Atlantic Casualty Insurance Co v. Chicago Masonry Construction, 718 F.3d 721

Atlantic issued a Commercial General Liability policy to Paszko, who is a party in the declaratory action to determine coverage for four defendant companies.
Rybaltowski, injured on a construction site while working for Raincoat Solutions, a Raincoat subcontractor of Prince, sues the defendant companies for negligence.
Raincoat’s demonstration caulking occurred at the project site before Raincoat became a subcontractor under a formal contract with Prince.
The policy contains a broad exclusion for bodily injury to any contractor arising from providing services or materials by such contractor; Raincoat could be a contractor under that exclusion.
The district court held the exclusion unambiguously barred coverage for Rybaltowski and thus denied coverage to the other defendants; this court is reviewing that ruling.
The court engages in ambiguity analysis for the exclusion and discusses whether the term 'providing services . . . of any kind' should be read narrowly or broadly.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the contractor exclusion apply to Raincoat’s activities when Rybaltowski was injured?	Atlantic contends Raincoat was a contractor providing services, triggering the exclusion.	Prince and others argue the exclusion is overbroad and does not sweep in a worker like Rybaltowski.	Ambiguity resolved in insureds’ favor; exclusion not broad enough to include Rybaltowski.
Should ambiguities in the policy be interpreted in favor of the insureds?	Atlantic’s broad exclusion should be construed to bar coverage.	Insureds receive the benefit of ambiguous terms, given their lack of bargaining power.	Ambiguity resolved against insurer; coverage retained for the insureds unless proven otherwise.

Pekin Ins. Co. v. Wilson, 930 N.E.2d 1011 (Ill. 2010) (interpreting insurance contract ambiguity in favor of insureds)
Great West Casualty Co. v. Mayorga, 342 F.3d 816 (7th Cir. 2003) (ambiguous policy language construed in insureds’ favor)
Stone Container Corp. v. Hartford Steam Boiler Inspection & Ins. Co., 165 F.3d 1157 (7th Cir. 1999) (policy interpretation against insurer when ambiguous)
Outboard Marine Corp. v. Liberty Mutual Ins. Co., 607 N.E.2d 1204 (Ill. 1992) (ambiguity and insured's perspective in insurance contracts)
Payless Shoesource, Inc. v. Travelers Cos., Inc., 585 F.3d 1366 (10th Cir. 2009) (read ambiguous terms in favor of insureds)
National Union Fire Ins. Co. v. American Motorists Ins. Co., 707 F.3d 797 (7th Cir. 2013) (scope of additional insured and related coverage issues)
American Country Ins. Co. v. Kraemer Bros., Inc., 699 N.E.2d 1056 (Ill. App. 1998) (contractor exclusions and coverage implications)
American Country Ins. Co. v. Cline, 722 N.E.2d 755 (Ill. App. 1999) (interpretation of insurance provisions)
Bosecker v. Westfield Ins. Co., 724 N.E.2d 241 (Ind. 2000) (insured-protection under ambiguous contract language)