2020 IL App (2d) 190631
Ill. App. Ct.2021Background
- Claimants sued McKeown Classic Homes for conversion, alleging in July 2013 McKeown (without consent) took "hundreds of planks of knotty pine wood, a Dutch door, a hand sink, four windows and a glass door," refused to return them, and acted "willful[ly], wanton[ly], malicious[ly], and * with the intent to defraud."
- McKeown held a commercial general liability policy with Pekin that covered damages from "bodily injury" or "property damage" caused by an "occurrence," defined as an "accident."
- Pekin denied coverage and filed for declaratory judgment that it had no duty to defend McKeown against the conversion claim. McKeown counterclaimed that a subcontractor mistakenly removed the items (an "occurrence").
- McKeown later submitted an interrogatory answer suggesting a miscommunication and that the demo contractor removed the items, but Pekin had not known these facts before denying coverage.
- The trial court granted Pekin summary judgment, finding the underlying complaint alleged intentional conversion (not an "occurrence"), denied McKeown’s motion to reconsider, and McKeown appealed; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument (Pekin) | Defendant's Argument (McKeown) | Held |
|---|---|---|---|
| Whether Pekin had a duty to defend the conversion claim under the policy's "occurrence" (accident) definition | Complaint alleges intentional conversion, so no "occurrence"; no duty to defend | The conversion could have been accidental (subcontractor mistake) and thus an "occurrence" triggering duty to defend | Held for Pekin: complaint alleges intentional tort; not an "occurrence," so no duty to defend |
| Whether the trial court should consider McKeown's later-filed counterclaim/extra-pleading facts when deciding duty to defend | Court properly relied on underlying complaint and facts known to insurer at denial time | Court should have considered McKeown's counterclaim and interrogatory answer (like Wilson) showing accident/self-defense equivalent | Held for Pekin: Wilson inapplicable here because the exculpatory facts arose only in McKeown's later filings and were not known to Pekin when it denied defense |
| Whether inferences should be drawn in McKeown's favor (that conversion might have been accidental) | Allegations read as intentional; court may decide as matter of law there is no reasonable inference of accident | Ambiguity exists ("refused" could mean inability to return), so inferences should favor insured | Held for Pekin: reading complaint as whole, allegations of intent and fraud remove any reasonable inference of accident |
| Whether denial of McKeown's motion to reconsider was an abuse of discretion | Denial proper because no new evidence, change in law, or legal error shown | Denial erroneous because trial court misapplied law about potential coverage and inferences | Held for Pekin: denial not an abuse of discretion; underlying complaint conclusively alleged intentional conduct |
Key Cases Cited
- Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (2010) (trial may consider underlying pleadings/counterclaims when relevant to duty to defend)
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (1992) (duty to defend determined by comparing underlying complaint to policy)
- Shriver Insurance Agency v. Utica Mutual Insurance Co., 323 Ill. App. 3d 243 (2001) (true-but-unpleaded-facts doctrine is limited; insurer-supplied facts treated with caution)
- Travelers Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278 (2001) (clear policy terms are enforced according to plain meaning)
- Rock v. State Farm Fire & Casualty Co., 395 Ill. App. 3d 145 (2009) (an "occurrence" requires injury neither intended nor expected)
- Westfield Nat'l Ins. Co. v. Continental Community Bank & Trust Co., 346 Ill. App. 3d 113 (2003) (insurer not obligated to defend when alleged conduct conclusively intentional)