Liberty Mut. Fire Ins. Co. v. Mall, 1–09–1905.

CourtUnited States Appellate Court of Illinois
Citation346 Ill.Dec. 651,941 N.E.2d 209,407 Ill.App.3d 372
Docket NumberNo. 1–09–1905.,1–09–1905.
PartiesLIBERTY MUTUAL FIRE INSURANCE COMPANY, Plaintiff and Counterdefendant/Appellee,v.WOODFIELD MALL, L.L.C., Woodfield Associates, L.L.C., Taub–Co Management, Inc., improperly sued as The Taubman Company, L.L.C., and Taub–Co Management, Inc., Defendants and Counterplaintiffs/Appellants (Nina Swanson, as Administrator of the Estate of Mark Swanson, Deceased, Defendant/Counterdefendant).
Decision Date17 December 2010

407 Ill.App.3d 372
941 N.E.2d 209
346 Ill.Dec.

LIBERTY MUTUAL FIRE INSURANCE COMPANY, Plaintiff and Counterdefendant/Appellee,
WOODFIELD MALL, L.L.C., Woodfield Associates, L.L.C., Taub–Co Management, Inc., improperly sued as The Taubman Company, L.L.C., and Taub–Co Management, Inc., Defendants and Counterplaintiffs/Appellants (Nina Swanson, as Administrator of the Estate of Mark Swanson, Deceased, Defendant/Counterdefendant).

No. 1–09–1905.

Appellate Court of Illinois, First District, Sixth Division.

Dec. 17, 2010.

[941 N.E.2d 211]

Joseph P. Postel, David S. Osborne, Lindsay, Rappaport & Postel, LLC, for Plaintiff and Counterdefendant/Appellee.Jeremiah P. Connolly, Hilary J. O'Connor, Bollinger, Ruberry & Garvey, Kevin J. Caplis, Jennifer Medenwald, Querrey & Harrow, Ltd., Chicago, for Defendants and Counterplaintiffs/Appellant.Justice McBRIDE delivered the opinion of the court:

[407 Ill.App.3d 374 , 346 Ill.Dec. 653] Nina Swanson, of McHenry, Illinois, filed a wrongful death and survival action against the owners and managers of a large suburban shopping mall near Chicago, alleging their negligence in 2004 killed her husband Mark Swanson. Mark Swanson was a heating and air conditioning equipment technician dispatched to the mall by his employer, Carrier Corporation, to service the air conditioning equipment for one of the mall's tenants. Mark Swanson left the tenant's space, went into “an interior corridor” of the mall where he accessed the equipment on the roof, and as he was climbing back inside the building, he fell to the concrete floor 10–feet below, allegedly due to an inordinate 28–inch gap between the roof hatch and the top rung of an affixed ladder. Nina Swanson sued the mall, but not its tenant. The mall, however, tendered the complaint to the tenant's commercial general liability insurer, which determined it had no duty to defend the mall and then prevailed on crossmotions for summary judgment in this declaratory judgment action. On appeal, the mall contends the trial court made multiple errors in its choice-of-law analysis, should have found the injuries arose from the tenant's “work” or “premises” which entitled the

[346 Ill.Dec. 654 , 941 N.E.2d 212]

mall to additional insured coverage, should have recognized the lease contractually entitled the mall to primary insured coverage, and should have determined the insurer waived policy defenses.

The following undisputed facts are relevant to those arguments. The tenant's commercial general liability insurance policy for the one-year term beginning February 1, 2004, was issued by plaintiff insurer Liberty Mutual Fire Insurance Company, a Massachusetts corporation with a principal place of business in Massachusetts (Liberty Mutual). The named insureds include Luxottica U.S. Holdings Corporation, which is a Delaware corporation, a subsidiary of an Italian company, and the parent corporation of at least 33 United States corporations [407 Ill.App.3d 375] (Luxottica). Luxottica has a mailing address in Port Washington, New York. Luxottica's various subsidiaries were also listed on the written policy as named insureds and included the mall's tenant, LensCrafters, Inc., which was an Ohio corporation headquartered near Cincinnati in Mason, Ohio (LensCrafters). LensCrafters operates an extensive, nationwide chain of hundreds of retail eyeglass stores and in 1986 began leasing retail space from the mall defendants at Woodfield Mall in Schaumburg, Illinois. The insurance policy did not list the addresses of the individual LensCrafters stores; however, under the heading “Classifications and Locations,” the coverage encompassed “All Operations of the Named Insured.” None of the mall defendants was listed as a named insured in the policy declarations or appeared on the policy's “Named Insured Endorsement” page or any where else in the contract. The mall defendants, meaning the four defendants named in Swanson's negligence action, were Woodfield Mall, L.L.C., a foreign corporation which owns the mall in Schaumburg; Woodfield Associates, L.L.C., an Illinois corporation; The Taubman Company, L.L.C., a foreign corporation which manages the mall; and Taub–Co Management, Inc., another foreign corporation.

