Mt. Hawley Ins. Co. v. Robinette Demolition, Inc.

• Decision Date: 26 July 2013
• Docket Number: Docket No. 1–11–2847.
• Citation: 374 Ill.Dec. 36,2013 IL App (1st) 112847,994 N.E.2d 973
• Parties: MT. HAWLEY INSURANCE COMPANY, Plaintiff–Appellee, v. ROBINETTE DEMOLITION, INC. and Valenti Construction, LLC, Defendants–Appellants, (Richard Bucholz, Defendant).
• Court: United States Appellate Court of Illinois

2013 IL App (1st) 112847

994 N.E.2d 973

374 Ill.Dec. 36

MT. HAWLEY INSURANCE COMPANY, Plaintiff–Appellee,

v. ROBINETTE DEMOLITION, INC. and Valenti Construction, LLC, Defendants–Appellants,(Richard Bucholz, Defendant).

Docket No. 1–11–2847.

Appellate Court of Illinois,

First District, Sixth Division.

July 26, 2013.

Michael Resis and Christine V. Anto, both of SmithAmundsen LLC, of Chicago, for appellants.

Michael J. Duffy and Ashley L. Conaghan, both of Tressler LLP, of Chicago, for appellee.

OPINION

Justice HALL delivered the judgment of the court, with opinion.

[374 Ill.Dec. 38]¶ 1 The plaintiff, Mt. Hawley Insurance Company (Mt. Hawley), filed a complaint against the defendants, Robinette Demolition Company (Robinette) and Valenti Construction, LLC (Valenti), seeking a declaration that Mt. Hawley did not owe a duty to defend and indemnify the defendants in a personal injury suit filed by Richard Bucholz, an employee of one of Robinette's subcontractors. Ruling on cross-motions for summary judgment, the circuit court granted Mt. Hawley's motion and denied the defendants' motion. The defendants filed a timely notice of appeal.

¶ 2 On appeal the defendants contend that the named insured's violation of its duties under the notice provision of an insurance policy did not bar coverage for the additional insureds. They further contend that the circuit court erred when it determined Valenti was not an additional insured.

¶ 3 On April 8, 2003, Robinette and Cobra Concrete Cutting Service, Inc. (Cobra) entered into an “ongoing sub-contract agreement” (the Agreement) under which Cobra would perform concrete cutting services for Robinette on future projects. The Agreement required Cobra to “defend, indemnify and hold harmless” Robinette and “any and all other Additional Insureds specified in Schedule ‘B’ hereof * * *against all claims, damages, losses, costs, expenses, judgments and liabilities.” Schedule B delineated the type and amounts of insurance coverage and required that the insurance policy obtained by Cobra include an endorsement naming Robinette and “any other parties as may be reasonably required by [Robinette]” (emphasis omitted) as additional insureds.

¶ 4 Mt. Hawley issued a commercial general liability (CGL) policy (the policy) to Cobra effective March 20, 2008 to March 20, 2009. The policy required the named insured to notify Mt. Hawley “as soon as practicable” of an occurrence, and to provide written notification to Mt. Hawley of a claim or suit “against any insured.” The policy provided coverage for “[a]ll persons or organizations where required by written contract.”

¶ 5 On February 10, 2009, Robinette sent Cobra a work order for Robinette's 850 Lake Shore Drive project. Robinette then received a certificate of insurance, revised on February 11, 2009, adding Robinette and Valenti Builders, Inc., as additional insureds.¹

¶ 6 On February 25, 2009, Richard Bucholz, a Cobra employee, was injured while working on the 850 Lake Shore Drive project. Mr. Bucholz filed a personal injury complaint against the defendants on October 7, 2010; a first amended complaint was filed on November 3, 2010. On November 23, 2010, Robinette tendered its defense and indemnification in the Bucholz suit to Mt. Hawley. Subsequently, Robinette tendered Valenti's defense and indemnification to Mt. Hawley.

¶ 7 On January 12, 2011, Mt. Hawley responded denying liability coverage to the defendants. Mt. Hawley explained that since Robinette was potentially an additional insured, it was subject to all policy terms. Mt. Hawley's first notification of the “occurrence”, i.e. Mr. Bucholz's accident, was Robinette's tender, almost two years after the accident. Since Mt. Hawley was not notified of the accident in accordance with the terms of the policy, it denied any coverage obligations. Mt. Hawley further determined that Valenti was not an additional insured under the policy because the Agreement did not require Cobra to add Valenti as an insured.

¶ 8 On February 14, 2011, Mt. Hawley filed a complaint for declaratory judgment against the defendants. In count I, Mt. Hawley sought a declaration that it owed no duty to defend and indemnify Valenti in the Bucholz suit because Valenti was not an insured under the policy. In count II, Mt. Hawley sought a declaration that it had no duty to defend and indemnify the defendants because Mt. Hawley was not notified of Mr. Bucholz's accident in accordance with the terms of the policy. The defendants filed a counterclaim for declaratory judgment, seeking a declaration that they were additional insureds and entitled to coverage under the policy. The defendants filed a motion for partial judgment on the pleadings.

