U.S. Fire Ins. Co. v. Aetna Life and Cas., 1-96-4178

• Decision Date: 29 August 1997
• Docket Number: No. 1-96-4178,1-96-4178
• Citation: 684 N.E.2d 956,225 Ill.Dec. 965,291 Ill.App.3d 991
• Parties: , 225 Ill.Dec. 965 UNITED STATES FIRE INSURANCE COMPANY, Plaintiff-Appellant and Counterdefendant, v. AETNA LIFE AND CASUALTY, a corporation, Perini Corporation, University of Chicago, a not for profit corporation, and Howard Startz, Defendants-Appellees and Counterplaintiffs.
• Court: United States Appellate Court of Illinois

Page 956

684 N.E.2d 956

291 Ill.App.3d 991, 225 Ill.Dec. 965

UNITED STATES FIRE INSURANCE COMPANY, Plaintiff-Appellant and Counterdefendant, v. AETNA LIFE AND CASUALTY, a corporation, Perini Corporation University of Chicago, a not for profit corporation, and Howard Startz Defendants-Appellees and Counterplaintiffs.

No. 1-96-4178.

Appellate Court of Illinois First District, Sixth Division.

Aug. 29, 1997.

Rehearing Denied Oct. 2, 1997.

Cremer, Kopon, Shaughnessy & Spina, Chicago (Andrew Kopon, Jr., Douglas V. Bartman, of counsel), Plaintiff-Appellant and Counterdefendant.

Cassiday, Schade & Gloor, Chicago (John D. Hackett, Jean M. Golden, Jennifer A. Keller, Carolyn Quinn, of counsel), for Defendants-Appellees and Counterplaintiffs.

Presiding Justice GREIMAN delivered the opinion of the court:

This appeal concerns consolidated declaratory judgment actions in which two insurance companies dispute which one has the duty to defend in an underlying personal injury action. The trial court entered summary judgment against plaintiff United States Fire Insurance Company (USFI).

On appeal, USFI asserts that it had no duty to defend under the circumstances of this action and, even if a duty to defend existed, defendant Aetna Life & Casualty (Aetna) shares a concurrent duty to defend based on the "other insurance" clauses and endorsements in the two relevant policies.

For all the reasons that follow, we affirm the trial court's orders, finding that USFI had a sole duty to defend.

In brief, an employee of a subcontractor on a construction project sustained injuries. This appeal concerns what insurance coverage is available to the general contractor and the owner of the construction project in the underlying lawsuit filed by the subcontractor's employee.

A construction project was initiated at Argonne National Laboratories (Argonne). Defendant University of Chicago (University) was the designated owner and operator of the Argonne project, and defendant Perini Corporation (Perini) was the general contractor. Gateway Construction Company (Gateway) was a subcontractor on the project, and defendant Howard Startz (Startz) was an employee of Gateway.

Aetna issued an insurance policy to Perini, the general contractor. Perini entered into a subcontract agreement with Gateway.

Pursuant to the subcontract between Gateway and Perini, Gateway, as the subcontractor, had to "procure and maintain in force, on all its operations, insurance in accordance with attached Exhibit B [certificate of insurance], with Contractor [Perini] and Owner [the University] as additional insureds." The subcontract designates the University as the owner and operator of Argonne. Gateway obtained insurance from USFI.

USFI's policy named Gateway as the insured. An endorsement to this policy modified the commercial general liability coverage to include:

"Any person or organization required by written contract to be named as additional insured, and for whom operations are being performed by or on behalf of the named insured.

* * * * * *

Who is an insured (section II) is amended to include as an insured the person or organization shown in the schedule, but only with respect to acts or omissions of the named insured in connection with the named insured's operations at the applicable location designated."

As required by the contract between Gateway and Perini, Gateway also secured a certificate of insurance describing the USFI policy as including Perini and the University as additional insureds:

"Perini Building Co., Inc., The University of Chicago and the United States Government are added as additional insureds for GL [general liability] claims to the extent such claims are caused by the actions/omissions of Gateway Const. Co., Inc. or its employees."

Startz filed a complaint in the circuit court of Cook County alleging that he sustained personal injuries while employed by Gateway and naming Perini, the University and Argonne as defendants (case No. 95 L 02585) (the Startz action). Gateway was not named as a defendant. Startz alleged that he was injured when he tripped on a conduit protruding from a concrete slab while moving rebars. Startz alleged actions under the Structural Work Act (740 ILCS 150/1 et seq. (West 1992)) and in negligence.

Perini tendered the defense of the Startz action to Aetna based on the insuring agreement of Aetna that named the University as an additional insured under the policy. In turn, Aetna, Perini, the University and Argonne tendered the defense of the Startz action to USFI based on the provisions for additional insureds under the USFI insurance policy issued to Gateway.

