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06/08/88 Montgomery Ward Insurance v. Merit Insurance Company Et

June 8, 1988

MONTGOMERY WARD INSURANCE COMPANY, PLAINTIFF-APPELLEE

v.

MERIT INSURANCE COMPANY ET AL., DEFENDANTS-APPELLANTS



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

525 N.E.2d 1025, 171 Ill. App. 3d 799, 121 Ill. Dec. 718 1988.IL.890

Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.

APPELLATE Judges:

JUSTICE RIZZI delivered the opinion of the court. WHITE, P.J., and FREEMAN, J., 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 on the pleadings in favor of plaintiff Montgomery Ward Insurance Company (Montgomery Ward), declaring that an insurance policy issued by Montgomery Ward to John B. O'Connell did not provide coverage for injuries allegedly sustained by defendants in the underlying cause of action. We reverse and remand.

Briefly, the undisputed facts giving rise to this appeal are as follows. On April 23, 1983, O'Connell was the owner of an automobile insured by Montgomery Ward under a "Family Car Policy." On April 23, 1983, O'Connell drove his car to the Belmont Hotel located in Chicago, Illinois, to attend a wedding reception. Upon reaching the Belmont Hotel, O'Connell relinquished possession of his car to Andrew G. Delia, an employee of M. S. Valet, an agency utilized by the Belmont Hotel to provide parking services for guests of the hotel. M. S. Valet was insured by defendant, Merit Insurance Company (Merit), under a general-automobile liability policy. This insurance policy provided primary coverage to M. S. Valet, its agents, employees and customers for the parking services and operation conducted by M. S. Valet at the Belmont Hotel.

After O'Connell gave his vehicle to Delia for parking, Delia was involved in an accident while operating the vehicle. This collision involved a motor vehicle driven by Darrell Marcus. Mary Joy Hollingsworth was a passenger in the Marcus vehicle. Marcus' car was insured by Home Insurance Company (Home). Subsequent to this accident, Marcus, Hollingsworth and Home, as subrogee of Marcus and Hollingsworth, filed two lawsuits for personal injuries and property damage against Delia, M. S. Valet, and O'Connell, as owner of the vehicle. O'Connell is represented by Montgomery Ward, and Merit is defending Delia and M. S. Valet. Both Montgomery Ward and Merit tendered the defense of their respective insureds to each other. Each tender was denied.

Thereafter, Montgomery Ward brought a declaratory judgment action, seeking a declaration that there is no coverage to M. S. Valet and Delia under the terms of the policy it issued to its insured, O'Connell, because of an exclusion in the policy. O'Connell was not named as a party in the declaratory judgment action.

The exclusion on which Montgomery Ward relied in the declaratory judgment action provides:

"This coverage does not apply to:

(5)Bodily injury or property damage arising out of auto business operations. But, coverage does apply to the ownership, maintenance, or use of your insured car in auto business operations by you, a relative, or anyone associated with or employed by you or a relative in the business."

Following a hearing and argument of counsel, the trial court granted judgment in favor of Montgomery Ward on its motion for a judgment on the pleadings. In its judgment, the court concluded that "[the] automobile business operations exclusion contained in Montgomery Ward's policy of insurance . . . excludes all coverage under Montgomery Ward's policy for Andrew Delia and M. S. Valet . . . growing out of the collision of April 23, 1983."

On appeal, Merit contends that the "auto business operations" exclusion contained in the Montgomery Ward policy is ambiguous and does not, as a matter of law, exclude coverage for the business of parking cars. Merit concludes that Montgomery Ward had a duty to defend and indemnify Delia ...


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