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09/27/89 Hartford Accident & v. Aetna Insurance Company

September 27, 1989

HARTFORD ACCIDENT & INDEMNITY COMPANY, APPELLEE

v.

AETNA INSURANCE COMPANY, APPELLANT



SUPREME COURT OF ILLINOIS

547 N.E.2d 114, 132 Ill. 2d 79, 138 Ill. Dec. 145 1989.IL.1499

Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. George M. Marovich, Judge, presiding.

APPELLATE Judges:

JUSTICE CALVO delivered the opinion of the court.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE CALVO

The instant action stems from an underlying wrongful death case in which the $1.5 million judgment exceeded the insurance coverage provided by the primary insurer, defendant, Aetna Casualty and Insurance Company (Aetna). The excess insurer, plaintiff, Hartford Accident and Indemnity Company (Hartford), filed a complaint for declaratory relief and damages in January of 1987, seeking, in count I, a determination that Hartford was not liable for post-judgment interest that accrued on the portion of the underlying judgment for which Hartford provided excess coverage, and seeking, in counts II and III, a finding that Aetna breached a duty to Hartford when Aetna failed to settle the case for $1 million (Aetna's policy limit), resulting in a $500,000 loss to Hartford.

On cross-motions for partial summary judgment with respect to count I of Hartford's complaint, the circuit court, on August 18, 1987, entered an order granting Aetna's motion for partial summary judgment and denying Hartford's. The circuit court determined that Hartford was solely liable "for the accrued post-judgment interest on the $500,000 excess portion of [the] judgment." Pursuant to the circuit court's Rule 304(a) finding (107 Ill. 2d R. 304(a)), Hartford sought review of the circuit court's order.

The appellate court reversed (173 Ill. App. 3d 665), relying upon language in the insurers' policies and this court's decision in River Valley Cartage Co. v. Hawkeye-Security Insurance Co. (1959), 17 Ill. 2d 242. Although the applicability of River Valley is controverted in the cause now before us, the material facts of this case are not subject to dispute.

In 1979, Helen Buczyna brought a wrongful death action against the insured, Cuomo & Son Cartage Company (Cuomo), and its employee John Arias. Aetna provided Cuomo and Arias with primary vehicle 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 vehicle liability insurance coverage. On April 10, 1984, the jury returned a verdict against Cuomo and Arias assessing Buczyna's damages at $1.5 million, an amount that exceeded Aetna's primary policy limit and thereby triggered Hartford's umbrella coverage. The judgment was affirmed on July 21, 1986. The suit was defended, and the appeal prosecuted, by an attorney selected by Aetna.

On October 11, 1986, while a petition for leave to appeal to this court was pending, Aetna entered into a partial-settlement, partial-satisfaction-of-judgment agreement with Buczyna, whereby 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, paying 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 and Hartford's agreements with Buczyna acknowledged the dispute between Aetna and Hartford concerning liability for the post-judgment interest on the $500,000 portion of the judgment in excess of Aetna's policy limit. That dispute spawned the litigation previously mentioned which culminated in the circuit court's order holding Hartford liable for the portion of post-judgment interest at issue.

We begin our analysis by examining the pertinent contractual provisions in the insurers' agreements with the insured. Section VI(c) of the Hartford umbrella policy provides:

"With respect to any occurrence not covered by the underlying policies . . . or any other underlying insurance collectible by the insured, but covered by the terms and conditions of this policy . . . the company shall:

(c) pay . . . all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not ...


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