2018 IL App (1st) 161864
Ill. App. Ct.2018Background
- 2004 shooting in the parking lot outside a Dominick’s store: one death (Mustafov) and one injury (Ramirez). Plaintiffs sued Dominick’s (and others) alleging premises-liability and voluntary-assumption-of-duty claims tied to store and parking-lot security.
- Kennedy Plaza (property owner) had a CGL policy from Netherlands that named Dominick’s as an additional insured for “liability arising out of … premises or facilities owned or used by you.”
- Netherlands denied Dominick’s tender for defense; underlying litigation proceeded and Dominick’s ultimately settled for $1.3 million.
- Dominick’s sued Netherlands for declaratory relief (duty to defend/indemnify) and for statutory bad-faith under 215 ILCS 5/155.
- Trial court granted summary judgment to Netherlands on all counts; this appeal followed under Rule 304(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend — does complaint potentially allege "liability arising out of the premises"? | The complaint’s premises-liability and voluntary-undertaking theories tie Dominick’s legal duty to the premises and therefore potentially fall within the policy’s “arising out of the premises” language. | The phrase requires a defect or condition of the premises causing the injury; here injuries were criminal acts of third parties and not a premises defect. | Held for Dominick’s: the complaint potentially alleged liability arising out of the premises; Netherlands owed a duty to defend. |
| Duty to indemnify — does the settlement fall within policy coverage? | With discovery-enhanced allegations (e.g., nonworking exterior cameras, security failures), Dominick’s liability actually arose from premises-related failures, so indemnification is owed. | Coverage is limited; underlying loss arose from criminal acts, not covered premises-related liability. | Held for Dominick’s: Netherlands owed a duty to indemnify for the settlement. |
| Section 155 (bad-faith) damages | Netherlands’ denial of coverage and refusal to defend were vexatious and unreasonable, supporting statutory penalties. | There was a bona fide coverage dispute; insurer’s position was not unreasonable. | Held for Netherlands: summary judgment on §155 affirmed because a bona fide dispute existed. |
| Estoppel to deny coverage | (argued below) Netherlands should be estopped from denying coverage given its conduct. | Netherlands opposed estoppel; court need not reach it if coverage exists. | Court did not decide estoppel because coverage was resolved in Dominick’s favor. |
Key Cases Cited
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (Illinois 1992) (duty-to-defend broader than duty-to-indemnify; duty-to-indemnify depends on actual facts).
- United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64 (Illinois 1991) (insurer must defend if underlying complaint alleges facts that are within or potentially within policy coverage; ambiguities construed for insured).
- Ward v. K Mart Corp., 136 Ill. 2d 132 (Illinois 1990) (scope of landowner/occupier duty to entrants; premises liability principles).
- Buerkett v. Illinois Power Co., 384 Ill. App. 3d 418 (Ill. App. Ct. 2008) (elements of negligence include duty, breach, proximate cause, and injury — duty is required to establish liability).
- Consolidated R. Corp. v. Liberty Mutual Insurance Co., 92 Ill. App. 3d 1066 (Ill. App. Ct. 1980) (additional-insured endorsement with “arising out of” language interpreted broadly to trigger defense).
- Maryland Casualty Co. v. Chicago & North Western Transportation Co., 126 Ill. App. 3d 150 (Ill. App. Ct. 1983) (interpreting “arising out of” broadly; ‘but for’ causation can satisfy connection to premises).
- Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (Illinois 2010) (reiterating breadth of duty to defend doctrine).