*1 PROGRAM, CHICAGO HOSPITAL RISK POOLING Plaintiff and Counter- defendant-Appellee, v. ILLINOIS STATE MEDICAL INTER-INSURANCE
EXCHANGE, Counterplaintiff-Appellant. Defendant and (4th Division) 1—99—3507, First District Nos. — 3508 cons. 1—99
Opinion September 27, filed 2001. *2 J.,
QUINN, specially concurring. *3 (Robert P.C., Chicago Clausen Miller of Reifenberg, Kay, L. M. Edward Michaelides, counsel), appellant. and Barbara I. of for (Michael Meckler, Bulger Tilson, Chicago & of M. Marick and Hallie Miller counsel), Fahey, appellee. of for
JUSTICE THEIS delivered the opinion of court: (CHRPP) Chicago Pooling The Hospital Program brought Risk an against defendant, action the Illinois State Medical Inter-Insurance (ISMIE), Exchange equitable contribution, under unjust theories of enrichment, quantum and meruit to recover one-half a settlement payment it made on a physician by behalf of covered both CHRPP and an defense, alia, ISMIE. ISMIE filed alleging, affirmative inter CHRPP’s claim was physician’s contribution barred selective rejected argu tender his claim to CHRPP The trial court ISMIE’s ment, holding applied that the selective tender rule to traditional companies risk-pooling and apply did not to a self-insured Thereafter, a complaint pur trust. ISMIE filed motion to dismiss the (the suant to section 2—615 of the Illinois Code Civil Procedure Code) (West 1998)), a alleging risk-pooling ILCS that as 5/2 —615 a cause of action to state necessary elements trust CHRPP lacked but denied ISMIE’s motion The trial court equitable contribution. for Illinois law for review under following questions certified 155 Ill. 2d R. 308. interlocutory appeal. Court Rule 308 for Supreme London Un “1. tender’ rule Institute Whether ‘selective of 70, N.E.2d derwriters v. Fire Ins. Hartford (1st 1992), applied be to the Plaintiff progeny and its can Dist. case, [CHRPP], trust a self-insurance retention which is and Risk Pool Religious Illinois Charitable established under the Act; ing Trust [CHRPP],a retention trust established
2. Whether self-insurance Pooling Religious And Charitable Risk pursuant the Illinois contribution, Act, may Trust state a cause of action [ISMIE], enrichment, quantum against an insur- unjust meruit payment of a settlement company, ance to recover one-half by [ISMIE] physician made on behalf of covered [CHRPP] [CHRPP].” follows and remand for further questions
We answer the certified as proceedings opinion. consistent with this
BACKGROUND malpractice September Luz Rivera filed medical action Bal-
against Norwegian-American Hospital, Nguyen, Dr. Ha Dr. Carlos obstetrician, doceda, private alleging negligent and her were sons, and the brain delivering causing her twin the death of one damage professional of the other. Dr. Baldoceda was insured under issued ISMIE. He was also covered under CHRPP liability policy hospital. CHRPP administers trust employed physician Pooling Religious to the and Charitable Risk pursuant established (West (the Act) (215 et Pooling seq. Trust Act Risk Act or ILCS 150/1 1998)), whereby participating nonprofit pool certain risks as- hospitals Under provided patients. with the care and treatment their sociated (the agreement Agreement), participating the CHRPP trust Trust to CHRPP in hospitals required are to contribute certain sums judgments or settlements promise pay consideration of CHRPP’s response against participating hospital malpractice medical suits Persons,” employees while hospital include or other “Covered which acting employment. *4 scope within the respect to Baldoceda with the Rivera agreed
ISMIE defend Dr. request for defense under action. CHRPP declined Dr. Baldoceda’s obliga- rights primary that ISMIE had reservation of and claimed arising liability out respect him tion to defend and with However, refusing tender despite Dr. Baldoceda’s Rivera action. claim, CHRPP settled the Rivera action for million. The $3 settlement reflected that paid $1 million was on behalf of Dr. Baldo- ceda. ISMIE did not participate negotiations. in settlement
Thereafter, sought half of the settlement costs from equitable contribution, enrichment, ISMIE under theories of unjust quantum and meruit on based the court’s holding Padilla v. Norwegian-American Hospital, Inc., 641 N.E.2d (1994). Therein, that, the court found where and CHRPP coverage had obligations coincidental physician to the same and where their “other insurance” clauses were deemed incompatible, the li ability a judgment for or settlement was equally.1 owed The “other in surance” clauses construed in Padilla are identical those at issue in this case.
