Pekin Insurance Co. v. United Contractor Midwest, Inc.
997 N.E.2d 235
Ill. App. Ct.2013Background
- Pekin filed a declaratory relief action seeking to determine if Pekin must defend Cullinan as an additional insured under Durdel’s Pekin policy in Hill’s underlying negligence case (No. 11-L-165).
- Hill alleged Cullinan and CILCO were independently negligent in supervising, maintaining, and/or warning about live overhead power lines near the work site; Durdel was not alleged negligent.
- Cullinan and Pekin cross-moved for summary judgment in the declaratory action; the trial court granted Cullinan’s motion and Pekin’s cross-motion was denied.
- The subcontract between Cullinan and Durdel required Durdel to name Cullinan as an additional insured and to procure insurance; Durdel was insured by Pekin.
- Pekin’s policy covers an Additional Insured for vicarious liability arising from Durdel’s ongoing operations or work, with specific exclusions; coverage is limited to vicarious liability.
- The appellate court reversed and remanded, holding Pekin does not owe a duty to defend Cullinan based on the underlying complaint’s lack of vicarious liability allegations against Cullinan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend as additional insured? | Pekin argues Hill’s complaint shows potential vicarious liability from Durdel, triggering coverage. | Cullinan argues the underlying complaint alleges Cullinan’s own negligence, not Durdel’s, so no vicarious liability. | Duty to defend does not arise from the underlying complaint as pleaded. |
| Use of third-party complaint and extrinsic evidence? | Pekin contends extrinsic evidence may be considered to determine intent and potential coverage. | Cullinan argues third-party complaint is self-serving and cannot establish coverage. | Extrinsic evidence from Cullinan’s third-party complaint cannot establish coverage for the declaratory action. |
| Whether Hill’s complaint alleges Durdel’s ongoing operations under policy? | Hill’s facts suggest Cullinan controlled ongoing operations, potentially making Durdel’s work Durdel’s ongoing operations for Cullinan. | The complaint alleges Cullinan alone violated duties, not that Durdel’s ongoing operations were performed for Cullinan. | Complaint does not allege Durdel performed ongoing operations for Cullinan that would trigger vicarious liability. |
Key Cases Cited
- Wilson v. Pekin Insurance Co., 237 Ill. 2d 446 (2010) (duty to defend depends on underlying pleadings and policy coverage interpretations)
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (1992) (duty to defend when allegations potentially within policy coverage)
- Moiseyev v. Rot’s Building & Development, Inc., 369 Ill. App. 3d 338 (2006) (retention of control over subcontractor’s work governs vicarious liability)
- Pekin Insurance Co. v. DePaul University, 383 Ill. App. 3d 172 (2008) (third-party complaints used to bolster coverage claims may be inappropriate when not missing underlying facts)
- National Fire Insurance of Hartford v. Walsh Construction Co., 392 Ill. App. 3d 312 (2009) (third-party complaints may be used to supplement missing allegations but not when self-serving)
- Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (2010) (establishes framework for analyzing insurer’s duty to defend based on underlying allegations and policy terms)
- Pulte Home Corp. v. Pekin Insurance Co., 404 Ill. App. 3d 336 (2010) (indemnity and contractual terms affecting defense obligations)