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Wheeler v. Aetna Casualty & Surety Co.

MAY 14, 1973.

E. TODD WHEELER ET AL., PLAINTIFFS-APPELLEES,

v.

THE AETNA CASUALTY AND SURETY COMPANY, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. EDWARD J. EGAN, Judge, presiding.

MR. JUSTICE HALLETT DELIVERED THE OPINION OF THE COURT:

This is an appeal from a summary judgment entered in a declaratory judgment action for the plaintiff architects against their public liability insurer, holding, in substance, that it should have assumed their defense in a Structural Work Act suit filed against a hospital, its general contractor and them by a worker who fell from a scaffold when a plank gave way.

On November 11, 1968, Aetna issued to Perkins and Will a Public Liability insurance policy which included by endorsement, the following exclusion:

"EXCLUSION

`(ENGINEERS, ARCHITECTS OR SURVEYORS PROFESSIONAL LIABILITY)

`IT IS AGREED THAT THE INSURANCE DOES NOT APPLY TO BODILY INJURY OR PROPERTY DAMAGE ARISING OUT OF ANY PROFESSIONAL SERVICES PERFORMED BY OR FOR THE NAMED INSURED, INCLUDING

`(1) THE PREPARATION OR APPROVAL OF MAPS, PLANS, OPINIONS, REPORTS, SURVEYS, DESIGNS OR SPECIFICATIONS AND

`(2) SUPERVISORY, INSPECTION OR ENGINEERING SERVICES."

On April 20, 1969, Perkins and Will also took out a Professional Liability insurance policy from another (CNA) insurer, the coverage being stated as follows:

"The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages if legal liability arises out of the performance of professional services for others in the insured's capacity as an architect or an engineer and if such legal liability is caused by an error, omission or negligent act."

On June 20, 1964, Perkins and Will entered into a contract with the Silver Cross Hospital for professional services in connection with additions and alterations to that hospital. John Wagner, an ironworker employed by a subcontractor, claims to have been injured on September 29, 1969, while working on that job and on January 22, 1970, filed a Structural Work Act suit against the hospital, the general contractor, S.N. Nielsen & Company, and the architects, Perkins and Will.

Said complaint, inter alia, alleged:

"2. That on September 29, 1969, the defendants, SILVER CROSS HOSPITAL, E. TODD WHEELER AND THE PERKINS & WILL PARTNERSHIP, AND S.N. NIELSEN & COMPANY, A Corporation, and each of them, were entities simultaneously and concurrently in charge of the erection and construction of the aforesaid building or other structure located on the premises of the Silver Cross Hospital, located at 500 Walnut, in said city, county and state.

3. That on September 29, 1969, and prior thereto, the plaintiff, and other construction workers, were required to work upon certain scaffolding which was then and there being used in the erection and construction of the said building or other structure.

4. That on the above date, and prior thereto, the aforementioned scaffold was erected, controlled and placed in a manner which was not safe, suitable and proper for the protection of working men working on or about the same.

5. On the above date, the plaintiff, in the course of his employment, was upon the aforementioned scaffold and fell therefrom when a plank broke or gave way by virtue of the faulty erection, operation and placing of said scaffold."

On January 27, 1970, Perkins and Will forwarded a copy of the Wagner complaint and summons to Aetna with an accompanying letter demanding that it defend them. A copy of this was sent to CNA that same day with an accompanying letter advising that the architects had asked Aetna to assume their defense but stating that, if Aetna declined, they would expect CNA to defend and hold them harmless under the said Professional Liability policy.

On February 4, 1970, Aetna wrote Perkins and Will, taking the position that the allegations of the complaint were not covered under the Public Liability policy and were expressly excluded under the endorsement above quoted. It suggested that the complaint be forwarded to their Professional Liability carrier.

CNA then engaged Tom Yates and Fred Goff to defend the said Wagner suit, which they are doing and said action is still pending in the circuit court.

