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Country Mutual Insurance Co. v. Hagan

July 31, 1998

COUNTRY MUTUAL INSURANCE COMPANY, PLAINTIFF-APPELLEE,
v.
JOHN MARTIN HAGAN III, DEFENDANT-APPELLANT (JOHN MARTIN HAGAN, CAROL HAGAN, AND JENNIFER HARDWICK, DEFENDANTS).



The opinion of the court was delivered by: Justice Bowman

IN THE APPELLATE COURT OF ILLINOIS SECOND JUDICIAL DISTRICT

Appeal from the Circuit Court of Winnebago County.

No. 96--MR--139

Honorable J. Todd Kennedy, Judge, Presiding.

This case arises from an insurance coverage dispute between plaintiff, Country Mutual Insurance Company (Country Mutual), and defendant John Martin Hagan III (Marty Hagan). At issue is whether Country Mutual must defend and indemnify Marty Hagan in a lawsuit filed by defendant Jennifer Hardwick. Hardwick filed a complaint against Marty Hagan and his parents, defendants John Martin Hagan and Carol Hagan, alleging that Marty Hagan had sexually abused her when she was 6 years old and he was 14. The Hagans tendered their defense in this action to Country Mutual, who insured them under a homeowner's policy. Subsequently, Country Mutual filed a declaratory judgment action, in which it asserted that it owed neither indemnification nor a defense to the Hagans because Hardwick's complaint alleged intentional acts. The trial court granted summary judgment in favor of John and Carol Hagan and against Country Mutual, and neither party appeals that ruling. Marty Hagan, however, appeals the trial court's judgment granting summary judgment against him and in favor of Country Mutual. We reverse.

In her five-count fourth amended complaint, Hardwick alleged that, during the summer of 1982, Marty Hagan invited Hardwick and her seven- year-old brother to his room to play. In his room, Marty Hagan performed certain sexual acts with Hardwick, such as forcing her to perform oral sex and attempting to rape her. Based on these allegations, Hardwick alleged that Marty Hagan was liable for assault and battery, for intentional infliction of emotional distress, for negligence, and for willful and wanton conduct.

Although Hardwick does not state claims against John and Carol Hagan in her fourth amended complaint (at some point during the proceedings, they were dismissed from the action with prejudice), the record indicates that her original complaint initially contained two counts against them. In these counts, she alleged that they were negligent in failing to restrict Marty Hagan's access to other minors.

At the time of the acts alleged in Hardwick's complaint, the Hagans were insured under a homeowner's policy issued by Country Mutual. On March 12, 1996, Marty Hagan and his parents tendered their defense in this action to Country Mutual. After refusing the tender of the Hagans' defense, Country Mutual filed a complaint for declaratory judgment against the Hagans and Hardwick.

In its complaint, Country Mutual alleged that there was no coverage based on the following exclusion contained in the policy:

"Exclusions -- Section 1

Liability and Medical Payments, Coverages A & B, does not apply to bodily injury or property damage:

1. caused intentionally by or at the direction of an insured."

According to Country Mutual, Hardwick's complaint contained allegations of intentional conduct, and, therefore, there was no coverage under the policy pursuant to this exclusion and thus no duty to defend or indemnify the Hagans.

In addition, Country Mutual alleged that there was no coverage according to the coverage provisions of the policy, which provided in relevant part:

"Liability, Coverage A

We promise to pay on behalf of an insured for damages resulting from bodily injury or property damage caused by an occurrence, if the insured is legally obligated."

Country Mutual maintained that the intentional conduct alleged in Hardwick's complaint could not be considered an "occurrence," because the policy defined "occurrence" as "an accident, *** which results in bodily injury or property damage." According to Country Mutual, under this language, it owed no duty to defend or indemnify Marty Hagan and also was not obligated to defend or indemnify John and Carol Hagan because their alleged conduct "arose out of" Marty's intentional conduct.

Country Mutual, therefore, asked the trial court to declare that (1) it is not liable to the Hagans under the policy for any judgment or settlement based on Hardwick's complaint; and (2) it is not obligated to provide the Hagans with a defense to Hardwick's complaint.

John and Carol Hagan filed a motion for summary judgment with respect to the declaratory judgment complaint, and, in December 1996, the trial court granted their motion in part. It held that the intentional conduct exclusion in the insurance policy did not apply to the allegations against them because the complaint charged them with negligence, not intentional conduct. The trial court, therefore, held that Country Mutual must provide them with a defense. It declined, however, the parents' request for summary judgment on the issue of indemnification. Neither party has appealed this ruling.

The appeal in this case stems from Marty Hagan's separate motion for summary judgment against Country Mutual, which he filed on June 20, 1997. He argued that Country Mutual owed him a defense because Hardwick's complaint contained allegations of negligence, which was not excluded from coverage of the policy. In addition, he contended that Country Mutual's request for the court to rule on the issue of coverage was premature.

A few days later, Country Mutual filed a cross-motion for summary judgment against Marty Hagan. It argued that there was no coverage for the acts alleged in the assault, battery, intentional infliction of emotional distress, and "willful and wanton" counts of the complaint because the intentional conduct alleged in these counts could not be considered an "accident" within the coverage language of the policy and because such conduct fell within the policy's exclusionary language.

Country Mutual argued that the negligence count of the complaint also did not trigger coverage or its duty to defend because, despite the fact that this count was couched in terms of negligence, the factual allegations on which it was based were those of intentional conduct. In addition, it argued that an insured's intent to injure is presumed in cases involving sexual abuse of a minor. Country Mutual, therefore, asked the trial court ...


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