Dist. Ct. did not err in granting defendant-general contractor/additional insured’s motion for summary judgment in action by plaintiff-insurance company seeking declaration that it did not owe duty to defend defendant in underlying lawsuit filed by injured worker who was employed by insured-subcontractor at construction site. Relevant policy provided additional insured such as defendant with liability coverage, but only with respect to defendant’s liability for bodily injuries that may be imputed to defendant arising out of insured’s acts or omissions. Moreover, underlying lawsuit against defendant contained allegations of both direct liability and imputed liability for bodily injuries arising out of subcontractor’s actions. As such, defendant remained potentially liable under allegations of underlying lawsuit so as to require plaintiff to defend defendant in underlying lawsuit. Ct. rejected plaintiff’s reasoning that there was no duty to defend, where Illinois law would not impose liability on defendant for imputed liability in underlying lawsuit, since Ct. found that insurer’s duty to defend applies, where underlying complaint contained allegations that potentially fell within scope of coverage, and where duty to defend applied even to hopeless lawsuits, whether they are unfounded, false or fraudulent. However, duty to defend defendant ended when plaintiff settled with injured worker in underlying lawsuit on behalf of insured-subcontractor, where settlement extinguished any imputed liability of defendant. (Dissent filed.)
Federal 7th Circuit Court
Civil Court
Insurance