Pekin Insurance Co. v. AAA-1 Masonry & Tuckpointing, Inc.
2017 IL App (1st) 160200
| Ill. App. Ct. | 2017Background
- Alpha 1 Construction (Alpha) subcontracted with AAA-1 Masonry (AAA); Alpha's Pekin policy named AAA as an additional insured for vicarious liability arising from Alpha’s acts during the policy period.
- On Sept. 20, 2011, Emil Piekutowski (an Alpha employee) was injured falling from a swing-stage scaffold while working at the jobsite; he sued AAA and others alleging various negligent acts causing his injuries.
- Chicago Scaffolding, Inc. (CSI) later filed a third-party complaint against Alpha alleging Alpha’s negligent operation of the swing-stage caused the injury and seeking contribution.
- Scottsdale (AAA’s insurer) tendered AAA’s defense to Pekin (Alpha’s insurer); Pekin refused, filing a declaratory action that it had no duty to defend AAA because the complaint alleged AAA’s own negligence (excluded by the additional‑insured endorsement).
- The trial court granted summary judgment for Scottsdale, concluding Pekin had a duty to defend AAA; the appellate court affirmed, holding that the complaint together with Pekin’s claim note and the subcontract created a potential for vicarious liability imputable to AAA, triggering Pekin’s duty to defend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pekin had a duty to defend AAA as an additional insured | Pekin: underlying complaint alleges AAA’s own negligence, excluded by the endorsement; no pleaded facts show Alpha’s negligence was the cause | Scottsdale/AAA: allegations + subcontract + Pekin’s claim file note show Alpha operated the swing‑stage, so AAA could be vicariously liable | Court: Duty to defend triggered — pleadings + true but unpleaded facts create potential coverage |
| Whether the insurer can consider its own claim file (“true but unpleaded facts”) in deciding duty to defend | Pekin: claim note does not assert Alpha’s negligence; insurer cannot rely on extrinsic facts to rewrite pleadings | Scottsdale: insurer’s knowledge of claim investigation may be considered to show potential coverage | Court: True but unpleaded facts known to insurer (claim note) may be considered where they do not decide issues crucial to the underlying suit; they may trigger duty to defend |
| Whether CSI’s third‑party complaint was necessary to trigger Pekin’s duty | Pekin: considering third‑party complaint was improper; duty must be measured by underlying complaint alone | Scottsdale: even if third‑party complaint excluded, other unpleaded facts suffice | Court: Even without CSI complaint, the subcontract and claim note with underlying complaint suffice to trigger duty; so consideration of extrinsic facts was proper here |
Key Cases Cited
- Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (Illinois Supreme Court) (insurer not limited solely to underlying complaint in every duty‑to‑defend analysis)
- Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (1993) (insurer’s duty to defend is broader than duty to indemnify)
- American Economy Insurance Co. v. DePaul University, 383 Ill. App. 3d 172 (2008) (true but unpleaded facts can alert insurer to potential coverage)
- Pekin Insurance Co. v. Pulte Home Corp., 404 Ill. App. 3d 336 (2010) (standard for when courts may examine evidence beyond underlying complaint)
- Shriver Insurance Agency v. Utica Mutual Insurance Co., 323 Ill. App. 3d 243 (2001) (insurer’s knowledge of unpleaded facts may establish potential coverage)
- La Rotunda v. Royal Globe Insurance Co., 87 Ill. App. 3d 446 (1980) (insurer’s own investigation results may be considered as unpleaded facts)