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Sentinel Insurance Co. v. Walsh Construction Co.

United States District Court, N.D. Illinois, Eastern Division

January 16, 2018



          HON. JORGE L. ALONSO, United States District Judge

         In this diversity case, plaintiff, Sentinel Insurance Company (“Sentinel”), has filed a motion for summary judgment, seeking a declaration that it owes no duty to defend and indemnify Walsh Construction Company (“Walsh”) or Genesis Structures, Inc. (“Genesis”), for claims brought against them in a recent lawsuit stemming from the accidental death of James Quigley, an ironworker. Walsh opposes Sentinel's motion and moves for summary judgment on its counterclaim. For the following reasons, Sentinel's motion is denied and Walsh's motion is granted in part. Sentinel had a duty to defend Walsh, and because Sentinel breached its duty, it is estopped to assert policy defenses.


         Walsh served as the general contractor on a construction project (“the Project”) that lowered the streets that intersect at South Brainerd Avenue, South Torrence Avenue, and East 130th Street in southern Chicago and simultaneously realigned and raised the railroad tracks so traffic could pass beneath them. (Walsh LR 56.1 Stmt. ¶ 8, ECF No. 35.)[1] On April 9, 2012, James Quigley, an ironworker for S&J Construction Company, Inc. (“S&J”), one of the subcontractors hired to perform work on the project, was crushed by a steel post that fell out of its rigging during the erection of a steel truss system. (Id. ¶ 10) His estate filed suit (“the Quigley suit”) against Central Contractors Service, Inc., the subcontractor that was operating the crane from which the truss post was suspended at the time of the accident, and Walsh on April 12, 2012, asserting three counts against Walsh: negligence under the Wrongful Death Act, 740 ILCS 180/1 et seq; negligence in premises liability; and a claim under the Illinois Survival Act. (Id. ¶ 9.)

         The estate alleged that Walsh was “present during the course of [the] erection and construction” during which Quigley was killed; it “participated and coordinated in the work being done and designated various work methods, maintained and checked work progress and participated in scheduling of the work and the inspection of the work”; it “had the authority to stop the work, refuse the work and materials and order changes in the work”; it “managed, supervised and oversaw the erection of a steel bridge truss system consisting of numerous pieces of steel beams, plates and truss posts”; it bore responsibility for “management, supervision and oversight of the construction site and work being done thereon to prevent injury to those engaged in work upon said construction site”; and it committed negligent acts and omissions, including failing “to ensure the steel components of the truss system, in particular the truss posts, had erection aids or holes bored into the post for purposes of assisting in the erection of said component pieces when [Walsh] knew, or in the exercise of ordinary care should have known, that these were necessary components of the truss posts for the safety of the ironworkers during the erection of the truss system” and failing “to coordinate with the architect and engineers of record regarding the erection aids, erection manual, erection plans or procedural outline for the erection of the various components of the bridge truss system.” (Id., Ex. 1-A, Quigley Compl. ¶¶ 3, 4, 8, ECF No. 35-1 at 9-10).

         Walsh tendered its defense of the Quigley suit to Old Republic Insurance Company (“Old Republic”), claiming coverage as an additional insured under a policy Old Republic issued to S&J. (Id. ¶ 13.) Old Republic did not immediately respond to the tender. (Id. ¶ 14.) Walsh reviewed its records pertaining to the Project and discovered that its subcontract with Genesis Structures, Inc. (“Genesis”), an engineering firm that had been involved in the preparation of the steel truss system, required Genesis to obtain primary and non-contributory insurance covering Walsh for the Project. (Id. ¶¶ 15-16.) Walsh then tendered its defense to Genesis's insurer, Sentinel Insurance Company (“Sentinel”). (Id. ¶ 17.)

         Sentinel issued Genesis a “Spectrum Policy, ” which provided several different types of coverage. Under the terms of the policy's “business liability coverage, ” Sentinel promised to (a) “pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury” caused by an “occurrence” (or accident), and (b) “defend the insured against any suit seeking those damages.” (Compl. ¶ 19, ECF No. 1 (internal quotation marks omitted).) The term, “the insured, ” refers not only to Genesis, the policyholder identified as the “named insured” on the policy's declarations page (id., Ex. G, Sentinel Policy, Declarations, ECF No. 1-7 at 6), but also potentially to other persons or organizations, “when [Genesis has] agreed, in a written contract [or] written agreement[, ] . . . that such person or organization be added as an additional insured on [its] policy.” (Id., Ex. G, Business Liability Coverage Form, Part C.6., ECF No. 1-7 at 102-03.) When there is such an agreement, the policy covers the “additional insured, ” but, as relevant here, “only with respect to liability for bodily injury . . . caused, in whole or in part, by [Genesis's] acts or omissions or the acts or omissions of those acting on [its] behalf . . . in the performance of [its] ongoing operations.” (Id., Ex. G, Part C.6.f., ECF No. 1-7 at 104 (internal quotation marks omitted).) A general condition of the business liability coverage is that “this insurance applies . . . [s]eparately to each insured against whom a claim is made or suit is brought.” (Id., Ex. G, Liability and Medical Expenses General Conditions, Separation of Insureds, Part E.5, ECF No. 1-7 at 107.)