ISMIE set forth its affirmative complaint, defenses to the including that the action for contribution was defeated the “selective tender” expressed rule as in Institute London Under writers v. Fire Insurance 234 Ill. App. 3d Hartford (1992), progeny. rule, and its Under where two potentially apply loss, to the same may forego the insured choose to policy, under one thereby foreclosing targeted insurer from obtaining contribution from nontargeted insurer. ISMIE al leged that, pursuant Institute, holding to the Dr. Baldoceda exercised his indemnity to tender the defense and obligation for the Rivera action to CHRPP under the Agreement, Trust trig and elected not to ger the defense and indemnity obligations of ISMIE. it Accordingly, al leged that CHRPP could not obtain contribution from ISMIE for its settlement of addition, the Rivera action. In ISMIE filed a counterclaim seeking recoup defending the costs it incurred in Dr. Baldoceda.
CHRPP responded rely that ISMIE could not on the “selective tender” rule because the only applied rule to traditional companies company but, that CHRPP was not an insurance rather, a trust. applying CHRPP claimed that the rule to the trust Act, minimize purpose Pooling would violate the of the Risk money hospitals spend amount of nonprofit protecting on themselves from the risks of financial due loss to their liabilities ILCS 150/2 (West 1998)), provide public and would undermine its function to argued health benefit. CHRPP also that the “selective tender” rule apply could not presumes because the rule defend Agreement its Trust obligate does not it to Dr. defend Baldoceda. sharing specifically equal 1The Padilla court did not order the settle However, require interpreted ment costs. on remand the contract was ISMIE to reimburse CHRPP 50% of the settlement costs.
975 “unequivocally” Baldoceda did not argued that Dr. Lastly, CHRPP exclusively policy in order to his ISMIE coverage his under renounce coverage obligations of CHRPP trigger the ap- not tender” rule was that the “selective The trial court found court Pooling Act. The under the Risk to a trust established plicable pur- formed states that trusts language of the Act which examined the companies or to be insurance are not to be considered suant to the Act subject regulation they to be nor are in the business 215 specifically provided. except as the Illinois Insurance Code under (West 1998). Act, of the plain language upon Based ILCS 150/25 as in- to be treated that CHRPP not intended the court concluded was only apply- tender rule as strictly construed the selective surance and The court held traditionally companies. ing to constituted insurance legislative intent “undermine that to hold otherwise would *** and participating hospitals for the benefit of the operate the trusts [Sjtate Illinois, as contrary public policy to the would be Act, as should not be enunciated in the that a trust such business of insurance.” company considered an insurance Thereafter, argu- complaint, to dismiss the ISMIE filed a motion ing, underlying that the the court’s refusal treat part, reasons of the “selective ten- company CHRPP as an insurance contribu- equitable rule also dictated that CHRPP could not seek der” argued equitable contribu- Specifically, remedy tion. only tion available that insure on the same basis insurers identity insur- parties, that there must be between the CHRPP, being an insurance able interests risks. Since necessary to company, identity of insurable interests obtain lacked The trial remedy, such a it could not maintain its cause of action. motion, finding denied ISMIE’s that CHRPP was entitled to court sought remedies it from ISMIE. granted joint motion for interlocu Subsequently, trial court 308), finding Ill. 2d tory Supreme under Rule 308 R. appeal Court rulings questions impression that the involved of first under Illinois ground opinion. and a for difference of law substantial
ANALYSIS gen answering questions, the certified we review some
Before
necessary
understanding
of insurance law
to an
principles
eral
coverage for the
Ordinarily, where an insured has concurrent
case.
obligated
provide
liability,
same
both of its insurers are
coverage obliga
policies and their
respective
under the terms of their
coordinated,
policies’
reference to the
“other
typically by
tions are then
forms,
generally
many
take
but
provisions.
insurance”
These clauses
that,
provide
where there
other
insurance available to cover the
claim, the loss
be apportioned according
will
to various formulas in or
der to limit
potential
each
obligation
insurer’s
See, e.g.,
to the insured.
Padilla,
829,
However, “other insurance”
rights
clauses
affect insurers’
among themselves; they do not affect the
right
recovery
insured’s
(Zurich
under each
concurrent
Raymark
Insurance Co. v.
