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Richard Marker Associates v. Pekin Insurance Company

January 29, 2001

RICHARD MARKER ASSOCIATES AND RICHARD MARKER, PLAINTIFFS,
v.
PEKIN INSURANCE COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLEE
(STATEWIDE INSURANCE COMPANY, THIRD-PARTY DEFENDANT-APPELLANT).



Appeal from the Circuit Court of Du Page County. No. 98--MR--522 Honorable Bonnie M. Wheaton, Judge, Presiding.

The opinion of the court was delivered by: Justice O'malley

Third-party defendant, Statewide Insurance Company (Statewide), appeals the judgment of the circuit court of Du Page County granting the summary judgment motion of third-party plaintiff, Pekin Insurance Company (Pekin). We reverse and remand.

In October 1992, an action was brought by Leon Yuan, Angela Yuan, and Leon Yuan, Ph.D., D.D.S. Ltd. (Yuans) against Richard Marker and Richard Marker Associates (Marker). In this lawsuit, the Yuans alleged breach of an architectural services agreement and breach of a construction contract on the grounds that Marker improperly designed and incorrectly constructed a building which was to contain the Yuans' residence, dental offices, and laboratory. The Yuans further alleged actual and constructive fraud and consumer fraud.

The Yuans' construction project had closed on February 3, 1992, and Marker had provided a warranty for one year thereafter. Marker was insured by Pekin from August 25, 1991, to August 25, 1992, and by Statewide beginning on August 25, 1992.

Marker initially tendered defense of the cause of action to Pekin, which refused the tender. As a result of this refusal, Marker retained counsel to represent him in the Yuans' lawsuit.

Pekin filed a complaint for declaratory judgment on December 19, 1994, seeking a judicial determination that it was not required to defend or to indemnify Marker with respect to the Yuans' lawsuit.

In July 1995, the Yuans filed an "amended fourth amended complaint," and, on August 4, 1995, Marker tendered that complaint to Statewide for defense. On December 7, 1995, Statewide refused Marker's tender on the ground that the policy held by Marker became effective after all but one of the allegations in the complaint occurred. Statewide also refused the tender as being untimely. On February 22, 1996, Statewide filed a complaint for declaratory judgment, seeking a judicial determination that it was not required to defend or indemnify Marker with respect to the Yuan lawsuit.

On May 8, 1996, the trial court granted Pekin's motion for summary judgment in the declaratory judgment action brought by Pekin, and Marker appealed. While the appeal was pending, the following occurred. In June 1996, Marker settled the Yuans' lawsuit. On August 30, 1996, Marker withdrew his tender to Statewide. On September 26, 1996, the trial court entered an agreed order in which it granted Statewide's motion for voluntary non-suit of its declaratory judgment action against Marker.

Marker's appeal in the Pekin matter subsequently was decided on June 30, 1997. See Pekin Insurance Co. v. Richard Marker Associates, Inc., 289 Ill. App. 3d 819 (1997). In that case, we reversed the trial court and held that Pekin had a duty to defend Marker where the allegations of the underlying complaint filed by the Yuans potentially fell within the policy coverage. Pekin Insurance Co., 289 Ill. App. 3d at 823.

On July 10, 1998, Marker brought a complaint for declaratory judgment against Pekin seeking indemnification for the settlement of the Yuans' lawsuit, attorney fees, and costs. Pekin denied that it owed Marker indemnification. Additionally, Pekin filed a motion for leave to file a third-party complaint for declaratory judgment against Statewide, alleging that Statewide owed Pekin equitable contribution pursuant to the "other insurance" provision of Pekin's insurance policy. The trial court granted Pekin's motion to file the third-party complaint against Statewide.

Marker objected to Pekin's motion on three bases. First, Pekin breached its own duty to defend and, hence, was estopped from claiming entitlement to equitable contribution. Second, assuming that Pekin and Statewide were co-primary insurers, Marker had elected that Pekin defend the Yuans' lawsuit and had withdrawn his tender to Statewide. Therefore, Pekin was unable to seek equitable contribution from Statewide because Statewide's policy was not available to Pekin for contribution. Third, Pekin had not yet paid any losses claimed by Marker, rendering the request for equitable contribution premature.

Statewide filed an answer to Pekin's third-party complaint, denying that Pekin was entitled to equitable contribution. Statewide also filed a motion for summary judgment against Pekin in which it alleged, inter alia, that it owed no duty of equitable contribution to Pekin because Marker had deactivated his tender to Statewide. Pekin filed a cross-motion for summary judgment in which it responded that, as a matter of law, Statewide owed Pekin equitable contribution because the Statewide policy had been triggered and Marker's attempt to withdraw his tender to Statewide was of no legal consequence where he had settled the underlying lawsuit prior to the withdrawal.

The trial court granted Pekin's motion for summary judgment, finding that "Statewide Insurance Company [was] liable to Pekin Insurance Company for equitable contribution during the period of August 4, 1995, through July 1, 1996." The court also denied Statewide's motion for summary judgment and ruled that its order was appealable immediately pursuant to Supreme Court Rule 304(a). 155 Ill. 2d R. 304(a). Statewide filed this timely appeal.

On appeal, the parties concede that Marker's letter of August 30, 1996, clearly indicated his intent to withdraw his tender of defense of the Yuans' lawsuit from Statewide. Thus, the issues on appeal are whether Marker was capable of withdrawing his tender to Statewide after the Yuans' lawsuit was settled and whether Statewide's coverage of the Yuans' lawsuit was accessible for equitable contribution under the "other insurance" provision of the Pekin policy. We agree with Statewide that the trial court, as a matter of law, incorrectly found that Pekin was entitled to equitable contribution from ...


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