2019 IL App (1st) 180743
Ill. App. Ct.2019Background
- Condominium association sued general contractor Belgravia for water infiltration and related damage to the building; Belgravia third‑partied several subcontractors, including carpentry subcontractor Denk & Roche.
- Denk & Roche held consecutive primary CGL policies: Cincinnati (Jan 1, 2000–June 1, 2007) and Acuity (June 1, 2007–Dec 31, 2013); Denk & Roche tendered defense to both insurers.
- Cincinnati defended Denk & Roche and settled the subcontractor’s exposure; Acuity denied coverage and filed a declaratory‑judgment action that it owed no duty to defend.
- Cincinnati intervened and sought equitable contribution from Acuity for defense costs, asserting Acuity had a duty to defend under its CGL policy.
- The trial court granted summary judgment for Acuity, holding the underlying complaints did not allege an "occurrence" causing "property damage," so Acuity owed no duty to defend; Cincinnati appealed.
- The appellate court reversed, holding Acuity had a duty to defend because the third‑party complaints alleged damage beyond Denk & Roche’s discrete scope of work, and remanded for contribution prove‑up.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Acuity owed a duty to defend Denk & Roche under its CGL policy | Cincinnati: underlying complaints alleged property damage and an "occurrence" because Denk & Roche’s workmanship allegedly caused water damage that interfered with habitation and damaged units/common elements | Acuity: allegations only assert faulty workmanship and economic loss; natural consequences of defective work are not an "occurrence" and do not allege covered "property damage" | Reversed trial court: duty to defend exists where subcontractor’s faulty work is alleged to have caused damage beyond the subcontractor’s own work/scope — that triggers an "occurrence" and "property damage" under the policy |
| Whether Cincinnati is entitled to equitable contribution from Acuity for defense costs | Cincinnati: both insurers provided primary CGL coverage to Denk & Roche for the risks alleged and thus share liability for defense costs | Acuity: policies are consecutive (non‑overlapping) so they do not insure the same risk and contribution is unavailable | Court: contribution available where both policies cover the particular risk involved even if policy periods are consecutive; remanded to determine amount owed |
Key Cases Cited
- Travelers Ins. Co. v. Eljer Mfg., 197 Ill. 2d 278 (superseding Illinois precedent on economic loss vs. physical property damage under CGL)
- Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90 (principles of policy construction; plain meaning rule)
- Brochu v. Western Cas. & Sur. Co., 105 Ill. 2d 486 (distinguishing faulty workmanship from an "accident"/occurrence)
- Home Ins. Co. v. Cincinnati Ins. Co., 213 Ill. 2d 307 (equitable contribution requires identity of parties, interests, and risks)
- Richard Marker Assocs. v. Pekin Ins. Co., 289 Ill. App. 3d 819 (CGL covers damage to property other than insured’s own work)
- CMK Dev. Corp. v. West Bend Mut. Ins. Co., 395 Ill. App. 3d 830 (damage to property other than the project itself can be an occurrence)
- Stoneridge Dev. Co. v. Essex Ins. Co., 382 Ill. App. 3d 731 (limits on coverage for mere repair/replacement of defective work)
- Viking Constr. Mgmt., Inc. v. Liberty Mut. Ins. Co., 358 Ill. App. 3d 34 (analysis of occurrence and property damage in construction disputes)
- Wil‑Freds Constr. v. Monticello Ins. Co., 277 Ill. App. 3d 697 (duty to defend analysis comparing underlying allegations to policy language)
- Ohio Cas. Ins. Co. v. Bazzi Constr. Co., 815 F.2d 1146 (7th Cir.: subcontractor’s work causing damage to existing structure can trigger coverage)
- Westfield Ins. Co. v. Nat’l Decorating Serv., 147 F. Supp. 3d 708 (N.D. Ill. finding duty to defend where subcontractor’s work allegedly damaged other trades’ work)