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JOHN MOHR & SONS v. HANOVER INSURANCE COMPANY

January 15, 1971

JOHN MOHR & SONS, AN ILLINOIS CORPORATION (AND SUCCESSOR TO MOHR BUILDING CORPORATION), AND GMR ASSOCIATES, INC., AN ILLINOIS CORPORATION, PLAINTIFFS,
v.
HANOVER INSURANCE COMPANY, A CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Marovitz, District Judge.

CROSS-MOTIONS FOR SUMMARY JUDGMENT

The essential facts are undisputed. In February, 1962, Mohr Building Company (MBC), a general contractor, contracted with Freightways Terminal Company (Freightways) to construct a motor carrier freight terminal building in Chicago, Illinois. Subsequently, in October, 1962, MBC employed GMR to do paving work, including excavation, grading and preparation of the soil, and installation and laying of paving, in connection with the terminal project. As part of its contract with MBC, GMR agreed to indemnify MBC as follows:

  "Subcontractor (GMR), by reason of this purchase
  order, hereby assume the entire and full
  responsibility and liability for any and all damages,
  injury, loss and expense of any kind or nature
  whatsoever to all persons, whether employees or
  others, and to all property, arising out of or in any
  manner resulting from the execution of the work
  provided for in this contract and work incidental
  threto, or occurring in connection therewith, whether
  the same arises from negligence or otherwise, even
  though such damages * * * are attributable to the
  joint, concurrent or contributory negligence of Mohr
  Building Corporation, its agents, servants and
  employees and agrees to indemnify, save harmless and
  defend Mohr Building Corporation, its agents,
  servants, and employees from and against any and all
  such damages, injury, loss and expenses, including
  attorney's fees and expense of litigation arising out
  of or in any manner resulting from or occurring in
  connection with the execution of the work herein
  provided for and work incidental thereto or occurring
  in connection with or resulting from the use of
  sub-contractor's subcontractors, agents or employees
  or others, of any material, tools, implements,
  appliances, scaffolding, ways, condition of premises,
  works or machinery or other personal or real property
  of Mohr Building Corporation, whether any claims
  resulting in any such damages, injury, loss or
  expense arise under the common law or under any
  applicable Workmen's Compensation Law or other
  statute or otherwise."

Pursuant to its agreement with MBC, GMR obtained general comprehensive liability insurance from Hanover for the contractual indemnity liability which GMR had assumed in its contract with MBC. Ultimately, Hanover agreed to provide the following coverage:

Coverage B — Property Damage Liability

  "To pay on behalf of the insured all sums which the
  insured shall become legally obligated to pay as
  damages because of injury to or destruction of
  property, including the loss of use thereof, caused
  by accident."

Coverage Z — Contractual Property Damage Liability

  "To pay on behalf of the insured all sums which the
  insured, by reason of the liability assumed by him
  under any written contract designated in the schedule
  below, shall become legally obligated to pay as
  damages because of injury to or destruction of
  property, including the loss of use thereof, caused
  by accident."

The pertinent schedule then listed the designated contract as that subcontract between MBC and GMR for the Freightways Terminal building, and recited GMR's obligations to indemnify MBC.

The policy also contained some exclusions from these, and other, broad statements of coverage. Exclusion (j) to Coverage B clearly indicated that the policy did not apply:

  "to injury or destruction of any property arising out
  of * * * (2) the collapse of or structural injury to
  any building or structure due to (a) grading of land,
  excavating, borrowing, filling [or]
  back-filling * * * or removal or rebuilding of any
  structural support thereof: provided, however, this
  exclusion does not apply with respect to liability
  assumed by the insured under any contract covered by
  this policy * * * and provided further that part 2 of
  this exclusion [Structural Injury Damage]" is
  inapplicable if such operations are covered in the
  declaration.

Excluded from Coverage Z, by virtue of Exclusion (h), was:

  "injury to or destruction of any goods, products or
  containers thereof manufactured, sold, handled or
  distributed or premises alienated by the named
  insured, or work completed by or for the ...

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