Industries, Inc,
Ill. App.
(1986)),
N.E.2d
nor do
affect the
right
insured’s
to selectively tender a claim to
one insurer alone.
rule,
Under the “selective tender”
an insured has
paramount
or knowingly forgo
choose
an insurer’s
participation in
claim. John Burns Construction Co.
In
v. Indiana
surance
189 Ill. 2d
The
court held that an insured
right
has
exclusive
determine whether
trigger coverage
policy
under
available
al
lowing the insured to make a “selective tender” of its claim to one of
potential insurers, irrespective
several
presence
in
an “other
targeted
surance” clause. The
responsibility
insurer has the sole
insured,
defend and
thereby foreclosing
eq
a claim for
Burns,
uitable contribution from the excluded insurer.
977 Apply CHRPP? Selective Tender Does mind, of the analysis to an we turn principles these With Supreme pursuant scope of our review us. The questions before 308) questions strictly limited to 2d R. Ill. Court Rule 1092, Skellion, court. Klak v. by the trial certified question, we In the certified 288, 290 first 1094, 741 N.E.2d particular risk-pooling this the nature of are to decide whether asked insur differently than a traditional it treated be requires trust rule. As tender” applying the “selective company ance insurer, CHRPP administers previously, unlike a traditional stated whereby participat Pooling to the Risk Act pursuant established trust with the care ing hospitals pool certain risks associated nonprofit patients. part category of a broad provided As treatment many “self-insurance,” type of has described program been the “functional of insurance and jurisdictions as both the “antithesis” insurance, analysis depending upon the nature equivalent” to Compare, e.g., of each case. and the facts and circumstances particular 178, 183, 126 Idaho 879 P.2d Casualty State v. Continental (1994) (because transfer of the not involve a self-insurance does loss, insurance), Manage with Ohio Risk risk of Government Inc., Sharing Ohio County Authority, ment Plan v. Risk (structure (1998) risk-sharing 174, 180, author Landwehr, insurance); Hillegass ity analogous to v. 176 Wis. (self-insurance (1993) 81-82, is a form of in 499 N.W.2d 654-55 surance). past, respective have looked to their CHRPP and ISMIE liability between themselves apportion
“other insurance” clauses However, case, present alleges did in Padilla. in the *7 CHRPP, thereby selectively Dr. tendered his claim to Baldoceda seeking equitable foreclosing from contribution. CHRPP to argues applied that the rule been commercial response in has considered an and CHRPP is not be insurance carriers statute It further company or in the business of insurance. insurance Act, legisla- plain language Pooling maintains that the of the Risk intent, Agreement prevent provisions of CHRPP’s Trust tive and applying from regarding the common law rules selective tender must ex- question, To resolve this we risk-pooling self-insured trust. Act, Pooling Agreement, the Trust and amine the nature of the Risk relationship parties involved. of relevant risk-pooling legislation impetus enacting particular The generally context. It is can be understood in its historical best in malpractice a medical recognized during the 1970s there was stemming increasing reluctance of insurance surance crisis from an companies to issue and the dramatic premiums rise in being demanded companies those issuing that were policies. result, aAs many providers health-care were forced to curtail or cease to render their difficulty services due to the in obtaining insurance at reasonable rates. Wagner, Anderson v. 79 Ill. 2d In in the crisis, wake of this the Religious and Charitable Pooling Risk Trust Act nonprofit was enacted to organizations, allow including hospitals, pool their risks of certain financial losses as a protecting method of ability. against themselves imposition legal li (West 1998). Thus, 215 ILCS provided nonprofit the Act 150/2 hospitals cost-effective, awith alternative means to cover medi cal malpractice liability of having purchase instead insurance and pay premiums on the commercial market.
