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Illinois Emcasco Insurance Company v. Northwestern National Casualty Company

February 03, 2003


Appeal from the Circuit Court of Cook County Honorable Nancy Jo Arnold, Judge Presiding

The opinion of the court was delivered by: Justice McNULTY


In 1998 Balthazar Rodriguez fell while working on a construction project. He sued the general contractor, R.A. Faganel Builders (Faganel), seeking to recover damages he incurred due to the fall. Faganel tendered defense of the suit to Northwestern National Casualty Company (Northwestern). Northwestern had issued a policy to Kol Painting (Kol), and the policy named Faganel as an additional insured. But the policy limited coverage for Faganel to liability imputed to Faganel for Kol's acts. Northwestern refused to defend Faganel against the lawsuit Rodriguez filed.

Illinois Emcasco Insurance Company (Emcasco), which also insured Faganel, accepted Faganel's tender of the defense against Rodriguez's suit. Emcasco then filed the lawsuit now on appeal, seeking a judgment declaring that Northwestern breached its insurance contract by refusing to defend Faganel. Although the trial court acknowledged that Faganel might be liable in the underlying suit based on imputed liability for Kol's conduct, the court found that Rodriguez's complaint did not on its face sufficiently suggest that Faganel's liability would fall under the coverage of Northwestern's policy. The trial court granted Northwestern summary judgment on Emcasco's complaint.

We hold that an insurer has a duty to defend its insured against any complaint that leaves open the possibility of coverage. The insurer may refuse to defend only when the complaint, considered in light of the insurance policy, precludes the possibility of coverage. Because we agree with the trial court's conclusion that Rodriguez's complaint does not preclude coverage under Northwestern's policy, we hold that Northwestern had a duty to defend Faganel. Therefore, we reverse the judgment of the trial court and remand for further proceedings.


In March 1997 Kol purchased commercial general liability coverage from Northwestern. The policy provides:

"[Northwestern] will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' *** to which this insurance applies. [Northwestern] will have the right and duty to defend any 'suit' seeking those damages."

Kol paid an additional premium for a modification of the policy naming Faganel as another party insured under the policy. The modification provides that the policy covers Faganel "only with respect to liability imputed to [Faganel] as a result of negligent acts or omissions of [Kol]."

Rodriguez sued Faganel and later added Kol as a co-defendant. Rodriguez alleged that Faganel acted as general contractor for construction of a residence, and Rodriguez worked as a drywaller and painter on that project. According to the complaint, on January 19, 1998, Rodriguez fell off the floor of the upper level of the home into a stairwell. He alleged that both Faganel and Kol, "through [their] duly authorized agents," violated duties to keep the worksite reasonably safe, because Faganel and Kol failed to place guardrails or other warnings around the stairwell. Although Rodriguez described Kol as a "contractor or subcontractor" on the project, he made no allegations regarding the relationship between Faganel and Kol. The complaint on its face did not establish whether Kol might count, for purposes of the lawsuit, as one of Faganel's duly authorized agents.

When Faganel tendered the suit to Northwestern, Northwestern replied that it was "unable to accept this tender of defense due to many unknown facts." Northwestern did not sue for a judgment declaring that it had no duty to defend Faganel.

Faganel's general liability insurer, Emcasco, agreed to defend Faganel, but Emcasco sued for a declaratory judgment and for damages resulting from Northwestern's breach of its insurance contract.

Both Northwestern and Emcasco moved for summary judgment on Emcasco's claim against Northwestern for breach of contract. After hearing oral argument on the motions, the court said:

"The Court finds that looking at those pleadings [Rodriguez filed against Faganel], nowhere in them do they present potential coverage under additional ...

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