2011 IL App (1st) 101316
Ill. App. Ct.2011Background
- Milwaukee Insurance provided Larsen with CGL and umbrella coverage.
- Weather-Tite hired Larsen to apply window sealant for Prairie District Homes (PDH).
- PDH Association alleged defective construction causing water intrusion and damages in its third amended complaint.
- Weather-Tite pleaded third-party claims against Larsen seeking contribution for negligence and breach of contract for failure to name Weather-Tite as an additional insured.
- Milwaukee Insurance denied defense tenders; trial court granted Milwaukee summary judgment against Weather-Tite and Larsen’s cross-motion for summary judgment against Milwaukee; appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the underlying pleadings allege property damage within policy | Milwaukee Insurance: pleadings lack property damage | Larsen: pleadings impute damages to property from defective work | Yes, pleadings allege property damage within policy |
| Does the pleadings show an occurrence causing property damage | Milwaukee Insurance: no accident/occurrence | Larsen: occurrence shown by damage from negligent workmanship | Yes, occurrence alleged through significant water leakage from faulty workmanship |
| Is there a duty to defend Larsen given the pleadings | Milwaukee Insurance: no coverage duties | Larsen: possible coverage under policy terms | Milwaukee has a duty to defend Larsen |
Key Cases Cited
- Travelers Ins. Co. v. Eljer Manufacturing, Inc., 197 Ill.2d 278 (Ill. 2001) (definition of property damage and economic loss under CGL policies)
- Walsh Construction Co. v. Walsh,, 392 Ill.App.3d 312 (Ill. App. 2009) (duty to defend when allegations could fall within policy coverage)
- Pekin Insurance Co. v. Richard Marker Associates, Inc., 289 Ill.App.3d 819 (Ill. App. 1997) (duty to defend where some allegations relate to third-party damages from insured's work)
- CMK Development Corp. v. West Bend Mutual Insurance Co., 395 Ill.App.3d 830 (Ill. App. 2009) (policy interpretation and broad duty to defend when pleading could fall within coverage)
- Stoneridge Development Co. v. Essex Insurance Co., 382 Ill.App.3d 731 (Ill. App. 2008) (coverage for damage to property other than the insured project under defective workmanship)