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Louis Marsch, Inc. v. Pekin Insurance Co.

OPINION FILED JULY 1, 1985.

LOUIS MARSCH, INC., PLAINTIFF-APPELLEE,

v.

PEKIN INSURANCE COMPANY ET AL., DEFENDANTS-APPELLEES (AETNA LIFE & CASUALTY INSURANCE COMPANY, DEFENDANT-APPELLANT).



Appeal from the Circuit Court of Christian County; the Hon. Dennis Huber, Judge, presiding.

JUSTICE WELCH DELIVERED THE OPINION OF THE COURT:

This action arises out of a personal injury action. In the personal injury action, Thomas Chizmar, a minor, by his father and next friend of the same name, filed his complaint for damages against the city of Virden, Stephen Clark, and Clark's employer, Louis Marsch, Inc. (Marsch), alleging that the minor was injured by a dump truck driven by Clark and owned by Marsch during road work for the city of Virden. Marsch commenced the instant action in the circuit court of Christian County seeking a declaratory judgment that Pekin Insurance Company (Pekin) and Aetna Life & Casualty Insurance Company (Aetna) were obligated to provide coverage and a defense to Marsch for any claim for damages as a result of injuries sustained by the minor Chizmar. The trial court concluded that Pekin and Aetna had a duty to defend and provide coverage as to various theories of liability asserted by Chizmar. Aetna appeals. There is no cross-appeal.

Chizmar's seven-count complaint in Macoupin County case No. 80-L-41 alleges that Clark was driving the dump truck in reverse when he ran over the minor Chizmar, who had been riding a motorbike. Count I alleges that Clark was negligent in his operation of the truck and seeks compensatory damages against Clark. Count II alleges that Clark was Marsch's agent and seeks compensatory damages against Marsch under the theory of respondeat superior. Count III alleges that Marsch and clark were agents of the city of Virden and seeks compensatory damages against the city of Virden. Count IV alleges that Clark's actions or omissions were wilful and wanton and seeks compensatory and punitive damages against Clark. Count V alleges that Marsch wilfully and knowingly violated the provisions of "[a]n Act to protect workers and the general public * * * during construction or repair of bridges and highways * * *" (Ill. Rev. Stat. 1983, ch. 121, par. 314.1 et seq. (the Road Construction Injuries Act)) and seeks compensatory and punitive damages against Marsch. Count VI alleges Clark's wilful and knowing violation of the same act and seeks compensatory and punitive damages against Clark. Count VII alleges Marsch's failure to exercise ordinary care in the hiring and training of Clark and seeks punitive damages against Marsch.

Marsch commenced the instant action for declaratory judgment that Pekin and Aetna each owed Marsch liability coverage and a defense in case No. 80-L-41. The policy of insurance issued by Pekin to Marsch is an automobile insurance policy. The policy of insurance issued by Aetna to Marsch is entitled "Comprehensive General Liability Policy." It provides coverage for Marsch's business as a "Road Oil Cont. Hauler" and states an exclusion for "bodily injury * * * arising out of the ownership, maintenance, operation, use, loading or unloading of (1) any automobile * * * owned or operated by or rented or loaned to any insured, or (2) any other automobile * * * operated by any person in the course of his employment by any insured." "Automobile" is defined in the Aetna policy as including any "land motor vehicle."

The circuit court of Christian County determined that Pekin should be required to cover and defend Marsch as to counts I, II, IV, and VI, that Aetna should be required to cover and defend Marsch as to count V and defend as to count VII, and that neither Pekin nor Aetna owed coverage as to punitive damages. Aetna appeals, contending that the court erred in determining that Aetna owed any coverage or defense based on case No. 80-L-41.

Aetna contends that the automobile exclusion provision in the Aetna policy renders the Aetna policy inapplicable to counts V and VII of case No. 80-L-41, since, regardless of the theory of recovery asserted in those counts, Chizmar's injuries arose out of the operation of an "automobile" owned by the insured. Marsch and Pekin argue that what controls Aetna's duty to cover and defend is not the manner of the injury, but rather the theories of liability alleged by Chizmar, i.e. violation of the Road Construction Injuries Act (count V) and Chizmar's negligent hiring theory (count VII). Marsch and Pekin also contend that Aetna is estopped from asserting policy defense for failing to file an action for a declaratory judgment as to the extent of its duty to cover or defend.

Aetna argues that estoppel cannot be raised by Marsch on appeal because it was not raised at any time in the trial court. This court has so concluded, based upon the principle that an issue not presented to or considered by the trial court is waived, in Ayres v. Bituminous Insurance Co. (1981), 100 Ill. App.3d 33, 36, 424 N.E.2d 1316, 1318. However, in Ayres, the issue of estoppel was raised on review by the appellant, the insured, in his appeal from a declaratory judgment in favor of the insurer. It is well established that although an appellant waives a point not raised in the trial court, an appellee may urge any point in support of the judgment on appeal even though it was not ruled on in the trial court, as long as it finds support in the record. (Ingram v. License Appeal Com. (1971), 131 Ill. App.2d 218, 220, 268 N.E.2d 469, 470; Shaw v. Lorenz (1969), 42 Ill.2d 246, 248, 246 N.E.2d 285, 287.) It has been held that matters such as estoppel which must be affirmatively pleaded are waived when not placed in issue at trial. (Rodenkirk v. State Farm Mutual Automobile Insurance Co. (1945), 325 Ill. App. 421, 440, 60 N.E.2d 269, 277; Bass v. Illinois Fair Plan Association (1981), 98 Ill. App.3d 549, 553, 424 N.E.2d 908, 911; Collins v. Collins (1958), 14 Ill.2d 178, 184, 151 N.E.2d 813, 816.) However, this requirement originates in section 2-613(d) of the Code of Civil Procedure (see Rodenkirk v. State Farm Mutual Automobile Insurance Co. (1945), 325 Ill. App. 421, 440, 60 N.E.2d 269, 277) which requires that the facts constituting an affirmative defense such as estoppel be plainly set forth in the answer or reply to the "complaint, counterclaim, or third-party complaint." (Ill. Rev. Stat. 1983, ch. 110, par. 2-613(d).) This record includes no counterclaim or third-party complaint by Aetna. No responsive pleading to Aetna's answer to Marsch's complaint appears, nor was any such responsive pleading appropriate. (See Ill. Rev. Stat. 1983, ch. 110, par. 2-602.) Accordingly, Marsch need not have pleaded estoppel in response to Aetna's answer. Further, Marsch need not have raised the issue of estoppel in its complaint; such would merely have negatived a potential defense. See Cunningham v. City of Sullivan (1958), 15 Ill. App.2d 561, 567, 147 N.E.2d 200, 204; Ill. Ann. Stat., ch. 110, par. 2-613, Historical and Practice Notes, at 354 (Smith-Hurd 1983).

