American Serv. Ins. Co. v. China Ocean Shipping Co. Inc.
| Decision Date | 16 June 2010 |
| Docket Number | No. 1-08-1821.,1-08-1821. |
| Citation | 932 N.E.2d 8,342 Ill.Dec. 117,402 Ill.App.3d 513 |
| Parties | AMERICAN SERVICE INSURANCE COMPANY, Plaintiff-Appellant, v. CHINA OCEAN SHIPPING COMPANY (AMERICAS) INC., and Interpool Titling Trust, Defendants-Appellees (Frontline Transportation Corp., Vincent Zepeda, Kenneth Edward Lipski, Leisure Products Charter, Leisure Pursuits, Inc., Kenneth Allen Olson, Peter Penner, Irene Penner, Penner International Company, Ronald G. Sutfin, Carl Klemm, Inc., International Women's Association, Jane Hand, Marita Landa, Cecilia Ellis, Sonia Aladjem, Jeanette Notardonato, Olga L. Buenz, Irma Oppenheimer, Peggy Albert, Gordon Mark, Maria Mejia, Anita Yamada, Millicent Getz, Zarah Sobolski, Blovail Corp., Glaxo SmithKline, Appleton Papers, Inc., Midwest Recycling of Illinois, Yumi Ross, Nancy Knapp, Draga Vesseminovich, Carolyn Yelton, Barbara Mark, Ana Manglano, Diane Gottlieb, Unit Equipment Service of AG of Hamburg, Provena St. Joseph Hospital, State Farm Insurance Company d/b/a Isshi Yamada, Advocate Healthcare Systems, d/b/a Lutheran General Hospital, f/u/o Gordon Mark, Encompass Insurance Company a/s/o Marita Landa, Encompass Insurance Company a/s/o Arthur and Peggy Albert, Encompass Insurance Company a/s/o Gordon and Barbara Mark, Defendants). |
| Court | United States Appellate Court of Illinois |
OPINION TEXT STARTS HERE
COPYRIGHT MATERIAL OMITTED.
COPYRIGHT MATERIAL OMITTED.
Newman Raiz LLC Chicago, IL, for Plaintiff-Appellant.
Schuyer Roche & Crisham, P.C., Chicago, IL, for Defendants-Appellees, China Ocean Shipping Co. (Americas), Inc., Interpool Titling Trust.
Corboy & Demetrio, P.C., Chicago, IL, for Defendants-Appellees, Randall Ellis, Ind. Adms. Estate of Ellis; Dianne Gottlier; Nancy Knapp; Karl Landa, Ind. Adms. of Estate of Marita Landa; Maria Mejia; Vince Notardonato, Ind. Adms. of Estate of J. Notardonato; Zarah Sobolski.
Cooney & Conway, Chicago, IL, for Defendants-Appellees, Norman Aladjem, Executor of Estate of Sonia Aladjem.
Querrey & Harrow, Chicago, IL, for Defendants-Appellees, State Farm Mutual Insurance.
Clifford Law Offices, Chicago, IL, for Defendants-Appellees, Todd J. Kuoni, Co-Special Adm for Est. of Jane K. Hand; Charles F. Kuoni Co-Special Adm for Jane K. Hand.
On October 1, 2003, Vincent Zepeda was involved in a multivehicle accident, resulting in the deaths of eight people and injuries to many others. Twelve consolidated lawsuits were filed against Zepeda; his employer, Frontline Transportation (Frontline); and Interpool Titling Trust and China Ocean Shipping Company (COSCO), which the underlying lawsuits alleged owned, leased, maintained, and/or controlled the trailer hauled by Zepeda. Plaintiff, American Service Insurance Company, filed an interpleader action seeking to deposit the limits of Frontline's policy with the circuit court clerk. See 735 ILCS 5/2-409 (West 2006). Defendants Interpool Titling Trust and COSCO filed a counterclaim alleging breach of the duty to defend. The parties filed cross-motions for summary judgment. The trial court granted defendants' motion and denied plaintiff's, finding that plaintiff had a duty to defend defendants in the underlying action. The court awarded defendants attorney fees, costs, and interest totaling $1,074,676.86. On appeal, plaintiff argues that: (1) it had no duty to defend defendants because they were not insureds under the policy; (2) its interpleader action was proper; and (3) the award of attorney fees, costs, and interest was improper.
On July 24, 2004, John Buenz, as special administrator of the estate of Olga Buenz, deceased, filed a second amended complaint against Frontline, Zepeda, COSCO, and Interpool Titling Trust alleging negligence. Buenz alleged that on October 1, 2003, Frontline, by and through its agent, Zepeda, acted negligently when Zepeda drove a tractor-trailer into a minibus, causing the death of Olga Buenz.
