Pekin Insurance Co. v. Centex Homes, 2017 IL App (1st) 153601

Pekin issued a CGL policy to McGreal effective Sept 30, 2009–Sept 30, 2010; policy included an additional-insured endorsement that limited additional-insured coverage to vicarious liability imputed from the named insured and required a written contract naming the additional insured.
Centex Homes (Owner) contracted with McGreal (Contractor); the contract required McGreal to add "Centex Homes" and "Centex Real Estate Corporation" as additional insureds; Centex Real Estate signed the contract as managing partner of Centex Homes.
Worker Scott Nowak, employed by McGreal, was injured while working on a balloon wall; he sued Centex Homes and Centex Real Estate (McGreal was not a defendant due to workers’ compensation immunity).
Pekin refused defense tender, sued for declaratory relief arguing (1) Centex Real Estate was not a party to the written contract and thus not an additional insured, (2) Centex Homes was not an additional insured for the relevant work because no purchase order authorized that work, and (3) even if additional insureds, Pekin had no duty to defend because the underlying complaint alleged direct (not vicarious) negligence of the Centex defendants.
The circuit court held Centex Real Estate was not an additional insured, Centex Homes was an additional insured, but Pekin had no duty to defend Centex Homes. Centex Homes appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Centex Real Estate is an additional insured under McGreal’s Pekin policy	Pekin: Centex Real Estate was not a party to the written contract (it signed only as agent) and thus not covered	Centex: Centex Real Estate is a signatory/partner and thus an additional insured	Held: Centex Real Estate is not an additional insured (it signed as agent for Centex Homes)
Whether Centex Homes is an additional insured and whether Pekin owes Centex Homes a duty to defend the Nowak suit	Pekin: No additional-insured coverage for the specific work (no purchase order) and no duty to defend because complaint alleges Centex’s direct negligence, not vicarious liability for McGreal	Centex: The contract was effective without a purchase order; Centex Homes is an additional insured and the Nowak complaint potentially alleges vicarious liability based on McGreal’s negligence	Held: Centex Homes is an additional insured; Pekin owes a duty to defend because the complaint plausibly alleges McGreal negligence and potentially vicarious liability of Centex Homes

Virginia Surety Co. v. Northern Ins. Co. of New York, 224 Ill. 2d 550 (Illinois 2007) (summary judgment standard and duty-to-defend principles)
General Agents Ins. Co. of America, Inc. v. Midwest Sporting Goods Co., 215 Ill. 2d 146 (Illinois 2005) (insurer must compare complaint to policy; duty to defend arises if claim potentially falls within coverage)
Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90 (Illinois 1992) (insurer’s duty to defend broader than duty to indemnify)
Valley Forge Ins. Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352 (Illinois 2006) (duty to defend exists if any theory in complaint potentially covered)
Carney v. Union Pacific R.R. Co., 2016 IL 118984 (Illinois 2016) (Restatement §414 addresses direct—not vicarious—liability; agency law distinct)
United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64 (Illinois 1991) (where multiple liability theories exist, duty to defend arises if any theory is potentially covered)
Pekin Ins. Co. v. Roszak/ADC, LLC, 402 Ill. App. 3d 1055 (Illinois App. Ct.) (conduct, not label, controls duty-to-defend analysis)
Pekin Ins. Co. v. United Parcel Service, Inc., 381 Ill. App. 3d 98 (Illinois App. Ct.) (complaint focused on additional insured’s direct acts, supporting no duty to defend where no allegation suggested named insured’s negligence)