Pekin Insurance Company v. AAA-1 Masonry & Tuckpointing, Inc.
81 N.E.3d 1040
Ill. App. Ct.2017Background
- Alpha 1 Construction (Alpha) subcontracted with AAA-1 Masonry (AAA); the subcontract required Alpha to add AAA as an additional insured on Alpha’s commercial general liability policy issued by Pekin.
- Pekin’s additional-insured endorsement covered AAA only for vicarious liability imputed from Alpha for ongoing operations during the policy period and expressly excluded AAA’s own negligence.
- Emil Piekutowski sued AAA and others for injuries sustained while he (an Alpha employee) worked on a swing-stage scaffold; complaint alleged negligent scaffolding operation and related supervision/safety failures.
- Chicago Scaffolding, Inc. (CSI) filed a third-party complaint against Alpha alleging Alpha’s negligence caused the injury; CSI alleged Alpha rented the swing-stage equipment and was negligent in its operation.
- Scottsdale (AAA’s insurer) tendered AAA’s defense to Pekin; Pekin denied coverage and sued for a declaratory judgment that it had no duty to defend AAA. Scottsdale intervened and sought a declaration that Pekin must defend and reimburse Scottsdale’s defense costs.
- The trial court granted summary judgment for Scottsdale, concluding Pekin’s duty to defend was triggered by the possibility that AAA’s liability could be imputed from Alpha’s negligence; this appeal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pekin had a duty to defend AAA as an additional insured | Pekin: duty not triggered because Piekutowski sued AAA for AAA’s own negligence; policy excludes additional-insured’s own negligence | Scottsdale/AAA: complaint and other facts create potential that AAA’s liability could be vicariously imputed from Alpha’s negligent operation of the swing stage | Court: Duty to defend triggered — pleadings plus true but unpleaded facts (Pekin’s claim note and subcontract) created potential coverage under the additional-insured endorsement |
| Whether court may consider evidence beyond the underlying complaint to decide duty to defend | Pekin: court should look only to underlying complaint (or third-party complaint if permissible) | Scottsdale: insurer’s knowledge of true but unpleaded facts may be considered; insurer can’t ignore its own investigation documents | Court: Permitted to consider true but unpleaded facts known to insurer so long as they do not decide issues central to the underlying suit; here such facts appropriately considered |
| Whether Pekin’s claim file note alleging Alpha operated the swing stage sufficed as a "true but unpleaded fact" | Pekin: note did not state Alpha’s negligence and thus cannot trigger defense duty | Scottsdale: note plus subcontract and complaint raise possibility of vicarious liability | Court: Note, combined with subcontract and complaint, alerted Pekin to potential coverage and triggered duty to defend |
| Whether consideration of the extra-record facts improperly decides merits of underlying claim | Pekin: using those facts would decide issues crucial to the underlying suit | Scottsdale: facts only inform coverage potential, not decide liability in underlying suit | Court: Consideration did not determine any issue crucial to the underlying suit and was proper |
Key Cases Cited
- Pekin Ins. Co. v. Wilson, 237 Ill. 2d 446 (2010) (insurer’s duty-to-defend inquiry may consider evidence beyond the underlying complaint in certain circumstances)
- American Economy Ins. Co. v. DePaul Univ., 383 Ill. App. 3d 172 (2008) (true but unpleaded facts can trigger duty to defend when combined with the complaint and subcontract terms)
- Pekin Ins. Co. v. Pulte Home Corp., 404 Ill. App. 3d 336 (2010) (summary judgment and duty-to-defend principles explained)
- Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (1993) (insurer’s duty to defend broader than duty to indemnify)
- United Servs. Auto. Ass’n v. Dare, 357 Ill. App. 3d 955 (2005) (doubts about duty to defend resolved in favor of insured)
- Shriver Ins. Agency v. Utica Mut. Ins. Co., 323 Ill. App. 3d 243 (2001) (insurer’s own investigation may supply true but unpleaded facts relevant to coverage)