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Alcan United Inc. v. West Bend Mutual Insurance Co.

February 16, 1999

ALCAN UNITED, INC., A DOMESTIC CORPORATION, PLAINTIFF-APPELLEE,
v.
WEST BEND MUTUAL INSURANCE COMPANY, A DOMESTIC CORPORATION, DEFENDANT-APPELLANT, AND GATEWAY CONCRETE FORMING SYSTEMS, INC., A DOMESTIC CORPORATION, MORSE DIESEL, INC., A FOREIGN CORPORATION, AND MICHAEL REYNOLDS, AN INDIVIDUAL, DEFENDANTS. WEST BEND MUTUAL INSURANCE COMPANY, COUNTERPLAINTIFF-APPELLANT.
v.
ALCAN UNITED, INC. AND MICHAEL REYNOLDS, COUNTERDEFENDANTS, AND RELIANCE NATIONAL INSURANCE COMPANY, THIRD-PARTY DEFENDANT-APPELLEE.



The opinion of the court was delivered by: Presiding Justice Gordon *fn1

APPEAL FROM THE CIRCUIT COURT OF)COOK COUNTY. HONORABLE MICHAEL B. GETTY, JUDGE PRESIDING.

Alcan United, Inc. (Alcan), *fn2 the plaintiff, brought this action against defendants, West Bend Mutual Insurance Company (West Bend), Gateway Concrete Forming Systems, Inc. (Gateway), Morse Diesel, Inc., and Michael Reynolds. In count I, Alcan sought a declaration that West Bend was obligated to provide coverage to Alcan for a personal injury lawsuit filed by Michael Reynolds against Morse Diesel, Inc., the general contractor on a construction project, and Alcan, Morse Diesel's subcontractor, under a policy issued to Gateway, Alcan's construction subcontractor, which named Alcan as an additional insured. In count II, Alcan alternatively alleged that if West Bend was not contractually obligated to assume Alcan's defense and to indemnify Alcan, then Gateway, breached its contract with Alcan by failing to provide insurance on behalf of Alcan for all claims relating to Alcan's performance of its work on the project. West Bend filed a countercomplaint and amended countercomplaint against Alcan and a third-party complaint and amended third-party complaint against Reliance National Insurance Company (Reliance), Alcan's insurer, seeking a declaration that West Bend's insurance policy was excess to Reliance's policy and that West Bend had no duty to defend or indemnify Alcan unless and until the Reliance policy limits were exhausted.

The parties filed cross-motions for summary judgment. The trial court granted summary judgment in favor of Alcan and Reliance finding that the coverage provided in West Bend's policy was primary to any other coverage and that West Bend was obligated to assume Alcan's defense in the Reynolds litigation as of January 12, 1996 and to indemnify Alcan for any losses in that litigation. The court further found that Reliance owed no duty to Alcan or West Bend until the West Bend policy limits were exhausted. West Bend appeals.

On appeal, West Bend contends that the trial court erred in finding that Reliance's policy was not co-primary to West Bend's policy. It argues that Reliance was obligated to share in the payment of Alcan's defense costs because Alcan first tendered the Reynolds lawsuit to Reliance and because the "other insurance" clause in West Bend's insurance policy required that all primary insurers share defense costs equally. West Bend also argues that the trial court erred in determining the date upon which the Reynolds lawsuit was tendered to West Bend. For the reasons discussed below, we affirm the order of the trial court granting summary judgment to Alcan and Reliance.

I. UNDISPUTED FACTS

The undisputed facts derived from the parties' pleadings, motions, affidavits and depositions show that Alcan entered into a subcontract agreement with Gateway whereby Gateway was to perform subcontracting work for Alcan. The contract between Alcan and Gateway required Gateway to procure an insurance policy listing Alcan as an additional insured. The contract also required that the insurance policy "be endorsed as PRIMARY/NON-CONTRIBUTORY to any insurance of the ADDITIONAL INSUREDS." Gateway contracted with West Bend to provide the necessary insurance. The West Bend policy contained an endorsement providing insurance coverage to persons or organizations that Gateway was required "under a written contract or agreement currently in effect or becoming effective during the term of the policy" to add as additional insureds. Alcan was identified as an additional insured under the West Bend policy.