While expresses the Act these trust funds “shall be considered companies or to be in the business insurance” regulated (West or be under the Insurance Code ILCS 150/25 1998)), nothing in the Act exempts CHRPP from its common law rights, duties, contractual obligations and to indemnify covered persons expressed as Agreement. its Trust Indeed, CHRPP has conceded that many respects “in provisions of the [TJrust [Ajgreement follow the same an basic structure as insurance policy.” many ways, Agreement the CHRPP Trust purports to be a provides “hospital contract insurance. It liability coverage” fur and provides ther that it pay “Hospitals” judgments will on behalf of settlements, costs, as well in response as defense incurred to medical malpractice Additionally, physician suits. to the extent that a qualifies as a “Covered Person” Agreement, under the Trust ishe entitled to coverage for all sums that he becomes legally obligated pay as dam ages malpractice injury. due to participating hospital Each obligated pay a contribution to persons, the trust on behalf of covered each has a minimum paid by deductible to be the hospital. CHRPP management program, has claims management program, risk underwriting committee which has the seek reservation rights persons relation to covered under the trust. The Trust Agreement includes an provisions “other insurance” clause with regarding the allocation of funds in cases where there is concurrent coverage. It also provisions includes to allow CHRPP to its reinsure Furthermore, hospital risk. each participating required provide possible any written notice to CHRPP soon as as threatened claims against hospital persons. or covered upon Agreement, particular provisions
Based this Trust differently CHRPP should be treated no than a traditional insurer for applying principles common law insurance relate *8 Agreement, if the no example, Trust under the coverage issues. For to would to, CHRPP are not adhered of the contract provisions tice brought claim any defenses to coverage to raise certainly entitled be See, e.g., Northbrook timely for lack of notice. a person covered Inc., 313 Ill. Systems, Applied Co. v. Casualty Insurance Property & to 915, If CHRPP is entitled 457, 466, 729 N.E.2d App. 3d no Agreement, we find reason Trust rights under the its contractual obligations its to meet contractual why required should not also be persons. to its covered clear that the “selective
Furthermore,
makes it
specifically
Burns
relationship
construing the
with
contractual
tender” rule is concerned
Thus,
question
key
person.
insurer and the covered
between the
insurance,
is
but
risk-pooling
a
trust
here is not whether
self-insured
the loss
Agreement
and ISMIE’s
cover
Trust
whether CHRPP’s
coverage provided to
on the
basis such that the
to Dr. Baldoceda
same
previously,
relationship
As
between
is concurrent.
stated
him
coverage
trig
multiple
is
is not effectuated until
CHRPP
ISMIE
Burns,
576-78,
CHRPP public next that policy dictates that it should responsible not be for the full obligation amount of its to Dr. Baldo ceda under the “selective tender” Specifically, rule. it maintains that to do deplete so would the trust, assets of reducing the the amount of funds that could be public tunneled into the health initiatives CHRPP member hospitals. However, purpose of the trust is not to provide a nonprofit safe haven hospitals against employee claims but, rather, provide a cost-effective obtaining means of coverage for legal its liabilities. Additionally, the Second District of this court recently rejected argument unduly prejudices the rule targeted insurer because solely it holds it responsible without of equitable benefit contribution. The court held that prejudice will always when result the insured a particular elects insurer. Neverthe less, Illinois has protect chosen to right insured’s to choose or forgo knowingly coverage over the insurer’s to contribution. Pe kin, Ill. App. 3d at 743 N.E.2d at Accordingly, 1083. we find CHRPP’s status as risk-pooling trust does not application defeat the of the “selective tender” rule and answer the question first certified in the affirmative. However, although the materially above conclusion advances the
termination litigation 308), of this under Rule 308 Ill. 2d R. there many are unresolved legal questions factual and impact on the ultimate determination of whether the “selective tender” applies rule to CHRPP in the A question instant case. factual remains as to whether Dr. Baldoceda effectively renounced coverage under his policy properly perfected his selective tender of the claim Dr. CHRPP Baldoceda ISMIE-appointed and his attorney defense wrote to CHRPP that Dr. “[i]t is Baldoceda’s wish have his ISMI[E] coverage remain secondary; the only ISMI[E] would be used the event that there was insufficient CHRPP coverage (primary and excess) to cover his entire loss.” The trial court never reached this is sue because it held that selective tender applied to insurance companies in the strict sense of the term.
