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02/03/88 Counterplaintiff and Third v. Underwriters Insurance

February 3, 1988

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION INTERNATIONAL AMPHITHEATRE COMPANY, PLAINTIFF

v.

VANGUARD UNDERWRITERS INSURANCE COMPANY, DEFENDANT AND COUNTERPLAINTIFF AND THIRD-PARTY PLAINTIFF-APPELLANT (DAVID



Cox, Intervening Petitioner and Counterdefendant-Appellee;

Al-Par, Inc. et al., Defendants; Denise Morales et al.,

Cross-Plaintiffs; Vanguard Underwriters Insurance Company

et al., Cross-Defendants; W. Russell Hummell & Company,

Inc., Third-Party Defendant)

519 N.E.2d 1015, 166 Ill. App. 3d 369, 116 Ill. Dec. 800 1988.IL.123

Appeal from the Circuit Court of Cook County; the Hon. Thomas J. O'Brien, Judge, presiding.

APPELLATE Judges:

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

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE FREEMAN

This appeal arises from the trial court's dismissal of the counterclaim of defendant/counterplaintiff, Vanguard Underwriters Insurance Company (Vanguard), which sought indemnity from intervening petitioner/counterdefendant, David Cox (Cox). Vanguard, an insurer, alleged in its counterclaim that Cox, an insurance broker, wrongfully issued a certificate of insurance to the plaintiff insured without proper authority from Vanguard.

In the original action, still pending in the circuit court of Cook County, plaintiff, International Amphitheatre Company, filed a declaratory judgment action seeking indemnification and a defense from Vanguard in several personal injury actions arising out of an incident which occurred at the International Amphitheatre on December 29, 1981. Vanguard moved to dismiss the original complaint and the cross-complaints, denying coverage under the policy and certificate of insurance. The court denied Vanguard's motions to dismiss.

Cox' motion to intervene in the matter was granted by the trial court. Vanguard then filed its counterclaim against Cox, asserting that Cox wrongfully represented himself as acting with the authority of Vanguard when he issued the subject certificate of insurance to International Amphitheatre and that the certificate of insurance issued by Cox was at variance with express provisions of the policy and failed to include sufficient reference to certain exclusions on the face of the certificate of insurance. The counterclaim also asserted that Cox actively conspired to defraud Vanguard by misrepresenting the nature of the risks it was being asked to insure and conspiring with others to improperly obtain insurance coverage from Vanguard. The counterclaim asserted that if the court ultimately found that Vanguard was obligated to defend or indemnify the International Amphitheatre, the liability of Vanguard was the result of the wrongful acts of Cox.

The trial court dismissed the counterclaim with prejudice on the ground that it failed to state a cause of action. The court stated that the counterclaim purported to sound in "non-express" indemnity, a cause of action which is no longer viable in Illinois in view of "An Act in relation to contribution among joint tortfeasors" (Ill. Rev. Stat. 1985, ch. 70, par. 301 et seq.) (the Contribution Act), which abolished actions based on implied indemnity. The trial court found that, as a matter of law, a cause of action for implied indemnity no longer exists in Illinois. The trial court relied on Heinrich v. Peabody International Corp. (1985), 139 Ill. App. 3d 289, 486 N.E.2d 1379, affirmed in part and reversed in part (1987), 117 Ill. 2d 162, 510 N.E.2d 889.

On appeal Vanguard asserts that its action for indemnity from Cox pleads a theory of liability completely apart from and unaffected by the Contribution Act. (Ill. Rev. Stat. 1985, ch. 70, par. 301 et seq.) The Contribution Act provides for allocation of responsibility "where 2 or more persons are subject to liability in tort arising out of the same injury to person or property." (Ill. Rev. Stat. 1985, ch. 70, pars. 302(a), (b).) Vanguard asserts that neither it, the insurer, nor Cox, its agent, is a tortfeasor or is alleged to be "subject to liability in tort" to plaintiff, the insured, and therefore, the Contribution Act does not apply to its counterclaim. Rather, Vanguard asserts, Cox' potential liability to Vanguard is based on the theory that an agent who acts on behalf of his principal for the purpose of entering into a contractual relationship ...


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