Certain Underwriters at Lloyd's London v. Metro. Builders, Inc.

• Decision Date: 18 December 2019
• Docket Number: No. 1-19-0517,1-19-0517
• Citation: 2019 IL App (1st) 190517,158 N.E.3d 1084,442 Ill.Dec. 49
• Parties: CERTAIN UNDERWRITERS AT LLOYD'S LONDON, Subscribing to Certificate No. RTS000275-4, Plaintiff-Appellee and Cross-Appellant, v. METROPOLITAN BUILDERS, INC.; and AIG Property Casualty Company, as Subrogee of 1903 Schiller, LLC, Defendants (Metropolitan Builders, Inc., Defendant-Appellant and Cross-Appellee).
• Court: United States Appellate Court of Illinois

2019 IL App (1st) 190517

158 N.E.3d 1084

442 Ill.Dec. 49

CERTAIN UNDERWRITERS AT LLOYD'S LONDON, Subscribing to Certificate No. RTS000275-4, Plaintiff-Appellee and Cross-Appellant,

v. METROPOLITAN BUILDERS, INC.; and AIG Property Casualty Company, as Subrogee of 1903 Schiller, LLC, Defendants(Metropolitan Builders, Inc., Defendant-Appellant and Cross-Appellee).

No. 1-19-0517

Appellate Court of Illinois, First District, THIRD DIVISION.

Filed December 18, 2019

Rehearing denied January 30, 2020

David E. Schroeder, of Tribler Orpett & Meyer, P.C., of Chicago, for appellant.

Neal R. Novak and Karen Andersen Moran, of Novak Law Offices, of Chicago, for appellee.

PRESIDING JUSTICE ELLIS delivered the judgment of the court, with opinion.

¶ 1 Metropolitan Builders, Inc. (Metropolitan), appeals the circuit court's order finding that Certain Underwriters at Lloyd's London, Subscribing to Certificate No. RTS000275-4 (Lloyd's), did not have a duty to defend Metropolitan in an underlying case. In its order granting summary judgment to Lloyd's, the court found that the complaint in the underlying case alleged "property damage" but did not allege an "occurrence" within the meaning of the insurance policy.

¶ 2 We hold that the underlying complaint alleged both an "occurrence" and "property damage" under the policy. Metropolitan was thus entitled to a defense from Lloyd's of the underlying lawsuit. We reverse the trial court's judgment and remand for further proceedings.

¶ 3 BACKGROUND

¶ 4 A. General Facts

¶ 5 Metropolitan was hired as the general contractor for a construction job on property in Chicago. During the construction, a wall adjoining two structures collapsed. The amount of structural damage ultimately led the City of Chicago (the City) to declare the structures unsafe and demolish them.

¶ 6 The owner of the building turned to its insurer, AIG Property Casualty Company (AIG), for indemnification and reimbursement for the damages it suffered. AIG paid the owner "a sum of over $1,802,479.88 for repairs, demolition, construction, and other associated expenses arising from" the collapse.

¶ 7 AIG then invoked its rights of subrogation and filed suit against Metropolitan, the general contractor on the construction job (the Underlying Case). We draw our more detailed facts below from AIG's complaint in that action (the Underlying Complaint).

¶ 8 B. The Underlying Complaint

¶ 9 Metropolitan was hired as the general contractor for "construction, renovation, demolition, and/or other related activities" at contiguous properties on the 1900 block of West Schiller Street in Chicago—the 1907 Property, 1909 Property, and 1911 Property (collectively, the Properties).

¶ 10 As of October 2016, Metropolitan had obtained a permit from the City to perform construction activity to convert the 1909 and 1911 Properties into single-family dwellings. But as of that time, the City had not given Metropolitan a permit to perform construction activity of any kind on the 1907 Property.

¶ 11 In October 2016, the structures on the 1907 Property and 1909 Property collapsed. We do not know a great deal about how this collapse occurred. The allegations are that Metropolitan had "constructed a new wooden framing building and removed portions of the stairway within [the 1907 Property], without the authorization of a permit, in addition to altering the structural integrity and lower level supports of [the 1907 and 1909 Properties]."

¶ 12 In any event, the entire existing structures at the 1907 and 1909 Properties collapsed. The collapse caused significant damage to the Properties, "including in areas where [Metropolitan] was not conducting work." The existing structures on the Properties were later deemed unsafe and demolished by the City.

¶ 13 The Underlying Complaint alleged warranty and contract claims, as well as various tort claims, against Metropolitan. The various tort claims each alleged that, "[a]s a result of the aforementioned negligence, [the property owner] suffered losses including, but not limited to, damage to [its] real and personal property."

¶ 14 C. The Declaratory Judgment Action Before This Court

¶ 15 Metropolitan tendered defense of the Underlying Case to its insurer, Lloyd's. Lloyd's denied coverage and filed this declaratory judgment action, seeking a declaration that it owed no duty to defend Metropolitan. In its motion for summary judgment, Lloyd's argued that, while its insurance policy with Metropolitan required Lloyd's to defend Metropolitan for claims of liability resulting from "property damage" caused by an "occurrence," the allegations of the Underlying Complaint alleged neither "property damage" nor an "occurrence."

