Appeal from the Circuit Court of Madison County. No. 98-MR-564 Honorable Randall A. Bono & Daniel J. Stack, Judges, presiding.
The opinion of the court was delivered by: Justice Welch
This is an appeal from a summary judgment entered by the circuit court of Madison County in a declaratory judgment action brought by Korte Construction Company (Korte) against American States Insurance, a Safeco Company (American States). Korte was named an "additional insured" under a policy of insurance issued by American States to Miller & Maack General Contractors, Inc. (Miller & Maack), which was constructing the new Edwardsville high school building. Korte was the construction manager on the project. The additional-insured endorsement of the American States policy names Korte as an additional insured, "but only with respect to liability arising out of [Miller & Maack's] ongoing operations performed for [Korte]."
On or about December 8, 1997, Margy Voigt, individually and as special administrator of the estate of Darwin Voigt, filed a wrongful-death action against Korte in the circuit court of the City of St. Louis, alleging that on June 25, 1997, Darwin Voigt was a laborer employed by Miller & Maack at the Edwardsville high school construction site and that he was killed while setting up a construction office trailer owned by, and for the use of, Korte. The complaint asserted various theories of liability against Korte. This underlying action was settled for $1.5 million in December 1999.
The complaint for declaratory judgment, filed December 31, 1998, alleges that Korte had tendered its defense of the Voigt suit to American States pursuant to the additional-insured endorsement but that American States had failed and refused to accept said tender. Count I of the complaint seeks a declaratory judgment that Korte was covered under the American States policy, that American States had a duty to defend Korte in the Voigt suit, and that American States has a duty to indemnify Korte up to the $1 million limit of the policy for any settlement or judgment entered in the Voigt suit. Count II of the complaint seeks attorney fees, costs, and a punitive award against American States pursuant to section 155 of the Illinois Insurance Code (Insurance Code) (215 ILCS 5/155 (West 1998)) for its vexatious and unreasonable conduct in refusing to defend or indemnify Korte in the Voigt suit.
On June 16, 1999, American States answered the complaint for declaratory judgment and asserted the affirmative defense that Korte was covered as an "additional insured" under an applicable insurance policy issued by St. Paul Fire & Marine Insurance Company (St. Paul) to the Edwardsville School District, which policy provided primary insurance to Korte, making any coverage provided by the American States policy excess. This affirmative defense was based on an endorsement to the American States policy, which provides:
"This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
The following paragraph is added to Section IV, paragraph 4.b[,]
COMMERCIAL GENERAL LIABILITY CONDITIONS
This insurance is excess over:
Any other insurance provided to you on a primary basis under a policy to which you have been included as an additional insured." Section IV, paragraph 4.a, of the American States policy, entitled "Commercial General Liability Conditions," provides, "This insurance is primary except when [paragraph 4.b] applies." According to American States, because Korte had primary coverage under the St. Paul policy, the American States policy provided only excess coverage and, accordingly, no defense or indemnification was required by American States. In its answer, American States prays for a declaratory judgment that its policy provides only excess coverage and that therefore American States had no duty to defend or indemnify Korte. Korte made no reply or other response to the affirmative defense asserted by American States.
On November 12, 1999, Korte filed a motion for summary judgment on its declaratory judgment complaint. American States responded, asserting that the St. Paul policy provided primary coverage and the American States policy provided only excess coverage. American States also asserted that, according to the complaint in the underlying suit, Darwin Voigt was killed solely due to acts of Korte, and not to acts of Miller & Maack performed for Korte, and that the additional-insured endorsement of the American States policy provides coverage only "with respect to liability arising out of [Miller & Maack's] ongoing operations performed for [Korte]." American States asserted that it had accepted the tender of St. Paul in the Voigt suit to the extent that the American States policy potentially provides excess coverage to Korte.
The motion for summary judgment was denied as premature because of outstanding discovery requests. American States had served a request to admit facts and a request for production on Korte, to which Korte had not yet responded. American States had then filed a motion to compel response. This motion to compel was still pending.
On February 15, 2000, the day after its motion for summary judgment was denied as premature, Korte noticed up for hearing American States' motion to compel. On February 18, 2000, a hearing was held on American States' motion to compel Korte's response to the request to admit facts and request to produce documents. The court entered an order directing Korte to comply with certain requests for production. The order makes no mention ...