martin was in charge of the construction of the building where
Swartz was injured when one of the rebar forms that he was working on broke away and caused
Swartz to fall. Platinum was working on the construction site pursuant to a subcontract
agreement with Martin wherein Platinum agreed to provide labor and equipment to set rebar.
¶4 Relevant to this appeal, count 1 of the underlying complaint, entitled “Retained control
over the work” alleges that FQC and Martin owned and/or were in charge of the erection,
construction, repairs, alteration, removal and/or painting on the construction project where the
underlying plaintiff, Swartz, worked as an employee of Platinum. Count I further alleges that
FQC and Martin, through their agents, servants and employees: were present and participated in
coordinating the work; checked the work progress; inspected the work; and had the authority to
stop work, refuse the work, and order changes in the work. Finally, count I alleges that FQC and
Martin, by and through their agents, servants, and employees were guilty of certain negligent
acts, including “(g) failed to provide safe, suitable and proper support for [p]laintiff to work off
of.” Count II alleges the direct negligence of Martin and FQC.
¶5 By letter dated December 29, 2011, Martin’s attorney in the underlying case tendered
Martin’s defense to Pekin. Martin’s tender arose from a Commercial General Liability Policy
that was issued by Pekin as the insurer to Platinum as the insured for the effective policy period
of June 1, 2010 – June 1, 2011. Under the subcontract agreement whereby Platinum, as the
subcontractor, agreed to set rebar for Martin, as the contractor, dated June 15, 2010, Platinum
was required to purchase and maintain this insurance coverage, naming Martin as an additional
insured. The policy contained an additional insured endorsement titled “Contractors Additional
2 Insured/Waiver of Rights of Recovery Extension Endorsement.” Specifically, the policy
provided coverage to Martin with respect to vicarious liability for bodily injury or property
damage imputed from Platinum to Martin as a proximate result of Platinum’s ongoing operations
performed for Martin. It did not provide coverage for Martin’s own negligence.
¶6 On January 13, 2012, FQC filed a third-party complaint against Platinum in the
underlying case. That complaint sought contribution from Platinum if FQC was found to be
liable to Swartz, based upon Platinum’s: failure to properly train and supervise Swartz; improper
maintenance and control of the area where Swartz was working; failure to warn Swartz; failure
to provide adequate safeguards; and failure to provide Swartz with a safe place to work.
¶7 By letter dated February 10, 2012, Pekin rejected Martin’s tender of the defense of the
underlying case, stating that Martin was not listed as an additional insured on the Declarations
page and the allegations against Martin in the underlying complaint were for negligence by
Martin, which was excluded under the policy. Martin did not withdraw its tender of defense, so
Pekin filed this declaratory judgment action on March 20, 2012.
¶8 On March 30, 2012, Martin filed a third-party complaint against Platinum in the
underlying case, making similar allegations to FQC in the contribution count, and adding a count
for breach of contract.
¶9 Pekin moved for summary judgment. With respect to Martin, Pekin argued that it was
entitled to summary judgment because it owed no duty to Martin under the additional insured
endorsement when Swartz sued Martin for Martin’s own conduct and the policy provided no
coverage for Martin’s own negligence. Martin filed a cross-motion for summary judgment,
arguing that the underlying complaint stated claims against Martin that Platinum was potentially
responsible for, thus falling within the endorsement. In addition, FQC’s third-party complaint
3 alleged that Platinum was at fault. The circuit court granted summary judgment in favor of
Pekin and against Martin. In so ruling, the circuit court determined that it was not appropriate to
consider Martin’s third-party complaint, but it did specifically to rule on the argument that it
could consider FQC’s third-party complaint. Martin appealed.
