International Amphitheatre Co. v. Vanguard Underwriters Ins. Co.

• Court: Appellate Court of Illinois
• Writing for the Court: FREEMAN
• Citation: International Amphitheatre Co. v. Vanguard Underwriters Ins. Co., 519 N.E.2d 1015, 166 Ill.App.3d 369 (Ill. App. 1988)
• Decision Date: 03 February 1988
• Docket Number: No. 86-1218,86-1218
• Parties: , 116 Ill.Dec. 800 INTERNATIONAL AMPHITHEATRE COMPANY, a corporation, Plaintiff, v. VANGUARD UNDERWRITERS INSURANCE COMPANY, Defendant and Counterplaintiff and Third-Party Plaintiff/Appellant (David Cox, Intervening Petitioner and Counterdefendant/Appellee; Al-Par, Inc., Maryland Leisure Corp., Rainbow Productions, Inc., Denise Morales, Hugo Novales, Martha Novales, Robert C. Noonan, Jr., Constance M. Noonan, Quentin Perry and Mark Kadziewlawski, Defendants; Denise Morales, Hugo Novales and Martha Novales, Cross-Plaintiffs; Vanguard Underwriters Insurance Company and Rainbow Productions, Inc., Cross-Defendants; W. Russell Hummell & Company, Inc., Third-Party Defendant).

Page 1015

519 N.E.2d 1015

166 Ill.App.3d 369, 116 Ill.Dec. 800

INTERNATIONAL AMPHITHEATRE COMPANY, a corporation, Plaintiff, v. VANGUARD UNDERWRITERS INSURANCE COMPANY, Defendant and Counterplaintiff and Third-Party Plaintiff/Appellant (David Cox Intervening Petitioner and Counterdefendant/Appellee Al-Par, Inc., Maryland Leisure Corp., Rainbow Productions Inc., Denise Morales, Hugo Novales, Martha Novales, Robert C. Noonan, Jr., Constance M. Noonan, Quentin Perry and Mark Kadziewlawski, Defendants; Denise Morales, Hugo Novales and Martha Novales, Cross-Plaintiffs; Vanguard Underwriters Insurance Company and Rainbow Productions, Inc., Cross-Defendants W. Russell Hummell & Company, Inc., Third-Party Defendant).

No. 86-1218.

Appellate Court of Illinois, First District, Third Division.

Feb. 3, 1988.

Rehearing Denied March 17, 1988.

Kralovec, Marquard, Doyle & Gibbons, Chicago (Nancy Jo Arnold, Henry J. Marquard, of counsel), for counter-plaintiff/appellant.

Hinshaw, Culbertson, Moelman, Hobar & Fuller, Chicago (Kevin R. Sido, Stephen R. Swofford & Lynn D. Dowd, of counsel), for counter-defendant/appellee.

Justice FREEMAN delivered the opinion of the court:

This appeal arises from the trial court's dismissal of the counterclaim of defendant/counter-plaintiff, Vanguard Underwriters Insurance Company (Vanguard), which sought indemnity from intervening petitioner/counter-defendant, David Cox (Cox). Vanguard, an insurer, alleged in its counterclaim that Cox, an insurance broker, wrongfully issued a certificate of insurance to the plaintiff insured without proper authority from Vanguard.

In the original action, still pending in the circuit court of Cook County, plaintiff, International Amphitheatre Company, filed a declaratory judgment action seeking indemnification and a defense from Vanguard in several personal injury actions arising out of an incident which occurred at the International Amphitheatre on December 29, 1981. Vanguard moved to dismiss the original complaint and the cross-complaints, denying coverage under the policy and certificate of insurance. The court denied Vanguard's motions to dismiss.

Cox's motion to intervene in the matter was granted by the trial court. Vanguard then filed its counterclaim against Cox, asserting that Cox wrongfully represented himself as acting with the authority of Vanguard when he issued the subject certificate of insurance to International Amphitheatre, and that the certificate of insurance issued by Cox was at variance with express provisions of the policy and failed to include sufficient reference to certain exclusions on the face of the certificate of insurance. The counterclaim also asserted that Cox actively conspired to defraud Vanguard by misrepresenting the nature of the risks it was being asked to insure and conspiring with others to improperly obtain insurance coverage from Vanguard. The counterclaim asserted that if the court ultimately found that Vanguard was obligated to defend or indemnify the International Amphitheatre, the liability of Vanguard was the result of the wrongful acts of Cox.

The trial court dismissed the counterclaim with prejudice on the ground that it failed to state a cause of action. The court stated that the counterclaim purported to sound in "non-express" indemnity, a cause of action which is no longer viable in Illinois in view of the "Act in Relation to Contribution Among Joint Tortfeasors" (Ill.Rev.Stat.1985, ch. 70, par. 301 et seq.) (the Contribution Act), which abolished actions based on implied indemnity. The trial court found that, as a matter of law, a cause of action for implied indemnity no longer exists in Illinois. The trial court relied on Heinrich v. Peabody International Corp. (1985), 139 Ill.App.3d 289, 93 Ill.Dec. 544, 486 N.E.2d 1379, aff'd in part and rev'd in part, Heinrich v. Peabody International Corp. (1987), 117 Ill.2d 162, 109 Ill.Dec. 821, 510 N.E.2d 889.

On appeal Vanguard asserts that its action for indemnity from Cox pleads a theory of liability completely apart from and unaffected by the Contribution Act. (Ill.Rev.Stat.1985, ch. 70, par. 301 et seq.) The Contribution Act provides for allocation of responsibility "where two or more persons are subject to liability in tort arising out of the same injury to person or property." (Ill.Rev.Stat.1985, ch. 70, par. 302(a), (b).) Vanguard asserts that neither it, the insurer, nor Cox, its agent, is a tortfeasor or is alleged to be "subject to liability in tort" to plaintiff, the insured, and therefore, the Contribution Act does not apply to its counterclaim. Rather, Vanguard asserts, Cox's potential liability to Vanguard is based on the theory that an agent who acts on behalf of his principal for the purpose of entering into a contractual relationship can be held liable to his principal for losses resulting from a breach of fiduciary duties owed him. Vanguard cites Milwaukee Mutual Insurance Co. v. Wessels (1983), 114 Ill.App.3d 746, 70 Ill.Dec. 550, 449 N.E.2d 897, and other cases.

Vanguard contends that the contractual liability which may be incurred by Vanguard by reason of Cox's acts is not the vicarious liability of respondeat superior imposed as a matter of policy in tort law, since no tort liability to third parties is involved here. The declaratory judgment action in the instant case is concerned strictly with contract law. Vanguard notes that it has not alleged that Cox breached any duties he owed to plaintiff, the insured, but rather alleged in its counterclaim that Cox breached duties owed directly to Vanguard.

A counterclaim will be dismissed if it fails to state a cause of action by the counterclaimant against the counter-defendant. (Muhlbauer v. Kruzel (1968), 39 Ill.2d 226, 230, 234 N.E.2d 790; Jackson v. Burlington Northern, Inc. (1980), 84 Ill.App.3d 967, 39 Ill.Dec. 826, 405 N.E.2d 805.) In considering a motion to dismiss, the trial court must accept as true all facts well pleaded as well as reasonable inferences which can be drawn from those facts. (Browder v. Hanley Dawson Cadillac Co. (1978), 62 Ill.App.3d 623, 20 Ill.Dec. 138, 379 N.E.2d 1206.) The decision to grant a defendant's motion to dismiss may be sustained only if no set of facts as pleaded by the plaintiff could conceivably state a cause of action....