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Northbrook Property v. U.s. Fid. & Guar.

OPINION FILED NOVEMBER 25, 1986.

NORTHBROOK PROPERTY & CASUALTY INSURANCE COMPANY ET AL., PLAINTIFFS-APPELLEES,

v.

UNITED STATES FIDELITY & GUARANTY COMPANY ET AL., DEFENDANTS-APPELLANTS. — NORTHBROOK PROPERTY & CASUALTY INSURANCE COMPANY ET AL., PLAINTIFFS-APPELLEES,

v.

UNITED STATES FIDELITY & GUARANTY COMPANY ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne and the Hon. James C. Murray, Judges, presiding.

PRESIDING JUSTICE BILANDIC DELIVERED THE OPINION OF THE COURT:

The issues presented in the two actions for declaratory judgment consolidated here on appeal involve construction of language contained in insurance policies and language contained in additional-insured endorsements. In each case, Northbrook Property & Casualty Insurance Company (Northbrook) had in full force and effect a policy of insurance issued to the construction manager, Schal Associates, Inc. (Schal). In each case, the subcontractor was insured by United States Fidelity & Guaranty Company (USF&G). Each policy of insurance issued to the subcontractor was amended by an additional-insured endorsement which named the construction manager, Schal, as an additional insured. The events leading up to the filing of the declaratory judgment actions are similar.

Schal was the construction manager for the owner in the construction of a multistory office building known as 200 Madison Plaza in Chicago. All of the above-ground concrete work was subcontracted by Schal to Mid-American Concrete Construction Company (Mid-American). William Conroy (Conroy) was an employee of Mid-American and performed services at the site.

Schal also was the construction manager for the owner in the construction of a multistory office building at 200 South Wacker Drive in Chicago. A portion of the work was subcontracted by Schal to Mayfair Construction Company (Mayfair). E.W. Green (Green) was an employee of Mayfair and performed services at the site.

Both Conroy and Green sustained personal injuries while performing work for their respective employers at the jobsites. Each brought a separate underlying lawsuit against Schal, the construction manager, and others to recover for their injuries alleging violations of the Structural Work Act (Ill. Rev. Stat. 1985, ch. 48, par. 60).

Mid-American and Mayfair obtained a general liability policy from USF&G. An endorsement was added naming Schal as an "additional insured." There is no dispute that the policies were in effect on the date of the accidents and pertained to work performed at the respective jobsites. The USF&G policy provides that Schal is an additional insured "but only with respect to liability out of operations performed for [Schal] by or on behalf of [Mid-American and Mayfair]."

Schal was insured by Northbrook under a general liability policy that provides, in part, that the policy "shall apply only as excess insurance over any other valid and collectible insurance which would apply in the absence of this policy, except it shall not apply as excess over any policy written as specific excess."

Northbrook tendered the defense of Schal to USF&G in the Conroy and Green actions. USF&G refused to defend Schal on the basis that there was no coverage afforded to Schal under the additional-insured endorsement. Northbrook undertook the defense of Schal in both actions. Declaratory judgment actions by Northbrook and Schal followed.

On December 3, 1984, the trial court entered its final order in the Conroy action. It found that Schal was an additional insured under USF&G's policy and that USF&G was obligated to defend Schal in regard to the Conroy litigation. The court held that USF&G's policy was valid and collectible, and primary insurance, and that Northbrook's policy provides excess insurance to Schal. However, the court found that the costs of Schal's defense in the Conroy action was to be borne equally by USF&G and Northbrook. Finally, the court found that USF&G was estopped to raise any policy defenses for its refusal to defend Schal. USF&G appeals. Northbrook and Schal cross-appeal from that part of the judgment ordering that Northbrook must share in the costs of Schal's defense.

On July 10, 1985, the trial court entered its final order in the Green action. It found that the terms in Northbrook's policy, "valid and collectible," speak to the future insofar as the duty to indemnify is concerned and denied the motion by Northbrook and Schal for summary judgment on the issue of estoppel because it was considered premature. The court held that until the Green action was resolved, USF&G and Northbrook had a concurrent obligation to defend Schal on an equal basis. USF&G appeals from the court's finding that Schal was an additional insured under its policy and that Schal was entitled to a defense from USF&G. Northbrook and Schal appeal from the denial of their motion for summary judgment on the issue of estoppel and from the order that Northbrook had a concurrent obligation to defend Schal in the action by Green.

I

• 1 In both the Conroy and Green actions, USF&G makes the same argument that was presented by Casualty Insurance Company in the Krkjlus action. *fn1 It accepts the pronouncement of this court in Maryland Casualty Co. v. Chicago & North Western Transportation Co. (1984), 126 Ill. App.3d 150, 466 N.E.2d 1091, but urges us to follow Consolidation Coal Co. v. Liberty Mutual Insurance Co. (W.D. Pa. 1976), 406 F. Supp. 1292.

The additional-insured endorsement in the instant case is substantially the same as in Casualty Insurance Co. v. Northbrook Property & Casualty Co. (1986), 150 Ill. App.3d 472. There is no reference in the endorsement requiring the fault of the respective subcontractors, Mid-American or Mayfair. Therefore, Consolidation Coal is not applicable.

For the same reasons stated in Point I of Casualty Insurance Co. v. Northbrook Property & Casualty Co. (1986), 150 Ill. App.3d 472, 474-76, we conclude that Schal is entitled to a defense by virtue of being an additional insured under the ...


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