¶ 10 ANALYSIS
¶ 11 Martin argues that Pekin had a duty to defend it as an additional insured under the policy
issued to Platinum because the underlying complaint, read in conjunction with the subcontract
between Martin and Platinum, contained allegations that Martin was sued for vicarious liability
imputed from Platinum to Martin. In addition, Martin argues that the circuit court should have
considered FQC’s third-party complaint, which alleged several failures by Platinum, including
failure to properly train and supervise Swartz; improper maintenance and control of the area
where Swartz was working; failure to warn Swartz; failure to provide adequate safeguards; and
failure to provide Swartz with a safe place to work. Thus, Martin contends that the circuit court
erred in finding that Pekin had no duty to defend under the additional insured endorsement in the
policy that Pekin issued to Platinum.
¶ 12 An insurer’s duty to defend its insured is broader than its duty to indemnify. Pekin
Insurance Co. v. Wilson, 237 Ill. 2d 446, 456 (2010). In determining whether an insurer has a
duty to defend its insured, a court must look to the allegations in the underlying complaint and
the relevant portions of the insurance policy. Outboard Marine Corp. v. Liberty Mutual
Insurance Co., 154 Ill. 2d 90, 107-08 (1992). The court must focus on the allegations of the
complaint, liberally construed in favor of the insured. United States Fidelity & Guaranty Co. v.
Wilkin Insulation Co., 144 Ill. 2d 64, 73 (1991). If the allegations of the underlying complaint
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2015 IL App (3d) 140290
Opinion filed September 2, 2015 _____________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2015
PEKIN INSURANCE COMPANY, ) Appeal from the Circuit Court ) of the 12th Judicial Circuit, Plaintiff-Appellee, ) Will County, Illinois. ) v. ) Appeal No. 3-14-0290 ) Circuit No. 12-MR-531 MARTIN CEMENT COMPANY, ) ) The Honorable Defendant-Appellant. ) Barbara Petrungaro, ) Judge, presiding. _____________________________________________________________________________
JUSTICE O’BRIEN delivered the judgment of the court, with opinion. Justices Lytton and Wright concurred in the judgment and opinion. _____________________________________________________________________________
OPINION
¶1 The defendant, Martin Cement Company, appealed from a circuit court order granting the
motion of the plaintiff insurer, Pekin Insurance Company, for summary judgment and denying
Martin’s cross-motion for summary judgment, and finding that Pekin owed no duty to defend
Martin as an additional insured in a personal injury construction accident lawsuit.
¶2 FACTS
¶3 This case involves injuries sustained by Jake Swartz on or about July 14, 2010. As
alleged in the underlying complaint, Swartz was employed on that date by Platinum Steel, Inc., (Platinum) and was working on a construction project. The underlying complaint named The
Frederick Quinn Corporation (FQC) and Martin Cement Co. (Martin) as defendants. The
underlying complaint alleged that Martin was in charge of the construction of the building where
Swartz was injured when one of the rebar forms that he was working on broke away and caused
Swartz to fall. Platinum was working on the construction site pursuant to a subcontract
agreement with Martin wherein Platinum agreed to provide labor and equipment to set rebar.
¶4 Relevant to this appeal, count 1 of the underlying complaint, entitled “Retained control
over the work” alleges that FQC and Martin owned and/or were in charge of the erection,
construction, repairs, alteration, removal and/or painting on the construction project where the
underlying plaintiff, Swartz, worked as an employee of Platinum. Count I further alleges that
FQC and Martin, through their agents, servants and employees: were present and participated in
coordinating the work; checked the work progress; inspected the work; and had the authority to
stop work, refuse the work, and order changes in the work. Finally, count I alleges that FQC and
Martin, by and through their agents, servants, and employees were guilty of certain negligent
acts, including “(g) failed to provide safe, suitable and proper support for [p]laintiff to work off
of.” Count II alleges the direct negligence of Martin and FQC.
