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Country Mutual Insurance Co. v. Teachers Insurance Co.

March 22, 2001

COUNTRY MUTUAL INSURANCE COMPANY, APPELLANT,
v.
TEACHERS INSURANCE COMPANY ET AL. (TEACHERS INSURANCE COMPANY, APPELLEE).



The opinion of the court was delivered by: Justice McMORROW

Docket No. 89412-Agenda 32-September 2000.

The issue presented to us in this appeal is whether plaintiff, Country Mutual Insurance Company (Country Mutual), the insurer of a school board, or defendant Teachers Insurance Company (Teachers), the insurer of a teacher, is primarily liable for damages resulting from an automobile accident involving the teacher which occurred while the teacher was acting within the scope of her employment. The appellate court held that the public policy expressed in section 10-20.20 of the School Code (105 ILCS 5/10-20.20 (West 1998)) required the school board's insurer to provide primary coverage and granted summary judgment to Teachers. 312 Ill. App. 3d 566. For the reasons that follow, we reverse the judgment of the appellate court granting summary judgment to Teachers and remand the cause to that court for further proceedings.

BACKGROUND

The facts in this case are not in dispute. On December 8, 1995, Jo Chapman, a teacher at Sandoval Community High School District No. 501 (Sandoval), was driving her automobile while acting within the scope of her employment. Jamie Johnston, a student at Sandoval, was a passenger in the vehicle. Chapman's vehicle slid on an icy roadway and ran off the road, allegedly injuring Johnston. Johnston subsequently brought suit against Chapman and Sandoval, claiming that Chapman's negligence in driving the vehicle resulted in Johnston's injuries.

At the time of the accident, Chapman's vehicle was insured by defendant Teachers Insurance Company (Teachers), with Chapman as the named insured under the policy. Teachers' insurance policy with Chapman provides that Teachers will pay damages which Chapman becomes liable to pay because of bodily injury to others and that Teachers will defend any suit brought against Chapman for such damages.

Sandoval was insured by plaintiff, Country Mutual Insurance Company (Country Mutual), on a business automobile insurance policy. Country Mutual's policy with Sandoval provides:

"It is agreed that such insurance as is afforded by the policy for bodily injury liability and for property damages liability with respect to an insured automobile is extended to insure any member of the Board of Education or any employee, teacher, volunteer, personnel or any student teacher of the named insured, but only while acting within the course or scope of his duties, as such, or under the direction of the Board of Education, subject to the following provisions:

2. The insurance afforded by this endorsement with respect to any hired or non-owned automobile shall be excess insurance over any other valid and collectible insurance."

On August 20, 1995, Country Mutual issued an endorsement adding to the "who is insured" portion of its policy with Sandoval, which states:

"Any employee of yours is an insured while using a covered auto you don't own, hire or borrow in your business or your personal affairs." (Emphasis in original.)

Chapman tendered the claim that Johnston filed against her to Teachers. Teachers then tendered the defense to Country Mutual. Teachers argued that Country Mutual's policy provided primary coverage for Chapman's accident. In response, Country Mutual filed suit for declaratory judgment in the circuit court of Jefferson County, naming Teachers, Ruth Johnston, Jo Chapman and Sandoval as defendants. *fn1 Country Mutual alleged that its policy does not provide primary coverage and that it does not owe a duty to defend Chapman in the action against her. Teachers answered Country Mutual's complaint for declaratory judgment and filed a counterclaim against Country Mutual for declaratory judgment, alleging that Country Mutual's insurance policy did provide primary coverage for the accident. Teachers requested that Country Mutual be ordered to reimburse it for all amounts paid as a result of the underlying claim, as well as costs of the defense of the claim.

Both Teachers and Country Mutual filed motions for summary judgment. In its motion for summary judgment, Country Mutual contended that: (1) the unambiguous language of the policy that it issued to Sandoval establishes that it provides only excess coverage, rather than primary coverage, for Chapman's accident; and (2) the policy that Teachers issued to Chapman provides primary coverage. Country Mutual also argued that Illinois law sets forth the general principle that the automobile liability policy of the owner of a vehicle generally provides primary coverage.

Teachers, in its motion for summary judgment, argued that: (1) Country Mutual is obligated to indemnify Chapman pursuant to the Local Governmental and Governmental Employees Tort Immunity Act (Tort Immunity Act) (745 ILCS 10/2-302 (West 1998) (stating that a local public entity may elect to indemnify its employee for court costs, a judgment, and/or a settlement stemming from an action brought against that employee that arose while the employee was acting within the scope of his or her employment)); and (2) the August 1995 endorsement to the policy that Country Mutual issued to Sandoval establishes that Country Mutual is the primary carrier for Chapman's accident.

The circuit court of Jefferson County found that Teachers' insurance policy provided primary coverage for the accident and granted Country Mutual's summary judgment motion. Teachers then filed a motion to reconsider. In this motion, Teachers repeated the arguments that it made in its motion for summary judgment. Teachers also argued for the first time that section 10-20.20 of the School Code (105 ILCS 5/10-20.20 (West 1998)) establishes that Sandoval had an obligation to indemnify and protect Chapman. Country Mutual filed a brief in response to Teachers' motion to reconsider, contending that Teachers' argument regarding section 10-20.20 did not address the issue before the court, as it failed to consider the language in the ...


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