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08/27/87 Shelter Mutual Insurance v. Charles L. Bailey

August 27, 1987

SHELTER MUTUAL INSURANCE COMPANY, PLAINTIFF-APPELLANT

v.

CHARLES L. BAILEY, DEFENDANT AND COUNTERCLAIMANT-APPELLEE (ROBERT L. KENILEY, DEFENDANT-APPELLEE.)



APPELLATE COURT OF ILLINOIS, FIFTH DISTRICT

513 N.E.2d 490, 160 Ill. App. 3d 146, 112 Ill. Dec. 76 1987.IL.1253

Appeal from the Circuit Court of St. Clair County; the Hon. Jan Fiss, Judge, presiding.

APPELLATE Judges:

JUSTICE KASSERMAN delivered the opinion of the court. KARNS, P.J., and LEWIS,* J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE KASSERMAN

The plaintiff, Shelter Mutual Insurance Company (Shelter), filed suit for declaratory judgment, requesting a determination as to whether it was obligated to defend and extend coverage to its named insured, Charles Bailey, one of the defendants. A motion for summary judgment was filed by the plaintiff, and a countermotion for summary judgment was filed by defendant Bailey. The defendant Charles Bailey was also the defendant in an underlying personal injury action brought by a Robert Keniley.

Hearing on the motions for summary judgment was stayed until the underlying lawsuit was resolved. Shelter's motion for summary judgment was denied. Counterclaimant Charles Bailey's motion for summary judgment was allowed. Shelter was ordered to pay the attorney fees and defense costs of defendant Charles Bailey's attorney. From that order, Shelter appeals.

The relevant facts are as follows: On August 28, 1980, Robert Keniley filed a verified complaint alleging that Charles Bailey committed the offense of battery, specifically, "battery in that the above [Charles Bailey] did knowingly, without justification cause bodily harm to Robert E. Keniley in that he struck Robert E. Keniley in the face with his fist, knocking out one of the complainant's teeth." On November 6, 1980, Charles Bailey, who was defended by attorney James Stiehl, was found guilty of the offense of battery after a bench trial. Subsequent thereto, on July 10, 1981, Robert Keniley filed a civil suit against Charles Bailey in St. Clair County. The initial complaint alleged that the defendant committed reckless acts resulting in personal injuries to the plaintiff. Shelter Mutual Insurance Company, pursuant to a reservation of rights, retained Robert Schmeider to defend its insured, who defended the underlying suit to its Conclusion. A motion to dismiss the original complaint was filed and allowed. An amended complaint, setting forth only allegations of negligence, was filed in September of 1981. From that date until August of 1985, a complaint alleging only negligence was on file against Charles Bailey. Shortly thereafter, the lawsuit was resolved.

Following the filing of the civil lawsuit, attorney Stiehl demanded that Shelter pay his attorney fees for the defense of the underlying personal injury lawsuit along with all necessary costs. Attorney Stiehl had also made this request by letter dated November 17, 1981, to attorney Robert Schmeider. Attorney Schmeider advised attorney Stiehl that inasmuch as the amended complaint did not contain any allegations of intentional tort, a conflict of interest did not exist and, therefore, Shelter was not obligated to pay his attorney fees. Shelter, by letter dated November 30, 1981, reiterated their position and indicated that they had not employed attorney Stiehl to represent the insured and would not pay his fees.

On January 27, 1982, Shelter filed its complaint for declaratory judgment setting forth, in part, that the automobile liability insurance policy issued to the defendant by Shelter provided in part the following exclusion: "Coverages A and B do not apply to: . . . (b) Bodily injury or property damage caused intentionally by or at the direction of the insured" and also provided:

"1. COVERAGE A -- Bodily Injury Liability; COVERAGE B -- Property Damage Liability -- The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of:

A. Bodily injury sustained by any person;

B. Property damage, including loss of use thereof, sustained by any person;

caused by accident . . .."

The complaint for declaratory judgment also set forth a homeowner's insurance policy issued to the defendant which provided the following exclusions:

"This policy does not apply:

1. Under Coverage E -- Personal Liability and Coverage F -- Medical Payments to Others:

(f) to bodily injury or property damage which is either expected or intended from the standpoint of the Insured."

The homeowner's policy also provided:

"Coverage E -- PERSONAL LIABILITY.

This Company agrees to pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury or property damage, to which this insurance applies, caused by an occurrence . . .."

An answer to the complaint for declaratory judgment was filed by both Charles Bailey and Robert Keniley. Charles Bailey filed an affirmative defense setting forth that he had requested the right to control the conduct of the case and that the expenses of his defense be met by the plaintiff, Shelter. Defendant Bailey also filed a counterclaim asserting, pursuant to Maryland Casualty Co. v. Peppers (1976), 64 Ill. 2d 187, 355 N.E.2d 24, ...


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