Westfield Nat. Ins. Co. v. CONTINENTAL COMMUNITY BK. AND TRUST CO.

• Citation: 804 N.E.2d 601,281 Ill.Dec. 636,346 Ill. App.3d 113
• Decision Date: 23 December 2003
• Docket Number: No. 2-01-1369.,2-01-1369.
• Parties: WESTFIELD NATIONAL INSURANCE COMPANY, Plaintiff-Appellee, v. CONTINENTAL COMMUNITY BANK AND TRUST COMPANY, as Next Friend and Guardian of the Estates of J.S. and S.S., Minors, Defendant-Appellant (Jill Wood Valdez, Defendant).
• Court: United States Appellate Court of Illinois

804 N.E.2d 601

346 Ill. App.3d 113

281 Ill.Dec. 636

WESTFIELD NATIONAL INSURANCE COMPANY, Plaintiff-Appellee, v. CONTINENTAL COMMUNITY BANK AND TRUST COMPANY, as Next Friend and Guardian of the Estates of J.S. and S.S., Minors, Defendant-Appellant (Jill Wood Valdez, Defendant).

No. 2-01-1369.

Appellate Court of Illinois, Second District.

December 23, 2003.

Rehearing Denied March 3, 2004.

Junie L. Sinson, Sinson & Sinson, Ltd., Chicago, for Continental Community Bank & Trust Co., Jill Wood Valdez.

Richard T. Valentino, Lynn Urkov Thorpe, Mora, Baugh, Waitzman & Unger, LLC, Chicago, for Westfield Insurance Co.

Presiding Justice HUTCHINSON delivered the opinion of the court:

In 2001 plaintiff, Westfield National Insurance Company (Westfield), brought a declaratory judgment action seeking a judicial determination that it was not obligated to defend or indemnify its insured, Jill Wood Valdez (the aunt), in a civil suit filed against her by defendant, Continental Community Bank and Trust Company, as next friend and guardian of the estates of J.S. and S.S., minors (collectively, the minors) (No. 00-LK-625). The underlying civil suit, filed in December 2000, arose from allegations that, between early 1995 and continuing to November 1996, the aunt's husband, Librado Valdez, sexually molested the minors during their visits to the Valdez home. Valdez later pleaded guilty and was criminally convicted for these incidents (No. 96-CF-2395). The minors appeal the trial court's order granting summary judgment in favor of Westfield. The aunt has not appealed the trial court's ruling and is not a party to this appeal. We affirm.

In the underlying civil suit, the minors alleged that their aunt owed "a duty to protect each child from harm and danger which she knew or should have known existed." The minors further alleged that, notwithstanding that duty, the aunt "was guilty of the following wrongful acts of commission or omission":

"(a) Report to the parents of [the minors] the sexual molesting of [the minors] which she knew or should have known because of the conduct of her husband * * *[;]

(b) Advised the parents of [the minors] of the prior criminal involvement with minors involving * * * Valdez in the State of Florida;

(c) Report to the parents of [the minors] inappropriate physical encounters which were occurring involving [the minors] and * * * Valdez;

(d) Desist from bringing [the minors] to sit on the lap of * * * Valdez;

(e) Desist from creating a sexually charged atmosphere by promoting a collective viewing of movies which involved naked actors and actresses;

(f) Desist during said movie viewings the encouragement of comments involving the naked bodies of actresses applicable to the pubescent and pre-pubescent [minors];

(g) Ascertain the activities of * * * Valdez at such times as he would leave the marital bedroom and visit the bed of [the minors];

(h) Desist from directing * * * [the minors] to sit on the lap of the partially clad * * * Valdez for the purposes of keeping him warm;

(i) Investigate reason why she discovered [one of the minors] locked in the bathroom and crying after an encounter with * * * Valdez;

(j) Desist from providing and encouraging [the minors] from wearing minimal and provocative clothing when interacting with * * * Valdez;

(k) Desist from the isolating of [the minors] from each other so as to secure a one-on-one intimacy with * * * Valdez."

The underlying complaint further alleged:

"As a direct and proximate result of one or more of the aforesaid enabling acts or omissions, * * * [the minors] were exposed to and submitted to * * * Valdez, at which time, each of them was molested and suffered injuries of a personal and pecuniary nature."

Count II contained the same allegations but claimed that the aunt's conduct violated sections 2-3(1)(b) and (2)(iii) of the Juvenile Court Act of 1987 (705 ILCS 405/2-3(1), (2)(iii) (West 2000)).

The aunt tendered her defense to Westfield under her homeowner's policies in effect at the relevant times. In response, Westfield filed this declaratory judgment action claiming that it owed no duty to defend or indemnify the aunt because, inter alia, the underlying complaint alleged deliberate or intentional conduct on the part of the aunt, which enabled Valdez to molest the minors, and was therefore barred under the "expected or intended" exclusion of the Westfield policies. At the hearing on Westfield's motion for summary judgment, the minors sought leave to depose the aunt; the, trial court denied the motion. Following a hearing, the trial court granted summary judgment in favor of Westfield, ruling that Westfield had no duty to defend or indemnify the aunt. The minors timely appeal.

