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10/29/96 STATE FARM FIRE AND CASUALTY COMPANY v.

October 29, 1996

STATE FARM FIRE AND CASUALTY COMPANY, PLAINTIFF-APPELLANT,
v.
GREGORY LEE MARTIN, SR., SCOTT LEWIS, AS SPECIAL ADMINISTRATOR OF THE ESTATE OF TIMMIE LEE LEWIS, DECEASED, AND ETHELYN J. GORHAM, EXECUTRIX OF THE ESTATE OF GARY PORTER, DECEASED, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Madison County. No. 93-MR-374. Honorable David Herndon, Judge, presiding.

As Corrected.

The Honorable Justice Kuehn delivered the opinion of the court: Chapman and Welch, JJ., concur.

The opinion of the court was delivered by: Kuehn

The Honorable Justice KUEHN delivered the opinion of the court:

Plaintiff, State Farm Fire and Casualty Company (State Farm), filed a declaratory judgment action seeking a determination of whether it owed its insured, Gregory Lee Martin, Sr. (Martin), a defense and indemnification in two underlying wrongful death suits. These suits were based upon Martin's involvement in an arson which resulted in the death of two firemen. State Farm appeals from trial court orders finding that it had a duty to defend and to indemnify Martin. We affirm.

This case originated with an arrangement between Martin and Delaney Gordon, Sr. (Gordon), to destroy a building. Martin owned the designated building. The building was located in Alton, Illinois. Gordon was one of Martin's tenants, and in exchange for his participation, Martin offered him a reduced rental rate.

On October 24, 1992, at approximately 2 a.m., Gordon ignited the fire by leaving an unattended candle in a hamper in the basement. An accelerant was used. By the time the fire was reported and firemen responded, the building was in flames. As the fire intensified, the building's second floor collapsed onto some of the firemen. Firemen Timmie Lee Lewis and Gary Porter perished.

Martin and Gordon were indicted by a federal grand jury for damaging by fire a building used in interstate commerce, directly causing a death, in violation of section 844(i) of the Anti-Arson Act of 1982. 18 U.S.C. ยง 844(i) (1988).

Defendants Scott Lewis (Lewis) and Ethelyn J. Gorham (Gorham) were appointed executors of the estates of Timmie Lee Lewis and Gary Porter, respectively. Lewis filed a wrongful death suit against Martin and Gordon on or about June 7, 1993. Gorham filed her suit on or about July 7, 1993. Both suits alleged that Martin negligently started the fire with the knowledge that firemen would respond.

State Farm insured Martin's building. Martin tendered both wrongful death suits to State Farm. State Farm denied coverage and refused to defend Martin. Martin did not answer the suits.

State Farm filed the declaratory judgment action on August 20, 1993, alleging that the underlying actions did not constitute an occurrence as defined in the policy and that Martin's actions triggered two coverage exclusions. Defendants Lewis and Gorham sought to stay the declaratory judgment action until the federal criminal cases then pending against Martin and Gordon were resolved. State Farm opposed the stay. The trial court entered an order on February 24, 1994, staying the declaratory judgment action. The order further stated that any party could move to lift the stay upon resolution of the criminal cases. The wrongful death suits were not stayed.

On September 23, 1994, Martin was found guilty on the indictment and in December 1994 was sentenced to 50 years' imprisonment.

During the summer of 1995, Gorham and Lewis defaulted Martin on the wrongful death suits. On August 8, 1995, the trial court entered judgment on the negligence counts of Gorham's wrongful death suit against Martin in the amount of $10 million. On September 5, 1995, the trial court entered judgment on Lewis's suit against Martin in the amount of $9 million. Sometime in late September 1995, after default judgments were taken in both suits, State Farm offered Martin a defense.

The record contains no order lifting the stay imposed upon the declaratory judgment action following the criminal case's conclusion. However, on April 18, 1995, approximately seven months after Martin's conviction, State Farm filed a summary judgment motion in the declaratory judgment action seeking a determination that it had no duty to defend and indemnify Martin in the underlying suits. On August 30, 1995, ...


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