Pekin Ins. Co. v. Rada Dev., LLC

CourtUnited States Appellate Court of Illinois
Citation16 N.E.3d 781
Docket NumberNo. 1–13–3947.,1–13–3947.
PartiesPEKIN INSURANCE COMPANY, Plaintiff–Appellant, v. RADA DEVELOPMENT, LLC, and Barnabus R. Sutton, Defendants, Certain Underwriters at Lloyd's, London, Subscribing to Certificate No. CRCC000537, Third–Party Petitioner–Appellee.
Decision Date28 July 2014

16 N.E.3d 781

PEKIN INSURANCE COMPANY, Plaintiff–Appellant
v.
RADA DEVELOPMENT, LLC, and Barnabus R. Sutton, Defendants
Certain Underwriters at Lloyd's, London, Subscribing to Certificate No.
CRCC000537, Third–Party Petitioner–Appellee.

No. 1–13–3947.

Appellate Court of Illinois, First District, First Division.

July 28, 2014.


16 N.E.3d 783

Robert Marc Chemers and Philip G. Brandt, both of Pretzel & Stouffer, Chtrd., of Chicago, for appellant.

Neal R. Novak and Colleen M. Costello, both of Novak Law Offices, of Chicago, for appellee.

OPINION

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

¶ 1 The plaintiff, Pekin Insurance Company (Pekin), filed a declaratory judgment (Pekin action) against the defendants, Rada Development, LLC, (Rada) and Barnabus R. Sutton (Sutton), seeking a judicial declaration that Rada was not an additional insured under the Pekin policy issued for Chicago Masonry Construction, Inc. (Chicago Masonry), a co-defendant with Rada in a personal injury action instituted by Sutton. The trial court found that Pekin had no duty to defend Rada in the Sutton lawsuit. Later, Certain Underwriters at Lloyd's, London, Subscribing to Certificate No. CRCC000537 (Lloyd's), filed a petition to vacate the trial court's judgment under section 2–1401 of the Code of Civil Procedure (Code) (735 ILCS 5/2–1401 (West 2012) ), arguing that the order was void because it was a necessary party to the Pekin action. The trial court granted Lloyd's petition and vacated the judgment, finding the judgment was void because Lloyd's was a necessary party to the Pekin action. The trial court further allowed Lloyd's leave to intervene in the Pekin action. Pekin now appeals, arguing that the trial court erred in granting Lloyd's section 2–1401 petition and allowing Lloyd's to intervene. For the reasons that follow, we affirm.

¶ 2 Rada owns and is the developer of a commercial property located at 1322 North Clybourn Avenue in Chicago. On October

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25, 2006, Rada contracted with Heartland Construction Group to act as the general contractor of the development project at the Clybourn Avenue property (hereinafter referred to as “the Project”). On August 7, 2006, Heartland entered into a subcontract agreement with Chicago Masonry, and as part of that agreement, Chicago Masonry was required to list Heartland as an additional insured on its liability insurance policy. Later, Rada took over as the general contractor of the Project, pursuant to a “reassignment agreement” between Rada and Heartland. Per the terms of the reassignment agreement, Heartland agreed to assign all of its interests in any subcontract agreement for the Project, which allegedly included its subcontract agreement with Chicago Masonry.

¶ 3 Chicago Masonry was insured under a policy issued by Pekin, which contained an additional insured endorsement which included the following language:

“any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability incurred solely as a result of some act or omission of the named insured and not for its own independent negligence or statutory violation. That person's or organization's status as an insured under this endorsement ends when your operations for that insured are completed or at the end of the policy period stated in the declarations of this policy, whichever is earlier. It is further understood that the designation of an entity as an additional insured does not increase or alter the scope of coverage of this policy.”

¶ 4 The Pekin policy also contained language excluding coverage of additional insureds for personal injury losses arising out of the “rendering of, or the failure to render, any professional architectural, engineering or surveying services, including * * * [s]upervisory, inspection, architectural or engineering activities.”

¶ 5 On January 12, 2010, Sutton sued, inter alia, Chicago Masonry and Rada for injuries which he sustained in a construction accident at the Project site on November 15, 2006. Sutton v. Rada Development, LLC, et al., No. 10–L–440 (Cir. Ct. Cook Cty.) Chicago Masonry tendered its defense to Pekin. Rada tendered its defense to Lloyd's, which had issued a commercial general liability insurance policy identified as Certificate No. CRCC000537 to Rada for the period of October 3, 2006, through October 3, 2007. Lloyd's agreed to defend Rada in the Sutton suit subject to a reservation of rights.

¶ 6 Between May 30, 2012, and July 23, 2013, Lloyd's attempted to tender Rada's defense in the Sutton suit to Chicago Masonry and Pekin on the basis that Rada was an additional insured under the Pekin policy.

¶ 7 On August 14, 2012, Pekin filed a three-count complaint for declaratory judgment against Rada, seeking a declaration that it had no duty to defend Rada in the Sutton action. In count I, Pekin alleged that a certificate of insurance, which provided that Chicago Masonry with “Blanket AI” insurance and listed “Rada Architects (GC and Architect)” as an additional insured, issued to Rada did not afford it any coverage or trigger a duty to defend. In count II, Pekin alleged that it had no duty to defend Rada under the policy issued for Chicago Masonry because there was no written contract between Rada and Chicago Masonry requiring Chicago Masonry to add Rada as an additional

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insured under its liability policy. In count III, Pekin alleged that it had no duty to defend Rada because the Sutton action contained allegations of Rada's own negligence, independent of the allegations alleged against Chicago Masonry.

¶ 8 In a letter dated August 24, 2012, Pekin acknowledged receipt of Lloyd's tender and set forth its reasons for rejecting the tender of Rada's defense. Pekin further stated that it “intends to file a Complaint for Declaratory Judgment to have a court declare that Rada is not entitled to coverage” under the Chicago Masonry policy. In a response letter dated August 27, 2012, Lloyd's disagreed with Pekin's position based on the reassignment agreement between Rada and Heartland, and it requested that “Pekin immediately voluntarily dismiss the Pekin” action and “accept the defense of Rada in the Sutton Action.” Further, if Pekin refused to do so, Lloyd's stated that it would consider all available options with respect to Rada's defense.

¶ 9 In a letter dated September 11, 2012, Pekin stated that, even if Rada was an additional insured under Chicago Masonry's policy, there were other policy defenses precluding a duty to defend Rada. Pekin further suggested that “Rada Development, LLC put forth its position in the declaratory judgment action rather than in letters.” However, neither Rada nor Lloyd's appeared in the Pekin action.

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