John Buenz alleged that COSCO owned a leasehold on, maintained, and/or controlled the trailer that Zepeda was hauling. He similarly alleged that Interpool Titling Trust owned, maintained, or controlled the trailer. The complaint also alleged that defendants committed acts and omissions that contributed to the accident. These acts and omissions included defendants' permitting the trailer and/or container to be used and operated when they knew or should have known that it was not in a safe operating condition; permitting the trailer to be used and operated when they knew that it was not equipped with proper brakes; and failing to inspect and repair the trailer and its brakes. Buenz also alleged that Zepeda operated the trailer as COSCO's agent. 1
A number of other complaints were filed alleging claims for personal injuries, wrongful death, and survival arising out of the October 1, 2003, accident. A total of 12 underlying actions were consolidated into 1 action pending in the circuit court of Cook County under case number 03 L 012014.
Plaintiff issued automobile insurance policy No. 986057 to Frontline for the policy period June 12, 2003, through June 12, 2004. The policy provided as follows:
“The company will pay on behalf of the insured all sums, except for punitive or exemplary damages, which the insured shall become legally obligated to pay as damages because of A. bodily injury or B. property damage to which this insurance applies, caused by an accident and arising out of the ownership, maintenance or use or [ sic ] an owned vehicle or any temporary substitute automobile, and the company shall defend any suit alleging such bodily injury or property damage and seeking damages which are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent.”
The policy states that “the company will not defend any suit after it has paid the applicable limit of its liability for the accident which is the basis of the lawsuit.”
The policy further provides in relevant part:
“Each of the following is an insured under this insurance to the extent set forth below:
(a) the named insured;
(b) any partner or executive officer thereof, but with respect to a temporary substitute automobile only while such vehicle is being used in the business of the named insured;
(c) any other person while using an owned vehicle or a temporary substitute automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission; (d) any other person or organization but only with respect to his or her liability because of acts or omissions of an insured under (a), (b) or (c) above.”
The policy also provides that none of the following is an insured:
“(iii) any person or organization, other than the named insured, with respect to
(1) a motor vehicle while used with any trailer owned or hired by such person or organization and not covered by like insurance in the company (except a trailer designed or used with a four wheel passenger type vehicle and not being used for business purposes with another type motor vehicle), or
(2) a trailer while used with any motor vehicle owned or hired by such person or organization and not covered by like insurance in the company.”
An exclusion to the policy reads, “This insurance does not apply (a) to liability assumed by the insured under any contract or agreement.”
After Frontline hired Zepeda as a driver in August 2003, Frontline contacted its insurance broker to obtain coverage for Zepeda and his tractor-trailer. On August 28, 2003, Frontline's insurance broker sent a facsimile to the Buschbach Insurance Agency, an insurance producer for American Insurance, requesting coverage for Zepeda's 1995 Freightliner, which had a vehicle identification number of 1FUYDMCB5SP547151. On September 3, 2003, Buschbach submitted the request to American Service. The request sought coverage effective August 28, 2003, for the Freightliner and an “undescribed trailer.” An American Service policy endorsement shows that Zepeda was added as “Driver # 25.” Zepeda's Freightliner was added as “Vehicle # 43” for an additional premium of $3,098. American Service also added a “non-owned trailer” as “Vehicle # 44” for an additional premium of $1,201.
A schedule of additional insureds lists Interpool, Inc. as an additional insured. Defendants also produced Frontline's commercial insurance application and fax cover sheet. Pages 11 through 32 of the fax contained “additional insured endorsements” with “Sirius Insurance Company, Inc.,” printed on the bottom. Page 11 of the fax consisted of an “additional insured endorsement” that named “Interpool Inc. & its affiliates & subsidiaries,” “Interpool Titling Trust, Interpool Funding 2000 LLC, Interpool Acquisition LLC,” and “Interpool Chassis Funding LLC” as insureds under the policy, “but only to the extent that person or organization qualifies as an ‘insured’ under the WHO IS AN INSURED provision contained in Section II of the Coverage Form.”
On February 24, 2004, COSCO requested a defense through correspondence to counsel for Frontline, plaintiff's named insured. COSCO sought coverage based, inter alia, on an equipment interchange agreement it had with Frontline for the use of containers, chassis, and other equipment. 2 Frontline, a trucking firm, was identified as the “acquiring carrier” in the agreement, and COSCO was referred to as “the Line.” The agreement, dated April 21, 2001, provided as follows:
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