Sears, Roebuck and Co. v. ACCEPTANCE INS.

• Decision Date: 30 June 2003
• Docket Number: No. 1-01-4346.,1-01-4346.
• Citation: 793 N.E.2d 736,275 Ill.Dec. 965,342 Ill. App.3d 167
• Parties: SEARS, ROEBUCK AND COMPANY, a New York corporation, and Alfredo E. Jijon, Third-Party Plaintiffs-Appellants, v. ACCEPTANCE INSURANCE COMPANY, Travelers Casualty and Surety Company, f/k/a Aetna Casualty and Surety Company, and Rosa L. Kresin, Third-Party Defendants-Appellees (Charwil Associates L.P., Defendant; Acceptance Insurance Company, Counterplaintiff; Charwil Associates L.P., Acceptance Insurance Company, Travelers Casualty and Surety Company, f/k/a Aetna Casualty and Surety Company, and Rosa L. Kresin, Counterdefendants).
• Court: United States Appellate Court of Illinois

793 N.E.2d 736

342 Ill. App.3d 167

275 Ill.Dec. 965

SEARS, ROEBUCK AND COMPANY, a New York corporation, and Alfredo E. Jijon, Third-Party Plaintiffs-Appellants, v. ACCEPTANCE INSURANCE COMPANY, Travelers Casualty and Surety Company, f/k/a Aetna Casualty and Surety Company, and Rosa L. Kresin, Third-Party Defendants-Appellees (Charwil Associates L.P., Defendant; Acceptance Insurance Company, Counterplaintiff; Charwil Associates L.P., Acceptance Insurance Company, Travelers Casualty and Surety Company, f/k/a Aetna Casualty and Surety Company, and Rosa L. Kresin, Counterdefendants).

No. 1-01-4346.

Appellate Court of Illinois, First District, Fifth Division.

June 30, 2003.

Arnstein & Lehr, Chicago (Arthur L. Klein, Michael R. Turoff, Anna-Katrina S. Christakis and Keli M. Videtto, of counsel), for Appellant.

Stellato & Schwartz, Ltd. (Esther Joy Schwartz, Benjamin B. Belcher, Richard D. Foody and Donald E. Stellato, of counsel), and Mora, Baugh, Waitzman and Unger, L.L.C. (Richard T. Valentino and Lynn Urkov Thorpe, of counsel), Chicago, for Appellee.

Justice QUINN delivered the opinion of the court:

Third-party plaintiffs Sears, Roebuck and Company (Sears) and Alfredo Jijon (collectively plaintiffs) appeal the trial court's grant of summary judgment (735 ILCS 5/2-1005 (West 2000)) in favor of third-party defendants Acceptance Insurance Company (Acceptance) and Travelers Casualty and Surety Company (Travelers). This ruling had the effect of denying Sears and Jijon indemnification for a nearly $15.7 million judgment they had entered against them stemming from a June 1, 1996, accident where Rosa Kresin was injured when she was struck by a van driven by Jijon while it was being backed out of a Sears Automotive Center at Charlestowne Mall in St. Charles, Illinois.¹ On appeal, plaintiffs contend that the trial court erred in granting summary judgment because it failed to consider the "parking exception" contained in the policy. For the reasons set forth, we affirm the judgment of the trial court.

BACKGROUND

In January 2000, while the Kresin case was on appeal, plaintiffs filed their fourth amended third-party complaint containing five counts. Counts I and II were directed against Charwil Associates, L.P. (Charwil), Sears' landlord, which managed the Charlestowne Mall on behalf of an affiliated entity, Jamesport Associates (Jamesport). According to the terms of a lease between Charwil and Sears, Charwil was required to obtain and maintain liability insurance naming Sears as an insured for the common areas of the mall. In compliance with the lease, Jamesport purchased insurance from Acceptance and Travelers. In count I of their complaint, plaintiffs alleged that Charwil had breached the indemnification clause contained in its lease with Sears based upon Charwil's failure to defend Sears in the Kresin litigation. In count II, plaintiffs alleged breach of contract in that Charwil had failed to obtain and maintain adequate insurance as required by the lease. The counts against Charwil are not at issue in this appeal.

Counts III through V were directed against Acceptance and Travelers. In count III, plaintiffs alleged breach of contract against Acceptance because it had refused to defend Sears in the Kresin lawsuit. In count IV, plaintiffs sought a declaration that Acceptance had a duty to defend and indemnify Sears in the Kresin lawsuit. In count V, plaintiffs sought a declaration that Travelers, as its excess insurance carrier, had a duty to indemnify Sears. In response, Acceptance filed a counterclaim wherein it sought a declaration that it did not have a duty to defend any party involved in the Kresin lawsuit.

Acceptance subsequently filed a motion for summary judgment, wherein it asserted that it did not have a duty to defend or indemnify Sears. Acceptance argued that the language contained in its policy with Sears did not require it to defend Sears. Acceptance further argued that because the accident causing Kresin's injuries fell within the "automobile exclusion" of the policy, it had no duty to defend or indemnify. Travelers also moved for summary judgment. In its motion, Travelers adopted Acceptance's argument that indemnification was barred based upon the automobile exclusion. Travelers argued that because it was an excess insurer, it had no duty to indemnify because Acceptance was not obligated to defend or indemnify.

