Pekin Insurance Co. v. Lexington Station, LLC
2017 IL App (1st) 163284
| Ill. App. Ct. | 2017Background
- Pekin issued a commercial general liability (CGL) policy to ACC, with an endorsement naming Lexington Station, LLC as an additional insured only for vicarious liability imputed from ACC.
- ACC contracted with Lexington to perform carpentry at a Morton Grove development; the written contract labeled ACC an independent contractor and required ACC to supply hoisting equipment and supervise safety programs; it also stated Owner (Lexington) had no safety responsibility.
- Marcos Botello, an ACC employee, was injured in March 2015 after falling from a ladder; he sued Lexington (not ACC) alleging construction negligence, premises liability, and direct negligence, including allegations that Lexington acted "by and through its agents" and exercised control over scheduling, inspection, and the ability to stop work.
- Pekin refused Lexington’s tendered defense and filed for declaratory relief seeking a ruling that it had no duty to defend Lexington under the additional-insured endorsement, which excludes direct negligence by the additional insured.
- Lexington and its insurer Westfield sought judgment on the pleadings that Pekin owed a duty to defend; the trial court granted that motion and ordered Pekin to defend and pay defense costs. Pekin appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pekin has a duty to defend Lexington as an additional insured for vicarious liability | Pekin: Botello's complaint alleges only Lexington's direct negligence, not a potential for vicarious liability for ACC, so exclusion bars coverage | Lexington/Westfield: Complaint plus the construction contract create a potential that ACC was the negligent actor and Lexington could be vicariously liable | Court: Duty to defend exists because complaint read with the contract shows potential that ACC’s negligence caused injury and Lexington might be vicariously liable |
| Whether the court improperly considered Lexington’s third-party complaint against ACC in deciding duty to defend | Pekin: Third-party complaint is self-serving and should be ignored | Lexington/Westfield: Third-party complaint is evidence that allegations refer to ACC’s acts | Court: Decision may be affirmed without considering third-party complaint; court need not reach that issue here |
Key Cases Cited
- General Agents Ins. Co. of Am. v. Midwest Sporting Goods Co., 215 Ill. 2d 146 (Illinois 2005) (insurer must defend if underlying complaint potentially falls within coverage)
- Wilson v. Pekin Ins. Co., 237 Ill. 2d 446 (Illinois 2010) (courts may consider extrinsic documents in duty-to-defend analysis when insured’s pleading would not plausibly include them)
- Steadfast Ins. Co. v. Caremark Rx, Inc., 359 Ill. App. 3d 749 (Ill. App. Ct. 2005) (controlling is alleged conduct, not the claim label, when assessing potential coverage)
- Carney v. Union Pacific R.R. Co., 2016 IL 118984 (Illinois 2016) (clarifying scope of Restatement §414 and distinguishing direct versus vicarious liability)