2013 IL App (2d) 121184
Ill. App. Ct.2013Background
- Royce Realty manages multiple properties, including a golf course, and obtained a CGL policy from Indiana Insurance with an endorsement titled Limitation of Coverage to Designated Premises or Project.
- The Endorsement limits coverage to claims arising from the ownership, maintenance or use of the designated premises and related operations; the schedule lists Royce Realty’s main office only.
- Stackhouse, injuring at Lakemoor Golf Club, sued Royce Realty and Lakemoor; Indiana initially defended but later withdrew, citing the Endorsement.
- Indiana sought a declaratory judgment that Stackhouse’s injury was not covered under the policy; Stackhouse cross-claimed for bad faith.
- The trial court granted summary judgment for defendants, interpreting the Endorsement as creating coverage for off-premises injuries arising from the insured’s operations.
- On appeal, the Illinois Appellate Court affirmed, holding the Endorsement ambiguous and read in favor of coverage, given the policy’s CGL nature and other provisions suggesting off-premises coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Endorsement limit coverage to designated premises? | Indiana: Endorsement confines to premises use and ownership. | Defendants: Endorsement is ambiguous and not a clear exclusion of off-premises operations. | Ambiguity resolved in favor of coverage. |
| Should the Endorsement be read in light of other policy provisions suggesting off-premises coverage? | Indiana: Other terms do not override Endorsement’s limit. | Defendants: The policy, as a whole, supports coverage for Royce Realty’s operations, including off-premises. | Yes, read with the policy as a whole, the Endorsement supports coverage. |
Key Cases Cited
- Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (1993) (ascertain policy intent by reading policy as a whole)
- Dash Messenger Service, Inc. v. Hartford Insurance Co. of Illinois, 221 Ill. App. 3d 1007 (1991) (designated-premises endorsement and off-premises coverage factors)
- Pekin Insurance Co. v. Recurrent Training Center, Inc., 409 Ill. App. 3d 114 (2011) (endorsement controls when in irreconcilable conflict with policy body)
- United States Fire Insurance Co. v. Schnackenberg, 88 Ill. 2d 1 (1981) (premises-liability policy context for endorsements)
- Allstate Insurance Co. v. Smiley, 276 Ill. App. 3d 971 (1995) (premises-policy with business-operation exclusion)
- Rich v. Principal Life Insurance Co., 226 Ill.2d 359 (2007) (ambiguity resolved in insured’s favor)