¶5 By letter dated December 29, 2011, Martin’s attorney in the underlying case tendered
Martin’s defense to Pekin. Martin’s tender arose from a Commercial General Liability Policy
that was issued by Pekin as the insurer to Platinum as the insured for the effective policy period
of June 1, 2010 – June 1, 2011. Under the subcontract agreement whereby Platinum, as the
subcontractor, agreed to set rebar for Martin, as the contractor, dated June 15, 2010, Platinum
was required to purchase and maintain this insurance coverage, naming Martin as an additional
insured. The policy contained an additional insured endorsement titled “Contractors Additional
2 Insured/Waiver of Rights of Recovery Extension Endorsement.” Specifically, the policy
provided coverage to Martin with respect to vicarious liability for bodily injury or property
damage imputed from Platinum to Martin as a proximate result of Platinum’s ongoing operations
performed for Martin. It did not provide coverage for Martin’s own negligence.
¶6 On January 13, 2012, FQC filed a third-party complaint against Platinum in the
underlying case. That complaint sought contribution from Platinum if FQC was found to be
liable to Swartz, based upon Platinum’s: failure to properly train and supervise Swartz; improper
maintenance and control of the area where Swartz was working; failure to warn Swartz; failure
to provide adequate safeguards; and failure to provide Swartz with a safe place to work.
¶7 By letter dated February 10, 2012, Pekin rejected Martin’s tender of the defense of the
underlying case, stating that Martin was not listed as an additional insured on the Declarations
page and the allegations against Martin in the underlying complaint were for negligence by
Martin, which was excluded under the policy. Martin did not withdraw its tender of defense, so
Pekin filed this declaratory judgment action on March 20, 2012.
¶8 On March 30, 2012, Martin filed a third-party complaint against Platinum in the
underlying case, making similar allegations to FQC in the contribution count, and adding a count
for breach of contract.
¶9 Pekin moved for summary judgment. With respect to Martin, Pekin argued that it was
entitled to summary judgment because it owed no duty to Martin under the additional insured
endorsement when Swartz sued Martin for Martin’s own conduct and the policy provided no
coverage for Martin’s own negligence. Martin filed a cross-motion for summary judgment,
arguing that the underlying complaint stated claims against Martin that Platinum was potentially
responsible for, thus falling within the endorsement. In addition, FQC’s third-party complaint
3 alleged that Platinum was at fault. The circuit court granted summary judgment in favor of
Pekin and against Martin. In so ruling, the circuit court determined that it was not appropriate to
consider Martin’s third-party complaint, but it did specifically to rule on the argument that it
could consider FQC’s third-party complaint. Martin appealed.
¶ 10 ANALYSIS
¶ 11 Martin argues that Pekin had a duty to defend it as an additional insured under the policy
issued to Platinum because the underlying complaint, read in conjunction with the subcontract
between Martin and Platinum, contained allegations that Martin was sued for vicarious liability
imputed from Platinum to Martin. In addition, Martin argues that the circuit court should have
considered FQC’s third-party complaint, which alleged several failures by Platinum, including
failure to properly train and supervise Swartz; improper maintenance and control of the area
where Swartz was working; failure to warn Swartz; failure to provide adequate safeguards; and
failure to provide Swartz with a safe place to work. Thus, Martin contends that the circuit court
erred in finding that Pekin had no duty to defend under the additional insured endorsement in the
policy that Pekin issued to Platinum.
¶ 12 An insurer’s duty to defend its insured is broader than its duty to indemnify. Pekin
Insurance Co. v. Wilson, 237 Ill. 2d 446, 456 (2010). In determining whether an insurer has a
duty to defend its insured, a court must look to the allegations in the underlying complaint and
the relevant portions of the insurance policy. Outboard Marine Corp. v. Liberty Mutual
Insurance Co., 154 Ill. 2d 90, 107-08 (1992). The court must focus on the allegations of the
complaint, liberally construed in favor of the insured. United States Fidelity & Guaranty Co. v.
Wilkin Insulation Co., 144 Ill. 2d 64, 73 (1991). If the allegations of the underlying complaint
fall within, or potentially within, the policy coverage, then the insurer has a duty to defend.
