Pekin Ins. Co. v. Wilson

• Decision Date: 08 June 2009
• Docket Number: No. 5-07-0571.,5-07-0571.
• Parties: PEKIN INSURANCE COMPANY and Farmers Automobile Insurance Association, Plaintiffs-Appellees, v. Jack O. WILSON, Defendant-Appellant, and Terry Johnson, Defendant.
• Court: United States Appellate Court of Illinois

909 N.E.2d 379

391 Ill. App. 3d 505

PEKIN INSURANCE COMPANY and Farmers Automobile Insurance Association, Plaintiffs-Appellees, v. Jack O. WILSON, Defendant-Appellant, and Terry Johnson, Defendant.

No. 5-07-0571.

Appellate Court of Illinois, Fifth District.

June 8, 2009.

L. James Hanson, Mt. Vernon, for Jack O. Wilson.

Joshua M. Bradley, Marion, for Terry Johnson.

Robert Marc Chemers, Richard J. Siebert, Scott L. Howie, Pretzel & Stouffer Chartered, Chicago, for Appellees.

Justice STEWART delivered the opinion of the court:

The defendant, Jack O. Wilson, appeals from an order of the Jefferson County circuit court entering a declaratory judgment in favor of the plaintiffs, Pekin Insurance Company (Pekin) and Farmers Automobile Insurance Association (Farmers). The trial court determined that neither Pekin nor Farmers owed Wilson a duty to defend him in an underlying personal injury lawsuit, Johnson v. Wilson, No. 04-L-93 (the underlying lawsuit), which remains pending in the Jefferson County circuit court. We affirm as to Farmers and reverse and remand as to Pekin.

BACKGROUND

In the underlying lawsuit, the plaintiff, Terry Johnson, alleged causes of action against Wilson for assault, battery, and intentional infliction of emotional distress. Wilson tendered the defense of the underlying lawsuit to both Pekin and Farmers. Pekin had issued a commercial general liability policy to Wilson covering the period of September 23, 2002, through September 23, 2003. Farmers 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 they did not owe Wilson a duty to defend the underlying lawsuit.

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 had occurred at D & J Tarp Service, where, Johnson alleged, he had been "assisting Debi Wilson at her place of business." Johnson alleged that a second incident occurred in January 2004 at a Wal-Mart store. In the amended complaint, Johnson alleged that, at D & J Tarp Service, Wilson screamed expletives at him and "brandished" a steel pipe. Johnson alleged that Wilson struck him with the pipe. Johnson alleged that Wilson lacerated his hand with a knife. He alleged that Wilson threatened to go home to get a gun to shoot him and Debi Wilson. He also alleged that more than one year later, Wilson approached him 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 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." He alleged 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." The location of the premises covered is listed as "RR3 S35 T2S R2E, MOUNT VERNON, JEFFERSON CO, IL." 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 a section defining who is an insured, Pekin limited coverage to Wilson and his spouse, "but only with respect to the conduct of a business" of which they were the sole owners. 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."

The homeowners policy issued by Farmers defined the term "occurrence" as "an accident" that results in bodily injury or property damage during the policy period. The Farmers policy stated that "[i]f a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies," Farmers would pay up to the limit of liability for the damages for which the insured was legally liable and "provide a defense at [its] own expense by counsel of [its] choice, even if the suit is groundless, false[,] or fraudulent." Farmers excluded coverage for bodily injury and property damage that was "expected or intended by the insured" but did not include a self-defense exception.

On October 5, 2005, Pekin and Farmers filed an amended complaint for a declaratory judgment, again seeking a declaration that they 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. In his counterclaim, Wilson alleged that Johnson was guilty of assault, battery, and intentional infliction of emotion 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:

"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."

Wilson alleged that as a result of Johnson's conduct he sustained compensable damages in excess of $50,000 and that he was entitled to receive $100,000 in punitive damages and attorney fees.

On March 3, 2006, Wilson filed an answer to the amended complaint for a declaratory judgment, denying that Pekin and Farmers had no duty to defend him in the underlying lawsuit. Wilson contended that the allegations of the underlying lawsuit were covered by both policies and that the amended complaint in the underlying lawsuit 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 alleged that his business was located at "Rural Route 3 in Mt. Vernon, Illinois." Wilson filed counterclaims against Pekin and Farmers, alleging that they had breached their contracts with Wilson and that they were guilty of unreasonable and vexatious delay in violation of statute (215 ILCS 5/155 (West 2006)).

On September 18, 2006, Pekin and Farmers filed a motion for a judgment on the pleadings pursuant to section 2-615(e) of the Code of Civil Procedure (735 ILCS 5/2-615(e) (West 2006)). They argued that the negligence count of Johnson's amended complaint did not bring the underlying lawsuit within the coverage of either policy because Johnson had merely couched allegations of intentional conduct by Wilson in negligence terms. They argued that they were entitled to a judgment on the pleadings because there were no factual issues and it was clear they did not owe Wilson a duty to defend him in the underlying lawsuit.

Pekin also argued that its policy covered bodily injury only if the occurrence arose out of the ownership, maintenance, or use of the covered premises. Pekin contended that the "premises" covered in its policy was located at Rural Route 3, Mt. Vernon, Illinois, but that the underlying complaint alleged only that the incident occurred at D & J Tarp Service. Pekin alleged that D & J Tarp Service was located at 11020 East Graham Road, Mt. Vernon, Illinois. Similarly, Pekin alleged that there was no coverage for the incident that Johnson alleged to have occurred at the Mt. Vernon Wal-Mart store. In a related argument, Pekin argued that the underlying lawsuit was not covered under its policy because Johnson had not alleged that Wilson "was in any way involved in conducting his private warehouse business" at the time of the alleged incidents.

On October 10, 2006, Wilson filed a response to the motion for a judgment on the pleadings, arguing that the Pekin policy covered the incident at D & J Tarp Service because the "premises described are the very premises involved." Wilson argued 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. He argued that...