Insurance Law

In action by plaintiff-excess insurance company seeking declaration that it had no obligation to defend or indemnify defendant-insured in underlying action filed by estate of defendant’s wife against defendant for personal injuries sustained in car crash in which defendant was driver and in underlying action filed by wife’s estate against medical entities, in which said entities had filed third-party contribution actions against defendant, Dist. Ct. erred in finding that plaintiff owed duty to defend and indemnify defendant in estate’s action against defendant. Record showed that both defendant and his wife were insureds under policy, and policy precluded coverage for bodily injuries sustained by “any insured.” However, plaintiff owed duty to defend and indemnify defendant on contribution claims, because policy specifically allowed such coverage, and because any recovery on contribution claims would go to medical providers and not to defendant or estate. Fact that plaintiff must provide defense and indemnity in contribution claims did not mean that it had duty to defend and indemnify defendant in action by estate against defendant.

Dist. Ct. had jurisdiction to consider state-court declaratory judgment action alleging that defendant-insurance company had duty to defend plaintiff-insured in underlying action alleging that plaintiff breached contract to pay one of its truck drivers money to drive his truck, where said action was removed to Dist. Ct., even though plaintiff named truck driver as party in instant lawsuit who shared Illinois citizenship with plaintiff. Ct. dismissed truck driver from instant lawsuit so as to create complete diversity and to preserve its jurisdiction, since truck driver was dispensable party who had no legal interest in instant insurance dispute. Moreover, Dist. Ct. properly granted insurance company’s motion to dismiss instant action for failure to state cause of action, where: (1) relevant policy issued to plaintiff contained exclusion for defending claims based on contracts; and (2) underlying action was outside coverage of policy because underlying lawsuit rested fundamentally on contract claims based on lease agreement that truck driver had with insured.

Dist. Ct. did not err in granting defendant-insurance company’s motion for summary judgment in action by plaintiff alleging that defendant wrongfully distributed $1 million in death benefit proceeds from life insurance policy to third-party, who was not named as beneficiary of said policy. While defendant acknowledged its error in paying proceeds to third-party, record showed that corporation, as correct beneficiary of policy, waived its right to receive said proceeds, when it voted to give said proceeds to same third-party after corporation’s Bd. had been informed by said third-party that corporation was policy’s beneficiary.

Dist. Ct. did not err in granting plaintiff-insurance company’s motion for summary judgment in action seeking declaration that plaintiff had no duty to defend defendant-insured in underlying lawsuit that alleged that defendant had breached employment contract by failing to pay defendant’s employee compensation for unused but accrued sick and vacation time. Instant policy only covered injuries arising out of defendant’s “negligent acts,” and alleged failure to pay employee benefits in underlying action was breach of contract that could not be insured under any insurance policy. Moreover, defendant’s responsibility to make payments according to contract is not sort of duty that will support negligence action.