147 F. Supp. 3d 708
N.D. Ill.2015Background
- The case asks Illinois-law questions about whether an occurrence under standard-form CGL policies covers damage to a building beyond the named insured contractor’s scope of work.
- Plaintiff Westfield Insurance seeks a duty to defend its insured National Decorating and additional insureds in an underlying construction-defect action in Cook County.
- The underlying action involves a 24-story building at 200 North Jefferson, with claims of faulty workmanship across multiple trades, including painting by National Decorating.
- Two Additional Insured Endorsements cover 200 North Jefferson, McHugh Construction, and MCZ/Jameson to varying extents based on the named insured’s work scope.
- The policy is occurrence-based and covers property damage caused by an occurrence, while the term occurrence is defined as an accident (not further defined in the policy).
- The court analyzes whether damage beyond the named insured’s work constitutes property damage from an occurrence, relying on Bazzi, Larsen, Leopardo, and related Seventh Circuit/Illinois authority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does damage beyond the named insured’s scope amount to an occurrence? | Westfield contends such damage is not an occurrence under the policy. | National Decorating argues damage beyond scope qualifies as property damage from an occurrence. | Yes; damage beyond the scope qualifies as an occurrence triggering defense under the policy. |
| Do the Additional Insured endorsements extend coverage to damage beyond the named insured’s work? | Westfield maintains endorsements hinge on the named insured’s work scope and can cover such damage. | 200 North Jefferson, McHugh, and MCZ/Jameson rely on endorsements that attach based on the named insured’s ongoing or completed work. | Yes; endorsements tie coverage to the named insured’s work, supporting defense duty for covered damages beyond scope. |
| Is there a duty to defend in the underlying action given some damages are covered and some are not? | Westfield argues no duty to defend if not all damages are covered. | Defendants contend the duty to defend applies for any allegations within policy coverage, even if some claims are not. | There is a duty to defend where some underlying damages are covered. |
Key Cases Cited
- Bazzi Construction Co., Inc. v. Bazzi Constr. Co., Inc., 815 F.2d 1146 (7th Cir. 1987) (duty to defend where damage beyond scope can be covered under CGL)
- J.P. Larsen v. Chicago Park Dist., 956 N.E.2d 531 (Ill. App. 2nd Dist. 2005) (damage to property beyond the project can constitute occurrence)
- Leopardo Construction Co. v. Nat. Fire Ins. Co., 831 N.E.2d 1 (Ill. App. 1st Dist. 2005) (endorsed coverage for damage beyond scope; purpose of CGL insurance)
- Lagestee-Mulder, Inc. v. Consolidated Insurance Co., 682 F.3d 1054 (7th Cir. 2012) (duty to defend broader than indemnity; assessable from underlying complaint)
- CMK Development Corp. v. West Bend Mutual Insurance Co., 917 N.E.2d 1155 (Ill. App. 1st Dist. 2009) (claims within policy coverage trigger defense; language of policy matters)