Additionally, reached, parties the trial court never and the did not fully on appeal, duty address whether CHRPP had to defend Dr. Bal presumes doceda. The “selective tender” rule that both insurers have Burns, a concurrent obligation. 574-78, 189 Ill. 2d at Alcan, 214-17; 77-78, N.E.2d at N.E.2d at 690- defend, Without duty 91. Dr. Baldoceda would not have two avail target able from which to and the selective tender rule would if on remand the trial Accordingly, to him.2 applicable not be therefore Dr. duty to defend Baldoceda CHRPP had no court finds that either perfect the properly failed to claim or that Dr. Baldoceda the Rivera subject not be coverage, CHRPP would tender of his selective rule in this case. to the selective tender Equitable Remedies? of Action for
Can CHRPP State Cause depends question upon disposition of the second certified Our “selec questions on remand. If the to the above unresolved answers not be case, CHRPP would applies tive rule in the instant tender” As explained it seeks from ISMIE. equitable entitled to the remedies Burns, responsibility to defend targeted insurer has the sole If, at 215. Ill. 2d at its insured. 189 he did however, no to defend Dr. Baldoceda or CHRPP had indemnity obligations effectively tender of the defense and perfect his could then we must consider whether CHRPP exclusively CHRPR it seeks. state a cause of action for remedies among equitable principle arising is an co- Contribution *10 the entire to be permits paid insurers which one who has loss are also liable for the Schal reimbursed from other insurers that loss. 353, 362, Bovis, Co., Casualty App. Inc. v. Insurance 315 Ill. 3d 732 (2000). 1179, The this rule insurer N.E.2d 1186 reason for is one has insurers. The fact paid equally a debt that owed other payment undertakes the burden of a full settlement one insurer Casualty Surety & Co. does not mean the insurer is volunteer. Aetna Associates, Inc., 413, Ill. App. & 229 3d Illinois v. James J. Benes of (1992). 417, settling 1087, party In order for the 593 N.E.2d 1090 action, policies must cover a risk on the in a contribution recover par as to identity same basis and there must be between Bovis, Inc., App. 315 Ill. ties and insurable interests and risks. Schal Thus, 362, since contribution claims are 3d at 732 N.E.2d 1186. insurers, to the solely question the focus of two shifts matters between CHRPP and ISMIE. relationship between in Many relationship this the context of courts have examined whether can be considered “other valid collectible self-insurance Pooling language appears Act plain that the of the Risk 2We also note liability solely participating professional to the limit indemnification for hospitals practices for arising corporate out their their for their liabilities of (West 2000). 150/2, However, superior. we need respondeat role 215 ILCS 5 as issue, purposes for of this lit parties not this where the both concede address employees igation of that the Act also authorizes CHRPP scope liability acting of participating hospitals legal for while within the their employment. 982
insurance” for the purpose assigning liability of between insurance providers and self-insureds. These that, courts have held when an entity completely chooses to particular retain the risk of loss rather than obtain a traditional policy, self-insurance insur ance. As stated in USX v. Corp. Liberty Co., Mutual Insurance “Il appears aligned linois to have itself with majority at rejecting tempts by commercial carriers to treat self-insurance ‘other ” insurance’ context. Corp. Liberty USX v. Mutual Insurance Co., (1994). App. 233, 243, 396, 645 N.E.2d 403 Benes, example,
For
App.
413,
593 N.E.2d
court considered
Intergovernmental
whether the
Management
Risk
(IRMA),
Agency
municipal
joint risk management pool, had the
obligation
same
to contribute to the settlement
aof claim as an insurer.
The court held that IRMA did not have the same obligation for
“
because,
of
contribution
‘when municipality
self-insures,
itself,
all
it bears
risks
and settlements or
paid
awards are
”
directly from government
Benes,
coffers.’
N.E.2d at
quoting Antiporek Village Hillside,
v.
114 Ill. 2d
246, 250,
The court concluded that the
sharing
among
risk
the self-insured entities under IRMA was dis
tinguishable
shifting
from the
of the same risk to for-profit companies.
Regional
See also St. John’s
Health
Casualty
Center v. American
Co.