         The Sentinel policy contains a number of provisions that exclude coverage for “professional services” as follows:

1. This insurance does not apply to bodily injury . . . arising out of the rendering or failure to render any professional services by:
a. Any insured; or
b. Any engineering, architectural or surveying firm that is performing work on your behalf in such capacity.
2. Professional services include:
a. The preparing, approving, or failure to prepare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders, designs or drawings and specifications; and
b. Supervisory, inspection, architectural or engineering activities.

(See, e.g., Compl., Ex. G, Engineers, Architects or Surveyors Professional Liability Exclusion Endorsement, ECF No. 1-7 at 116 (internal quotation marks omitted); id., Ex. G, Business Liability Coverage Form Exclusion j., ECF No. 1-7 at 97.)

         Sentinel denied coverage in a letter dated December 27, 2012, asserting that its policy did not cover “professional errors and omissions” of Genesis and that since Genesis had not been asked to design a truss post rigging system, the failure of the rigging system was not caused by Genesis. (Id. ¶ 18; id., Ex. 1-E, ECF No. 35-1 at 42-49.)

         On May 9, 2013, in the Quigley suit, the Quigley estate filed a first amended complaint (“FAC”), this time naming Genesis as a defendant and asserting a negligence claim against it, and on June 4, 2013, Genesis tendered the FAC to Sentinel for defense and indemnity. (Id. ¶¶ 21-22.) In November 2013, having received no further communication from Sentinel since the December 27, 2012 letter, Walsh filed a declaratory judgment action against Old Republic and Sentinel in the Circuit Court of Cook County, seeking to resolve the coverage issue. (Id. ¶¶ 23-24.) Walsh twice attempted to effect service via the Cook County Sheriff and the Illinois Department of Insurance, but in February 2015, Sentinel filed a motion to dismiss, arguing that service was improper. (Id. ¶ 24.) The Circuit Court of Cook County granted Sentinel's motion on July 23, 2015, and Sentinel filed this action on the same day. (Id. ¶ 25.)

         Walsh and Genesis filed counterclaims. Walsh's counterclaim consists of three counts, seeking (1) a declaration that Sentinel owes it a duty to defend and indemnify for the Quigley lawsuit, and an award of costs, prejudgment interest, and other appropriate relief, (2) a declaration that Sentinel is estopped to assert policy defenses against Walsh, and an award of costs, prejudgment interest, and other appropriate relief, and (3) relief under Section 155 of the Illinois Insurance Code, which penalizes insurers for vexatious or unreasonable actions or delays in handling claims.


         To prevail on a summary judgment motion, “the movant [must] show[] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In considering such a motion, the court must view all evidence and draw all inferences in favor of the non-moving party. See Wesbrook v. Ulrich, 840 F.3d 388, 391 (7th Cir. 2016); Kvapil v. Chippewa Cty., 752 F.3d 708, 712 (7th Cir. 2014). At this stage, the court may not weigh evidence or determine the truth of the matters asserted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). A “genuine” dispute is one that could change the outcome of the suit, and is supported by evidence sufficient to allow a reasonable jury to return a favorable verdict for the non-moving party. Spivey v. Adaptive Mktg. LLC, 622 F.3d 816, 822 (7th Cir. 2010). The court will enter summary judgment against a party who does not “come forward with evidence that would reasonably permit the finder of fact to find in [its] favor on a material question.” Modrowski v. Pigatto, 712 F.3d 1166, 1167 (7th Cir. 2013).

         Sentinel contends that it is entitled to summary judgment because, based on the professional services exclusion, the policy did not even potentially cover Walsh for the Quigley lawsuit. Walsh contends that the professional services exclusion does not apply and Sentinel breached its duty to defend by refusing Walsh's tender. According to Walsh, because Sentinel wrongfully denied Walsh's claim without timely seeking a declaratory judgment of no coverage, Sentinel is estopped to assert policy defenses.


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