Appeal from the Circuit Court of Cook County. Honorable Donald J. O'Brien, Judge Presiding.
The opinion of the court was delivered by: Presiding Justice Hoffman
In this declaratory judgment action, the plaintiff, Home Insurance Company (Home), appeals from a circuit court order granting summary judgment in favor of the defendant, Cincinnati Insurance Company (Cincinnati), and denying its cross-motion for summary judgment. For the reasons which follow, we affirm.
The facts giving rise to this litigation are substantially undisputed. Allied Asphalt Paving Company (Allied) was the general contractor for a renovation project on the Kennedy Expressway in Chicago commissioned by the State of Illinois. The renovation work was subcontracted to Aldridge Electric Company, Inc. (Aldridge) and Western Industries, Inc. (Western). On August 18, 1994, Matthew Fisher, an employee of Aldridge, was injured when he was struck by an automobile while installing lights in an underpass. At the time of the accident, the driver of the car was intoxicated, drove through the construction area and struck Fisher. Fisher filed suit against numerous parties, including Allied and Western, the safety subcontractor for the renovation project. In his third-amended complaint, Fisher alleged that Allied and Western had agreed to assume responsibility for all safety aspects of the project and agreed to follow all statutory and Illinois Department of Transportation directives to protect workers during construction. Fisher further alleged that Allied and Western breached their duty to, inter alia, provide proper safety signs, traffic cones, barricades, warning lights, flagmen, and other traffic control devices at the location where he was working.
At the time of the accident, Allied was named as an additional insured under two insurance policies. Cincinnati had issued a commercial general liability insurance policy to Western, naming Allied as an additional insured, with a $1 million limit of liability for each occurrence. Allied was also named as an additional insured under a policy issued to Aldridge by Home, with a $1 million limit of liability for each occurrence. Each policy contained the following endorsement:
"WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of 'your work' for that insured by or for you."*fn1
Further, under each policy, "your work" was defined as:
"a. Work or operations performed by you or on your behalf; and
b. Materials, parts or equipment furnished in connection with such work or operations."
Allied tendered the defense of the Fisher action to both Cincinnati and Home. In a letter dated June 23, 1997, Cincinnati informed Richard Johnson, Allied's attorney, that it was accepting the defense, but would be reserving its rights to deny coverage with respect to any work or conduct that was not performed by Western on behalf of Allied.
In a letter dated September 14, 1999, addressed to Johnson, Home agreed to accept the defense of Allied. The letter also stated: "We [Home] will agree to share the cost of Allied's defense and indemnity with the insurance carrier for Western Industries on a 50/50 basis subject to a review of both policies and any reservation of rights."
About six to eight months before the Fisher trial commenced in October 1999, Cincinnati settled Fisher's claim against Western for $40,000. After the trial in the Fisher action commenced, Fisher agreed to settle his suit against Allied for $600,000. Home paid $500,000, and Cincinnati paid $100,000 of the settlement amount.
On November 8, 2000, Home filed the instant declaratory judgment action against Cincinnati, asserting theories of equitable subrogation and equitable contribution. In Count I of the complaint, Home sought a declaration that Cincinnati was the sole primary insurance carrier responsible for the defense of Allied in the Fisher action and, thus, was liable to Home for the entire amount Home paid toward the settlement. In Count II, Home sought a declaration that it was entitled to recover from Cincinnati the amount it paid in excess of its pro-rata share of the Fisher settlement.
In its answer to Home's complaint, Cincinnati raised three affirmative defenses. It alleged that: (1) Home waived any defenses to coverage by accepting Allied's defense without asserting a reservation of its rights; (2) Home was estopped from asserting for the first time in its declaratory judgment action that it was only an excess insurer as to Allied and, therefore, lacked any duty to defend or indemnify Allied against the ...