The minors contend that the trial court erred when it granted summary judgment in favor of Westfield and argue that the applicable provisions of insurance did not preclude coverage to the aunt. The construction of an insurance policy and a determination of the rights and obligations arising under the policy are questions of law for the court, and summary judgment is an appropriate proceeding for resolving these questions. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.2d 384, 391,189 Ill.Dec. 756, 620 N.E.2d 1073 (1993). A trial court will enter summary judgment if the pleadings, depositions, admissions, and affidavits show that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Jones v. Chicago HMO Ltd. of Illinois, 191 Ill.2d 278, 291, 246 Ill.Dec. 654, 730 N.E.2d 1119 (2000). We apply a de novo standard of review to the trial court's decision to grant summary judgment. Jones, 191 Ill.2d at 291, 246 Ill.Dec. 654, 730 N.E.2d 1119.

Whether an insurer has a duty to defend its insured depends on whether the underlying complaint alleges facts within or potentially within coverage of the insurance policy. National Union Fire Insurance Co. of Pittsburgh v. R. Olson Construction Contractors, Inc., 329 Ill.App.3d 228, 234, 264 Ill.Dec. 140, 769 N.E.2d 977 (2002). Where the underlying complaint alleges facts which, if true, would exempt the insured from coverage under the policy, the insurer has no duty to defend. American Family Mutual Insurance Co. v. Chiczewski, 298 Ill.App.3d 1092, 1094, 233 Ill.Dec. 249, 700 N.E.2d 777 (1998), citing State Farm Fire & Casualty Co. v. Hatherley, 250 Ill.App.3d 333, 336, 190 Ill. Dec. 170, 621 N.E.2d 39 (1993). In construing the insurance policy, we must construe the policy as a whole, 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., 156 Ill.2d at 391, 189 Ill.Dec. 756, 620 N.E.2d 1073. If the words in the policy are plain and unambiguous, the court will afford them their plain, ordinary, meaning and will apply them as written. Crum & Forster Managers Corp., 156 Ill.2d at 391, 189 Ill.Dec. 756, 620 N.E.2d 1073.,

Each policy in force during the relevant time period provided the following coverage:

"COVERAGE E—Personal Liability

If a claim is made or a suit is brought against an Insured for damages because of bodily injury, caused by an occurrence to which this coverage applies, we will:

1. pay up to our limit of liability for the damages for which the Insured is legally liable; and

2. provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent." (Emphasis added.)

Each policy also excluded from coverage bodily injury or property damage "which is expected or intended by the Insured." The policies also stated that personal injury insurance did not apply to "injury caused by a violation of a penal law or ordinance committed by or with the knowledge or consent of an insured."

Each policy defined "occurrence" as follows:

"9. `occurrence' means an accident, including continuous or repeated exposure to substantially the same harmful conditions, which results, during the period, in:

a. bodily injury; or

b. property damage." (Emphasis added.)

The policies define the term "bodily injury" as "bodily harm, sickness or disease, including required care, loss of services and death resulting therefrom." With respect to the term "Insured," the policies stated that it "means, unless otherwise defined, you and any `family member.'" The policies define occurrence as an "accident." Although the use of the word "occurrence" in insurance policies broadens coverage and eliminates the need to find an exact cause of damages, as long as they are neither intended nor expected by the insured, the "occurrence" must still be "accidental." State Farm Fire & Casualty Co. v. Tillerson, 334 Ill.App.3d 404, 408, 268 Ill.Dec. 63, 777 N.E.2d 986 (2002). Illinois courts have defined "accident" as an unforeseen occurrence, usually of an untoward or disastrous character or an undesigned, sudden, or unexpected event of an inflictive or unfortunate character. Aetna Casualty & Surety Co. v. Freyer, 89 Ill.App.3d 617, 619, 44 Ill.Dec. 791, 411 N.E.2d 1157 (1980). The natural and ordinary consequences of an act do not constitute an accident. See Atlantic Mutual Insurance Co. v. American Academy of Orthopaedic Surgeons, 315 Ill.App.3d 552, 561, 248 Ill.Dec. 342, 734 N.E.2d 50 (2000). Therefore, under the terms of the policies, if the aunt "expected or intended" to cause bodily injury to the minors, her actions are not an "accident" and are not covered under the "occurrence" provision, which triggers coverage. See State Farm Fire & Casualty Co. v. Watters, 268 Ill.App.3d 501, 506, 205 Ill.Dec. 936, 644 N.E.2d 492 (1994). Moreover, if the aunt "expected or intended" to cause bodily injury to the minors, her actions are not covered and are excluded under the "intended-acts" provision. See Watters, 268 Ill.App.3d at 506, 205 Ill.Dec. 936, 644 N.E.2d 492.

As an initial matter, we believe it...