Essex Insurance Company v. Wright ( 2007 )

SIXTH DIVISION
February 9, 2007
No. 1-05-0267
ESSEX INSURANCE COMPANY, ) Appeal from the
) Circuit Court of
Plaintiff-Appellee, ) Cook County
)
v. )
)
HAROLD WRIGHT, Special Administrator of )
the Estate of Brian Wright, Deceased, )
)
Defendant-Appellant )
)
(O'Hare Auto Recycling, ) Honorable
) William Maki,
Defendant). ) Judge Presiding
JUSTICE McNULTY delivered the opinion of the court:
Essex Insurance Company brought an action for declaratory
judgment against its insured, O’Hare Auto Recycling, to determine
whether its commercial general liability insurance policy covered
a spoliation of the evidence claim filed against O’Hare. The
trial court entered summary judgment in favor of Essex. We
affirm.
BACKGROUND
Brian Wright died on October 13, 2002, when the Ford Bronco
he was driving rolled over. O’Hare, which is in the business of
recycling automobiles, acquired Wright's Bronco from a towing
company. An attorney for Wright's estate paid O’Hare $675 to
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store the vehicle. When the attorney later tried to obtain the
vehicle, O’Hare informed him that it had been crushed.
On August 6, 2003, Linda Wright, as special administrator of
Wright's estate, filed a two-count complaint alleging a products
liability action against Ford Motor Company and a spoliation of
the evidence claim against O’Hare. Linda alleged in her
complaint that O’Hare owed her a contractual duty to store and
preserve the Bronco as evidence for the products liability
lawsuit. She alleged that O'Hare "[f]ailed to maintain *** the
Bronco ***; [or] [d]estroyed the vehicle."
O'Hare asked Essex to defend it against the estate's claims.
Essex sued for a judgment declaring that it had no duty to defend
or indemnify O’Hare under its commercial general liability
insurance policy. The policy reads in pertinent part:
"1. Insuring Agreement
a. 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. *** [W]e will have no duty to defend the
insured against any 'suit' seeking damages for 'bodily
injury' or 'property damage' to which this insurance
does not apply. ***
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2. Exclusions
This insurance does not apply to:
***
b. Contractual Liability
'Bodily injury' or 'property damage' for which the
insured is obligated to pay damages by reason of the
assumption of liability in a contract or agreement.
This exclusion does not apply to liability for damages:
(1) That the insured would have in the
absence of the contract or agreement ***.
* * *
j. Damage To Property
'Property damage' to:
* * *
(4) Personal property in the care, custody or
control of the insured."
The policy defines "property damage" as "[p]hysical injury
to tangible property, including all resulting loss of use of that
property," or "[l]oss of use of tangible property that is not
physically injured."
Essex moved for summary judgment. The trial judge said:
"The question here is what duty is there from
O’Hare Auto Recycling to Linda Wright. The only duty
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that I see alleged is a contractual duty, and that’s
specifically excluded in the policy *** exclusion 2b
***. *** I’m going to grant the motion for summary
judgment."
Harold Wright, as special administrator of the estate,
appeals the judgment in favor of Essex.
ANALYSIS
We note first that nothing in the record shows a motion for
substitution of Harold Wright for Linda Wright as special
administrator of the estate. In Trapp v. Orr, 43 Ill. App. 3d
888, 889 (1976), as in this case, "all parties and the trial
court treated the matter as though a formal order allowing the
substitution had been entered." The court in Trapp held:
"Plaintiff [appellant] does not argue that the substitution was
improper and we will therefore treat the matter as the parties
have done." Trapp, 43 Ill. App. 3d at 889. Essex, like the
appellant in Trapp, does not contest the substitution. Following
Trapp, we will treat the case as though Harold properly
substituted for Linda.
The estate contends that the trial court erred in granting
Essex summary judgment because the spoliation of evidence claim
falls within the coverage of the policy. We disagree.
"[S]ummary judgment is properly granted if the pleadings,
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depositions, and admissions on file, together with any
affidavits, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment
as a matter of law." Caisson Corp. v. Home Indemnity Corp., 151
Ill. App. 3d 130, 133 (1986). We review de novo the decision to
grant a party summary judgment. General Agents Insurance Co. of
America, Inc. v. Midwest Sporting Goods Co., 215 Ill. 2d 146, 153
(2005).
First the estate argues that the case involves two forms of
property damage. The estate seeks to recover not only for the
damage to the destroyed vehicle, but also for the diminution of
the value of the product liability claim resulting from the
destruction of the evidence. Appellant argues that such a
negligence cause of action is a form of property covered by
O’Hare’s policy. We reject that notion.
The insurance policy at issue in Iowa Mutual Insurance Co.
v. Hennings, No. 05-3073, slip op. at 3 (C.D. Ill. October 13,
2006), like the insurance policy here, defined property damage as
"physical injury to tangible property" or "loss of use of
tangible property." The insurer in Iowa Mutual sued for a
judgment declaring that it had no duty to defend its insured
against an underlying suit for damages arising from the loss in
value of a workers compensation claim. The court held: "Property
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damag[e] is limited to damage to tangible property. The damage to
the cause of action is not damage to tangible property. Thus, the
diminution in the value of his workers compensation claim is not
covered." Iowa Mutual, No. 05-3073, slip op. at 7.
