Cincinnati Companies v. West American Ins. Co.

• Decision Date: 09 April 1997
• Docket Number: No. 2--96--0467,2--96--0467
• Citation: 679 N.E.2d 91,287 Ill.App.3d 505,223 Ill.Dec. 147
• Parties: , 223 Ill.Dec. 147 The CINCINNATI COMPANIES, Plaintiff-Appellee, v. WEST AMERICAN INSURANCE COMPANY, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 91

679 N.E.2d 91

287 Ill.App.3d 505, 223 Ill.Dec. 147

The CINCINNATI COMPANIES, Plaintiff-Appellee, v. WEST AMERICAN INSURANCE COMPANY, Defendant-Appellant.

No. 2--96--0467.

Appellate Court of Illinois Second District.

April 9, 1997.

Robert Marc Chemers, Anne S. Johnson, Pretzel & Stouffer, Chartered, Chicago, for West American Insurance Company.

James P. DeNardo, Patricia R. Morton, Kristin L. Dvorsky, McKenna, Storer, Rowe, White & Farrug, Chicago, for the Cincinnati Companies.

Presiding Justice GEIGER delivered the opinion of the court:

The defendant, West American Insurance Company (West American), appeals from the April 8, 1996, order of the circuit court of Du Page County granting summary judgment in favor of the plaintiff, the Cincinnati Companies (Cincinnati), on its complaint for declaratory judgment. The trial court ruled that West American was liable to Cincinnati for an equitable share of Cincinnati's expenses in the defense and settlement of a personal injury action filed in the circuit court of Will County. West American's equitable share was determined to be $29,384.50, and judgment was subsequently entered against West American in that amount. We affirm.

In 1989, Lorren Kessel filed a personal injury lawsuit in the circuit court of Will County (the underlying action). The underlying action arose out of injuries Kessel sustained while performing construction work at the Lockport train station. Among the defendants named in the underlying action were Baird Land Surveyors (Baird) and William Grady, doing business as B & D Home Repair and Builders (B & D).

Cincinnati had issued an insurance policy to another contractor on the project, Champion Drywall. This policy named Baird as an additional insured. Upon receipt of service of process in the underlying action, Baird tendered the action to its own insurer, which, in turn, tendered the defense to Cincinnati. Cincinnati then retained counsel to defend Baird in the underlying action.

West American had issued an insurance policy to B & D. Pursuant to this policy, West American retained counsel to defend B & D in the underlying action. This policy also named Baird as an additional insured. Baird, however, was not aware that it was an additional insured under the West American policy.

During the course of litigation, Baird propounded interrogatories to B & D that specifically requested that B & D identify the name of each insured under the West American policy. In response to this inquiry, B & D failed to disclose that Baird was named as an additional insured. Baird also requested that B & D produce a copy of the West American policy. Although B & D responded to the production request, it did not provide a copy of the policy endorsement that named Baird as an additional insured. B & D's responses to these discovery requests were signed by the attorney retained by West American to defend B & D in the underlying action.

The underlying action was scheduled for trial on three separate occasions. On January 27, 1992, which was the third trial date, B & D's attorney turned over a document to Baird's attorney that disclosed that Baird was named as an additional insured under the West American policy. Following this disclosure, Baird's attorney discussed the matter with Baird's president, Barbara Baird, and then immediately tendered the defense to West American. West American rejected the tender.

On February 17, 1992, the underlying action was settled between the parties. Cincinnati paid Kessel $30,000 on Baird's behalf, and West American paid Kessel $30,000 on B & D's behalf. Prior to settlement, Cincinnati and West American entered into a stipulation reserving Cincinnati's right to pursue a contribution action against West American for reimbursement of the settlement amount, as well as its attorney fees in defending Baird in the underlying action.

On June 25, 1993, Cincinnati filed the instant action against West American seeking a declaration that, pursuant to the doctrine of equitable contribution, West American was obligated to reimburse Cincinnati for the defense costs and indemnity payments that it made on behalf of Baird in the underlying action. On January 4, 1995, Cincinnati filed a motion for summary judgment. In support of its motion, Cincinnati attached the affidavit of Barbara Baird. In her affidavit, Barbara Baird averred that (1) a company named AVA handled all of Baird's insurance matters; (2) she had never had any insurance training or classes dealing with insurance; (3) she was unaware that Baird was listed as an additional insured under the West American policy until January 27, 1992; and (4) she considered B & D responsible for the accident at the construction site and preferred to have B & D's insurance pay for Baird's defense and settlement.