• 1 In summary, Marsch has not waived the issue of estoppel for purposes of this appeal. However, Marsch's contention that Aetna is estopped from raising policy defenses is not well taken. A comparison of two recent opinions of this court is helpful. In Ayres v. Bituminous Insurance Co. (1981), 100 Ill. App.3d 33, 424 N.E.2d 1316, the insured brought a declaratory judgment action against the insurer, seeking a determination that he should be afforded coverage with respect to a personal injury action filed against him which the insurer had refused to defend. In both its answer and a third-party complaint directed against the plaintiff in the personal injury action, the insurer sought the issuance of a favorable declaratory judgment. The insured argued that the insurer was estopped from claiming noncoverage under the insurance policy by the insurer's refusal to defend. Disagreeing, this court concluded that the insurer had discharged its duty to either seek a determination of its rights under the policy or defend under a reservation of rights. As the insurer had sought a determination of its rights in the declaratory judgment action, the court found no significance in the fact that the insured commenced the action: "It is the fact of the proceeding itself, and not the identity of the party initiating the proceeding, that is of legal import." 100 Ill. App.3d 33, 35 n. 1, 424 N.E.2d 1316, 1318 n. 1.

In County of Massac v. United States Fidelity & Guaranty Co. (1983), 113 Ill. App.3d 35, 446 N.E.2d 584, this court reached what on cursory inspection appears to be a contrary result. In Massac, as in Ayres, the insurer refused to defend upon a personal injury action against the insured. The insured then sought a declaratory judgment that the policy of insurance provided coverage for the personal injury action. From a judgment partially in favor of the insurer, the insured appealed, contending inter alia that the insurer was estopped from raising policy defenses. The insurer maintained that its duty to seek a determination of its rights was discharged when the insured filed the declaratory judgment action. This court disagreed:

"In the case at bar, USF&G [the insurer] never indicated to the trial court that it desired a determination of rights under the policy. Its answer to the county's declaratory judgment complaint sought only a dismissal of the county's action. Unlike the insurer in Ayres, USF&G thus remained immobile after refusing to defend the county, and, in fact, even contested the county's efforts to determine the rights and obligations of the parties to the policy. It is the duty of an insurer to secure a declaratory judgment determination of its obligations and rights under the policy (Country Mutual Insurance Co. v. Murray (1968), 97 Ill. App.2d 61, 73, 239 N.E.2d 498, 505), not to take action to prevent such a conclusive and binding determination from being obtained. * * *" (Emphasis in original.) (113 Ill. App.3d 34, 40-41, 446 N.E.2d 584, 588.)

In the instant case, it was the insured who commenced the action for declaratory judgment. Aetna, in its answer to Marsch's initial complaint, requested dismissal on the ground that it "denies that said policy of insurance provides coverage to the plaintiff herein." Aetna thereafter consistently argued that in light of policy defenses and exclusions it had no duty to cover or defend. Thus, unlike the insurer in Massac, Aetna has not attempted to prevent a conclusive and binding determination on the merits of the parties' rights and obligations under the policy, but has participated fully in contesting the merits of the issues raised. We cannot conclude that Aetna is estopped from raising the very policy defenses it has consistently attempted to raise and have decided in its favor during this declaratory judgment action.

• 2 We now consider whether Aetna had a duty to defend as to the negligent-hiring (count VII), despite the automobile exclusion in the Aetna policy. Comparison of two Illinois cases relied on by the parties is helpful. Each involves a declaratory judgment action by an insurer seeking to determine the extent of its duty under a policy of insurance to cover or defend as to a third party's personal injury complaint. Each policy included an automobile exclusion essentially the same as the one in the instant Aetna policy.

In United States Fidelity & Guaranty Co. v. State Farm Mutual Automobile Insurance Co. (1982), 107 Ill. App.3d 190, 437 N.E.2d 663, the underlying complaint alleged that a child had fallen from a vehicle operated by an employee of the insured, a day-care center, while the employee was transporting children to dance classes. The underlying complaint included allegations not related to the operation or use of an automobile, e.g., negligent operation of the day-care center and negligent supervision of the children. The appellate court concluded that these theories of recovery were potentially within the coverage of the policy:

"These alleged acts are separate and distinct from any allegations relating to the negligent operation of the automobile. If it is ultimately determined that the insureds are guilty of these acts, USF&G could be liable under the policy. In other words, if the liability of an insured arises from negligent acts which constitute non-auto-related conduct, the policy should be applicable regardless of the automobile exclusion or the fact that an automobile was involved in the occurrence. If an occurrence is caused by a risk included within the policy, coverage is not ...


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