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01/21/87 United States Fidelity and v. State Farm Mutual

January 21, 1987

UNITED STATES FIDELITY AND GUARANTY COMPANY, PLAINTIFF-APPELLEE

v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY ET AL., DEFENDANTS-APPELLEES



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

504 N.E.2d 123, 152 Ill. App. 3d 46, 105 Ill. Dec. 254 1987.IL.40

Appeal from the Circuit Court of Cook County; the Hon. James C. Murray, Judge, presiding.

APPELLATE Judges:

JUSTICE RIZZI delivered the opinion of the court. WHITE and FREEMAN, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE RIZZI

This is an appeal from a declaratory judgment action. The trial court entered a judgment declaring that an insurance policy issued by plaintiff, United States Fidelity and Guaranty Company , to defendant Laura B. Hargis, individually and d/b/a Happyland Day Care Center, provided coverage for injuries sustained by Corneshia Barron, a child who fell from a station wagon owned by Happyland. In the judgment, the trial court also granted motions to dismiss filed by defendants Hargis, Barron and the driver of the station wagon, Patricia Peterson. We affirm.

The pertinent facts are stated in an earlier opinion of this court, United States Fidelity & Guaranty Co. v. State Farm Mutual Automobile Insurance Co. (1982), 107 Ill. App. 3d 190, 437 N.E.2d 663. Briefly, Hargis is the owner and operator of Happyland, the day-care center attended by Barron. Peterson, an employee of Happyland, was using a station wagon owned by Happyland to transport children from Happyland to a dance class. Barron was injured while en route to the dance class when a passenger door opened and she fell from the station wagon. At the time, there were 8 to 10 children in the station wagon. Peterson was the only adult in the vehicle. As a result of the occurrence, Barron is a quadriparetic, with impaired sight and severely limited speech.

In the underlying personal injury lawsuit, it is alleged in one count of the complaint that a proximate cause of Barron's injuries was a failure to provide sufficient and adequate supervision of the children. In a separate count, it is alleged that a proximate cause of Barron's injuries was a failure to operate and maintain the station wagon properly. Only general verdict forms were submitted to the jury. The jury returned a verdict of $2,355,787 in favor of Barron and against Hargis, individually and d/b/a Happyland Day Care Center, and Peterson.

At the time of the occurrence, State Farm Mutual Insurance Company had in effect an automobile liability insurance policy relating to the station wagon, wherein Hargis and Happyland were the named insureds. Government Employees Insurance Company had in effect an automobile liability insurance policy wherein Peterson was the named insured. USF&G had in effect a "Special Multi-Peril Insurance Policy" which it had issued to Laura B. Hargis, individually and d/b/a Happyland Day Care Center. The USF&G policy has the highest policy limits of the three insurance policies. Both State Farm and GEICO have settled claims made against them as a result of the personal injury lawsuit. USF&G denies that its policy covers the occurrence, but it assumed the defense of its insureds, under a reservation of rights, in the personal injury lawsuit.

There is no dispute that the USF&G policy offers coverage for liability resulting from injuries proximately caused by a failure to provide sufficient and adequate supervision of the children. However, USF&G denies that its policy offers coverage because it contains an exclusion clause, which states:

"This insurance does not apply

(b) to bodily injury arising out of the ownership, maintenance, operation [or] use of

(1) any automobile . . . owned or operated by . . . any insured, or

(2) any other automobile . . . operated by any person in the course of his ...


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