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Hankins v. Pekin Insurance Co.

July 14, 1999

LOUIS C. HANKINS, D/B/A LOUIE'S CARTAGE COMPANY, PLAINTIFF AND COUNTERDEFENDANT APPELLEE
v.
PEKIN INSURANCE COMPANY, DEFENDANT AND COUNTERPLAINTIFF-APPELLANT, AND RUDOLF EXPRESS COMPANY, DEFENDANT AND COUNTERDEFENDANT-APPELLEE.



Appeal from the Circuit Court of Effingham County. No. 97-MR-20

Rule 23 Filed: May 18, 1999 Motion to Publish Granted: July 14, 1999 Opinion Filed: July 14, 1999

The opinion of the court was delivered by: Justice Welch

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

Rule 23 Order filed May 18, 1999;

Honorable Sherri L. E. Tungate, Judge, presiding.

This is a declaratory judgment action brought by Louis Hankins, doing business as Louie's Cartage Company (Hankins), against its insurer, Pekin Insurance Company (Pekin), to determine a question of coverage. The circuit court of Effingham County determined, in a judgment on the pleadings, that coverage was provided by the Pekin policy and that Pekin had a duty to defend Hankins against a suit brought against it by Rudolf Express Company (Rudolf).

Hankins operates a trucking terminal in Effingham County. Hankins had entered into an "Independent Cartage Operator Agreement" (Agreement) with Rudolf Express Company, a motor freight carrier. Under the terms of this Agreement, Hankins agreed to provide a shipping and receiving terminal that Rudolf, a transportation company, was permitted to use to deliver and pick up loads of materials. Jerry Ervin was an employee of Hankins. While Ervin, in the employ of Hankins, was unloading a truck owned by Rudolf, an employee of Rudolf moved the truck away from the loading dock, causing Ervin's forklift to fall to the ground, injuring Ervin. Ervin sued Rudolf to recover for his injuries.

Rudolf filed a third-party complaint against Hankins, seeking contribution, indemnification, and damages for breach of contract, based in part on the Agreement. Hankins tendered the defense of this third-party complaint to its insurer, Pekin Insurance Company (Pekin). Pekin accepted the tender as to count I but refused the tender as to counts II and III. Count I was later severed from counts II and III, and only issues with respect to these latter two counts are before this court on appeal. The action by Ervin against Rudolf was settled for $100,000.

In its amended count II against Hankins, Rudolf seeks express contractual indemnification based upon the Agreement. Paragraph 11(a) of that agreement provides as follows:

"(a) Hold Harmless. CARTAGE OPERATOR agrees to indemnify and hold harmless CARRIER from and against all claims, damages, losses[,] and expenses, including reasonable attorney's fees which might arise out of the performance of any work to be performed hereunder by CARTAGE OPERATOR, including all damages for bodily injury, illness, death, property damage[,] and cargo loss, caused in whole or in part by CARTAGE OPERATOR'S negligent act or omission [or] non[]compliance with any part of this contract or that of anyone employed by CARTAGE OPERATOR or for whose acts CARTAGE OPERATOR may be liable."

In count II of its third-party complaint against Hankins, Rudolf alleges that the negligent conduct of Hankins or its employee contributed in whole or in part to Ervin's claimed injuries and that the claim brought by Ervin against Rudolf met the requirements of paragraph 11(a) because it involved a claim for injury that was caused in whole or in part by the negligence of Hankins. Count II sought indemnification under that paragraph for legal fees and expenses incurred by Rudolf in defending and settling the suit brought by Ervin against Rudolf.

In its amended count III against Hankins, Rudolf seeks damages for breach of the Agreement. Paragraph 11(b) of that agreement required that Hankins procure commercial liability insurance with policy limits of one million dollars and that Rudolf be named as an additional insured on that policy. Count III alleges that Hankins failed to obtain the required insurance, forcing Rudolf to tender its defense in the Ervin lawsuit to its own insurance carrier, resulting in damage to Rudolf.

We turn now to the policy of insurance, and specifically, the exclusion that Pekin argues applies to exclude coverage of count II of the amended third-party complaint. This provision of the policy excludes ...


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