April 12, 2017
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. l:14-cv-01572 -
John Robert Blakey, Judge.
Posner, Rovner, and Williams, Circuit Judges.
Williams, Circuit Judge.
is an insurance coverage dispute that resulted after a newly
constructed multi-story condominium building suffered water
damage. The water damage was allegedly caused by the failure
of the painting subcontractor, National Decorating Service,
to apply an adequate coat of sealant to the exterior of the
Illinois state court, the building's condominium
association filed suit against the general contractor,
developer, and various subcontractors (collectively the
"defendants") to recover for the damages incurred.
When the defendants tendered the defense to Westfield,
National Decorating Service's insurer, Westfield filed
this action seeking a declaration that it owes no duty to
defend the defendants in the underlying action. After
cross-motions for summary judgment were filed and fully
briefed, the district court determined that the condominium
association's complaint triggered Westfield's duty to
appeal, Westfield argues that the district court erred in
finding that there was a duty to defend for two reasons.
First, we agree with Westfield that the condominium
association's allegations of damage to individual unit
owners' property are not sufficient to trigger the duty
because the condominium association, on behalf of its unit
owners, lacks standing to pursue these claims.
Westfield contends it owes no duty to defend because the
condominium association's complaint does not allege a
covered incident under its policy. Rather, the complaint
alleges that the painting contractor failed to apply an
adequate amount of paint, which cannot be said to be an
"accident." Absent an "accident, "
Westfield asserts that there was not a covered
"occurrence" under the policy. Further, West-field
argues that because the damage alleged is to the building
itself, which was a new construction and not an existing
structure, the condominium association has not demonstrated
that there was property damage incurred that is subject to
we disagree. When the policy defines the term to include the
"continuous or repeated exposure to substantially the
same harmful conditions/' as it does here, the
condominium association's allegation that the painting
subcontractor acted negligently is sufficient under Illinois
law to constitute an "occurrence." Further, because
the painting subcontractor's actions are alleged to have
damaged parts of the building that were outside of the scope
of the work for which it was engaged, the condominium
association's complaint alleges potentially covered
property damage sufficient to invoke the duty to defend.
Therefore, we affirm the district court's grant of
summary judgment to the defendants.
coverage dispute arises out of the construction of a 24-story
condominium building located at 200 North Jefferson Street,
Chicago, Illinois ("200 North" or the
"Building"). 200 North Jefferson, LLC was the owner
and developer of the Building. James McHugh Construction
Company ("McHugh Construction") was the general
contractor who retained National Decorating Service,
Incorporated ("National Decorating") as a
subcontractor to perform all of the painting work.
Specifically, National Decorating was tasked with painting
the exterior of the Building with a protective coating known
as Modac, a waterproof sealant.
January 13, 2012, the Board of Managers of 200 North
Jefferson Tower Condominium Association (the
"Association") filed suit in the Circuit Court of
Cook County. See Bd. of Managers of 200 N. Jefferson
Tower Condo. Ass'n v. 200 Jefferson LLC, No.
2012-L-000480 (Cir Ct. Cook Cnty. filed January 13, 2012).
This action, which we will refer to as the "underlying
action/' is currently pending and seeks to recover for
damages incurred as the result of faulty workmanship on the
Building. 200 North Jefferson, LLC, McHugh Construction,
MCZ/Jameson Development Group, LLC, and National Decorating
were named as defendants. On September 4, 2014, the
Association filed the operative five-count Third Amended
Third Amended Complaint, the Association identifies the
following damages: (1) significant cracking of the exterior
concrete walls, interior walls, and ceilings; (2) significant
leakage through the exterior concrete walls, balconies, and
windows; (3) defects to the common elements of the Building;
and (4) damage to the interior ceilings, floors, interior
painting, drywall, and furniture in the units. Although the
previous complaint contained similar allegations regarding
the damages incurred, it was not until the Third Amended
Complaint was filed that damage to furniture was alleged.
Further, it was only after the filing of the Third Amended
Complaint that any of the named defendants claimed that
Westfield had a duty to defend in the underlying action.
January 9, 2014, McHugh Construction filed an Amended
Third-Party Complaint against National Decorating. It
contains three counts: (1) breach of contract; (2)
"express contractual defense & indemnity"; and
(3) negligence. McHugh alleged that it was National
Decorating's actions that caused the alleged damages to