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Pekin Ins. Co. v. United Contractors Midwest, Inc.

Court of Appeal of Illinois, Third District

September 18, 2013

PEKIN INSURANCE COMPANY, Plaintiff-Appellant,
v.
UNITED CONTRACTOR MIDWEST, INC., d/b/a/ R.A. Cullinan and Son, Inc., a Delaware Corporation, and Charles Hill, Jr., Defendants-Appellees.

Page 236

Robert Marc Chemers (argued) and Richard M. Burgland, both of Pretzel & Stouffer, Chtrd., of Chicago, for appellant.

Craig L. Unrath (argued), Gary D. Nelson, Matthew S. Hefflefinger, and Tyler J. Pratt, all of Heyl, Royster, Voelker & Allen, of Peoria, for appellees.

OPINION

WRIGHT Presiding Justice.

[375 Ill.Dec. 233] ¶ 1 Pekin Insurance Company (Pekin) filed this declaratory relief action in response to a separate negligence complaint filed by Charles Hill, Jr. (Hill), in Peoria County, against United Contractors Midwest, Inc., d/b/a R.A. Cullinan & Son, Inc., a Delaware corporation (Cullinan), and Central Illinois Light Company (CILCO) [375 Ill.Dec. 234]

Page 237

in case No. 11-L-165. The underlying complaint alleged both defendants were independently negligent in supervising, maintaining and/or providing warnings regarding live overhead power lines near a work site where Hill's employer, Durdel & Sons Tree Service & Landscaping, Inc. (Durdel), was clearing trees. The negligence complaint alleged Hill, as Durdel's employee, operated machinery at the work site and struck overhead power lines, while moving logs, causing Hill to be injured by electricity.

¶ 2 In Pekin's action for declaratory relief, Pekin and Cullinan both filed motions for summary judgment. The court granted summary judgment in favor of Cullinan and against Pekin, finding Pekin had a duty to defend Cullinan, as an additional insured under Durdel's policy, in the negligence action filed by Hill against Cullinan.

¶ 3 Pekin appeals the circuit court's decision to grant summary judgment in favor of Cullinan. We reverse and remand.

¶ 4 BACKGROUND

¶ 5 In November of 2009, Cullinan became the general contractor of a construction project for the Illinois Department of Transportation along Northmoor Road in Peoria, Illinois. As the general contractor, Cullinan entered into a 15-page subcontract agreement with Durdel to clear trees and logs at the work site as an independent contractor/subcontractor.

¶ 6 On June 3, 2010, Durdel's employees, including Hill, were clearing trees and logs from the work site and Hill received injuries from electricity when he operated tree removal equipment that struck live overhead power lines. Consequently, on May 24, 2011, Hill filed a two-count negligence complaint, in Peoria County case No. 11-L-165, against Cullinan and CILCO. Count I of the complaint alleged Cullinan committed " Construction Negligence," and count II alleged CILCO committed general negligence. Hill's complaint did not contain any allegations that Durdel was negligent in any manner. On April 18, 2012, Cullinan filed a third-party complaint, in the underlying negligence case, alleging Durdel was solely negligent for Hill's injuries.

¶ 7 Cullinan contacted Pekin claiming it had a duty to defend Cullinan in Hill's negligence case, No. 11-L-165, as an additional insured under Durdel's policy. Pekin refused to represent Cullinan, claiming Durdel's policy did not cover Cullinan when the complaint alleged Cullinan was directly negligent for Hill's injuries, and not vicariously liable for Durdel's negligent actions. Thereafter, on November 10, 2011, Pekin filed a two-count complaint for declaratory relief, in Peoria County case No. 11-MR-461, against defendants Cullinan and Hill, asking the trial court to declare that: (1) Durdel's policy did not confer rights of insurance coverage to Cullinan for its own negligent acts or omissions, and (2) Pekin did not have a duty to defend Cullinan, as an additional insured under Durdel's insurance policy, for its own negligent actions alleged in Hill's underlying negligence complaint, No. 11-L-165. Both Pekin and Cullinan filed cross-motions for summary judgment in the instant case and attached copies of the relevant subcontract agreement, insurance policy, and the pleadings filed in case No. 11-L-165.

¶ 8 As part of the motions for summary judgment, the record contains a copy of the 136-page " Commercial Line Policy," issued by Pekin to Durdel for the period from June 3, 2010, to March 11, 2011, that lists Cullinan as one of 14 " additional insured" parties to this policy. The relevant clause in the " additional insured" portion of the policy provides:

Page 238

[375 Ill.Dec. 235] " Section II— Who Is An Insured is amended to include as an insured any person or organization for whom you [Durdel] are performing operations, when you and such person or organization have agreed in a written contract * * * and executed prior to the ‘ bodily injury’ or ‘ property damage’ for which coverage is sought, that you must add that person or organization as an additional insured on a policy of liability insurance (hereinafter referred to as the ‘ Additional Insured’ ).
The Additional Insured is covered only with respect to vicarious liability for ‘ bodily injury’ or ‘ property damage’ imputed from You [Durdel] to the Additional Insured [Cullinan] as a proximate result of:
(1) Your ongoing operations performed for that Additional Insured during the Policy Period; or
(2) ‘ Your work’ performed for the Additional Insured during the Policy Period, but only for ‘ bodily injury’ or ‘ property damage’ within the ‘ products-completed operations hazard.’
* * *
C. With respect to the coverage afforded to the Additional Insured, the following additional exclusions apply:
This insurance does not apply to:
(1) Liability for ‘ bodily injury’ or ‘ property damage’ arising out of the rendering of, or the failure to render, any professional services, including, but not limited to:
(a) The preparing, approving, or failing to prepare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders or drawings and specifications; or
(b) Supervisory, inspection, architectural or engineering activities.
(2) Liability for ‘ bodily injury’ or ‘ property damage’ arising out of or in any way attributable to the claimed negligence or statutory violation of the Additional Insured, other than vicarious liability which is imputed to the Additional Insured solely by virtue of the acts or omissions of the Named Insured [Durdel]."

¶ 9 I. Pleadings in the Underlying Negligence Case

¶ 10 Hill's negligence complaint, in case No. 11-L-165, contained allegations of negligence based on acts or omissions by Cullinan and CILCO directly. The relevant ...


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