4 Outboard Marine Corp., 154 Ill. 2d at 125. Summary judgment is appropriate only where “the
pleadings, depositions, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West 2010). We review de novo a ruling
on a motion for summary judgment. Clark Investments, Inc. v. Airstream, Inc., 399 Ill. App. 3d
209, 213 (2010).
¶ 13 Martin argues that it is being sued for events or conduct for which Platinum is
potentially responsible, thus for damages imputed from Platinum. Martin contends that the
underlying allegations that Martin was in charge of the entire project, had a duty to provide a
safe work place, and had a duty to exercise reasonable care in the performance of Martin’s work,
including the operation of the rebar cages, create, at a minimum, the potential that Martin was
being sued for something that Platinum was responsible for. In reaching that conclusion, Martin
relies on the language of the subcontract agreement, which provided that Platinum was to
provide labor and equipment to set the rebar on the project where Swartz was injured.
¶ 14 As this court pointed out in United Contractors Midwest, Inc., we look first to the
allegations in the underlying complaint and compare those allegations to the relevant portions of
the insurance policy. Pekin Insurance Co. v. United Contractors Midwest, Inc., 2013 IL App
(3d) 120803, ¶ 21. The additional insured provisions at issue in this case are identical to the
provisions at issue in United Contractors Midwest, Inc., wherein we concluded that the terms of
the policy required the insurer to defend additional insureds against claims arising out of the
insured’s work or “'ongoing operations performed for that Additional Insured during the Policy
Period.'” Id. ¶ 24. However, comparing the underlying complaint to the insurance policy, we
found that it failed to allege sufficient facts regarding the insured subcontractor’s actions that
5 would result in vicarious liability to the additional insured general contractor based on the
subcontractor’s performance, and failed to allege that the additional insured exercised such
control over the insured’s ongoing operations so that the additional insured could be held
vicariously liable for the acts of its subcontractor. Id. ¶ 33. In reaching that conclusion, we
declined to consider the additional insured’s third-party complaint against the insured on the
basis that it was potentially self-serving in that it was filed by the additional insured after the
declaratory judgment action was filed. Id. ¶¶ 31-32.
¶ 15 United Contractors Midwest, Inc., does not stand for the proposition that it is never
appropriate to consider outside pleadings, only that it was not appropriate in that case due to the
timing of the filing and the identity of the party filing the pleading. Id. ¶ 32. Rather, as a general
rule, as long as in so doing the trial court does not determine an issue critical to the underlying
action, a trial court should be able to consider all the relevant facts contained in the pleadings,
including third-party complaints and counterclaims, to determine whether there is a duty to
defend. Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446, 460-61 (2010) (quoting American
Economy Insurance Co. v. Holabird & Root, 382 Ill. App. 3d 1017, 1031-32 (2008)); see also
Farmers Automobile Insurance Ass’n v. Neumann, 2015 IL App (3d) 140026, ¶ 12 (a trial court
is not required to put on blinders and could consider a complaint filed by an outside party in
determining duty to defend, even though it was filed after the declaratory judgment action,
because there was no indication the outside complaint was filed to fill in information for
coverage). In this case, there were two third-party complaints filed: the complaint filed by FQC
before the declaratory judgment action was filed and the complaint filed by Martin after the
declaratory judgment action was filed. Thus, while Martin’s own third-party complaint against
Platinum, filed after the declaratory judgment action was filed, was arguably potentially self-
6 serving in that it was filed by the putative additional insured after the declaratory judgment
action was already filed, there is no similar reason to bar consideration of FQC’s complaint,
which was filed prior to the declaratory judgment action. That complaint makes sufficient
allegations that actions or omissions of Platinum caused Swartz’s injuries, making summary
judgment in favor of Pekin on the duty to defend in error. Thus, we reverse the grant of Pekin’s
motion for summary judgment and remand for the circuit court to enter summary judgment in
favor of Martin.
¶ 16 CONCLUSION
¶ 17 The judgment of the circuit court of Tazewell County is reversed and remanded.
¶ 18 Reversed and remanded.