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03/24/95 CONTINENTAL INSURANCE COMPANY v. SKIDMORE

March 24, 1995

THE CONTINENTAL INSURANCE COMPANY, REAL PARTY IN INTEREST IN PLACE OF HARBOR INSURANCE COMPANY, PLAINTIFF-APPELLANT AND PLAINTIFF-APPELLEE,
v.
SKIDMORE, OWINGS AND MERRILL, JAMES MCHUGH CONSTRUCTION COMPANY, MCNULTY BROTHERS COMPANY, DESSENT ROOFING COMPANY, INC., AND MATERIAL SERVICE CORPORATION, DEFENDANTS-APPELLEES (ECONOMY MECHANICAL INDUSTRIES, INC., AND FLOOD TESTING LABORATORIES, INC., DEFENDANTS-APPELLEES AND DEFENDANTS-APPELLANTS).



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. THE HONORABLE ARTHUR L. DUNNE, JUDGE PRESIDING.

Rehearing Denied April 20, 1995.

Presiding Justice Cousins delivered the opinion of the court: Gordon And McNULTY, JJ., concur.

The opinion of the court was delivered by: Cousins

PRESIDING JUSTICE COUSINS delivered the opinion of the court:

Plaintiff Continental Insurance, as real party in interest in place of Harbor Insurance, filed a complaint for declaratory judgment denying any liability to defend or indemnify defendants under their insurance policies. In its amended complaint, plaintiff denied coverage, and any duty to defend, because (1) the underlying complaint was not covered under the liability language of the policy, (2) plaintiff's excess insurance coverage was in excess above other collectible insurance by defendants, and (3) the application of exclusion clauses (y) and (z). The trial court granted plaintiff's motion for summary judgment solely under theory (3), and the trial court's decision was reversed and remanded by this court in Harbor Insurance Co. v. Tishman Construction Co. (1991), 218 Ill. App. 3d 936, 578 N.E.2d 1197, 161 Ill. Dec. 551. On remand, plaintiff sought to litigate theories (1) and (2) and to present a second amended complaint which also contained exclusion clauses (a), (m), and (n), among other issues, which plaintiff alleged denied coverage to the defendants. However, the trial court held that the opinion of Harbor required that defendants be granted judgment on the issue of duty to defend, which is the substance of plaintiff's appeal. The trial court also denied attorney fees to defendants which resulted from the declaratory judgment action, a decision which defendant Flood Testing Laboratories, Inc. (Flood), has also appealed in this consolidated proceeding.

We affirm.

Plaintiff filed its amended action for declaratory judgment on November 16, 1987. The plaintiff alleged that the underlying complaint against defendants was for damage resulting from faulty workmanship, damage which was not covered under the language of the policy. Plaintiff also stated that exclusion clauses (y) and (z) negated any coverage or duty to defend by plaintiff for such alleged damage. These exclusions provided, in pertinent part:

"This insurance does not apply:

(y) to property damage * * * (2) * * * to * * *

(d) that particular part of any property, not on premises owned by or rented to the insured * * *

(iii) the restoration, repair or replacement of which has been made or is necessary by reason of faulty workmanship thereon by or on behalf of the insured.

(z) * * * to property damage to work performed by the named insured arising out of the work or any portion thereof, or out of the materials, parts, or equipment furnished in connection therewith."

Lastly, plaintiff alleged that its excess insurance policy was in excess above other collectible insurance coverage by defendants. The contract provided:

"The insurance afforded by this endorsement shall be excess insurance over any valid and collectible property insurance (including any deductible portion ...


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