APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SECOND DIVISION
527 N.E.2d 950, 173 Ill. App. 3d 665, 123 Ill. Dec. 312 1988.IL.1186
Appeal from the Circuit Court of Cook County; the Hon. George M. Marovich, Judge, presiding.
JUSTICE BILANDIC delivered the opinion of the court. HARTMAN, P.J., and SCARIANO, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BILANDIC
This chancery action has, as its origin, an underlying wrongful death case in which the judgment exceeded the insurance coverage provided by the primary insurer, defendant Aetna Casualty and Insurance Company of Illinois (Aetna). The excess insurer, plaintiff Hartford Accident and Indemnity Company (Hartford), filed a complaint for declaratory relief against defendant Aetna, alleging in count I of the complaint that Hartford was not liable for post-judgment interest that accrued on the portion of the underlying judgment for which Hartford provided excess coverage.
On cross-motions for summary judgment with respect to count I of plaintiff's complaint, the trial court, on August 18, 1987, entered an order granting defendant Aetna's motion for partial summary judgment and denying plaintiff Hartford's motion for partial summary judgment. Plaintiff appeals.
The issue presented is whether the trial court properly declared plaintiff Hartford, the excess insurer, liable for its pro rata share of post-judgment interest on that portion of the underlying judgment that exceeded the primary insurance policy limits.
The material facts involving this controversy are essentially undisputed. In 1979, Helen M. Buczyna brought a wrongful death action arising out of an automobile accident against the insured, Cuomo & Son Cartage Company (Cuomo), and its employee, John Arias. Aetna provided Cuomo and Arias with primary liability insurance coverage in the amount of $1 million for the period in which decedent's death occurred. Hartford provided Cuomo and Arias with excess automobile liability insurance coverage for the same period. On April 10, 1984, the jury returned a verdict against Cuomo and Arias, assessing Buczyna's damages at $1,500,000, an amount that exhausted Aetna's primary policy limit and thereby triggered Hartford's umbrella coverage. This court affirmed the judgment on July 21, 1986.
On October 11, 1986, while a petition for leave to appeal to the Illinois Supreme Court was pending, Aetna entered into a partial settlement-partial satisfaction of judgment agreement with Buczyna. Pursuant to the agreement, Aetna paid Buczyna $1,191,667, an amount representing Aetna's policy limit plus accrued interest and minus the settlement discount. On December 23, 1986, Hartford entered into a partial satisfaction of judgment agreement with Buczyna and paid Buczyna $500,000, the amount of the judgment exceeding Aetna's policy limit but excluding the post-judgment interest that accrued thereon. Both Aetna's agreement and Hartford's agreement with Buczyna acknowledged the dispute between Aetna and Hartford as to each insurer's liability for the post-judgment interest on the $500,000 portion of the judgment in excess of Aetna's policy limit.
In January 1987, Hartford filed a complaint for declaratory judgment against Aetna and Buczyna, alleging in count I that Aetna owes Buczyna payment of post-judgment interest that has accrued on the portion of the judgment that exceeds Aetna's primary policy limit. The other counts set forth in Hartford's complaint await adjudication and are not at issue in this appeal. Aetna and Hartford both filed crossmotions for partial summary judgment with respect to count I. Each insurer contended that the other was liable for post-judgment interest on the excess portion of the underlying judgment. On August 18, 1987, the trial court, viewing the interest issue as a question of first impression, declared Hartford liable to Buczyna for the interest and entered an order of partial summary judgment in favor of Aetna and against Hartford. It is this order that forms the basis of Hartford's appeal. I
The parties agree that no reported Illinois decision has addressed the issue of an insurer's liability for post-judgment interest where the insured was provided with primary and excess coverage.
Aetna provided Cuomo with primary liability insurance coverage with a $1 million limit. Aetna's policy provided that in addition to its limit of liability, Aetna would pay "[all] interest accruing after the entry of a judgment in a suit we defend. Our duty to pay interest ends when we pay or tender our limit of liability." Substantially identical policy language was construed by the Illinois Supreme Court in River Valley Cartage Co. v. Hawkeye-Security Insurance Co. (1959), 17 Ill. 2d 242, 161 N.E.2d 101. Justice Schaefer's unanimous opinion rejected the argument that the insurer is liable only for the interest on that portion of the judgment that does not exceed its policy limits. The policy obligated the carrier to pay "'all interest accruing after entry of judgment until the company has paid, tendered or deposited in court such part of the judgment as does not exceed the limit of the company's liability thereon.'" (17 Ill. 2d at 244.) Even if the policy could be read to limit the insurer's interest liability to that part of the judgment for which it was responsible, the court said, the policy's ambiguity would have to be construed against the insurer. More importantly, the court found that the policy was unambiguous in obligating the insurer to pay all interest on the judgment.
"The phrase referring to interest uses the term 'judgment' without qualification while in the same clause the phrase limiting the duration of the liability for interest refers to 'such part of the judgment as does not exceed the limit of the company's liability thereon.' Obviously the insurer knew how to qualify the term ...