OWNERS INSURANCE CO. v. Seamless Gutter Corp.
960 N.E.2d 1260
Ill. App. Ct.2011Background
- Westfield was general contractor and Seamless was subcontractor on a construction site in Algonquin, Illinois.
- Construction contract required Seamless to maintain insurance and name additional insureds, including Westfield, via an endorsed certificate.
- Certificate issued in 2001 listed Seamless as insured and Westfield as certificate holder, with no explicit additional-insured designation.
- Westfield dissolved in 2001 and Cambridge acquired Westfield’s assets, including the Algonquin site; Cambridge was later added as an additional insured to Owners’ policy.
- Gulbrandsen sued Westfield and Seamless for personal injury; Seamless sought contribution from Cambridge in a third-party action; underlying suit settled in 2007.
- Owners and Auto-Owners filed a declaratory judgment seeking to limit coverage; the circuit court granted summary judgment for defendants; on appeal the appellate court reversed and then vacated a prior order per supervisory mandate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend Westfield under Owners policy | Owners lacked Westfield as an insured; no additional insured status from certificate | Westfield claimed insured via certificate or written contract provision | Westfield not an insured; no duty to defend Westfield under Owners policy |
| Duty to defend Cambridge under Owners policy | Employee exclusion barred coverage for Gulbrandsen as Cambridge employee | Potential coverage existed; third-party complaint pleaded employment relation | No duty to defend Cambridge; employee exclusion applies |
| Effect of certificate of insurance on coverage | Certificate did not list Westfield as additional insured; policy terms govern | Certificate may create estoppel or implied coverage | Certificate referred to policy; policy governs; no additional insured status for Westfield under these facts |
| Estoppel/waiver | Insurers are estopped from raising defenses due to timing and actions | No estoppel because insurer had no duty to defend | Estoppel does not bar policy defenses where no duty to defend was found |
Key Cases Cited
- United Stationers Supply Co. v. Zurich American Insurance Co., 386 Ill. App. 3d 88 (Ill. App. 2008) (disclaimer in certificate governs when referring to policy terms)
- Pekin Insurance Co. v. American Country Insurance Co., 213 Ill. App. 3d 543 (Ill. App. 1991) (contractor denied additional insured status when certificate excludes coverage)
- Kraemer Brothers, Inc. v. United States Fire Insurance Co., 298 Ill. App. 3d 805 (Ill. App. 1998) (certificate with disclaimer binds to policy exclusions)
- J.R. Construction Co. v. Kraemer Brothers, Inc., 334 Ill. App. 3d 75 (Ill. App. 2002) (disclaimer in certificate; status as additional insured depends on contract and policy; corroborating documents matter)
- Holabird & Root v. Envirodyne Engineers, Inc., 382 Ill. App. 3d 1017 (Ill. App. 2008) (consideration of evidence beyond underlying complaint in duty-to-defend analysis)
- Wilson v. Pekin Insurance Co., 237 Ill. 2d 446 (Ill. 2010) (Supreme Court approved broader review for duty to defend beyond the complaint)
- Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352 (Ill. 2006) (duty to defend determined by comparing allegations to policy language)
- Employers Insurance of Wausau v. Ehlco Liquidating Trust, 186 Ill. 2d 127 (Ill. 1999) (estoppel with duty to defend framework)