Insurance Law

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.)

Dist. Ct. did not err in entering judgment on pleadings in favor of plaintiff-insurance company on action seeking declaration that terms of workers’ compensation and employer’s liability policies it issued to insured-subcontractor, which performed services at construction site, obligated plaintiff to pay nothing more for workplace injury than amounts Ill. workers’ compensation law required subcontractor to pay its injured employee. Record showed that under Ill. Workers’ Compensation Act, subcontractor’s liability to one defendant-employee’s estate was $5,993.91 and its liability to second defendant-employee was $25,229.15, but that subcontractor waived instant Kotecki caps, where subcontractor, in separate agreement with general contractor, agreed to indemnify general contractor and hold it harmless for any injuries arising out of subcontractor’s work at construction site. However, policy issued by plaintiff contained exclusion that provided that insurance did not cover subcontractor’s instant waiver of right to limit its liability for contribution to amounts of benefits payable under Workers’ Compensation Act. As such, policy did not cover general contractor’s contribution claim against subcontractor, even though general contractor had settled for amount in excess of $75,000 with injured employees, and thus plaintiff was only required to pay amounts set forth under Workers’ Compensation Act. Fact that subcontractor’s agreement with general contractor called for subcontractor to perform work in workmanlike manner did not require different result, since general contractor’s contribution claim was based on subcontractor’s pro rata share of liability in tort (as opposed to liability based on breach of warranty) for instant workplace accident.

Dist. Ct. erred in granting plaintiff-insurance company’s motion for summary judgment in plaintiff’s action seeking declaration that it had no duty to defend or indemnify its insured in defendant’s underlying negligence action, alleging that insured’s employee ran over defendant with insured’s golf cart during horse trail event that took place off insured’s premises and was hosted by insured. Applicable policy was ambiguous as to whether policy could properly be viewed as CGL or farmland policy, and that: (1) policy contained clause providing for payment of benefits for bodily injuries caused by occurrence that arose out of operations that were necessary or incidental to insured’s premises; and (2) policy contemplated that it would cover insured’s equestrian events that took place off insured’s premises. Also, exclusion that provided that there would be no coverage for incidents arising out of recreational use of golf cart did not apply. As such, plaintiff had duty to defend insured in defendant’s underlying lawsuit. Too, Dist. Ct. improperly resolved issue regarding plaintiff’s duty to indemnify insured, where merits of duty to indemnify claim could not be resolved until insured had incurred liability in underlying lawsuit.

Dist. Ct. did not err in granting defendant-insurance company's motion for summary judgment in plaintiff-insured's action alleging that defendant had failed to pay expenses covered by insurance policy for damages associated with two incidents in which tree fell on plaintiff's home and eventually rendered said home uninhabitable. While plaintiff alleged that defendant breached contract by failing to pay $37,575 for roof reconstruction, $2,580 for damages to home's siding, and unspecified amount for additional living expenses, no breach occurred, where policy required that plaintiff actually incur said expenses and then seek recovery from defendant, and plaintiff had not paid said expenses prior to seeking recovery of same from defendant. Also, with respect to plaintiff's claim for additional living expenses, record showed that plaintiff had not yet submitted said expenses to defendant, and thus plaintiff could not establish any wrongful denial of said expenses. Moreover, record showed that defendant had paid applicable limit under insurance policy.

Dist. Ct. erred in granting plaintiff-insured's motion for summary judgment in action for extracontractual damages under section 155 of Illinois Insurance Code, based on defendant-insurance company's failure to defend plaintiff in underlying action, as well as defendant's failure to pay plaintiff for over one year for fees and expenses awarded to it in underlying action, after state court had found that defendant had duty to defend plaintiff in underlying action that had been ultimately settled by plaintiff in 2013 for zero dollars in exchange for plaintiff's promise not to sell alleged copy-cat products. Record showed that Illinois Appellate Court found in 2015 that defendant was liable under its policy to defend plaintiff in underlying action and further awarded plaintiff damages in 2017 that were payable under defendant's policy. Moreover, section 155 allowed insured to seek extracontractual damages from insurer only under circumstances where: (1) insurer's liability under policy was undecided; (2) amount of loss payable under policy was undecided; or (3) there was unreasonable delay in settling underlying claim. Plaintiff, though, did not satisfy any of these prerequisites, since: (1) defendant's liability and damages under said policy had already been resolved by 2013 settlement, as well as Illinois Appellate Court judgments in 2015 and 2017; and (2) plaintiff did not seek recovery based on delay in settling underlying lawsuit against plaintiff, but rather delay in defendant's failure to pay Illinois court's judgment relating to fees and expenses associated with underlying claim.

Dist. Ct. did not err in dismissing for lack of standing plaintiffs' action seeking to collect on healthcare receivables assigned to them by Medicare Advantage Organization (MAO), where plaintiff alleged that defendant, as primary insurer, failed to pay for medical expenses covered by insurance policy under circumstances, where MAO, as secondary insurer, had made conditional payments on behalf of defendant. While Medicare Act recognized existence of plaintiffs' potential cause of action against defendant, instant plaintiffs lacked standing to bring instant action, where, after discovery had taken place, plaintiffs had failed to identify within their basket of receivables, example of concrete and definite amount owed to them by defendant. Ct. rejected plaintiffs' claim that allegation of mere existence of assignment to them to collect potentially un-reimbursed payments was sufficient to establish standing. Moreover, record did not support plaintiffs' citation to single claim within said basket of receivables where defendant owed them money, where payments made by MAO were for knee injury that did not arise out of car accident that was covered under defendant's insurance policy, and thus said payments for treatment given to insured's knee were not made on behalf of defendant for purposes of Medicare Act. Ct. also disapproved of plaintiffs' apparent tactic of filing instant lawsuit in hope that discovery would find existence of viable claim, rather than performing some due diligence to find existence of viable claim prior to filing instant lawsuit.

Dist. Ct. did not err in granting judgment on pleadings in favor of defendant-insurance company in plaintiff-insured's action alleging that defendant breached insurance contract by failing to defend plaintiff in underlying lawsuit alleging that plaintiff sent unsolicited fax advertisements in violation of Telephone Consumer Protection Act (TCPA), as well as Illinois Consumer Fraud and Deceptive Practices Act, and that plaintiff's conduct constituted common-law conversion, nuisance and trespass. Instant policy barred coverage for any claims "arising out of TCPA" or any similar regulatory or statutory law. Both parties agreed that exclusion barred plaintiff's TCPA and other statutory claims. Also, Ct. of Appeals found that policy exclusion extended to plaintiff's common-law claims, where conduct associated with instant common-law claims arose out of same conduct associated with plaintiff's TCPA-related claims.