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Owners Insurance Company and Auto-Owners Insurance v. Seamless Gutter Corp.

November 14, 2011

OWNERS INSURANCE COMPANY AND AUTO-OWNERS INSURANCE COMPANY,
PLAINTIFFS-APPELLANTS,
v.
SEAMLESS GUTTER CORP., AN ILLINOIS CORPORATION, D.R. HORTON, INC., AN ILLINOIS CORPORATION, DOING BUSINESS AS CAMBRIDGE HOMES, ERIC GULBRANDSEN AND AMY GULBRANDSEN, DEFENDANTS WESTFIELD HOMES OF ILLINOIS, INC., A DISSOLVED ILLINOIS CORPORATION, AND DRH CAMBRIDGE HOMES, INC., AN ILLINOIS CORPORATION, DOING BUSINESS AS CAMBRIDGE
S. AGRAN, HOMES,
DEFENDANTS-APPELLEES).



Appeal from the Circuit Court of Cook County. No. 07 CH 01603 Honorable Martin Judge Presiding.

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

PRESIDING JUSTICE HALL delivered the judgment of the court, with opinion.

Justices Lampkin and Rochford concurred in the judgment and opinion.

OPINION

¶ 1 The plaintiffs, Owners Insurance Company (Owners) and Auto-Owners Insurance Company (Auto-Owners), filed a complaint for declaratory judgment against Seamless Gutter Corporation (Seamless), Westfield Homes of Illinois, Inc. (Westfield), DRH Cambridge Homes, Inc. (Cambridge), D.R. Horton, Inc., and Eric and Amy Gulbrandsen, seeking a declaration that defendants Westfield and Cambridge were not entitled to coverage under the policies of insurance issued to Seamless by the plaintiffs. The circuit court denied the plaintiffs' motion for summary judgment and entered summary judgment in favor of the defendants.*fn1 The plaintiffs appealed.

¶ 2 On November 15, 2010, this court entered an order pursuant to Illinois Supreme Court Rule 23 (eff. Jan. 13, 2011) affirming in part and reversing in part the grant of summary judgment to the defendants finding that there were genuine issues of material fact. Owners Insurance Co. v. Seamless Gutter Corp., No. 1-08-2924 (2010) (unpublished order under Supreme Court Rule 23). The plaintiffs filed a petition for leave to appeal.

¶ 3 On March 30, 2011, our supreme court denied leave to appeal but issued a supervisory order directing this court to vacate our order and reconsider our determination that Owners owed a duty to Cambridge, in light of Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (2010). Owners Insurance Co. v. Seamless Gutter Corp., No. 111754 (Ill. Mar. 30, 2011) (table). January 18, 2011). In accordance with the supervisory order, we vacate our judgment in Owners Insurance Co., and upon reconsideration, we now determine that the insurers did not have a duty to defend Cambridge.

¶ 4 As our prior order was vacated, we revisited the issue of whether the plaintiffs had a duty to defend Westfield. See Flavell v. Ripley, 247 Ill. App. 3d 842, 847 (1993) (where a judgment order is vacated, the effect is to leave the pleadings as if no judgment were ever entered); but see People v. Coulter, 345 Ill. App. 3d 81 (2003) (where supreme court vacated appellate court's prior opinion and remanded for reconsideration in light of a recent decision of the court, the appellate court would not consider portions of that decision not related to the case before the appellate court).

¶ 5 We now determine that Westfield was not an insured under either of the plaintiffs' policies and therefore, they had no duty to defend Westfield. The pertinent facts are taken from the pleadings and are set forth below.

¶ 6 I. BACKGROUND

¶ 7 A. The Construction Contract

¶ 8 Westfield was the general contractor and Seamless was a subcontractor on a construction project site in Algonquin, Illinois (the Algonquin site). The contract between Seamless and Westfield contained the following provisions relating to insurance:

"Subcontractor shall *** pay for and maintain insurance for all coverages and amounts of coverage not less than those set forth below *** and shall provide directly from Subcontractor's insurance carrier to Contractor at Contractor's office certificates issued by insurance companies satisfactory to Contractor to evidence such coverage ***. *** In the event of any failure by Subcontractor to comply with the provisions of this Paragraph 27.1. Contractor may *** purchase such insurance at Subcontractor's expense, provided that Contractor shall have no obligation to do so and if Contractor shall do so, Subcontractor shall not be relieved of or excused from the obligation to obtain and maintain such insurance amounts and coverages. Subcontractor shall provide to Contractor a certified copy of any and all applicable insurance policies and/or endorsements within fifteen (15) days of any request of Contractor.

The non-procurement of such insurance by the Subcontractor, or the non-delivery of such certificates or policies to Contractor, whether inadvertently or otherwise, shall not constitute waiver of subcontractor's obligations hereunder.

27.2 SCHEDULE OF INSURANCE COVERAGES

27.2.3 Commercial Liability Insurance $2,000,000 general aggregate, and $2,000,000 completed operations aggregate, and $2,000,000 each occurrence for bodily injuries, death and property damage resulting from any one occurrence, including the following coverages and conditions:

1. Shall name Contractor, Owner and Lender, if any, and any other parties designated by the Contractor as Additional Insureds as their interests may appear pursuant to ISO Additional Insured Endorsement CG 2010 (or the most recent form of said endorsement, if applicable), including but not limited to the following entities:

Westfield Homes of Illinois, Inc. (Sample Certificate Attached)

Westfield Development Corporation of Illinois

Westfield Homes USA

A copy of such Additional Insured endorsement shall be attached to the Certificate of Insurance, and the endorsement number or designation shall be entered on the Certificate."

¶ 9 On September 4, 2001, a certificate of insurance was issued by Seamless' insurance agent, listing Seamless as the insured and Westfield as the certificate holder. There was no reference to Westfield as an additional insured on the certificate. The certificate provided as follows:

"THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW."

¶ 10 In 2001, Westfield was dissolved, and Cambridge acquired Westfield's assets, including the Algonquin site. Cambridge was added as an additional insured pursuant to an endorsement to the Owners policy.

¶ 11 B. The Insurance Policies

¶ 12 1. Owners Policy

¶ 13 Owners issued a commercial general liability (CGL) policy of insurance to Seamless as the named insured for the effective policy period of July 1, 2001, to July 1, 2002. The CGL policy provided in pertinent part as follows:

"1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies. We will have the right and duty to defend any 'suit' seeking those damages."

The Owners policy contained the following exclusion to the above coverage:

"This insurance does not apply to:

e. 'Bodily injury' to:

(1) An employee of the insured arising out of and in the course of employment by the insured; or

(2) The spouse, child, parent, brother or sister of that employee as a ...


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