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02/18/88 Charles H. Eichelkraut and v. Bituminous Casualty

February 18, 1988

CHARLES H. EICHELKRAUT AND SONS, INC., INDI

v.

AND ON BEHALF OF WAUSAU INSURANCE COMPANY, ET AL., PLAINTIFFS-APPELLANTS,

v.

BITUMINOUS CASUALTY CORPORATION, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

519 N.E.2d 1180, 166 Ill. App. 3d 550, 117 Ill. Dec. 13 1988.IL.224

Appeal from the Circuit Court of Cook County; the Hon. Benjamin Mackoff, Judge, presiding.

APPELLATE Judges:

JUSTICE LINN delivered the opinion of the court. JIGANTI, P.J., and McMORROW, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LINN

Plaintiffs, Eichelkraut and Sons, Inc., Wausau Insurance Company, and Liberty Mutual Insurance Company (plaintiffs), filed suit against Bituminous Casualty Corp., alleging that Bituminous breached its duty to defend its insured, Eichelkraut, in a lawsuit brought by a school district in Ottawa, Illinois. The school district sued Eichelkraut as the general contractor for the construction of a junior high school, alleging faulty construction. Eichelkraut, Wausau, and Liberty Mutual defended and settled that lawsuit. They then filed a declaratory judgment action in the trial court seeking damages representing the attorney fees and expenses incurred in the defense of the suit.

The parties filed cross-motions for summary judgment. After a hearing, the court denied plaintiffs' motion and granted Bituminous' motion, finding that Bituminous had no duty to defend Eichelkraut because there was no coverage under the pertinent policy.

On appeal, plaintiffs contend that the trial court erred because their complaint alleged sufficient factual allegations of property damage during the period in which Bituminous' policy was in effect to establish a duty to defend, and, having wrongfully refused to defend initially, Bituminous is now estopped from denying coverage.

Background

In September of 1968 the school directors of School District No. 141 engaged Eichelkraut to construct Shepard Junior High School in Ottawa, Illinois. The work was completed in September of 1969.

From the beginning of construction in 1968 to April 3, 1970, Liberty Mutual insured Eichelkraut. From April 3, 1970, through April 3, 1973, Wausau provided coverage. Bituminous provided comprehensive general liability insurance from April 1, 1973, through April 1 of 1978.

The school district filed a 19-count complaint against Eichelkraut, the architect, engineer, and additional contractors. Eichelkraut was served with summons in January 1978. Only four of the counts of the complaint were directed against Eichelkraut: these were breach of contract, breach of a guarantee contained in the contract, negligence, and breach of warranty.

The factual allegations set out various defects and inadequacies in the construction, installation, and selection of the roof of the school. As a result, it was alleged, the roof had leaked in approximately 120 places. Some leaks had begun upon the completion of the construction and continued to the present. The complaint further averred that the school district "has and will sustain damage to other parts of the building by reason of water leakage."

Eichelkraut tendered its defense to Liberty Mutual, Wausau, and Bituminous, the three companies which had provided coverage at various times from the beginning of construction to the filing of the suit. Liberty Mutual and Wausau jointly provided Eichelkraut a defense under their reservations of rights. Bituminous, however, denied coverage and declined to defend, citing certain provisions of its policy. After Eichelkraut tendered the defense to Bituminous a second time, Bituminous requested more information, ...


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