No Defense Owed to Insured for Mediation Involving Environmental Contamination

The Illinois Appellate Court recently held that the term “suit” in a commercial general liability policy does not include a pre-suit mediation between the insured and others over the allocation of costs incurred to remediate environmental contamination. As a result, the court ruled that the insurers had no obligation to reimburse the insured for its legal fees incurred in the mediation.[1]

The insured operated a manufacturing facility on a property that was eventually declared a Superfund site by the U.S. EPA. To avoid litigation …

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Vicarious Liability and Additional Insured Coverage: Illinois Appellate Court Clarifies Factual Allegations Sufficient to Trigger Defense Duty

The Appellate Court of Illinois recently considered whether an underlying complaint against an a general contractor (additional insured), filed by the estate of an independent contractor/subcontractor’s employee who was killed in a job site accident, triggered the defense of the general contractor under the subcontractor’s liability policy. The subcontract at issue contained the standard additional insurance requirements. The court first decided that the liability policy’s additional insured endorsement did not protect an additional insured for its own negligence; and the issue was whether a duty …

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Illinois Appellate Court Reaffirms Trigger Date for Malicious Prosecution Offense Under Coverage B

In First Mercury Insurance Company v. Ciolino, the Illinois Appellate Court, First District waded into the sea-change concerning the trigger of coverage for malicious prosecution offenses under a liability policy. The First District joined the other districts to consider the issue, departed from the Seventh Circuit’s Erie prediction, and reasoned that the trigger date for malicious prosecution coverage will be similar under law enforcement liability and commercial general liability policies.

The facts giving rise to the coverage dispute stem from a lawsuit filed by …

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Illinois Coverage Litigations Beware! Attorney’s Failure to Properly Investigate Results in Severe Sanctions

In American Access Casually Co. v. Alcauter, 2017 IL App (1st) 160775, the Illinois Appellate Court, First District, affirmed the district court’s imposition of sanctions against the plaintiffs, American Access Casually Company (AACC) and its coverage counsel, James Newman, pursuant to Illinois Supreme Court Rule 137. Specifically, the Appellate Court held that there were sufficient grounds to uphold the sanctions because of the plaintiffs’ failure to properly investigate the continuing validity of their lawsuit, their failure to turn over pertinent information, and their proceeding …

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Five Yards for Encroachment: Prematurity Doctrines Found to Preclude Insurer’s Use of Extrinsic Evidence to Evade Coverage

In Pekin Insurance Co. v. St. Paul Lutheran Church, 2016 IL App (4th) 150966, the Illinois Appellate Court refused, based on the Prematurity Doctrine, to consider extrinsic evidence in an insurer’s declaratory judgment action in connection with an underlying wrongful death suit.

As background, Hope Farney, as administrator of the estate of Kitty Mullins, sued St. Paul Lutheran Church (Church) for wrongful death. She alleged that a Church employee, Matthew Geerdes, used his personal vehicle for Church business and negligently crashed into a vehicle …

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No Magic Words Needed To Trigger Application of the Construction Contract Anti-Indemnification Statute Says Illinois Appellate Court

In Pekin Insurance Co. v. Designed Equipment Acquisition Corp., 2016 IL App (1st) 151689, the Illinois Appellate Court examined a common issue for insurance carriers in disputes involving construction site injuries. In particular, the Appellate Court provided helpful clarification with respect to the application of the Construction Contract Indemnification for Negligence Act (Act), also known as the anti-indemnification statute.

The circumstances at issue involved a rental agreement between Abel Building & Restoration and Designed Equipment Acquisition Corporation, whereby Designed leased from Abel scaffolding materials. …

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No Complaint, No Duty to Defend: An Insurer’s Duty To Defend Does Not Arise from Unfiled Draft Complaints

In Philadelphia Indemnity Insurance Co. v. Pace Suburban Bus Service, 2016 IL App (1st) 151659, the Illinois Appellate Court provided keen insights into when the duty to defend is triggered and when an action for equitable contribution can be maintained.

As background, Pace Suburban Bus Services and Countryside Association for People with Disabilities entered into a leasing agreement whereby Pace would provide Countryside with a van, which would be driven by a Countryside employee, for the purposes of transporting disabled individuals to Countryside’s facility. …

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No, No, No: No Accident, No Property Damage, No Duty to Defend Under Illinois Law

Westfield Insurance Co. v. West Van Buren, LLC, et al., 2016 IL App (1st) 140862 represents a continuation of Illinois law in the context of an insurer’s duty to defend construction defect claims. As articulated in Westfield, accidental events are required to trigger a duty to defend and shoddy workmanship does not constitute property damage. In addition, since the underlying complaint did not seek damages for any personal property damage, the Illinois Appellate Court held Westfield Insurance Company had no duty to defend …

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Insurer Accused of Having Ace Up its Sleeve: Insurer Estopped from Relying on Sublimit Due to Defense Counsel’s Failure to Supplement Discovery Responses in Tort Lawsuit

In Harwell v. Fireman’s Fund Insurance Co. of Ohio, 2016 IL App (1st) 152036, the Illinois Appellate Court refused to allow Fireman’s Fund Insurance Company to assert a policy sublimit because defense counsel retained by Fireman’s Fund to represent its insured in the underlying tort lawsuit failed to inform the tort claimant that the sublimit, and not the full limit, applied.

As background, Brian Harwell was injured while working at a construction project supervised by Kipling Development Corporation as a general contractor. Harwell sued …

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Illinois Appellate Court Rejects Coverage for Junk Fax Class Action Settlement and Calls TCPA Class Action Attorneys to Task

The Illinois Appellate Court recently offered greater protection to insurance companies from liability emanating from the Telephone Consumer Protection Act of 1991 (TCPA) and fervently condemned the reality of class action settlements rewarding only class counsel. In First Mercury Insurance Co. v. Nationwide Security Services., 2016 IL App (1st) 143924 (May 18, 2016), the Appellate Court affirmed the trial court’s judgment that First Mercury had no duty to indemnify the class (as assignees) with respect to a settlement reached in the underlying junk fax …

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