Pekin Ins. Co. (pekin Ins. Co. v. Wilson

• Decision Date: 20 May 2010
• Docket Number: No. 108799.,108799.
• Citation: 930 N.E.2d 1011,237 Ill.2d 446,341 Ill.Dec. 497
• Parties: PEKIN INSURANCE COMPANY et al. (Pekin Insurance Company, Appellant),v.Jack O. WILSON et al. (Jack O. Wilson, Appellee).
• Court: Illinois Supreme Court

237 Ill.2d 446

930 N.E.2d 1011

341 Ill.Dec. 497

PEKIN INSURANCE COMPANY et al. (Pekin Insurance Company, Appellant),v.Jack O. WILSON et al. (Jack O. Wilson, Appellee).

No. 108799.

Supreme Court of Illinois.

May 20, 2010.

COPYRIGHT MATERIAL OMITTED

Robert Marc Chemers, Richard J. Siebert, Pretzel & Stouffer, Chrtd., Chicago (Scott L. Howie, of counsel), for appellant.

L. James Hanson, Mt. Vernon, for appellee.

OPINION

Justice KARMEIERdelivered the judgment of the court, with opinion.

In this insurance coverage dispute, we are asked to determine whether the duty to defend the insured may be triggered by allegations of self-defense in the insured's counterclaim filed in response to an underlying lawsuit alleging the insured's intentional acts, where the policy contains both an exclusion for intentional acts and a self-defense exception to that exclusion.For the reasons which follow, we hold that the duty to defend is triggered.

BACKGROUND

This case has its origins in a lawsuit filed in Jefferson County circuit court by Terry Johnson against the appellee herein, Jack O. Wilson, alleging causes of action for assault, battery, and intentional infliction of emotional distress stemming from an incident in October 2002 and one in January 2004.Wilson tendered the defense of the Johnson suit (or underlying lawsuit) to the appellant herein, Pekin Insurance Company(Pekin), which had issued a commercial general liability policy to Wilson for the period September 22, 2002, through September 23, 2003.Wilson also tendered the defense of the Johnson suit to Farmers Automobile Insurance Association(Farmers), which had issued a homeowner's policy to Wilson covering the period of November 3, 2003, through May 3, 2004.On April 25, 2005, Pekin and Farmers jointly filed a complaint for a declaratory judgment, each asking the court for a determination that it did not owe Wilson a duty to defend the underlying lawsuit.¹

Johnson filed an amended complaint in the underlying lawsuit on August 31, 2005, adding a count alleging negligence against Wilson.In the amended complaint, Johnson alleged that on October 31, 2002, an incident occurred at D & J Tarp Service, where, Johnson alleged, he had been “assisting Debi Wilson at her place of business” when Wilson arrived and began screaming expletives at him and “brandished” a steel pipe.Johnson alleged that Wilson struck him with the pipe in the shoulder and lacerated Johnson's right hand with a knife.Johnson alleged that, in order to protect himself, he subdued Wilson and restrained him, as Wilson continued his attempt to physically harm Johnson.After Johnson released Wilson, Wilson continued to scream expletives and threatened to go home to get a gun to shoot Johnson and Debi Wilson.It was further alleged that more than one year later, in January 2004, Wilson approached Johnson at a Wal-Mart store and showed him “what appeared to be the handle of a pistol.”Johnson alleged that Wilson said he could “end it right now.”

In the negligence count, Johnson realleged all the factual assertions from the intentional tort counts (assault, battery, and intentional infliction of emotional distress).Johnson then alleged that Wilson had breached his duty of ordinary care by failing to “adequately use tools of his employment in a safe manner[,] causing physical harm,” that Wilson had failed to “properly maintain tools and knives in a protective manner,” and that he had failed to “use tools for their intended purpose[,] causing physical harm.”Finally, Johnson alleged that Wilson's negligence was the proximate cause of his injuries.

Pekin's policy covered Wilson as the “insured,” and it described his business as a “private warehouse.”In the coverages section, Pekin agreed to cover bodily injury and property damage liability as follows:

“We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.

We will have the right and duty to defend any ‘suit’ seeking those damages.We may at our discretion investigate any ‘occurrence’ and settle any claim or ‘suit’ that may result.”

Pekin listed the following exclusion to its bodily injury coverage: “ ‘Bodily injury’ or ‘property damage’ expected or intended from the standpoint of the insured”(the intentional-act exclusion).To the intentional-act exclusion, Pekin provided the following exception: “This exclusion does not apply to ‘bodily injury’ resulting from the use of reasonable force to protect persons or property”(the self-defense exception).In an endorsement to the policy, Pekin limited its coverage for bodily injury to occurrences “arising out of * * * [t]he ownership, maintenance[,] or use of the premises shown in the Schedule and operations necessary or incidental to those premises.”