Michael Reynolds, the plaintiff in the underlying action and a Gateway employee, was allegedly injured on January 10, 1994 while performing work pursuant to the subcontract between Gateway and Alcan. Reynolds filed his personal injury lawsuit against Alcan on December 23, 1994. On February 10, 1995, Alcan's registered agent, Burton Reif, forwarded a copy of the summons and complaint in the Reynolds litigation to Alcan. Alcan forwarded those documents to its insurance broker, Schwartz Brothers Insurance, on February 13, 1995. Schwartz Brothers then forwarded the documents to Reliance which undertook Alcan's defense in the Reynolds litigation. On January 12, 1996, the Blackmoor Group, a third-party claims adjuster for Reliance, tendered the Reynolds lawsuit to West Bend for full defense and indemnification to Alcan. West Bend did not respond to the tender; and Alcan filed its declaratory judgment complaint against West Bend and Gateway on June 6, 1996. *fn3

In their joint motion for summary judgment, Alcan and Reliance conceded that Alcan was potentially covered for the Reynolds claim by Reliance as well as by West Bend. They argued, inter alia, that, based upon Institute of London Underwriters v. Hartford Fire Insurance Co., 234 Ill. App. 3d 70, 599 N.E.2d 1311 (1992), Alcan had the right to choose which of the two carriers should defend and indemnify the Reynolds claim; that Alcan chose West Bend to defend and indemnify it; and that West Bend was foreclosed from seeking contribution from Reliance. They argued that, as the Reynolds claim was within or potentially within the coverage provisions of West Bend's policy, West Bend was obligated to assume Alcan's defense. Attached to their memorandum of law in support of their motion for summary judgment was the deposition of Michael Tiberi, Alcan's president. In that deposition, Tiberi stated that he did not want Reliance "to do whatever it's obligated to do under [its] policy on [Alcan's] behalf." He gave the following reason for that response:

"Because Reliance is my insurance carrier; and this accident, *** as shown by these drawings, is the result of actions by a worker employed by Gateway Forming who, in turn, has Alcan United Concrete listed as an additional insured with their own insurance company carrying that coverage."

With respect to Alcan's desire not to seek coverage under the policy issued to it by Reliance, Tiberi was asked the following question and gave the following answer:

"Q:*** If the West Bend policy does provide coverage, do you want the Reliance policy to participate in Alcan's defense indemnification [sic]?

A:No. I want West Bend to cover this insurance requirement."

In its cross-motion for summary judgment, West Bend argued, inter alia, that it was jointly liable with Reliance from the date of tender of the lawsuit to it. West Bend argued that Reliance was liable because Alcan had tendered the Reynolds lawsuit to Reliance and because Reliance had assumed Alcan's defense after that tender. West Bend further argued that Alcan could not "deactivate" its tender to Reliance and that, once activated, Reliance's policy remained operative. West Bend also argued that since both policies had been activated by tender, the "other insurance provisions" therein required Reliance and West Bend, as primary insurers, to share defense costs and indemnification equally. West Bend also argued, based upon Institute of London, 234 Ill. App. 3d 70, 599 N.E.2d 1311, that the tender on January 12, 1996 by Reliance's claims adjuster to West Bend was not valid since it was made by Reliance, Alcan's insurer, rather than Alcan, the insured.

In its Memorandum of Opinion, the trial court found, pursuant to Institute of London, that Alcan had the right to choose West Bend to defend and indemnify it exclusively; that Alcan could "deactivate" its prior tender to Reliance; and that the January 12, 1996 tender by ...


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