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Tapp v. Wrightsman-musso Insur. Agency

OPINION FILED OCTOBER 13, 1982.

GENE T. TAPP ET AL., PLAINTIFFS-APPELLANTS,

v.

WRIGHTSMAN-MUSSO INSURANCE AGENCY ET AL., DEFENDANTS. — (AETNA CASUALTY AND SURETY COMPANY OF ILLINOIS, DEFENDANT-APPELLEE.)



Appeal from the Circuit Court of Sangamon County; the Hon. Simon L. Friedman, Judge, presiding.

JUSTICE TRAPP DELIVERED THE OPINION OF THE COURT:

The trial court entered a judgment on the pleadings finding that Aetna Casualty and Surety Company had no duty to defend the insured Greff and Dodson in plaintiffs' action. Plaintiffs, as assignees of the rights and claims of Greff under a policy issued by Aetna, appeal.

Plaintiffs filed a complaint against Kenneth Greff, Donald D. Dodson and others on September 8, 1980. Counts VII and VIII of this complaint were the only counts against Greff and Dodson. A contract for the sale of a building by defendant, Kamar, to defendants, Greff and Dodson, as partners, was attached to the complaint as an exhibit. Subsequently, plaintiffs filed count XIII of their fourth amended complaint against defendant, Aetna. This count alleged that Aetna insured certain property of defendants, Greff and Dodson, by a policy which was in effect on September 30, 1978.

On September 30, 1978, Greff began dismantling the building, then located at the Farm Progress Show near Taylorville, Illinois, for relocation of the building as a storage facility in Virden, Illinois. During this dismantling operation, plaintiff, Gene Tapp, who voluntarily assisted Greff and Dodson, was injured. The complaint also alleged damages to Margie Tapp. The initial complaint against Greff was referred to defendant, Aetna, as a tender of defense. Defendant Aetna informed Greff it would not defend him.

It was alleged that a default judgment was entered against Greff on December 29, 1980. On February 27, 1981, Greff executed a document whereby he assigned to the plaintiffs all of his right, title, and interest in his policy with Aetna and all claims, demands, and causes of action arising out of the injuries sustained by plaintiffs. Plaintiffs, as assignees of the insurance policy, alleged that Aetna was obligated to provide a defense to defendant Greff on the initial complaint, and defendant denies this duty. Therefore, there was an actual controversy between the parties, and plaintiffs prayed for a declaration of rights under the policy, and a finding that defendant Aetna was liable for $300,000 and expenses.

On August 27, 1981, Aetna filed a motion to dismiss under sections 45(1) and 48(1) of the Civil Practice Act (Ill. Rev. Stat. 1979, ch. 110, pars. 45(1) and 48(1)). Attached as exhibit A was the initial complaint against Greff and Dodson.

On October 30, 1981, the court granted the motion in favor of Aetna. It further stated that although there were multiple parties involved in the case, the claim for relief could proceed without all parties being present and there was no just reason for delaying enforcement or appeal of the order.

In plaintiffs' count XIII of the fourth amended complaint, plaintiffs contend defendant was obligated to provide a defense to defendant Greff because the policy provides:

"* * * the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent * * *."

• 1-3 The general law in cases such as this is well defined. If the complaint reveals a potential for coverage by the policy, but the insurer believes that it has a valid exclusionary coverage defense, then the insurer must either (1) secure a declaratory judgment of its rights while defending the potential insured under a reservation of rights, (2) defend the potential insured under a reservation of rights and adjudicate its coverage in a supplemental suit, or (3) defend without a reservation of right. (Aetna Casualty & Surety Co. v. Coronet Insurance Co. (1976), 44 Ill. App.3d 744, 358 N.E.2d 914.) The insurer is obliged to defend where the complaint alleges a state of facts within the coverage of the policy, even if there is only potentially a case under the complaint within the coverage of the policy. (Sims v. Illinois National Casualty Co. (1963), 43 Ill. App.2d 184, 193 N.E.2d 123.) The complaint must be liberally construed and all doubts as to coverage must be resolved in favor of the insured. La Rotunda v. Royal Globe Insurance Co. (1980), 87 Ill. App.3d 446, 408 N.E.2d 928.

The opinion in Thornton v. Paul (1978), 74 Ill.2d 132, 144-45, 384 N.E.2d 335, 340, states:

"When the insurer wrongfully refuses to defend a complaint which alleges facts within coverage, it is liable to the insured for breach of contract. [Citation.] The measure of damages for such a breach is generally the amount of the judgment against the insured or of a reasonable settlement, plus any expenses incurred."

Where the company has already breached a contract by failing to defend where the facts alleged reveal potential coverage, the insurer no longer has any right to insist that the insured be bound by the exclusion provisions. Sims.

In Christensen v. Wick Building Systems, Inc. (1978), 64 Ill. App.3d 908, 912, 381 N.E.2d ...


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