Liberty Mutual Fire Insurance v. Woodfield Mall, L.L.C.
941 N.E.2d 209
Ill. App. Ct.2010Background
- Swanson died after falling from a roof-access ladder at Woodfield Mall while responding to LensCrafters’ HVAC maintenance; the incident occurred in Illinois and involved mall common areas controlled by the mall.
- LensCrafters leased Store No. D-330 at Woodfield Mall; the mall sought coverage as an additional insured under LensCrafters’ CGL policy with Liberty Mutual.
- The policy includes a General Amendatory Endorsement limiting additional insured coverage to liability arising out of the named insured’s work or premises; the lease requires LensCrafters to name the mall as additional insured and provides that the mall’s coverage shall be primary and excess for the landlord.
- The lease and policy interplay provides that the mall is covered as additional insured only in connection with LensCrafters’ premises and operations at Woodfield Mall, not for the mall’s own independent torts in common areas.
- Liberty Mutual filed a declaratory judgment action seeking a determination that it owed no duty to defend or indemnify the mall; the mall appealed, arguing choice of law, coverage scope, and primary-vs-excess status.
- The appellate court held Ohio law governs the contract interpretation, and under Ohio law the policy did not obligate Liberty Mutual to defend or indemnify the mall for Swanson’s injuries under the insured’s premises/work language.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What law governs the insurance contract interpretation? | Mall: Illinois/New York contacts require Illinois law | Liberty Mutual: Ohio law governs | Ohio law governs the contract interpretation. |
| Does LensCrafters’ policy grant the mall additional insured status for this loss? | Mall seeks broad application of additional insured coverage | Policy limited to liability arising out of named insured’s work or premises | Mall is insured only for liability arising out of LensCrafters’ work or premises. |
| Is the mall entitled to primary coverage under the lease? | Mall argues primary coverage under lease terms | Endorsement limits coverage to LensCrafters’ work/premises; mall not primary | Lease and endorsement show no primary coverage for the mall. |
| Did Liberty Mutual waive policy defenses by its letters? | Mall claims waiver based on insurer letters | Letters reserved rights and did not waive defenses | Insurer did not waive its policy defenses. |
Key Cases Cited
- Lapham-Hickey Steel Corp. v. Protection Mut. Ins. Co., 166 Ill.2d 520 (1995) (choice-of-law factors govern multi-state insured risks)
- Emerson Electric Co. v. Aetna Cas. & Surety Co., 319 Ill.App.3d 218 (2001) (locations of risk de-emphasized when risks are nationwide; focus on predictable law and nerve center)
- Westchester Fire Ins. Co. v. G. Heileman Brewing Co., 321 Ill.App.3d 622 (2001) (focus on nerve center and principal decision-making location for nationwide policies)
- Diamond State Ins. Co. v. Chester-Jensen Co., 243 Ill.App.3d 471 (1993) (location of insured risk given weight in simple, limited-coverage contexts)
- Society of Mount Carmel v. National Ben Franklin Ins. Co. of Illinois, 268 Ill.App.3d 655 (1994) (location of insured risk given weight in multi-state risk contexts)
- Buckeye Union Ins. Co. v. Zavarella Brothers Construction Co., 121 Ohio App.3d 147 (1997) (additional insured coverage limits; liability arising from named insured's work)
- Maryland Casualty Co. v. Chicago & North Western Transp. Co., 126 Ill.App.3d 150 (1984) (but-for causation in additional insured context tethered to named insured's activity)