On January 12, 1996, West American filed a response to Cincinnati's motion for summary judgment, along with its own crossmotion for summary judgment. On January 17, 1996, West American also filed a motion to strike the affidavit of Barbara Baird, alleging that is was conclusory and without foundation.

On April 8, 1996, after a hearing on these motions, the trial court granted Cincinnati's motion for summary judgment and denied West American's cross-motion for summary judgment. As to West American's motion to strike Barbara Baird's affidavit, the trial court stated that it would only utilize "those aspects of the affidavit that complied with the rules." The trial court's order provides, in pertinent part:

"(1) The court, aware of defendant's motion to dismiss the affidavit of Barbara Baird and the [r]esponse thereto, utilized those aspects of the affidavit that complied with the applicable rules.

* * *

(3) The [a]nswers to [i]nterrogatories provided to Baird made no reference to the West American * * * policy and foreclosed Baird's opportunity to make a reasonable judgment as to tender.

(4) The lack of tender must not be attributed to Baird but to West American through the actions of * * * B & D['s] attorney in the [underlying action].

(5) West America should share equitably in settlement costs and for reasonable attorney fees incurred in [the underlying action] from the date of service of the [i]nterrogatories: January 2, 1991."

On April 18, 1996, Cincinnati filed a motion seeking the entry of a money judgment against West American for its equitable share of the settlement and defense costs of the underlying action. Cincinnati sought judgment in the amount of $15,000, which was one-half of the $30,000 settlement paid by Cincinnati in the underlying action, in addition to attorney fees in the amount of $14,384.50, which represented one-half of the total attorney fees incurred by Cincinnati in defending the underlying action after the date of January 2, 1991. On April 24, 1996, the trial court entered judgment in favor of Cincinnati in the amount of $29,384.50. West American filed a timely notice of appeal as to the trial court's ruling on the cross-motions for summary judgment, as well as the money judgment entered on Cincinnati's behalf.

West American's first argument on appeal is that the trial court erred in finding that, as a matter of law, it was liable to Cincinnati for an equitable share of Cincinnati's settlement and defense costs. West American argues that an insurer has no obligation to an insured absent tender of the claim by the insured. West American contends that Baird never made such a tender in the underlying action and that the trial court erred in attributing this lack of tender to the conduct of B & D's attorney.

The purpose of a motion for summary judgment is to determine whether a genuine issue of triable fact exists (Purtill v. Hess, 111 Ill.2d 229, 240, 95 Ill.Dec. 305, 489 N.E.2d 867 (1986)) and should be granted only 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 1994)). An order granting summary judgment should be reversed if the evidence shows that a genuine issue of material fact exists or if the judgment was incorrect as a matter of law. In re Estate of Herwig, 237 Ill.App.3d 737, 741, 178 Ill.Dec. 641, 604 N.E.2d 1164 (1992). The disposition of a summary judgment motion is not discretionary and the standard of review is de novo. Quinton v. Kuffer, 221 Ill.App.3d 466, 471, 164 Ill.Dec. 88, 582 N.E.2d 296 (1991).

In the context of insurance law, the doctrine of equitable contribution permits an insurer who has paid the entire loss to be reimbursed from other insurers who are also liable for the loss. Aetna Casualty & Surety Co. v. James J. Benes & Associates, Inc., 229 Ill.App.3d 413, 417, 171 Ill.Dec. 267, 593 N.E.2d 1087 (1992). This rule is applied in cases where one insurer has paid a debt equally owed by other insurers. Benes, 229 Ill.App.3d at 417, 171 Ill.Dec. 267, 593 N.E.2d 1087. The fact that an insurer undertakes the burden of a full settlement payment prior to a possible judgment does not mean that the insurer is a volunteer and the insurer, therefore, is not precluded from recovering contribution from other insurers liable for the same loss. Benes, 229 Ill.App.3d at 417, 171 Ill.Dec. 267, 593 N.E.2d 1087.

West American does not contest the fact that Baird was named as an additional insured under the West American policy and was covered for the construction accident alleged in the underlying action. Rather, West American argues that the doctrine of equitable contribution does not apply in the instant case because Baird never tendered the defense in the underlying action to West American. Relying on Institute of London Underwriters v. Hartford Fire Insurance Co., 234 Ill.App.3d 70, 80, 175 Ill.Dec. 297, 599 N.E.2d 1311 (1992), West American argues that an insurer's coverage obligations under an insurance policy are...