Metzger v. Country Mutual Insurance Co
986 N.E.2d 756
Ill. App. Ct.2013Background
- In September 2009, plaintiff’s vehicle collided with a Ford F-250 driven by Brian McKee, who died in the crash.
- Brian McKee owned the Ford F-250; McKee Masonry is his subchapter S corporation, the named insured on defendant’s business policy.
- plaintiff seeks a declaratory judgment that the Ford F-250 was a “non-owned” auto under the business policy, seeking defense and indemnity.
- State Farm apparently defended the underlying tort action, though the State Farm policy and defense status are not in the record.
- The business policy covers bodily injury or property damage arising out of a non-owned auto used in the business; a non-owned auto is one McKee Masonry does not own, lease, hire, or borrow.
- The trial court held the F-250 was a non-owned vehicle and thus that defendant had a duty to defend and indemnify; the appellate court reverses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Ford F-250 was a non-owned vehicle under the policy | Metzger: F-250 was non-owned and used in business. | Country Mutual: F-250 is not non-owned because it was borrowed by McKee Masonry. | The F-250 was borrowed; not non-owned; defendant has no duty to defend or indemnify. |
| Whether insurer has a duty to defend given potential coverage | Any potential coverage requires defense; insurer must defend unless excess/secondary. | Because no potential coverage exists, no duty to defend arises. | No duty to defend due to no potential coverage under the policy. |
| Whether there is a duty to indemnify if there is no duty to defend | If there is any coverage, indemnity could follow damages. | Without defense or coverage, no indemnity. | No indemnity obligation because there is no coverage under the business policy. |
Key Cases Cited
- Central Illinois Light Co. v. Home Insurance Co., 213 Ill. 2d 141 (2004) (duty to indemnify vs. duty to defend have different ripeness triggers)
- Gregory v. Farmers Automobile Insurance Ass’n, 392 Ill. App. 3d 159 (2009) (defense ripe upon filing; indemnity not ripe until damages fixed)
- Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (2010) (policy terms defined; courts may look beyond complaint for defense duty)
- Fidelity & Casualty Co. of New York v. Envirodyne Engineers, Inc., 122 Ill. App. 3d 301 (1983) (courts may examine extrinsic evidence in coverage disputes)
- American Family Mutual Insurance Co. v. Niebuhr, 369 Ill. App. 3d 517 (2006) (liberal construction in insured’s favor; coverage explored)
- Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (1993) (no duty to defend/indemnify where no coverage could arise)