¶ 9 The parties filed cross-motions for summary judgment on Mt. Hawley's complaint. The circuit court granted summary judgment to Mt. Hawley. The court denied the defendants' motion for summary judgment and denied their motion for partial judgment on the pleadings. This appeal followed.²

¶ 10 ANALYSIS

¶ 11 I. Standard of Review

¶ 12 Review of a grant of summary judgment is de novo. Millennium Park Joint Venture, LLC v. Houlihan, 241 Ill.2d 281, 309, 349 Ill.Dec. 898, 948 N.E.2d 1 (2010). De novo review is also applicable to the construction of the provisions of an insurance policy. Owners Insurance Co. v. Seamless Gutter Corp., 2011 IL App (1st) 082924–B, ¶ 29, 356 Ill.Dec. 137, 960 N.E.2d 1260.

¶ 13 II. Applicable Principles

¶ 14 The principles governing the review of the grant of summary judgment are well settled. “Summary judgment is proper if, and only if, the pleadings, depositions, admissions, affidavits and other relevant matters on file show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.” Illinois Farmers Insurance Co. v. Hall, 363 Ill.App.3d 989, 993, 300 Ill.Dec. 530, 844 N.E.2d 973 (2006). A dispute as to the material facts or where the material facts are undisputed but reasonable persons might draw different inferences from the undisputed facts presents a triable issue of fact. Wolfram Partnership, Ltd. v. LaSalle National Bank, 328 Ill.App.3d 207, 215, 262 Ill.Dec. 404, 765 N.E.2d 1012 (2001). “By filing cross-motions for summary judgment, the parties invite the court to determine the issues as a matter of law and enter judgment in favor of one of the parties.” Hall, 363 Ill.App.3d at 993, 300 Ill.Dec. 530, 844 N.E.2d 973. The grant of summary judgment should be upheld only where the right of the moving party is free from doubt. Hall, 363 Ill.App.3d at 993, 300 Ill.Dec. 530, 844 N.E.2d 973.

¶ 15 The same rules apply to the construction of an insurance policy that are applied to the construction of other types of contracts. Hall, 363 Ill.App.3d at 993, 300 Ill.Dec. 530, 844 N.E.2d 973. The primary objective is to ascertain and give effect to the parties' intentions as expressed in the policy's language. Hall, 363 Ill.App.3d at 993, 300 Ill.Dec. 530, 844 N.E.2d 973. The policy must be construed as a whole giving effect to every provision; unambiguous words in the policy are to be given their plain, ordinary and popular meaning. West American Insurance Co. v. Yorkville National Bank, 238 Ill.2d 177, 184, 345 Ill.Dec. 445, 939 N.E.2d 288 (2010).

¶ 16 III. Discussion

¶ 17 It is undisputed that Cobra, the named insured, breached the policy notice provision. In granting summary judgment to Mt. Hawley, the circuit court found that, as a result of Cobra's breach, Mt. Hawley did not owe a duty to defend and indemnify the defendants in the Bucholz suit.

¶ 18 A. Breach of the Notice Provision

¶ 19 The policy provided in pertinent part as follows:

“COMMERCIAL GENERAL LIABILITY COVERAGE FORM

* * *

Throughout this policy 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. The words ‘we,’ ‘us' and ‘our’ refer to the company providing this insurance.

* * *

SECTION IV—COMMERCIAL GENERAL LIABILITY CONDITIONS

1. * * *

2. Duties In The Event Of Occurrence, Offense, Claim or Suit

a. You must see to it that we are notified as soon as practicable of an ‘occurrence’ or an offense which may result in a claim. * * * b. If a claim is made or ‘suit’ is brought against any insured, you must:

(1) Immediately record the specifics of the claim or ‘suit’ and the date received; and

(2) Notify us as soon as practicable.

You must see to it that we receive written notice of the claim or ‘suit’ as soon as practicable.

c. You and any other involved insured must:

(1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or ‘suit.’ ” (Emphasis omitted.)

¶ 20 “Insurance policy notice provisions impose valid prerequisites to insurance coverage.” West American Insurance Co., 238 Ill.2d at 185, 345 Ill.Dec. 445, 939 N.E.2d 288. “The primary purpose of such a notice requirement is to enable the insurer to make a timely and thorough investigation of a claim and to protect itself against unjustifiable claims.” State Farm Mutual Auto. Insurance Co. v. Gray, 211 Ill.App.3d 617, 620, 155 Ill.Dec. 959, 570 N.E.2d 472 (1991). The notice requirements of a policy apply not only to the named insured but also to unnamed additional insureds under an omnibus clause. International Harvester Co. v. Continental Casualty Co., 33 Ill.App.2d 467, 472, 179 N.E.2d 833 (1962).³

¶ 21 The issue presented in this case is a narrow one. The parties agree that Cobra, the named insured, failed to comply with its duty under sections 2(a) and (b) of the policy notice provision. Mt. Hawley does not dispute that the defendants complied with section 2(c) of the notice provision to immediately forward the documents received in connection with a suit or claim. The issue to be resolved is whether the named insured's breach of its duty to notify under the policy bars coverage for additional insureds who have...