Pekin Insurance Co. v. St. Paul Lutheran Church
2016 IL App (4th) 150966
| Ill. App. Ct. | 2017Background
- Pekin Insurance issued a business liability policy to St. Paul Lutheran Church covering bodily injury from use of a non-owned auto in church business (policy effective Oct 24, 2012–Oct 24, 2013) and contained an “Other Insurance” provision making such coverage excess and displacing Pekin’s duty to defend when a primary insurer defends without reservation.
- Kitty Mullins’s estate (through administrator Hope Farney) sued the church and others for wrongful death after church employee Matthew Geerdes, driving his personal car, allegedly caused a fatal crash while on a phone call; the third amended complaint alleged Geerdes was acting within the scope of his employment with the church (and also with University Lutheran).
- Geerdes’s personal auto policy from Country Mutual provided primary automobile liability coverage; Country Mutual accepted defense of the church without reservation after Pekin tendered defense to it.
- Pekin filed this declaratory-judgment action seeking: (Count I) a declaration it had no duty to defend because Geerdes was not using his car for church business; (Count II) a declaration that, as an excess insurer, Pekin has no duty to defend while Country Mutual defends; and (Count III) reimbursement of defense costs if Pekin initially defended but later determined no coverage.
- The church and Farney moved to dismiss under section 2-615. The trial court dismissed Pekin’s amended complaint without prejudice, later denied reconsideration and denied leave to file a second amended complaint (adding Geerdes’s deposition statement that he was driving to his other job) and made dismissal with prejudice. Pekin appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court may decide Count I (duty to defend) based on extrinsic evidence that Geerdes was not on church business | Pekin: Wilson allows extrinsic evidence in declaratory actions where it does not decide issues crucial to underlying suit; Geerdes’s deposition shows no use of car for church business so duty not triggered | Defendants: Eight-corners rule controls; underlying complaint alleges facts potentially within coverage so Pekin has duty to defend; extrinsic evidence would be premature and collaterally estop plaintiff in underlying tort case | Count I is premature and legally insufficient under eight-corners/Peppers–dismissed (affirmed) because extrinsic evidence would tend to determine an issue crucial to underlying litigation and ripeness is lacking |
| Whether Count II (other-insurance/excess duty) presents a justiciable controversy while Country Mutual defends | Pekin: Country Mutual’s acceptance of defense makes the “Other Insurance” clause operative now; there is an actual controversy because church has not formally withdrawn tender to Pekin | Defendants: Church agrees Pekin has no duty while Country Mutual defends; Farney effectively concedes the issue is not ripe while Country Mutual defends; therefore count II is moot | Count II is moot/dismissed for lack of justiciable controversy (appeal dismissed as to Count II) |
| Whether Count III (reimbursement for defense costs) survives dismissal | Pekin: sought declaration of right to reimbursement if it initially defends then determines no coverage | Defendants: challenged sufficiency; argued other procedural defects | Pekin forfeited argument on appeal (no briefing); dismissal of Count III upheld for forfeiture |
| Whether denial of leave to file second amended complaint was an abuse of discretion | Pekin: proposed amendment adding Geerdes deposition would cure Count I’s defect or allow stay; requested stay pending underlying action | Defendants: amendment would be premature and would not cure ripeness problem; oppose leave and seek sanctions | Denial affirmed: amendment would not cure legal deficiency because it relied on extrinsic evidence that would determine an issue in the underlying suit; no abuse of discretion |
Key Cases Cited
- Maxum Indemnity Co. v. Gillette, 405 Ill. App. 3d 881 (applying eight-corners comparison)
- Valley Forge Ins. Co. v. Swiderski Electronics, Inc., 359 Ill. App. 3d 872 (courts look to underlying complaint to determine duty to defend)
- United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64 (insurer’s duty to defend depends on comparison of underlying complaint and policy)
- Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (extrinsic evidence may be considered in declaratory proceedings except when it tends to determine an issue crucial to the underlying lawsuit)
- Maryland Casualty Co. v. Peppers, 64 Ill. 2d 187 (collateral estoppel concern limits use of extrinsic evidence in coverage suits)
- TIG Insurance Co. v. Canel, 389 Ill. App. 3d 366 (stay of declaratory action pending underlying case under certain circumstances)
- Schwanke, Schwanke & Associates v. Martin, 241 Ill. App. 3d 738 (dismissal of premature declaratory action with prejudice is appropriate when complaint fails to show ripeness)