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Northern Insurance Co. of New York v. City of Chicago

November 02, 2001

NORTHERN INSURANCE COMPANY OF NEW YORK, PLAINTIFF-APPELLANT,
v.
THE CITY OF CHICAGO, A MUNICIPAL CORPORATION, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. No. 99 CH 1638 The Honorable Albert Green, Presiding Judge.

The opinion of the court was delivered by: Justice Buckley.

Ordered published January 2, 2002.

NORTHERN INSURANCE COMPANY OF NEW YORK, PLAINTIFF-APPELLANT,
v.
THE CITY OF CHICAGO, A MUNICIPAL CORPORATION, DEFENDANT-APPELLEE.

Appeal from the Circuit Court of Cook County. No. 99 CH 1638 The Honorable Albert Green, Presiding Judge.

The opinion of the court was delivered by: Justice Buckley.

Northern Insurance Company of New York (Northern) brought this declaratory judgment action against its insured, the City of Chicago (City). Northern's complaint alleged that, because the City failed to provide timely notice of a pending action, Northern owed no duty to defend or indemnify the City. The trial court granted the City's motion for summary judgment and awarded the City $24,000 plus costs and expenses. Northern appeals, arguing that the trial court erred in granting the City's summary judgment motion because the City failed to provide timely notice of an underlying action and that the trial court should have stricken the City's summary judgment motion. The City disagrees, arguing that Northern is estopped from asserting a late-notice defense. For the following reasons, we reverse and grant summary judgment in favor of Northern.

BACKGROUND

In May 1993, Vixen Construction, Inc. (Vixen), contracted with the State of Illinois to repair the streets, sidewalks and parking meters along North Lincoln Avenue in Chicago. Pursuant to an ordinance, Vixen applied for a construction permit. To receive a permit, construction companies must present proof of insurance and agree to indemnify the City against losses arising from the construction. Such insurance coverage must include the City, its officers, employees, and agents as additional insureds. The City issued Vixen's permit on May 14, 1993.

In July 1994, Northern issued two policies to Vixen. The policies provided coverage between July 1994 and July 1995 and named the City as an additional insured. The policies provided in part that Northern would "pay those sums that the insured becomes legally obligated to pay as damages" and that Northern would "have the right and duty to defend any 'suit' seeking those damages." More specifically, the policies provided:

"2. Duties in the Event of Occurrence, Offense, Claim or Suit

a. [Vixen or the City] must see to it that [Northern is] notified as soon as practicable of an 'occurrence' or an offense which may result in a claim.

***

b. If a claim is made or 'suit' is brought against any insured, [Vixen or the City] must:

***

2. Notify [Northern] as soon as practicable. [Vixen or the City] must see to it that [Northern receives] written notice of the claim or 'suit' as soon as practicable.

***

d. No insured will, except at their own cost, voluntarily make a payment, assume any obligation or incur any expense, other than for first aid, without ...


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