(8th
1992)
Reading, Pennsylvania,
983 cases, any the other cited Benes or Here, unlike in circumstances. insurance” clause ISMIE, to include an “other has chosen like CHRPP risk of loss doing so, to share the By seeks Agreement. in its Trust coverage, and coincidental carrier when have a commercial with which, as self-insured something pure other than a it is therefore such, As and all of its risk. CHRPP chooses retain previously, stated in Pa- differently they were treated be treated no than ISMIE should duty indemnify Dr. have a both CHRPP and ISMIE dilla. Where contribu- claim, CHRPP is entitled to seek Baldoceda for the Rivera Dr. paid costs it on behalf of Baldoceda. tion for settlement defend, that, if had no reject argument ISMIE’s CHRPP We of contri and risks for it does insure same interests “ cover necessary policies provide identical bution. ‘It is not policies to be considered concur age respects in all in order for the two ” “ rent,’ actually risk involved in the long particular ‘as as the and contri policies, duplicate, covered both case is ” Bovis, 363, Inc., Ill. 732 bution will be allowed.’ Schal 315 1999). (3d § 1186, 15 218:6 ed. quoting N.E.2d at Couch on Insurance Here, primary duty Dr. both CHRPP and had for indemnification costs Baldoceda and seeks contribution only. Accordingly, risk-pooling we find that CHRPP’s status trust does not defeat its cause action for contribution. that, find the “other insurance” clauses of
We further where govern Agreement CHRPP’s Trust and ISMIE’s the relation ship allocating liability, CHRPP cannot a cause parties state People ex Har unjust quantum of action for enrichment or meruit. rel. Inc., N.E.2d tigan Hauling, v. E&E 177 Hale, Tobin, 906, 913, & (1992); Canel Ltd. v. Lastly, decline to address ISMIE’s N.E.2d we cer scope it is outside the counterclaim for defense costs where questions. tified reasons, the certified
Accordingly, foregoing we answer consistent with this proceedings and remand for further questions opinion. answered; questions cause remanded.
Certified REID, J., concurs. QUINN, specially concurring:
JUSTICE given the certified holdings I in the answers concur express my concern opinion. separately I write questions in this John Burns Construc theory tender.” In with the whole of “selected 570, 574, v. tion Co. Indiana Insurance *12 984
(2000),
supreme
our
court
question
articulated the
as follows:
“[Wjhether an
litigation
insurer to whom
is tendered
whose'policy
an
contains
‘other insurance’ clause like the one
may
above
seek con
tribution from another
policy
insurer whose
is in existence but whose
coverage the insured has refused to
answering
ques
invoke.” In
this
negative,
tion in the
upon
holdings
the court relied
the
in Alcan
United, Inc.
Co.,
v. West Bend Mutual
Insurance
3d
App.
Ill.
(1999),
In
supreme
our
explained
reasoning
court
as follows:
provided
“The insurance
by Royal
to Burns
‘available,’
was not
in the
language of
provision,
the other insurance
for
expressly
Burns had
declined to
coverage. Moreover,
invoke that
we do not believe that the
presence of
provisions
the ‘other insurance’
the Indiana
trigger
serves
itself to
the
by Royal’s policy.
afforded
An
provision
‘other insurance’
does not in itself
right
overcome the
of an
insured to tender
of
Burns,
defense
an action to one insurer alone.”
(cid:127) The
right
explained
raison d’etre for this
has
thusly: “[The]
been
may
forgo
insured
choose to
an insurer’s
assistance
various
reasons, such as
premiums
increased,
the insured’s fear that
would be
cancelled,
future,”
or the policy
in the
“ability
forgo
this
that
protected.”
Cos.,
assistance should be
Cincinnati
In supreme type Cincinnati our court what addressed no required trigger duty doing tice an insurer was to defend. In so, required the court commented that some courts that the insured actually duty tender its defense to the insurer before the defend is triggered, citing being example. Institute London Cincinnati Cos., rejected Ill. 2d at argument 324. The court advanced “allowing duty “tender rule trigger courts” mere notice to require officiously’ defend would the insurer to ‘intermeddle in the Cos., underlying litigation.” 327, citing Cincinnati 183 Ill. 2d at London 234 Ill. at Institute 78-79. Cos. in Cincinnati Burns, court commented that supreme
In trigger an insurer’s necessary court what “this considered a claim notice of duty arises with actual defend, and held that the sophistication.3 insured, of the insured’s level regardless against an authority result, acknowledged the line of court reaching will which of its insurers to elect granted an insured 574-75, Cincin Burns, citing particular defend a case.” *13 entirely authority” consisted Cos., 2d 324. That “line of nati 183 Ill. at cite Institute London. of a to of Bend. The Alcan, its defense to West the insured tendered to looking only informed it was West Reliance Insurance that insured coverage for provide did Reliance to coverage Bend for not want argument rejected West Bend’s that appellate the incident. The court distinguished the case from policy’s its “other insurance” clause London, London, in the insurer to whom Institute Institute of of policy: had no such in its tender was made clause in “[Ljanguage suggests that the result that in Institute London of policy contained case would not have been different had Institute’s regard the stated: an ‘other insurance’ clause. In that court ‘ “ ‘Only insurer becomes policy triggered when is and the obligated “any “all to defend suit” does the pay sums” and liability play “other insurance” clause come into to allow to be ” ’ London, apportioned among 234 Ill. the insurers.’ Alcan, Institute of App. App. at ***.” 303 Ill. 81. plain reading language