On September 1, 1995, USFI filed a complaint for declaratory judgment (case No. 95 CH 008457). USFI contended that Perini, the University and Argonne are not insureds or additional insureds under USFI's policy; that USFI does not owe a duty to defend or indemnify Perini, the University and Argonne; and that the Startz complaint does not allege any acts or omissions on the part of Gateway regarding the accident involving Startz.

On September 7, 1995, Perini filed a complaint for declaratory judgment (case No. 95 CH 008613). Perini contended that USFI has a duty to defend and indemnify Perini in the Startz lawsuit based upon Perini's status as an additional insured on Gateway's general liability policy. Perini also alleged that USFI must reimburse Perini for all defense costs Perini incurs in connection with the defense of the Startz action.

On October 25, 1995, the two declaratory judgment actions were consolidated. Thereafter, the parties filed cross-motions for summary judgment.

On January 9, 1996, the trial court granted the motion of defendants (Perini and the University) and denied the cross-motion of USFI. In its order, the trial court also found that USFI "has a duty to defend Perini Corporation and University of Chicago as operator of the Argonne National Laboratories in the Startz lawsuit (95 L 2585) as additional insureds under Gateway Construction Company's U.S. Fire Policy No. 541-025524-8." The order further stated that plaintiff's "declaratory judgment action remains pending, along with the counterclaim filed by Perini Corporation." USFI's motion to reconsider was denied on March 7, 1996.

On June 28, 1996, USFI filed a second motion for summary judgment asserting that the "other insurance" clauses in the two insuring agreements by USFI and Aetna require both insurers to share the defense costs of the Startz lawsuit. On the same day (June 28, 1996), Perini and the University filed a motion for summary judgment contending that USFI has the sole primary duty to defend and indemnify them in connection with the Startz litigation and that the Aetna policy is excess over the limits of USFI and does not apply until the limits of USFI's policy are exhausted.

On September 16, 1996, the trial court ruled on these June 1996 cross-motions for summary judgment. The trial court granted summary judgment in favor of Perini and the University and denied the cross-motion of USFI. The trial court found that USFI "has the sole primary duty to defend and indemnify Perini and the University of Chicago as operator of the Argonne National Laboratories in connection with the Startz lawsuit (95 L 2585)" and "that Perini's Aetna policy is excess over [USFI's] policy and Aetna does not have any obligation to share defense costs and indemnity with [USFI] and shall not apply in any respect until such time as the limits of [USFI's] policy have been exhausted." The trial court also found that USFI "must reimburse Aetna for all defense costs Aetna has incurred in connection with the defense of the Startz lawsuit (95 L 2585)." USFI filed a petition for rehearing on the matters determined in the order of September 16, 1996.

On October 30, 1996, in response to USFI's petition to vacate or modify the order of September 16, the trial court modified the September 16 order "to eliminate any determination of any duty to indemnify" and specifically reserved "ruling with respect to the issue of the duty to indemnify." The trial court ruled that the September 16 order "shall only determine the duties to defend of the parties." In addition, the trial court further modified the September 16 order, as amended in this order, "to add that there is no just reason to delay enforcement or appeal."

On appeal, USFI challenges the three trial court orders of January 9, 1996, September 16, 1996, and October 30, 1996. Perini and the University have responded in this appeal and are hereinafter referred to as defendants.

As a threshold matter, defendants assert that this court lacks jurisdiction to review the trial court's order of January 9, 1996, and argue that the order was purely interlocutory. Thus, according to defendants, this court cannot consider the issue adjudicated in that order, i.e., USFI has a duty to defend.

Defendants' argument is misplaced. There is no dispute that the subsequent orders (September 16, 1996, and October 30, 1996) are appealable and that USFI specified all three orders (January 9, September 16, and October 30) in its notice of appeal. "[A]n appeal from a final judgment draws into issue all prior nonfinal orders which produced the final judgment." Dowell v. Bitner, 273 Ill.App.3d 681, 688, 210 Ill.Dec. 396, 652 N.E.2d 1372 (1995). Even where an order is not specified in a notice of appeal, such order is subject to review "where that order was a step in the procedural progression to the specified order." Dowell, 273 Ill.App.3d at 688-89, 210 Ill.Dec. 396, 652 N.E.2d 1372, citing Burtell v. First Charter Service Corp., 76 Ill.2d 427, 435, 31 Ill.Dec. 178, 394 N.E.2d 380 (1979). The issue of USFI's duty to defend is an integral and interrelated matter addressed in the two subsequent orders, and we have jurisdiction to hear all matters raised in this appeal. See Waters v. Reingold, 278 Ill.App.3d 647, 651-58, 215 Ill.Dec. 376, 663 N.E.2d...