On July 27, 1971, the instant declaratory judgment action was filed by said attorneys Yates and Goff in the names of the architects, with CNA paying their fees. After the filing of various pleadings, motions and affidavits and the taking of a deposition of William Hurley, house counsel for Perkins and Will, both parties moved for summary judgment, which was entered in favor of the plaintiff architects and against the defendant Aetna. In said summary judgment order the trial judge took the position, inter alia, that:

"paragraph 4 means, to me, that each defendant `erected, controlled and placed in a manner which was not safe, suitable and proper' a scaffold,"

and therefore that:

"the complaint stated a cause of action potentially covered by Aetna breached by refusing to defend and is now estopped to deny coverage."

This appeal followed.

• 1 As the plaintiff points out, there is a line of cases in Illinois which holds generally that an insurer is bound to defend its insured when the allegations of the injury complaint bring the claim potentially within the coverage of the policy; or, in other words, the injury complaint must show on its face that there is no coverage before an insurance carrier can safely refuse to defend. Three cases, Sims v. Illinois Nat. Casualty Co. Of Springfield, 43 Ill. App.2d 184, 193 N.E.2d 123 (3d Dist. 1963), McFadyen v. North River Insurance Co., 62 Ill. App.2d 164, 209 N.E.2d 833 (2d Dist. 1965), and Palmer v. Sunberg, 71 Ill. App.2d 22, 217 N.E.2d 463 (3d Dist. 1966), are cited. All arose where the insured, whom the company involved had refused to defend, had suffered a judgment. In the first (Sims), the injury complaint alleged that plaintiff was injured while riding as a passenger in a truck owned and operated by Sims. The insurer refused to defend on the ground that plaintiff was the defendant's employee in the course of his employment at the time and was thus excluded under a Workmen's Compensation exclusion. In the second (McFadyen), the insurer refused to defend on the ground that the automobile being driven at the time of the accident was not an "owned" automobile and was hence excluded; and in the third (Palmer), a minor bitten by a dog, sued the owner thereof under a Home Owner's policy and the company refused to defend on the ground that the premises were being used for business and not residential purposes and were thus excluded. These are representative of the cases generally.

Assuming for the present that the general statements above set out correctly state the Illinois law (there are certain limitations and exceptions, particularly when the allegations collide with what the court judicially knows, which will be referred to later on), let us put ourselves in the places of the claim supervision for the defendant Aetna and of the trial court as we read the complaint in this case against the two policies involved.

As set out in the above factual resume, the plaintiff architects had entered into a contract with the Silver Cross Hospital for professional services in connection with additions and alterations to that hospital. In January, 1970, John Wagner, an ironworker employed by a subcontractor filed a Structural Work Act suit against said hospital, the general contractor, S.N. Nielsen & Company, and the plaintiff architects; and copies of said complaint, with covering letters were sent to Aetna, the Public Liability carrier and to CNA, the Professional Liability carrier.

Insofar as is here pertinent the Structural Work Act complaint alleged:

"2. That on September 29, 1969, the defendants, SILVER CROSS HOSPITAL, E. TODD WHEELER AND THE PERKINS & WILL PARTNERSHIP, AND S.N. NIELSEN & COMPANY, A Corporation, and each of them, were entities simultaneously and concurrently in charge of the erection and construction of the aforesaid building or other structure located on the premises of the Silver Cross Hospital, located at 500 Walnut, in said city, county and state.

3. That on September 29, 1969, and prior thereto, the plaintiff, and other construction workers, were required to work upon certain scaffolding which was then and there being used in the erection and construction of the said building or other structure.

4. That on the above date, and prior thereto, the aforementioned scaffold was erected, controlled and placed in a manner which was not safe, suitable and proper for the protection of working men working on or about the same.

5. On the above date, the plaintiff, in the course of his employment, was upon the aforementioned scaffold and fell therefrom when a plank broke or gave way by virtue of the faulty erection, operation and placing of said scaffold."

• 2 It would appear to us to be clear that paragraph 2, if it alleges anything against these architects, alleges liability arising only out of their "(1) Preparation or approval of Maps, Plans, Opinions, Reports, Surveys, Designs or Specifications", or "(2) Supervisory, Inspection or Engineering Services" and which was expressly excluded from the coverage afforded by the Aetna Public Liability policy and fell precisely within the coverage of the CNA Professional Liability policy which provided that:

"The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages if legal liability arises out of the performance of professional services for others in the insured's capacity as an architect or an engineer and if ...


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