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W.E. O'Neil Construction Co. v. General Casualty Co. of Illinois

March 30, 2001

W.E. O'NEIL CONSTRUCTION COMPANY AND ASSURANCE COMPANY OF AMERICA, PLAINTIFFS-APPELLEES,
v.
GENERAL CASUALTY COMPANY OF ILLINOIS, DEFENDANT-APPELLANT (ST. PAUL FIRE AND MARINE INSURANCE COMPANY, DEFENDANT).



The opinion of the court was delivered by: Justice Cerda

Appeal from the Circuit Court of Cook County Honorable John K. Madden, Judge Presiding.

Defendant, General Casualty Company of Illinois, appeals from the entry of summary judgment in the favor of plaintiff Assurance Company of America, an excess insurer of plaintiff W.E. O'Neil Construction Company, for the attorney fees and costs that Assurance paid for the defense of O'Neil in a personal injury lawsuit. The lawsuit arose out of a construction project in which O'Neil was the general contractor and Blommaert Brothers Masonry, Inc., was a subcontractor.

General Casualty argues on appeal that it was not liable for O'Neil's defense costs because the insurance was provided to cover a void indemnity agreement. General Casualty argues in the alternative that, if it is liable for O'Neil's defense costs, the trial court erred in calculating the amount reimbursable to Assurance by General Casualty and erred in awarding prejudgment interest. We affirm the finding of liability but reverse and remand on the issue of damages, on the basis that Assurance was improperly awarded reimbursement for the attorney fees incurred in seeking payment of the costs of defending the personal injury lawsuit from other insurers of O'Neil.

FACTS

O'Neil was the general contractor and Blommaert was a subcontractor to O'Neil on a construction project in Woodridge, Illinois. General Casualty issued a commercial general liability insurance policy to Blommaert. O'Neil was listed as an additional insured on the policy. Assurance was the excess insurer of O'Neil.

O'Neil was named as one of the defendants in a lawsuit entitled Posey v. W. E. O'Neil Construction Co., No. 92--L--8460 (Cir. Ct. Cook Co.) (Posey) in which damages were sought for bodily injuries suffered in an incident on July 2, 1992, at the Woodridge project because of alleged violations of the Structural Work Act (740 ILCS 150/0.01 (West 1992)). O'Neil tendered its defense to General Casualty, which paid only a portion of the defense costs.

O'Neil and Assurance brought a declaratory judgment action. O'Neil sought a declaration that General Casualty had breached its duty to defend it in the Posey lawsuit. Assurance alleged that it issued a commercial general liability insurance policy to O'Neil that was excess over any other insurance. Assurance further alleged that for certain coverages it had no duty to defend when the insurance was excess but that it would defend if no other insurer defended. Assurance sought to recover the defense costs it incurred on behalf of O'Neil in the Posey lawsuit on the basis that General Casualty's insurance policy was primary. Assurance also sought prejudgment interest.

Blommaert's subcontract with O'Neil includes the following provisions concerning indemnification and insurance:

"INDEMNIFICATION. ARTICLE XX. To the fullest extent permitted by law, the Subcontractor hereby assumes entire responsibility and liability for any and all damage or injury of any kind or nature whatever (including death resulting therefrom) to all persons, whether employees of the Subcontractor or otherwise, and to all property caused by, resulting from, arising out of or occurring in connection with his execution of the Work; and if any claims for such damage or injury (including death resulting therefrom) be made or asserted, the Subcontractor agrees to indemnify and save harmless W.E. O'Neil Construction Company, O'Neil Industries, Inc., Owner and others required in the contract documents, their officers, agents, servants and employees (hereafter referred to collectively as 'Indemnities') from and against any and all such claims, and further from and against any and all loss, cost, expense, liability, damage or injury, including legal fees and disbursements, that Indemnities may directly or indirectly sustain, suffer or incur as result thereof and the Subcontractor, upon demand, agrees to and does hereby assume, on behalf of Indemnities, the defense of any action at law or in equity which may be brought against Indemnities upon or by reason of such claims and to pay on behalf of Indemnities upon its demand, the amount of any judgment that may be entered against Indemnities in any such action.

***

INSURANCE. ARTICLE XXI. Subcontractor shall obtain and submit to the General Contractor, before any work is performed under this contract, certificates from the Subcontractor's insurance carriers indicating coverage with limits of liability as set forth in the Principal Contract

***

B. Comprehensive general liability to cover the indemnity agreement in ARTICLE XX, although the existence of insurance shall not be construed as limiting the liability of the Subcontractor under this contract. Limits of liability shall not be less than $1,000,000 combined single limits each occurrence for bodily injury and property damage liability. The insurance shall include blanket (broad form) contractual liability coverage. *** Comprehensive general liability insurance shall name W.E. O'Neil Construction Company and O'Neil Industries, Inc. as additional insured and must provide Premises-Operations, Elevators, Independent Contractors, Broad Form Property Damage, Contractual Liability, Products & Completed Operations coverages *** and must be endorsed as Primary/Non-Contributory to any insurance of the additional insureds.

***

Subcontractor's insurance certificate shall indicate that coverage is afforded for the Indemnification Clause in ARTICLE XX and as required in the Principal Contract." (Emphasis added.)

Assurance filed a motion for summary judgment seeking findings that General Casualty had a primary duty to defend O'Neil with respect to the Posey lawsuit, that the Assurance policy was excess to the General Casualty policy, and that General Casualty had to reimburse Assurance for all ...


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