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Home Ins. Co. v. Lorelei Restaurant Co.

OPINION FILED APRIL 28, 1980.

THE HOME INSURANCE COMPANY, INC., PLAINTIFF-APPELLEE,

v.

LORELEI RESTAURANT COMPANY, INC., ET AL., DEFENDANTS-APPELLEES. — (UNDERWRITERS AT LLOYD'S OF LONDON ET AL., INTERVENING PETITIONERS-APPELLANTS.) — VELVET TRUNK, INC., A/K/A SABRINA BOUTIQUE, INC., PLAINTIFF-APPELLEE,

v.

LORELEI RESTAURANT COMPANY, INC., ET AL., DEFENDANTS-APPELLEES. — (UNDERWRITERS AT LLOYD'S OF LONDON ET AL., INTERVENING PETITIONERS-APPELLANTS.)



APPEAL from the Circuit Court of Cook County; the Hon. LOUIS GILIBERTO, Judge, presiding.

MR. PRESIDING JUSTICE GOLDBERG DELIVERED THE OPINION OF THE COURT:

In case 79-1379, The Home Insurance Company, Inc. (Home), as subrogee for Central National Bank of Chicago (Central), brought suit against Lorelei Restaurant Company, Inc. (Lorelei), Nicholas Karnezis, Evans Karnezis, and Napoleon Karnezis (Karnezis brothers), for property damage resulting from a fire on premises owned by Central and leased to the Karnezis brothers. In case 79-1792, Velvet Trunk, Inc. (Velvet Trunk), lessee of adjoining premises, brought suit against Lorelei and the Karnezis brothers for property damage arising out of the same fire.

Lorelei's insurers, Underwriters at Lloyd's of London (Lloyd's), and First State Insurance Company (First State) (collectively intervenors), filed petitions for leave to intervene in both cases. The issues are identical in each instance. The petitions for intervention were denied. Intervenors appealed from both orders. We have consolidated the appeals.

In this court intervenors contend their interests are not adequately represented by Lorelei, their insured, since the intervenors may be bound by an order or judgment entered against Lorelei. They also urge it would not be reasonable to compel them to rely upon Lorelei or Home for proper representation of their interests.

Home's suit against Lorelei and the Karnezis brothers sought recovery for payment Home made to Central, its subrogee and the owner of the premises. The complaint alleged that Lorelei and the Karnezis brothers were in possession, maintenance, and control of the premises at the time of the fire and they had a duty to control, possess, and maintain the premises in such a manner so as not to cause damage to the property. The complaint alleged negligence, res ipsa loquitur, willful and wanton acts, and intentional acts as alternate theories.

By their answer Lorelei and Evans Karnezis admitted they were in possession of the premises and had a duty to maintain them so as not to cause damage or destruction. Nicholas and Napoleon Karnezis denied their possession and the existence of such a duty.

The petition for leave to intervene incorporated by reference a separate motion for summary judgment on behalf of Lorelei. The motion averred the premises were leased to the Karnezis brothers individually, and the lease prohibited transfer of control from the Karnezis brothers. Since Lorelei, the insured, was not a party to the lease, it could not be in possession, and thus Lorelei would not be liable to Home. These contentions contradict the answer of Lorelei and Evans Karnezis.

The petition for leave to intervene alleged that Lloyd's and First State had refused to defend Lorelei in the present action. It further stated that in a case pending before the United States District Court, Lorelei had sued the intervenors on the policy to recover for the damage arising from the same fire. In that action the intervenors contended they were not liable because the Karnezis brothers had set the fire and acts of arson were not covered by the policy. In addition, intervenors alleged they could not reasonably rely upon Lorelei for adequate representation of their interests.

The facts and contentions of case 79-1792 involving Velvet Trunk are similar and need not be elaborated. Velvet Trunk was in the same building as Lorelei. It shared its roof and front and rear walls with Lorelei. The complaint of Velvet Trunk against defendants alleged the fire resulted alternatively from the negligent acts, willful, wanton, and reckless acts, or intentional acts of the defendants. The complaint also alleged the Karnezis brothers, all or one or more, owned, operated, and maintained Lorelei. This was denied in the answer. The intervenors incorporated in their petition a separate motion for summary judgment. The allegations thereof are essentially similar to those in the companion case.

The right of intervention in Illinois courts> is governed by section 26.1 of the Civil Practice Act (Ill. Rev. Stat. 1977, ch. 110, par. 26.1.) This statute provides for intervention as a matter of right where specifically permitted by statute and also (par. 26.1(1)(b)) "when the representation of the applicant's interest by existing parties is or may be inadequate and the applicant will or may be bound by an order or judgment in the action * * *."

• 1 Leave to intervene may be allowed by the trial court as a matter of discretion where a statute confers a conditional right or (par. 26.1(2)(b)) "when an applicant's claim or defense and the main action have a question of law or fact in common."

In University Square, Ltd. v. City of Chicago (1979), 73 Ill. App.3d 872, 877-78, 392 N.E.2d 136, we find these principles expressed:

(1) Section 26.1 is to be liberally construed.

(2) Where intervention is discretionary, the ruling by the trial court "will not be disturbed absent a ...


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