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November 12, 1996


Appeal from the Circuit Court of Cook County. Honorable John N. Hourihane, Judge Presiding.

Released for Publication December 22, 1996.

The Honorable Justice Burke delivered the opinion of the court. Hartman, P.j., and DiVITO, J., concur.

The opinion of the court was delivered by: Burke

The Honorable Justice BURKE delivered the opinion of the court:

Defendant Mitchell Southwell appeals from the circuit court's order denying his motion for summary judgment and granting summary judgment in favor of plaintiff Ohio Casualty Insurance Company (Ohio Casualty). On appeal, Southwell contends that Ohio Casualty was estopped from asserting that the workers' compensation policy it issued Southwell did not provide coverage for Southwell's Illinois workers' compensation claim and that it is against Illinois public policy to limit the territoriality of an insurance policy. For the reasons set forth below, we affirm.

Ohio Casualty issued a policy of insurance to Maple Leaf Marketing, Inc. (Maple Leaf) providing for primary workers' compensation and employer's liability insurance with an effective policy period of October 2, 1988 to October 2, 1989. Section 3.A of the policy provided: "Part One [the workers' compensation section] of the policy applies to the Workers Compensation Law of the states listed here: CAL." Section 3.C of the policy is entitled "Other States Insurance." The policy explains that, for any state listed in this section, "the policy will apply as though that state were listed in item 3.A." The word "None" is typed in the "Other States Insurance" section.

Southwell was employed as a solicitor for Maple Leaf. On January 6, 1989, he was injured in an automobile accident in Illinois during the course of his employment. On September 1, 1989, he filed a claim for workers' compensation benefits under the Illinois Workers' Compensation Act (820 ILCS 305/1 et seq. (West 1993)). In April 1990, Maple Leaf tendered the defense of Southwell's workers' compensation claim to Ohio Casualty, which Ohio Casualty refused to accept.

On June 10, 1994, Ohio Casualty filed a complaint for declaratory judgment seeking a declaration that it was not liable for Southwell's workers' compensation benefits claim, it had no duty to defend Maple Leaf in Southwell's workers' compensation action and it was not obligated to provide any workers' compensation benefits to Southwell in connection with Southwell's automobile accident.

A hearing on Southwell's claim was conducted on November 10, 1994, and January 26, 1995, before an arbitrator designated by the Illinois Industrial Commission. On February 10, 1995, the arbitrator filed its decision with the Industrial Commission, stating that "the relationship of employee and employer existed between" Southwell and Maple Leaf, that Southwell's injuries "arose out of and in the course of the employment by" Maple Leaf, and that Maple Leaf "was covered by Workmen's Compensation Insurance issued by Ohio Casualty Insurance Company." The Industrial Commission entered an award for Southwell for the injuries he sustained.

Southwell served Ohio Casualty with two requests for an admission of facts in August 1995. Pursuant to Southwell's first request, Ohio Casualty admitted that in April 1990 Maple Leaf tendered Southwell's defense of his Illinois workers' compensation claim, it did not accept Maple Leaf's tender, it did not defend Southwell's workers' compensation claim with a reservation of rights and it did not defend Maple Leaf under a reservation of rights. In response to Southwell's second request, Ohio Casualty admitted that Southwell's attached "Exhibit D appeared to be" a letter from Tim Davies, Maple Leaf's president, on Maple Leaf stationery, dated July 21, 1994. Ohio Casualty also admitted "that it received a letter containing substantially the same text." (Davies stated in the July 21 letter that he "fully explained to Ohio Casualty how may [sic ] business worked, how it operated in states other than California, and the full extent of [his] business practices and procedures. *** [He] asked for and thought [he] received liability coverage to protect [him] against lawsuits, and worker's compensation coverage adequate to protect [him] against claims by anyone who [he] legally had an obligation to cover.")

On May 23, 1995, Southwell filed a motion for summary judgment and supporting brief, alleging that those portions of the Ohio Casualty "policy which attempt to limit their [Ohio Casualty's] territorial liability [are] against the public policy of the State of Illinois," that Ohio Casualty "is estopped from asserting their argument that they are not bound by the Industrial Commission ruling finding Mitchell Southwell an employee," and that Ohio Casualty "waived their right to claim that they are not bound by the opinion of the Industrial Commission."

On July 21, 1995, Ohio Casualty filed a cross-motion for summary judgment, arguing that the policy it issued Maple Leaf only provided coverage for claims brought pursuant to California's workers' compensation statute and that the doctrine of res judicata did not apply to preclude it from raising defenses against coverage under the policy. The trial court denied Southwell's motion and granted Ohio Casualty's cross-motion for summary judgment. This appeal followed.

In reviewing the entry of summary judgment, the appellate court reviews the record de novo to determine if "the pleadings, depositions and affidavits show that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law." Maher & Associates, Inc. v. Quality Cabinets, 267 Ill. App. 3d 69, 77, 640 N.E.2d 1000, 203 Ill. Dec. 850 (1994). In determining whether a genuine issue of material fact exists, the evidence is construed in a light most favorable to the nonmoving party. Purtill v. Hess, 111 Ill. 2d 229, 489 N.E.2d 867, 95 Ill. Dec. 305 (1986).

Southwell contends that the trial court failed to consider Illinois public policy and erred in finding that Ohio Casualty's policy did not cover his Illinois workers' compensation claim. Southwell argues that pursuant to section 4(a)(3) of the Workers' Compensation Act (820 ILCS 305/4 (a)(3)(West 1992)), it is against Illinois public policy to "interpose the non-territoriality of [Ohio Casualty's] policy." Acknowledging that there are no cases interpreting section 4(a)(3), Southwell cites to case law from other states, which he contends prohibits insurers from limiting territoriality. Southwell fails, however, to discuss these cases and explain how they relate to the present case. Southwell further argues that public policy supports reimbursing "the insured to the extent that the insurer would have been liable under the workers' compensation law of ...

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