American Economy Ins. v. Holabird and Root, 1-05-0403.

• Decision Date: 31 March 2008
• Docket Number: No. 1-05-0403.,1-05-0403.
• Parties: AMERICAN ECONOMY INSURANCE COMPANY, Plaintiff-Appellant, v. HOLABIRD AND ROOT, Defendant-Appellee (DePaul University, The City of Chicago, L & L Engineers, and Caroline Cogtella, Defendants).
• Court: United States Appellate Court of Illinois

886 N.E.2d 1166

AMERICAN ECONOMY INSURANCE COMPANY, Plaintiff-Appellant, v. HOLABIRD AND ROOT, Defendant-Appellee (DePaul University, The City of Chicago, L & L Engineers, and Caroline Cogtella, Defendants).

No. 1-05-0403.

Appellate Court of Illinois, First District, Sixth Division.

March 31, 2008.

Keith G. Carlson, Carlson Law Offices, Chicago, for Plaintiff-Appellant.

Jill B. Berkeley, Michael J. Hanahan, and Seth D. Lamden, Schiff Hardin LLP, Chicago, for Defendant-Appellee.

Presiding Justice McBRIDE delivered the opinion of the court:

Defendant Caroline Cogtella filed a lawsuit against defendants DePaul University (DePaul), L & L Engineers and Holabird & Root (H & R), alleging that she suffered bodily injury due to her exposure to the fluorescent lighting selected and installed in DePaul University's Goldblatt building. H & R tendered its defense of Cogtella's complaint to plaintiff American Economy Insurance Co. (American Economy) because American Economy was the insurer of Metrick Electric Co. (Metrick), the electrical subcontractor that H & R hired to install the lighting at the Goldblatt building and H & R was a named additional insured on Metrick's insurance policy. American Economy denied coverage and filed this declaratory judgment action as to its duty to defend in the Cogtella litigation. The trial court, in considering cross-motions for summary judgment, held that American Economy had an obligation to defend H & R in the Cogtella litigation.

American Economy appeals, arguing that the trial court erred in finding that American Economy had a duty to defend H & R because the complaint filed by Cogtella did not allege any negligence by Metrick and because the trial court improperly considered a third-party complaint filed by DePaul to find such a duty.

In December 1995, Cogtella filed her complaint for negligence, professional negligence, and negligent infliction of emotional distress against H & R, DePaul, and L & L Engineers. Cogtella's complaint alleged the following facts.

On or about November 1, 1991, the City of Chicago (City) and DePaul entered into an agreement in which the City sold real estate known as the Goldblatt building to DePaul, and DePaul, in turn, granted the City a leasehold interest for a portion of the building for City offices. Pursuant to that agreement, the City contracted with H & R to be the architect and general contractor for the design and construction of the City's space in the Goldblatt building. L & L Engineers was the electrical subcontractor on this project. All plans and specifications for the design and construction of the City's space were submitted to DePaul for approval.

Cogtella alleged that defendants "selected and installed fluorescent light fixtures and lights" in the City's space. "However, they did not elect to shield or filter the lights with commercially available and reasonably priced diffusers or filters that would diffuse or reduce to a safe level the ultraviolet (UV) rays emitted by the fluorescent lights." Cogtella further claimed that, "At no time during the planning, preparation of specifications, or construction of the City's leasehold space did Defendants consider the possible health effects on people occupying the City's space when they decided to install fluorescent lighting in the space."

Cogtella worked as the risk manager for the City's department of finance, risk management office, which moved into a portion of the City's space in the Goldblatt building. Cogtella had been previously diagnosed with lupus erythematosus, an autoimmune disease which causes inflammation of various parts of the body, especially the skin, joints, blood and kidneys. At the time Cogtella began working in the Goldblatt building, her illness was under control and did not cause any impairment in her ability to perform her job. However within days of Cogtella's move to the new work area in the Goldblatt building, she experienced a sudden, serious illness. She suffered severe erythema and edema of her face, neck and hands associated with first degree burns, skin lesions, hair loss, severe joint pain, vision impairment, and exhaustion. Cogtella alleged that this sudden illness was caused by her exposure to the unfiltered and undiffused fluorescent lighting in her work area.

