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Great American Insurance Company v. West Bend Mutual Insurance Company

January 11, 2000

GREAT AMERICAN INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
WEST BEND MUTUAL INSURANCE COMPANY, DEFENDANT-APPELLEE.



The opinion of the court was delivered by: Justice McNULTY

Appeal from the Circuit Court of Cook County

Honorable Dorothy Kinnaird, Judge Presiding

This case involves construction of an insurance policy. Plaintiff, Great American Insurance Company, and defendant, West Bend Mutual Insurance Company, both issued policies insuring Sundance Homes, Inc., against some forms of liability that might arise from construction work. A worker injured during construction sued Sundance for violation of the Structural Work Act (the Act) (Ill. Rev. Stat. 1987, ch. 48, par. 60 et seq.). Great American settled with the worker then brought this lawsuit against West Bend, seeking to recover part of the amount it paid in settlement of the worker's claim. The trial court granted West Bend summary judgment. Great American appeals.

In 1988 Sundance, a general contractor, subcontracted with Lenny Szarek, Inc., for carpentry work on a homebuilding project in Streamwood, Illinois. In the subcontract Szarek promised to purchase comprehensive general liability insurance naming Sundance as an additional insured. Szarek purchased that insurance from West Bend.

The policy provided:

"It is agreed that [Sundance] is added to this policy as an additional insured. That entity shall be covered for all liabilities for bodily injury, property damage or death that are imputed to it as a result of the actions or conduct of [Szarek]. ***

This endorsement provides no coverage to the additional insured for liabilities arising out of the claimed negligence of the additional insured, or out of negligence of parties other than [Szarek]."

Szarek also purchased worker's compensation insurance from Casualty Insurance Company.

In February 1989 Rondal Bass suffered injuries while working as Szarek's employee. Casualty paid Bass $165,239.15 in worker's compensation. Bass sued Sundance, alleging that it violated the Act by failing to ensure that walls and trusses had adequate bracing. Sundance asked both insurers to defend. Upon reviewing the complaint, West Bend declined on grounds that liability under the Act could not qualify as liability "imputed to [Sundance] as a result of the actions or conduct of [Szarek]."

West Bend sued for a declaration of the rights of the parties under the insurance contract. The trial court found West Bend had a duty to defend. On appeal we affirmed, finding the allegations of Bass' complaint sufficient to "give[] rise to the possibility of a recovery under the policy." West Bend Mutual Insurance Co. v. Sundance Homes, Inc., 238 Ill. App. 3d 335, 337, 606 N.E.2d 326 (1992). We further found West Bend's interpretation of the liabilities "'imputed *** as a result of" Szarek's conduct to be "strained and narrow.'" West Bend, 238 Ill. App. 3d at 337-38. Pursuant to our decision, West Bend and Great American shared the costs of defense.

In 1994 Great American and Bass settled the lawsuit. Casualty accepted $40,000 in exchange for the release of its worker's compensation lien on the recovery. But West Bend refused to split the settlement.

Great American sued for a judgment declaring the rights of the parties under West Bend's policy. In the complaint Great American alleged that it sent West Bend copies of statements given by witnesses to the accident, in which the witnesses allegedly said that an employee of Szarek removed a brace supporting the structure on which Bass stood, and the removal of that brace caused Bass to fall. West Bend admitted that Great American sent statements from witnesses but denied the substance of the alleged statements. West Bend also answered that Great American did not accurately summarize the statements. Great American provided only transcripts of interviews with the unsworn witnesses, not depositions or affidavits.

West Bend admitted the essential allegations of the complaint and stipulated that Great American paid a fair amount for the settlement. Then West Bend moved for summary judgment, arguing that it owed no part of the settlement because liability under the Act could not qualify as liability imputed to Sundance as a result of Szarek's conduct.

The trial court agreed and added that the cause of the accident remained undetermined. Nonetheless, the court held that "[t]he money Great American paid in settlement arose solely from the conduct of its insured[,] Sundance." The ...


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