We agree with the court in Iowa Mutual that a cause of
action does not qualify as tangible property. Thus, O’Hare’s
policy does not cover the diminution in the value of appellant’s
products liability claim.
We turn our focus instead to the damage to the destroyed
Bronco. In reaching the conclusion that O’Hare’s insurance policy
excludes coverage of Wright’s spoliation claim, we find the
personal property exclusion most persuasive. That provision
excludes property damage to "[p]ersonal property in the care,
custody or control of the insured."
The "care, custody or control" exclusion "prevent[s] the
general liability insurer from becoming a guarantor of the
insured's workmanship in his ordinary operations. Failures of
workmanship are a normal business risk which the insured is in
the best position to prevent." Stewart Warner Corp. v. Burns
International Security Services, Inc., 527 F.2d 1025, 1030 (7th
Cir. 1975). To determine whether property is in the care, custody
or control of an insured so as to preclude liability under such
an exclusion clause, Illinois courts employ a two-pronged test.
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"If the property damaged is within the possessory control of the
insured at the time of the loss and is a necessary element of the
work performed, the property is considered to be in the care,
custody, or control of the insured." Caisson Co., 151 Ill. App.
3d at 133. "While the control exercised by the insured must be
exclusive, it need not be continuous, and if the insured has
possessory control at the time the property is damaged, the
exclusion clause will apply." Country Mutual Insurance Co. v.
Waldman Mercantile Co., 103 Ill. App. 3d 39, 42 (1981).
In Maryland Casualty Co. v. Holmsgaard, 10 Ill. App. 2d 1, 3
(1956), the owner of a car brought it to a shop to have a trailer
hitch welded to the frame. The welding caused a fire that
destroyed the car. First the car's owner sued the shop and then
the shop's insurer sued the shop for a judgment declaring that it
had no duty to defend or indemnify the shop against the car
owner's lawsuit. The appellate court held:
"[The shop owner] had actual possession of the
automobile. He had dominion over it. He managed and
controlled it at his place of business and was in the
act of welding a trailer hitch to the automobile at the
time of the damage complained of. Under our statutes,
he was entitled to a lien for his services. There can
be no doubt that a bailment carries with it the
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surrender of possession and custody." Maryland
Casualty, 10 Ill. App. 2d at 9.
The court held that the exclusion for property in the insured's
care, custody, and control applied, and therefore the court
affirmed summary judgment for the insurer.
Here, as in Maryland Casualty, the insured had actual
possession and control of the automobile at issue. O'Hare
exercised possessory control over the Bronco first by storing it
and then by destroying it.
Moreover, the allegations of the complaint show at least a
constructive bailment of the vehicle.
"'Where *** one person has lawfully acquired the
possession of personal property of another and holds it
under circumstances whereby he ought, upon principles
of justice, to keep it safely and restore it or deliver
it to the owner, such person, and the owner of the
property are, by operation of law, generally treated as
bailee and bailor under a contract of bailment,
irrespective of whether or not there has been any
mutual assent, expressed or implied, to such
relationship.'" Chesterfield Sewer & Water, Inc. v.
Citizens Insurance Co. of New Jersey, 57 Ill. App. 2d
90, 94, (1965), quoting Woodson v. Hare, 244 Ala. 301,
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303-04, 13 So. 2d 172, 174 (1943).
O'Hare acquired the Bronco from the towing company. Once
the attorney for the estate notified O'Hare of the need to
preserve the vehicle as evidence, and especially after O'Hare
accepted money for storing the Bronco, O'Hare had possession
under circumstances whereby it ought to have kept it safely and
returned it to the estate. Accordingly, we find that O'Hare
acted as bailee of the vehicle when, according to the complaint,
O'Hare either destroyed the vehicle, or failed to maintain it.
See also Estep v. Johnson, 123 Ohio App. 3d 307, 314, 704 N.E.2d
58, 62-63 (1998). The bailment includes possessory control of
the vehicle. Maryland Casualty, 10 Ill. App. 2d at 9.
We also find that the Bronco was a necessary element of the
work O’Hare performed. O’Hare earns its income by recycling
automobiles. Without automobiles to recycle, O’Hare would not be
able to carry out its daily operations. Thus, in light of the
nature of O’Hare’s business, we find that the Wright’s Bronco was
a necessary element of the work performed. See Waldman
Mercantile, 103 Ill. App. 3d at 43.
The allegations of the estate's complaint and the evidence
presented leave no issue of material fact for trial. O'Hare had
exclusive possessory control over the Bronco, and the Bronco was
a necessary element of O'Hare's work. Thus, O'Hare had care,
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custody or control of the Bronco within the meaning of the policy
exclusion. The trial court correctly held that the exclusion
clause establishes that Essex has no liability for the damage to
the vehicle or to the estate's cause of action against Ford.
Accordingly, we affirm.
Affirmed.
FITZGERALD SMITH, P.J., and O'MALLEY, J., concur.
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