In count I, Cogtella pled a claim of negligent infliction of emotional distress and alleged that defendants had a duty to provide a safe work area, free from hazards, for all people occupying the Goldblatt building and that they carelessly and negligently breached their duty and caused severe physical harm to Cogtella. These negligent acts and omissions proximately caused Cogtella to suffer emotional distress of both a physical and mental nature and she will continue to suffer severe emotional and physical illness and financial harm. In count II, Cogtella presented a claim of professional negligence against H & R and alleged that H & R owed Cogtella a duty to design and construct the City's space in a reasonably safe manner and was guilty of one or more of the following careless and negligent acts or omissions:

"a. Failed to reasonably educate itself about current medical and scientific information and literature available regarding the dangers of exposure to UV emissions from fluorescent lights;

b. Selected unsafe fluorescent lighting fixtures and lights which it designated to be installed in the City's leasehold space;

c. Failed to reasonably educate itself about current medical and scientific literature on the subject of UV radiation from fluorescent lights;

d. Negligently selected lighting subcontractor, Defendant L & L, which was not knowledgeable regarding the health effects of unfiltered fluorescent lighting and the appropriate selection of the types of fluorescent lights which would minimize exposure to harmful UV rays from the fluorescent light selected for the City's leasehold space;

e. Undertook no testing of, monitoring of, or any type of scientific evaluation of the level of harmful UV emissions emitted from the fluorescent lights installed in the City's leasehold space;

f. Was otherwise careless and negligent."

In June 1997, DePaul filed a third-party complaint against Metrick and the City. In count II, DePaul alleged that Metrick "was in charge of the installation of the electrical light fixtures in [Cogtella's] work station and on the fourth floor of the DePaul Center." DePaul further alleged that Metrick owed a duty to Cogtella to install electrical lighting fixtures that would not cause her physical, mental or emotional illness. DePaul claimed that Metrick was guilty of the following careless and negligent acts and/or omissions:

"a. Failed to reasonably educate itself regarding the potential danger or harm caused by exposure to ultraviolet ray emissions from florescent lights which they installed into buildings;

b. Failed to ensure that the florescent lighting fixtures and light installed in the City's work space on the fourth floor of the DePaul Center and in [Cogtella's] work station were safe so as not to cause physical, mental and emotion illness to its workers;

c. Failed to properly consult with its lighting engineer, L & L Engineers, and its architect, Holabird & Root, in order to ensure that the florescent lights and lighting systems chosen by the City of Chicago for [Cogtella's] work station and the fourth floor of the Goldblatt building were safe and did not present a danger to the City of Chicago employees occupying the City of Chicago's leasehold space; and

d. Was otherwise careless and negligent."

In March 1999, American Economy filed its complaint for declaratory judgment, asking the trial court to find that H & R, DePaul,¹ the City, and L & L Engineers did not qualify as additional insureds on Metrick's policy and, therefore, American Economy had no duty to defend or indemnify the defendants in connection with the Cogtella litigation.

American Economy and Metrick entered into a contract for general liability insurance, effective October 1, 1993, to October 1, 1994. H & R, DePaul, L & L Engineers and the City were added as additional insureds under the policy pursuant to an additional insured endorsement, which provided as follows:

"WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule but only with respect to liability arising out of `your work' for that insured by or for you."

The Cogtella litigation was settled in January 2000. In January 2004, the trial court denied American Economy's motion for summary judgment and granted H & R's cross-motion for summary judgment. In November 2004, the trial court entered a money judgment in the amount of $173,789.40, in favor of H & R. This appeal followed.

The issue before us on appeal is whether American Economy has a duty to defend H & R as an additional insured under the terms of the American Economy policy. American Economy maintains that because Cogtella did not specifically name Metrick in the underlying complaint or specifically allege any negligence on Metrick's part, it does not have a duty to defend H & R. H & R responds that because the underlying complaint alleges facts that the injuries sustained by Cogtella arose or potentially arose out of the work, specifically the installation of the lighting, which the third-party complaint alleges was Metrick's task, there is a duty to defend.

The construction of an insurance policy and a determination of the rights and obligations thereunder are questions of law for the court which are appropriate subjects for disposition by way of summary judgment. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.2d 384, 391, 189 Ill.Dec. 756, 620 N.E.2d 1073 (1993). Summary judgment is appropriate where the pleadings, depositions, and admissions on file, together with any affidavits and exhibits, when viewed in the light most favorable to the nonmoving party, indicate that...