On October 5, 2005, Pekin filed an amended complaint for a declaratory judgment, again seeking a finding that it did not owe Wilson a duty to defend him in the underlying lawsuit.The amended complaint for a declaratory judgment was in response to Johnson's amended complaint in the underlying lawsuit, in which he added the negligence count against Wilson.On October 11, 2005, Wilson filed an answer to the amended complaint in the underlying lawsuit.As a part of his answer, Wilson filed a counterclaim against Johnson, alleging that, during the incident at D & J Tarp Service, Johnson was the aggressor and Wilson was defending himself.The counterclaim alleged that Johnson was guilty of assault, battery, and intentional infliction of emotional distress.In addition to the allegations that Johnson had been the aggressor in the altercation at D & J Tarp Service, Wilson also alleged in each of the three counts:

“6.Because of the physical size difference of * * * Wilson and * * * Johnson, [Wilson] picked up a piece of thin wall

conduit used in the tarp service and, without moving in any threatening manner but merely possessing the pipe as to defend himself from * * * Johnson renewed his demand that * * * Johnson leave the premises.

7.Thereupon, Johnson, with knowledge and intent, without provocation and without authority to remain upon the premises, came forward, grabbed Wilson, took the pipe away from him, and smashed his head and face into the wall.”

On March 3, 2006, Wilson filed an answer to the amended complaint for a declaratory judgment, denying that Pekin had no duty to defend him in the underlying lawsuit.Wilson contended that the allegations of the underlying lawsuit were covered by the Pekin policy, citing the amended complaint in the underlying lawsuit which alleged that “the occurrence took place during normal business hours at the premises where [Wilson's] business is located and to which the Pekin policy extends coverage.”Wilson also filed a counterclaim against Pekin, alleging counts of breach of contract and vexatious and unreasonable delay in violation of section 155 of the Illinois Insurance Code(215 ILCS 5/155(West 2006)), given that inter alia,“the Pekin policy gives rise to a duty on the part of Pekin to defend Wilson against covered claims.”

On September 18, 2006, Pekin filed a motion for judgment on the pleadings pursuant to section 2-615(e) of the Code of Civil Procedure(735 ILCS 5/2-615(e)(West 2006)).Pekin argued inter alia, that the negligence count of Johnson's amended complaint did not bring the underlying lawsuit within the coverage of its policy because Johnson had merely couched allegations of intentional conduct by Wilson in negligence terms.Pekin thus asserted that it was entitled to a judgment on the pleadings because there were no factual issues and it was clear it did not owe Wilson a duty to defend him in the underlying lawsuit.It was similarly asserted that there was no coverage for the incident that Johnson alleged to have occurred at the Wal-Mart store.²

On October 10, 2006, Wilson filed a response to the motion for a judgment on the pleadings, arguing inter alia, that Pekin had taken a statement from him and was aware that he denied any intention to harm Johnson.Wilson argued that any harm that Johnson suffered “would have been by accident.”He argued that the court should conclude that Johnson's allegations of negligence were sufficient to raise a duty to defend.Wilson further argued that Pekin was not entitled to a judgment on the pleadings so long as the possibility existed that the jury would find that his conduct was either negligent or that “no untoward conduct” occurred by Wilson toward Johnson, and that Pekin had denied coverage despite language in its policy stating: “we will pay the sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ to which this insurance applies.”

On March 29, 2007, the trial court entered an order declaring that Pekin had no duty to defend Wilson in the underlying lawsuit because its policy did not cover the claims asserted in that lawsuit.On April 30, 2007, Wilson filed a motion to reconsider, arguing, in pertinent part, that the order was premature because the jury in the underlying lawsuit could determine Wilson's conduct “to have been negligent,” or that “there was a duty to defend” Wilson After hearing the parties' arguments, the court entered an order denying Wilson's motion to reconsider and dismissing his counterclaim in the declaratory judgment action.The underlying lawsuit and Wilson's counterclaim against Johnson in that lawsuit remain pending.

Wilson filed a timely notice of appeal.The appellate court first found that the facts as alleged in the underlying complaint were inconsistent with allegations of negligence.Thus, no genuine issue of material fact remained as to the count that Johnson labeled as negligence.³Pekin Ins. Co. v. Wilson,391 Ill.App.3d 505, 511, 330 Ill.Dec. 666, 909 N.E.2d 379(2009).However, the remaining counts for assault, battery, and intentional infliction of emotional distress each...