In a written order dated February 16, 2001, the trial court found that Acceptance had a duty to defend based upon the language contained in the policy's "Endorsements." However, after reviewing the language contained in the automobile exclusion and the allegations contained in Kresin's complaint, the trial court ruled that Acceptance was justified in its refusal to defend Sears in the Kresin lawsuit. This conclusion was based upon its determination that the primary business of the automobile center was maintenance and use of vehicles, which was expressly covered in the automobile exclusion. In its ruling, the trial court recognized that Sears had asserted that a liberal construction of the allegations contained in the Kresin complaint established that the allegations could have potentially fallen within the parking exception to the automobile exclusion within the policy.

Citing case law for the proposition that where no duty to defend exists, there is no duty to indemnify, the trial court ruled that Acceptance was entitled to judgment as a matter of law on counts II and III of the amended third-party complaint. Regarding Traveler's motion for summary judgment, the trial court granted the motion, finding that because Acceptance had no duty to indemnify, Travelers, as an excess carrier, could not have a duty to indemnify broader than Acceptance's duty.

In an order dated October 30, 2001, the trial court found that there was no just cause to delay enforcement or appeal of its February 16, 2001, order. Plaintiffs now appeal.

ANALYSIS

On appeal, plaintiffs contend that the trial court erred in granting summary judgment in favor of its insurance carriers. They argue that because Jijon was "unparking" the van when Kresin was struck, the parking exception contained in the policy required coverage from its insurers.

Pursuant to the terms of the policy at issue, coverage did not extend under the automobile exclusion to:

"`Bodily injury' or `property damage' arising out of the ownership, maintenance, use or entrustment to others of any aircraft, `auto' or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and `loading and unloading.'"

The policy provided an exception to the automobile exclusion for: "Parking an `auto' on, or on the ways next to, premises you own or rent, provided the `auto' is not owned by or rented or loaned to you or the insured * * *."

When construing an insurance policy, the primary function of this court is to ascertain and enforce the intentions of the parties as expressed in the agreement. De Los Reyes v. Travelers Insurance Cos., 135 Ill.2d 353, 358, 142 Ill.Dec. 787, 553 N.E.2d 301 (1990). When ascertaining the meaning of the words used in the policy and the intent of the parties, we are to construe the policy as a whole, while taking into account "the type of insurance for which the parties have contracted, the risks undertaken and purchased, the subject matter that is insured and the purposes of the entire contract." Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.2d 384, 391, 189 Ill. Dec. 756, 620 N.E.2d 1073 (1993). The construction of the provisions contained in an insurance policy is a question of law that can properly be decided in a motion for summary judgment. Crum & Forster,156 Ill.2d at 391,189 Ill.Dec. 756,620 N.E.2d 1073. Summary judgment is appropriate when there is no genuine issue of material fact and the moving party's right to judgment is clear and free from doubt. Illinois Central R.R. Co. v. Accident & Casualty Co. of Winterthur, 317 Ill.App.3d 737, 744, 251 Ill.Dec. 116, 739 N.E.2d 1049 (2000). When ruling on a motion for summary judgment, it is proper to construe all evidence in the light most favorable to the nonmoving party and strictly against the moving party. Illinois Central R.R., 317 Ill.App.3d at 744,251 Ill.Dec. 116,739 N.E.2d 1049. Our review of the trial court's granting of summary judgment is de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 102, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1992)

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Insurance policies are to be liberally construed in favor of coverage, and where an ambiguity exists in the terms of the contract, the ambiguity will be resolved in favor of the insured and against the insurer. State Security Insurance Co. v. Burgos, 145 Ill.2d 423, 438, 164 Ill.Dec. 631, 583 N.E.2d 547 (1991). The duty of an insurer to defend its insured is much broader than its duty to indemnify. Outboard Marine, 154 Ill.2d at 125, 180 Ill. Dec. 691, 607 N.E.2d 1204. When determining whether the insurer has a duty to defend, the court must compare the allegations contained in the underlying complaint to the language contained in the policy. Outboard Marine, 154 Ill.2d at 125, 180 Ill.Dec. 691, 607 N.E.2d 1204. While liberally construing the underlying complaint in favor of the insured, if the court determines that the allegations fall within, or potentially within, coverage under the policy, the insurer has a duty to defend the insured against the underlying complaint. Outboard Marine, 154 Ill.2d at 125, 180 Ill.Dec. 691, 607 N.E.2d 1204. A duty to indemnify arises if the insured's activity and the resulting loss or damage actually fall within a policy's coverage. Outboard Marine, 154 Ill.2d at 128, 180 Ill.Dec. 691, 607 N.E.2d 1204. The insurer bears the burden of establishing that a claim falls within a provision that limits or excludes coverage. Pekin Insurance Co. v. L.J. Shaw & Co., 291 Ill.App.3d 888, 892, 225 Ill.Dec. 862, 684 N.E.2d 853 (1997).

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