Appeal from the Circuit Court of Cook County. 94 CH 3447 95 CH 1947 Honorable Ronald C. Riley, Judge Presiding.
The opinion of the court was delivered by: Presiding Justice Zwick
This coverage dispute concerns an attempt by three insurers to recover from two non-paying insurers money paid to settle a judgment in an underlying personal injury action. The separate actions were consolidated in the circuit court, and the court entered final judgments in favor of defendants Casualty Insurance Company (Casualty) and American States Insurance Company (American States) on August 27, 1997. The court modified its order on September 24, 1997, to include a finding that there was no just reason to delay enforcement or appeal. We have jurisdiction in each of the appeals pursuant to Supreme Court Rule 304(a) (155 Ill. 2d R. 304 (a)).
The coverage dispute involves three sets of pleadings. We address each in the order it was filed.
(1) The Great American Complaint
On January 12, 1995, Great American Insurance Company (a/k/a "American National Fire Insurance Company")(hereinafter, "Great American") filed an amended complaint for equitable contribution against Casualty and American States. Great American alleged that it and the four other insurance companies now before us issued policies naming MKDG/Buck 123 Partnership (Buck) as an additional insured in connection with a construction project at 515 North State Street in Chicago. In May of 1994, a worker on the site, William Keegan, obtained a judgment against Buck and others in the amount of $2,892,500. (Hereinafter, we refer to this judgment as "the Keegan judgment" and the associated litigation as "the Keegan litigation" or "the Keegan action.")
Great American alleged that three of the five insurers, Great American, Wausau Insurance Company (Wausau) and Northbrook Property & Casualty Company (Northbrook), satisfied this judgment. The other two insurers, Casualty and American States, failed to pay any part of the judgment, even though Keegan's injuries arose out of the work performed by Casualty's and American States' named insureds. Great American alleged that it was entitled to equitable contribution from Casualty and American States to the extent that Great American's payment exceeded its proportionate share of the common liability to Keegan. Specifically, Great American alleged that its proportionate liability was 20 percent, or $578,500, but that it had paid $1 million because Casualty and American States failed to contribute to the satisfaction of the judgment. Great American alleged that Casualty and American States were each indebted to it for $210,750.
(2) The Schal/Buck/Northbrook Complaint
On March 3, 1995, Schal Bovis, Inc. (Schal), Buck and Northbrook filed a complaint for declaratory judgment and other relief. The Schal/Buck/Northbrook complaint set forth seven causes of action. Counts II, III and IV (the subject of this consolidated appeal) were based on Casualty's and American States' wrongful refusal to defend and indemnify Schal and Buck in the Keegan action. (Counts I, V, VI and VII were the subject of an appeal previously decided in Schal Bovis, Inc. v. Casualty Insurance Co., No. 1-96-2968, 1999 Ill. App. LEXIS 334, 1999 WL 529428 (May 21, 1999)).
Count II of the Schal/Buck/Northbrook complaint sought a declaration that Casualty and American States were estopped from denying coverage to Schal and Buck with respect to the Keegan action. Count III sought full reimbursement from Casualty and American States of the $842,916.67 Northbrook paid on behalf of Schal and Buck. Count IV sought equitable contribution from Casualty and American States to Northbrook's contribution toward satisfaction of the Keegan judgment.
(3) The Wausau Counterclaim
Counts VI and VII of the Schal/Buck/Northbrook complaint were brought against Wausau. On August 31, 1995, Wausau filed a counterclaim in the Schal/Buck/Northbrook action seeking, inter alia, equitable contribution against Casualty and American States. Wausau sought a determination of whether Keegan's injury "arose out of" the operations of two subcontractors insured by Casualty and American States, Alcan United Concrete, Inc. (Alcan) and/or Chicago Forming, Inc. (Chicago Forming). Wausau alleged that these subcontractors were insured by Casualty and American States and that Schal and Buck were listed as "additional insureds" on their policies. Wausau sought equitable contribution from American States and Casualty in an amount to be determined by the trial court in the event the fact finder found in its favor.
B. The Underlying Litigation
The underlying litigation involved Keegan's fall from a steel beam while he was working on a construction project at 515 North Michigan Avenue in Chicago on June 9, 1989. Buck owned the site, and Schal was the general contractor. Both were insured by Northbrook.
Various other parties which were subcontractors on the project were subsequently added to the Keegan action. These included Ozark Steel Fabricators, Inc. and Ozark Steel Sales, Inc. (collectively "Ozark") which were insured by Wausau; Ranken Steel, Inc. and R.S. Erectors, Inc. (collectively "Ranken") which were insured by Great American; Alcan which was insured by Casualty; and Chicago Forming which was insured by American States. The Keegan action alleged that each defendant was "in charge of the work" at the site and that each violated the Structural Work Act in proximately causing Keegan's injuries. Buck and Schal were additional insureds on each of the subcontractors' policies.
Schal and Buck tendered their defenses to Wausau, Great American, Casualty and American States. Wausau and Great American accepted the tender. Casualty participated in Schal's and Buck's defense, but withdrew when its named insured, Alcan, was dismissed from the suit. American States never participated in Schal's or Buck's defense. *fn1 The jury returned a verdict in favor of Keegan and assessed his recoverable damages in the amount of $2,892,500 against Schal, Buck and Ozark. The jury was not asked to apportion fault. Judgment was entered on the verdict.
C. Summary of Policy Coverage
The coverage now at issue can be summarized as follows:
Insurance Named Additional
Company Insured Limits Insured(s)
Great American Ranken $1,000,000 Schal
Wausau Ozark $1,000,000 Schal
Casualty Alcan $1,000,000 Schal
American StatesChicago ...