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12/29/89 Motor Vehicle Casualty v. Gsf Energy

December 29, 1989





549 N.E.2d 884, 193 Ill. App. 3d 1, 140 Ill. Dec. 233 1989.IL.2054

Appeal from the Circuit Court of Cook County; the Hon. Sophia Hall, Judge, presiding.


JUSTICE McNAMARA delivered the opinion of the court. EGAN, P.J., and LaPORTA,* J., concur.


Plaintiff-appellant and cross-appellee, Motor Vehicle Casualty Company, appeals from an order of the circuit court of Cook County denying its motion for summary judgment and granting summary judgment to defendant-appellee and cross-appellant, Hatfield Electric Company. Motor Vehicle contends that the trial court improperly found it had a duty to defend Hatfield against an allegation predicated on a contractual indemnity provision and that, accordingly, it had a duty to defend the entire underlying third-party action brought against Hatfield by GSF Energy, Inc. (formerly known as Getty Synthetic Fuels, Inc., and referred to herein as GSF). Hatfield cross-appeals, contending that the trial court erred insofar as it ruled that, although Motor Vehicle was obligated to defend Hatfield against the contractual indemnity count and accordingly against the entire third-party action, it had no independent duty to indemnify Hatfield against the contribution claim or to defend Hatfield against the failure to procure insurance claim.

The parties have stipulated to the following facts. Motor Vehicle issued a general liability policy to Hatfield with coverage commencing on April 1, 1983, and expiring on April 1, 1986. Under Coverage E, the policy provided comprehensive general liability insurance for bodily injury. The policy contained numerous exclusions from coverage. Exclusion (j) stated that Coverage E does not apply

"to bodily injury to any employee of the Insured [Hatfield] arising out of and in the course of his employment by the Insured or to any obligation of the Insured to indemnify another because of damage arising out of such injury."

Exclusion (j) further provided that the exclusion does not apply to liability assumed by the insured under any incidental contracts. The term "incidental contract" was defined in a rider to the policy as "any contract or agreement relating to the conduct of the Named Insured's business." The rider also contained certain exclusions to the insurance afforded with respect to liability assumed under an incidental contract. Specifically, the exclusion provided that coverage does not apply

"to bodily injury or property damage for which the Insured [Hatfield] has assumed liability under any incidental contract, if such injury or damage occurred prior to the execution of the incidental contract."

On December 15, 1983, Hatfield orally contracted to perform electrical work at the GSF refinery located in Blue Island, Illinois. On December 20, 1983, Hatfield's employee, Clements, sustained injuries while working at the refinery. On January 25, 1984, the December 15, 1983, oral contract was memorialized by GSF's purchase order. Hatfield accepted the contract on February 14, 1984. The parties have stipulated that witnesses for both GSF and Hatfield would testify that when the parties entered the oral contract, they intended that the terms and conditions recited in the purchase order would be binding upon them as of the time they entered into the oral contract.

The written contract between Hatfield and GSF contained a number of relevant provisions. It provided that Hatfield would "maintain adequate protection for all work and materials furnished thereunder from damage or loss." Additionally, Hatfield agreed to defend and indemnify GSF from liability for Hatfield's negligence.

In 1985, Clements brought suit against GSF. Clements alleged in his amended complaint that GSF violated the Structural Work Act (Ill. Rev. Stat. 1983, ch. 48, par. 60 et seq.). Specifically, Clements alleged that GSF was in charge of the construction at the refinery and that GSF violated the provisions of the Structural Work Act in that the ladder Clements was using was unsafe, and that GSF should have provided him with a ladder which allowed for firm footing during his installation of the electrical conduit.

GSF denied the material allegations of the amended complaint and subsequently filed a two-count, third-party action against Hatfield. In count I, GSF sought contribution under the Illinois Contribution Act (Ill. Rev. Stat. 1983, ch. 70, par. 301 et seq.). In count II, GSF sought indemnity for breach of contract. In that regard, GSF alleged that Hatfield failed to assume full responsibility for providing a safe place of work for Clements to work; failed to obtain insurance to protect GSF ...

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