Pekin Insurance Company v. Equilon Enterprises LLC
980 N.E.2d 1139
Ill. App. Ct.2012Background
- Zablocki sued Summit and Shell for injuries from an explosion at a gas station during gasoline delivery.
- Summit procured Pekin insurance naming Shell as an additional insured for coverage purposes.
- Two endorsements amended who is insured: one grants coverage for liability as franchisor; another covers liability arising from operations and premises.
- Pekin sought a declaratory judgment that the policy did/ did not provide a duty to defend Shell.
- Circuit court denied Pekin's summary judgment and granted judgment as a matter of law for Shell on the duty to defend.
- On appeal, the court held the two endorsements read together are ambiguous and Pekin must defend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the endorsements ambiguous to extend coverage to Shell as additional insured? | Pekin: first endorsement limits to franchise grants; second limits to vicarious liability. | Shell: both endorsements together create broader coverage; not limited to sole vicarious liability. | Endorsements read together are ambiguous; Pekin must defend. |
| Does the second endorsement limit coverage to vicarious liability arising from Summit’s operations? | Pekin: limits to vicarious liability; Zablocki does not allege vicarious liability. | Shell: endorsement covers broader liability arising out of operations; not limited to vicarious liability. | Second endorsement does not foreclose potential coverage; duty to defend remains. |
| May evidence outside the complaint (franchise agreements) be considered in determining duty to defend? | Pekin: parole evidence should be excluded; review limited to underlying complaint and policy. | Shell: extrinsic evidence relevant to coverage should be considered; not barred. | Evidence beyond the complaint relevant to endorsements can be considered. |
Key Cases Cited
- Pekin Insurance Co. v. Roszak/ADC, LLC, 402 Ill. App. 3d 1055 (2010) (policy language broader than sole-negligence claims; duty to defend when potentially within coverage)
- Pekin Insurance Co. v. United Parcel Service, Inc., 381 Ill. App. 3d 98 (2008) (additional insured coverage not triggered by sole acts of named insured)
- Pekin Insurance Co. v. Beu, 376 Ill. App. 3d 294 (2007) (coverage limited to acts of grantor; under similar language, not broader exposure)
- Pulte Home Corp. v. American Economy Insurance Co., 404 Ill. App. 3d 336 (2010) (look beyond underlying complaint to determine insurer's duty to defend in certain contexts)
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (1992) (policy interpretation and broad duty to defend when potentially within coverage)
- Wilson v. Wilson, 237 Ill. 2d 446 (2010) (supreme court held trial court may look beyond the complaint in declaratory actions)