Selective Insurance Company of South Carolina v. Cherrytree Companies, Inc.
998 N.E.2d 701
Ill. App. Ct.2013Background
- Selective Insurance sued for declaratory judgment on coverage under CGL and umbrella policies for grain-storage facility defects built by Cherrytree.
- Cherrytree answered with counterclaims for breach of contract and bad-faith insurance-code damages.
- No underlying suit was filed against Cherrytree regarding the Fairfield or Chester claims at the time of counterclaims.
- Circuit court dismissed counterclaims with prejudice on pleadings, citing no suit requirement for indemnification.
- Court relied on Lapham-Hickey and Carus to hold that suit was required to trigger indemnity, and dismissed with prejudice.
- Appeal reversed and remanded to address whether indemnification can be sought absent a suit under this policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether indemnification requires a filed suit under the policy. | Selective argues indemnity requires a suit under the policy. | Cherrytree contends no suit is required to trigger indemnity. | Indemnification does not mandatorily require a suit; error to dismiss with prejudice. |
| Whether the circuit court properly relied on Carus and Crum to dismiss counts with prejudice. | Selective contends Carus/Crub justify dismissal. | Cherrytree argues these cases are distinguishable and inapplicable here. | Carus/Crumb context did not justify prejudice dismissal; misapplied here. |
| Whether the policy’s indemnity language stands apart from the duty-to-defend language in requiring a suit for indemnity. | Selective maintains indemnity is conditioned by suit. | Cherrytree asserts indemnity is not so conditioned. | Indemnity provision may be independent of the duty-to-defend language; no suit needed. |
Key Cases Cited
- Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill. 2d 520 (Supreme Court of Illinois 1995) (duty to indemnify may not require suit where policy language supports indemnity)
- Carus Corp. v. Zurich Insurance Co., 293 Ill. App. 3d 908 (First District 1997) (duty to defend and indemnify; Crum contextual limitations discussed)
- Sokol & Co. v. Atlantic Mutual Insurance Co., 430 F.3d 417 (7th Cir. 2005) (indemnity not limited to suits where policy lacks suit requirement)
- Keystone Consolidated Industries, Inc. v. Employers Insurance Co. of Wausau, 456 F.3d 758 (7th Cir. 2006) (context of Crum and indemnity without suit language)
- Central Illinois Light Co. v. Home Insurance Co. (CILCO II), 213 Ill. 2d 141 (Illinois Supreme Court 2004) (indemnity-only policy language and absence of strict suit prerequisite)