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Sears, Roebuck and Company v. National Union

May 22, 2002

SEARS, ROEBUCK AND COMPANY, PLAINTIFF-APPELLANT,
v.
NATIONAL UNION, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. The Honorable Julia M. Nowicki Judge Presiding

The opinion of the court was delivered by: Presiding Justice Hall

UNPUBLISHED

On November 19, 1999, Sears, Roebuck & Company (Sears), the insured, filed a three-count complaint for declaratory judgment and other relief seeking a judicial determination as to whether, pursuant to a commercial general liability policy (Policy), its insurer, National Union, had a duty to defend and indemnify it in an underlying lawsuit filed by Crystal D. Bland. In her complaint, Bland alleged that she was assaulted and raped by Arthur V. Lanier, who was hired to clean her carpets as an employee of Flagship Cleaning Services (Flagship), a Sears licensee.

Count I of Sears' complaint sought a declaratory judgment that National Union had a duty to defend and indemnify Sears in the Bland lawsuit pursuant to the Policy's coverage for "bodily injury." Count II sought a declaratory judgment that, under the Policy, Sears was entitled to "insured contract" coverage. In count III, Sears sought damages for National Union's alleged breach of contract for refusing to defend and indemnify Sears in the Bland lawsuit.

On February 17, 2000, Sears filed an amended complaint containing four counts. The amended complaint also gave notice that on December 15, 1999, Sears had reached a settlement agreement in the Bland lawsuit. Count III in the amended complaint now alleged breach of contract only for the failure to indemnify. The newly added count IV alleged breach of contract for the failure to reimburse defense fees and costs.

On April 19, 2000, National Union filed a motion to dismiss the amended complaint pursuant to section 2-615 of the Illinois Code of Civil Procedure (Code)(735 ILCS 5/2-615 (West 1998)), along with a supporting memorandum of law.

On June 27, 2000, the circuit court issued a memorandum opinion in which it granted National Union's motion to dismiss as to count II (declaratory judgment that Sears was entitled to insured contract coverage) and count IV (breach of contract for failure to reimburse fees and costs). However, the court denied the motion to dismiss as to count I (declaratory judgment that National Union had duty to defend and indemnify Sears) and count III (breach of contract for failure to indemnify), where Sears sought coverage for "bodily injury." The court found that based on the holding in Nationwide Mutual Fire Insurance Co. of Ohio v. Pipher, 140 F.3d 222 (3d Cir. 1998), Bland's claims alleging negligent conduct on the part of Sears fell within the Policy's coverage for "bodily injury" and, therefore, National Union could not claim that there was no coverage for Sears' potential liability.

On June 28, 2000, the circuit court issued a corrected memorandum opinion stating that its June 27 memorandum opinion mistakenly indicated that the court had granted National Union's motion to dismiss count IV. The court then corrected the error, stating that National Union's motion to dismiss count IV was denied.

On July 10, 2000, Sears filed a motion for partial summary judgment, contending that the circuit court's June 27 and 28 memorandum opinions were tantamount to a finding that National Union should have defended and indemnified Sears in the Bland lawsuit.

On July 17, 2000, Sears' motion for partial summary judgment was entered, but it was continued when National Union filed a motion to reconsider the denial of its motion to dismiss as to counts I, III, and IV of Sears' amended complaint.

On September 13, 2000, the circuit court entered a memorandum opinion granting National Union's motion to reconsider, thereby dismissing counts I, III, and IV of Sears' amended complaint. The court granted National Union's motion principally on the ground that it found that the holding in Moscov v. Mutual Life Insurance Co. of New York, 387 Ill. 378, 56 N.E.2d 399 (1944), prevented the court from exercising its discretion to follow the Third Circuit's decision in Pipher.

On September 19, 2000, Sears filed a timely notice of appeal from the September 13, 2000, final order dismissing its amended complaint. On appeal, Sears argues that: (1) the trial court erred when it determined that, based on the holding in Moscov, the court did not have the discretion to follow the Third Circuit's decision in Pipher; and (2) National Union should have defended Sears in the Bland lawsuit. For the following reasons we affirm the circuit court's final order dismissing Sears' amended complaint.

FACTUAL BACKGROUND

This declaratory judgment action arose from a lawsuit filed by Bland against Flagship, Sears, and Lanier, a Flagship employee. Bland's lawsuit was filed in the circuit court of Prince George's County, Maryland. The Bland complaint alleged that she was assaulted and raped by Lanier when he came to her home to clean her carpets. Bland's complaint contained 18 counts against Sears.

In the Policy that National Union issued to Flagship, Sears was named as an additional insured. National Union defended Flagship in the Bland lawsuit and ultimately settled it on behalf of Flagship. ...


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