A “General Amendatory Endorsement” to the policy stated in relevant part:


SECTION II–WHO IS AN INSURED is amended to include as an insured any person, organization, state or other political subdivision, trustee or estate for whom you have agreed in writing to provide liability insurance. But:

The insurance provided by this amendment:

1. Applies only to ‘personal injury’ or ‘property damage’ arising out of (a) ‘your work’ or (b) premises or other property owned by or rented to you[.]”

The policy specified, “the words ‘you’ and ‘your’ refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy.” Section 11.01 of LensCrafters' lease required it to name the owners and managers of Woodfield Mall as additional insureds on its comprehensive liability policy “with respect to the leased premises and the operations of Tenant and any subtenants of Tenant in, on or about the leased premises” and that “the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by [the owners and managers of the mall], and that any coverage carried by [the owners and managers] shall be excess insurance.” Thus, when the lease and policy are read together, the mall defendants are additional insureds on LensCrafters' policy, but only for personal injury [407 Ill.App.3d 376] or property damage arising out of LensCrafters'

[346 Ill.Dec. 655 , 941 N.E.2d 213]

premises and operations at Woodfield Mall.

The preamble and section 1.01 of the lease defined the “Leased Premises” as “Store Number 330, situated on the upper level of Building ‘D’, having an irregular shape and consisting of approximately 5,561 square feet.” A letter agreement that was simultaneously executed with the lease described the “ ‘leased premises' ” as “space * * * in the Shopping Center to be known as Woodfield Mall.” (Emphasis added.) The lease was modified in 1996 to extend the rental period for an additional 10 years through November 30, 2006, and the renewal stated the original lease was “for a retail business to be operated under the trade name ‘LENSCRAFTERS,’ covering premises identified as Store No. ‘D–330’, in the regional retail development commonly known as WOODFIELD MALL.” (Emphasis added.) Also relevant is section 1.01 of the original lease, which specified:

“(b) The exterior walls and the roof of the leased premises and the area beneath said premises are not demised hereunder, and the use thereof, together with the right to locate, both vertically and horizontally, install, maintain, use, repair and replace pipes, utility lines, ducts, conduits, flues, refrigerant lines, drains, sprinkler mains and valves, access panels, wires and structural elements leading through the leased premises serving other parts of the Shopping Center, is hereby reserved unto Landlord. Landlord reserves an easement above Tenant's finished ceiling to the roof, or to the bottom of the floor deck above the leased premises, for general access purposes and in connection with the exercise of Landlord's other rights under this Lease.”

The preamble and section 7.01 of the lease limited the tenant's “Permitted Use” and “Use of Premises” to “The retail sale of eyeglasses, contact lenses, solutions and all optical accessories related to the retail optical business; in addition, the on-premises professional optometric eye examination business and the on-premises manufacturing of prescription eyeglass lenses and contact lenses.”

The lease also addressed the operation and maintenance of the shopping center's common areas. Section 8.02 defined the “ ‘common areas' ” to include “stairs * * * not contained within any leased premises” and “service and fire and exit corridors.” In section 8.01, the landlord “agree[d] to cause to be operated and maintained * * * all common areas within the Shopping Center” and specified that the “manner in which such areas and facilities shall be operated and maintained * * * shall be at the sole discretion of Landlord.” In section 10.01, the landlord agreed to “keep and maintain the roof (including the structural integrity thereof), foundation and exterior surfaces of [407 Ill.App.3d 377] the exterior walls of the building in which the leased premises are located * * * in good order, condition and repair.”

In section 10.02, LensCrafters agreed to “keep and maintain in first class appearance * * * and in good order, condition and repair as determined by Landlord * * * the leased premises and every part thereof and any and all appurtenances thereto wherever located but exclusively serving the leased premises, including, but without limitation, * * * ventilation, heating and air conditioning and electrical systems (whether or not located in the leased premises but exclusively serving the leased premises), sprinkler systems, walls, floors and ceilings.” Beginning in 2004, LensCrafters entered into a three-year HVAC preventive maintenance and repair service contract with Carrier Corporation which encompassed LensCrafters' numerous retail

[346 Ill.Dec. 656 , 941 N.E.2d 214]

outlets. In accordance with this contract, the LensCrafters store in Woodfield Mall contacted Carrier Corporation when the air conditioning in its lab stopped working and Carrier Corporation sent its employee Mark Swanson to investigate and fix the problem.

Also relevant is that in section 11.03 of the lease, LensCrafters agreed to indemnify the mall defendants and “save them harmless (except for loss or damage resulting solely from the negligence of Landlord or breach of this Lease by Landlord) from and against any and all claims.”

After Liberty Mutual was notified of Mark Swanson's...

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