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Vivify Construction, LLC v. Nautilus Insurance Co.

Court of Appeals of Illinois, First District

January 24, 2018

VIVIFY CONSTRUCTION, LLC, Plaintiff and Counterdefendant-Appellant,
v.
NAUTILUS INSURANCE CO., Defendant and Counterplaintiff-Appellee.

          Appeal from the Circuit Court of Cook County. No. 2016 CH 05650 The Honorable Kathleen M. Pantle Judge, presiding.

          JUSTICE LAVIN delivered the judgment of the court, with opinion. . Justices Fitzgerald Smith and Howse concurred in the judgment and opinion.

          OPINION

          LAVIN JUSTICE

         ¶ 1 This appeal arises from the trial court's order entered against Vivify Construction, LLC (Vivify), and in favor of Nautilus Insurance Co. (Nautilus) with respect to the parties' cross-motions for judgment on the pleadings. The court found Nautilus had no duty to defend Vivify in the underlying action filed by an employee of its subcontractor, Victoria Metal Processor, Inc. (Victoria), which had procured insurance coverage with Nautilus on Vivify's behalf. Specifically, the court found that the Nautilus policy excluded bodily injury to Victoria's employees. On appeal, Vivify asserts that the trial court failed to give effect to the insurance policy's separation of insureds provision and failed to consider the subcontract between Vivify and Victoria in interpreting the policy. We affirm the trial court's judgment.

          ¶ 2 I. Background

         ¶ 3 On May 18, 2015, construction worker Pablo Vieyra sustained injuries when he fell from a second story scaffold. Although he was employed by Victoria, Vivify was the general contractor in charge of the construction project. Vieyra filed a negligence action solely against Vivify, alleging that it failed to properly supervise work at the job site (case No. 2015 L 6001). In turn, Vivify filed a third-party complaint against Victoria in that action, alleging that Victoria's negligence led to Vieyra's injury.

         ¶ 4 Vivify and Victoria had executed a written agreement the year before (subcontract). The subcontract required Victoria to indemnify Vivify against claims of bodily injury resulting from Victoria's work under the subcontract. Additionally, the subcontract required Victoria to procure insurance on Vivify's behalf:

"[Victoria] shall cause the commercial liability coverage required by the Subcontract Documents to include: (1) [Vivify] *** as [an] additional insured[ ] for claims caused in whole or in part by [Victoria's] negligent acts or omissions during [Victoria's] operations; and (2) [Vivify] as an additional insured for claims caused in whole or in part by [Victoria's] negligent acts or omissions during [Victoria's] completed operations."

         To that end, Victoria added Vivify as an insured under Victoria's commercial general liability policy with Nautilus.

         ¶ 5 Under the policy, an "additional insured" included the following:

"any person or organization when [Victoria] and such person or organization have agreed in writing in a contract *** that such person or organization be added as an additional insured on [Victoria's] policy. Such *** organization is an additional insured only with respect to liability for 'bodily injury' *** caused, in whole or part, by your acts or omissions, or the acts or omissions of those acting on your behalf:
1. In performing ongoing operations for the additional insured:
***
But only for:
1.The limits of insurance specified in such written contract or agreement, but in no event for limits of insurance in excess of the applicable limits of insurance of this policy; and
2.'Occurences' or coverages not otherwise excluded in the policy to which this endorsement applies." (Emphasis added.)

         ¶ 6 The policy addressed coverage for bodily injury:

"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 the insured against any 'suit' seeking those damages. However, we will have no duty to defend the insured against any 'suit' seeking damages for 'bodily injury' or 'property damage' to which this insurance does not apply."

         Furthermore, the body of the policy originally excluded coverage for certain bodily injury to "[a]n 'employee' of the insured, " but that exclusion was replaced by an endorsement (employee exclusion) titled "Exclusion-Injury to Employees, Contractors, Volunteers and Other Workers." The top of the endorsement warned, ...


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