¶ 16 The trial court disagreed in part with Lloyd's, ruling that the Underlying Complaint adequately alleged "property damage." But the court agreed that the Underlying Complaint failed to allege an "occurrence" as defined by the insurance policy and thus entered summary judgment in favor of Lloyd's.

¶ 17 Metropolitan appeals, claiming that summary judgment for Lloyd's was inappropriate, as the Underlying Complaint alleged an "occurrence" as well as "property damage." Lloyd's not only urges affirmance on the basis that the trial court's ruling on the definition of "occurrence" was correct, but it also has cross-appealed as a backstop, arguing that summary judgment could be affirmed for the additional reason (contrary to the trial court's ruling) that the Underlying Complaint did not allege "property damage," either.

¶ 18 JURISDICTION

¶ 19 Our mention of the cross-appeal filed by Lloyd's leads us to a jurisdictional matter that we have an independent duty to address, even if the parties do not. See Lakeshore Center Holdings, LLC v. LHC Loan, LLC , 2019 IL App (1st) 180576, ¶ 9.

¶ 20 Lloyd's cross-appeals from the trial court's ruling that the Underlying Complaint alleged "property damage." That cross-appeal is improper, because Lloyd's received all the relief it sought below—a grant of summary judgment in its favor. A party granted summary judgment may not appeal that order. Chicago Tribune v. College of Du Page , 2017 IL App (2d) 160274, ¶ 28, 414 Ill.Dec. 59, 79 N.E.3d 694 ("Where the circuit court grants summary judgment in favor of a party, that party cannot file a cross-appeal to seek relief from the summary judgment order.").

¶ 21 We understand that Lloyd's is cross-appealing out an abundance of caution, a belt-and-suspenders approach. In the event we disagreed with the trial court's stated reason for finding no duty to defend—the lack of any allegation of an "occurrence"—Lloyd's would have us affirm on the secondary ground that no "property damage" was alleged, even though the trial court ruled otherwise on that question.

¶ 22 Still, the avenue of a cross-appeal is improper. " ‘It is fundamental that the forum of courts of appeal should not be afforded to successful parties who may not agree with the reasons, conclusion or findings below.’ " Material Service Corp. v. Department of Revenue , 98 Ill. 2d 382, 386, 75 Ill.Dec. 219, 457 N.E.2d 9 (1983) (quoting Illinois Bell Telephone Co. v. Illinois Commerce Commission , 414 Ill. 275, 282–83, 111 N.E.2d 329 (1953) ). We must dismiss the cross-appeal.

¶ 23 But this is a pyrrhic defeat only, as Lloyd's remains free to argue that the trial court's order should be affirmed based on the definition of "property damage" as well as "occurrence." We may affirm the judgment of the trial court on any basis in the record, regardless of whether it was the trial court's stated reason. Material Service Corp. , 98 Ill. 2d at 387, 75 Ill.Dec. 219, 457 N.E.2d 9. Indeed, that's precisely why a cross-appeal is both improper and unnecessary—because the appellee may raise this additional basis for affirmance on direct appeal. Id. ; Chicago Tribune , 2017 IL App (2d) 160274, ¶ 28, 414 Ill.Dec. 59, 79 N.E.3d 694.

¶ 24 So the cross-appeal is dismissed, but we will consider the arguments of Lloyd's regarding the definition of "property damage" as an additional basis for affirmance, if necessary.

¶ 25 ANALYSIS

¶ 26 Summary judgment is appropriate when "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2018). We review an order granting summary judgment de novo . Milwaukee Mutual Insurance Co. v. J.P. Larsen, Inc. , 2011 IL App (1st) 101316, ¶ 7, 353 Ill.Dec. 662, 956 N.E.2d 524.

¶ 27 Generally, in determining an insurer's duty to defend an insured in an underlying suit, we compare the allegations in the underlying complaint against the relevant policy language. Pekin Insurance Co. v. Centex Homes , 2017 IL App (1st) 153601, ¶ 34, 411 Ill.Dec. 143, 72 N.E.3d 831. An insurer has a duty to defend "[i]f the underlying complaints allege facts within or potentially within policy coverage." (Emphasis in original.) United States Fidelity & Guaranty Co. v. Wilkin Insulation Co. , 144 Ill. 2d 64, 73, 161 Ill.Dec. 280, 578 N.E.2d 926 (1991).

This duty arises "even if the allegations are groundless, false, or fraudulent." Id.

¶ 28 We liberally construe the underlying complaint and policy in favor of the insured. Id. at 74, 161 Ill.Dec. 280, 578 N.E.2d 926. " ‘The question of coverage should not hinge on the draftsmanship skills or whims of the plaintiff in the underlying action.’ " Illinois Emcasco Insurance Co. v. Northwestern National Casualty Co. , 337 Ill. App. 3d 356, 361, 271 Ill.Dec. 711, 785 N.E.2d 905 (2003) (quoting International Insurance Co. v. Rollprint Packaging Products, Inc. , 312 Ill. App. 3d 998, 1007, 245 Ill.Dec. 598, 728 N.E.2d 680 (2000) ). The threshold an underlying complaint must meet to trigger the duty to defend is low. State Farm Fire & Casualty Co. v. Tillerson , 334 Ill. App. 3d 404, 408, 268 Ill.Dec. 63, 777 N.E.2d 986 (2002) ; Bituminous Casualty Corp. v. Gust K. Newberg Construction Co. , ...