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Certain Underwriters at Lloyd's London v. The Burlington Ins. Co.

Court of Appeals of Illinois, First District, Third Division

July 15, 2015

CERTAIN UNDERWRITERS AT LLOYD'S LONDON, Subscribing to Certificate No. CVC000537, Plaintiff-Appellee,
v.
THE BURLINGTON INSURANCE COMPANY and BARNABUS SUTTON, Defendants-Appellants

Appeal from the Circuit Court of Cook County. No. 13 CH 18775. The Honorable Rodolfo Garcia, Judge, presiding.

FOR PLAINTIFF-APPELLEE: Neal R. Novak, Esq., Colleen M. Costello, Novak Law Offices, Chicago, Illinois.

FOR DEFENDANT-APPELLANT: Michael C. Borders, Rosa M. Tumialàn, Dykema Gossett PLLC, Chicago, Illinois.

Lavin and Mason, Justices concurred in the judgment and opinion.

OPINION

Page 304

HYMAN, JUSTICE.

[¶1] Plaintiff, Certain Underwriters at Lloyd's, London, Subscribing to Certificate No. CRCC000537 (Underwriters), issued an insurance policy to Rada Development LLC (Rada) for a commercial development project. Barnabus Sutton, an employee of C& B Steel, Inc., a project subcontractor, sued Rada for injuries he sustained in an accident at the construction site. Underwriters filed a declaratory judgment action against C& B Steel's insurer, The Burlington Insurance Company (TBIC),

Page 305

sought a judicial declaration that, under the TBIC policy, Rada qualified as an additional insured. The circuit court held that TBIC had the sole duty to defend Rada as an additional insured and ordered TBIC to reimburse Underwriters for all reasonable costs in defending Rada. TBIC appealed, asserting that the circuit court erred in finding that TBIC has the sole duty to defend Rada, and asked that the order be reversed and a new order entered finding TBIC to be a co-primary insurer obligated to share in the defense with Underwriters.

[¶2] In a separate case involving the same tort claim, Pekin Insurance Company (Pekin), which issued a policy to Chicago Masonry Construction, Inc., another subcontractor, sought a declaration that Rada was not an additional insured under its policy. (Pekin named Rada but not Underwriters as a defendant in that declaratory judgment action.) After the trial court found Pekin had no duty to defend Rada in the Sutton lawsuit, Underwriters filed a petition to vacate the trial court's judgment under section 2-1401 of the Code of Civil Procedure (Code) (735 ILCS 5/2-1401 (West 2012)), asserting Underwriters was a necessary party. The circuit court granted Underwriters' petition and vacated the judgment. The appellate court affirmed. Pekin Insurance Co. v. Rada Development, LLC, 2014 IL App. (1st) 133947, 384 Ill.Dec. 388, 16 N.E.3d 781. Thereafter, in this case, TBIC filed a motion to vacate under section 2-1401, contending that Rada failed to name Pekin, a necessary party. The circuit trial court denied the petition. The trial court found Pekin did not acquire the status of a necessary party and TBIC had a duty to reimburse Underwriters' for its defense costs. Consolidated before us are TBIC's appeals of the order rejecting Pekin as a necessary party and the order granting Underwriters its reasonable defense costs.

[¶3] We affirm. Pekin does not have the status of a necessary party to this coverage dispute. The court only had to determine which insurer, as between Underwriters and TBIC, owed a primary duty to defend Rada. Further, the trial court did not err in finding that TBIC's " other insurance" clause rendered it primary to the Underwriters policy and responsible for Underwriters' defense costs.

[¶4] BACKGROUND

[¶5] Rada owns and is the developer of a commercial property located in Chicago (" the project" ). Rada contracted with Heartland Construction Group (Heartland) to act as general contractor. On August 1, 2006, Heartland entered into a subcontract agreement with C& B Steel, and as part of that agreement, C& B Steel was required to list Heartland as an additional insured on its liability insurance policy. Later, Rada took over as the general contractor of the project, under a " reassignment agreement" between Rada and Heartland. Heartland agreed to assign all of its interests in any subcontract agreement for the project, including its subcontract agreement with C& B Steel.

[¶6] On November 15, 2006, Barnabus Sutton, an employee of C& B Steel, sustained injuries in a construction related accident. Sutton sued Rada and others to recover for his injuries. (While these consolidated appeals were pending, the underlying action settled for $240,000 and was dismissed.) Underwriters tendered Rada's defense to TBIC, based on Rada's status as an additional insured under the TBIC policy. TBIC denied the tender, contending that the policy excluded Sutton's suit from coverage under ...


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