A of the cited from Institute London of way “suggests the that case not have been dif no that result in would ferent had an ‘other insurance’ clause.” policy Institute’s contained Alcan, language policy App. quoted 303 Ill. 3d at 81. The refers the the While tender was made of insurer to whom tender was made. Institute, no As no tender had policy its had “other insurance” clause. Hartford, been “other clause did made Hartford’s insurance” accept the Alcan court’s play.” “come into Even if one were to policy the that the insurance” clause in hypothesis, holding its “other disregarded is the tender made should be of insurer whom was contained in dicta. “suggestion” based on Institute London’s Casualty The court in Bituminous looked at of that “the insurer’s 3I that the court in Cincinnati Cos. also held note suit, regardless underlying the triggered by to defend is actual notice of “ Further, sophistication.” notice’ should be ‘actual level the insured’s permit to locate and defend ‘notice sufficient insurer defined as ” added.) Cos., 183 Ill. at 329. While both (Emphasis lawsuit.’ Cincinnati may correct, presented arguably which are are the manner in statements unnecessary confusion. lead “ language ‘if that policy triggered, never liability issue of ”
under the “other insurance” clause does not arise.’ Bituminous Ca sualty, App. quoting Institute, 3d at 77.
The interpreted court “It is this as follows: policy triggered when an insurer’s that the insurer claim,
becomes liable for the defense and indemnity costs necessary among becomes to allocate the loss co-insurers. The loss will according be allocated to the terms of the ‘other insur clauses, any, ance’ if in the triggered. that have been As above, Royal’s discussed policy triggered obligation was not and its defend and regard Johnson Construction with to the by Peterman lawsuit was targeted excused tender to Bitumi Casualty, nous.” Bituminous at3d 726. Alcan, analysis
As does not take into account the use of the singular form of the “policy” word Applying Institute London. the plain language London, triggered Institute if the policy clause, contains an “other insurance” the loss should be allocated ac- cording to the terms of simply, that clause. Put the amount and nature of the provided should be language determined issued the insurer to whom tender If has been made. policy provides covering contribution from other insurers risk, policy’s provisions same should control. opined
Bituminous
if one insurer was able to trigger the
*14
insured’s coverage
policy,
under another
policy
insurer’s
becomes,
effect,
insurer to whom tender was not made
in
a third-party
beneficiary contract entered into by the insured for the direct benefit
Casualty,
other insurers.
App.
citing
Bituminous
301 Ill.
at
3d
London,
turn,
Institute
Ill. App.
London,
79. Institute
Mansfield,
1008, 1016,
cited Sabath v.
3d
App.
Finally, accepting we an ‘other insurance’ clause tender, cannot an right alone overcome insured’s to selective left what, any, if previously steps unanswered all cited cases is may insurers protect take to contribution in “target Country face of tender.” American Insurance Co. v. (1998), court this Brothers, Inc., Kraemer requiring provision policy the effect of considered to: insured any made or ‘suit’ any claim the defense “Promptly tender loss which available insurance also has other insurer which Coverage part.” B this A or of cover under we tendering that, his defense selectively This court held the insured language, above contained the policy the insurer whose *** is not entitled to a “clearly the terms of breached 812. As Country, indemnity.” American defense or insurance,” it would seem to “available this case refers holding insur based on Bums’ viability is in serious doubt case’s his defense insured refuses tender “available” when the ance that insurer. request or for indemnification to undoubtedly legal jurisprudence, there are In the vast area of first, jurisdiction grant being only, many instances where pride. may rightly entities be source of While rights persons or not appear tender” does very early, is still the doctrine of “selective of those me be one instances. ILLINOIS, Plaintiff-Appellee, OF THE v. ENOCH
THE PEOPLE STATE OF WILDER, Defendant-Appellant. (5th Division) No. 1 — 99—1425
First District Opinion 2001. filed October