Maxum Indemnity Company v. Gillette ( 2010 )


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  •                                    No. 3-10-0006
    ______________________________________________________________________________
    Filed November 22, 2010-Correction
    IN THE
    APPELLATE COURT OF ILLINOIS
    THIRD DISTRICT
    A.D., 2010
    ______________________________________________________________________________
    MAXUM INDEMNITY COMPANY,            )     Appeal from the Circuit Court
    )     of the 13th Judicial Circuit
    Plaintiff-Appellant,          )     LaSalle County, Illinois,
    )
    v.                            )
    )
    DON AND BETTY GILLETTE d/b/a        )     No. 09-MR-113
    GILLETTE PARADE PRODUCTS,           )
    CECILIA KALER and HOWARD            )
    KALER,                              )
    )     The Honorable
    Defendants-Appellees.         )     Joseph P. Hettel,
    )     Judge, Presiding.
    ______________________________________________________________________________
    JUSTICE McDADE delivered the opinion of the court:
    ______________________________________________________________________________
    This appeal arises from a declaratory judgment action filed in the circuit court of LaSalle
    County to resolve insurance coverage issues. Plaintiff, Maxum Indemnity Company, appeals
    arguing that the court erred in determining that it owed a duty to defend defendant, Don & Betty
    Gillette, d/b/a Gillette Parade Products. We reverse and remand for further proceedings.
    FACTS
    Defendant is engaged in the business of preparing, providing and transporting parade
    floats for compensation. Plaintiff issued a commercial liability policy (the policy) to defendant
    with an effective policy period from October 10, 2007, through October 1, 2008. The policy
    provides in pertinent part:
    “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. We will have
    the right and duty to defend the Insured against any ‘suit’ seeking
    those ‘damages.’ However, we 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.
    ***
    b. This insurance policy applies to ‘bodily injury’ and
    ‘property damage’ only if:
    (1) The ‘bodily injury’ or ‘property damage’
    is caused by an ‘occurrence’ that takes place in the
    ‘coverage territory’; and
    (2) The ‘bodily injury’ or ‘property damage’
    takes place during the policy period.”
    The policy contains an “Aircraft, Auto or Watercraft” exclusion (auto exclusion) which
    excludes coverage for:
    “ ‘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, including the supervision, hiring,
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    employment, training or monitoring of, or failure to warn anyone in
    connection with, the ownership, maintenance, use or entrustment to
    others of any aircraft, ‘auto’ or watercraft. Use includes operation
    and ‘loading or unloading.’ ”
    The policy defines “auto” as:
    “[A] land motor vehicle, trailer or semi-trailer designed for travel
    on public roads, including any attached machinery or equipment.”
    On August 3, 2008, Cecilia Kaler was a passenger on a parade float owned and operated
    by defendant. The parade float at issue was being pulled by defendant, by way of its agent driver,
    on a public road. While being pulled, Kaler was thrown from the float.
    On April 24, 2009, Kaler filed a lawsuit against defendant alleging that defendant was
    guilty of one or more of the following negligent acts:
    “a. Provided a parade float in an unsafe, defective and
    dangerous condition in that there were no side rails to prevent
    passengers thereon from being thrown from the float,
    b. Provided a parade float in an unsafe, defective and
    dangerous condition in that there were insufficient hand rails for
    passengers to prevent them from being thrown from the float,
    c. Permitted and allowed *** KAILER [sic] to sit upon the
    defective and unsafe float when they knew or should have known
    that the float provided inadequate safety devices to prevent
    passengers from being thrown from the float,
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    d. Failed to warn *** KAILER [sic] of the defective and
    unsafe condition of the float.
    e. Pulled the float on a public way when the float was in an
    unsafe condition so as to endanger passengers thereon,
    f. Failed to have the float equipped with a retaining device
    to prevent passengers from being thrown onto the pavement,
    g. Failed to provide a safe and competent driver.”
    The complaint also alleged that defendant, by and through their agent driver, was guilty of
    one or more of the following negligent acts:
    “a. Pulled the float at a speed greater than reasonable,
    b. Pulled the float at an excessive speed so that when pulled
    over a bump in the road, caused the float to violently lunge and
    buck,
    c. Failed to decrease the speed at which the float was being
    pulled when he saw or should have seen the bumpy nature of the
    pavement ahead,
    d. Failed to keep a proper look-out ahead for pavement
    imperfections that could or might cause the float to lunge and buck,
    e. Failed to proceed cautiously when he saw or should have
    seen pavement imperfections ahead,
    f. Failed to see and observe pavement imperfections ahead,
    g. Swerved the float suddenly, when this movement could
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    not be made with reasonable safety to passengers thereon.”
    On June 3, 2009, plaintiff filed a declaratory judgment action seeking a determination that
    it was not required to defend and/or indemnify defendant Gillette in the Kaler lawsuit. In lieu of
    answering plaintiff’s complaint, defendant filed a motion for judgment on the pleadings. Upon
    hearing argument, the circuit court denied defendant’s motion as to the duty to indemnify, finding
    that the issue was premature. The court, however, granted defendant’s motion in part, finding
    that plaintiff owed a duty to defend defendant. Specifically, the court found that Kaler’s
    complaint involved a parade float, not an auto. The court also noted that Kaler’s complaint
    contained separate allegations pertaining to how the float was built, which did not relate in any
    way to an auto. Thus, the court concluded that the auto exclusion found in the policy did not
    apply. Plaintiff now appeals the court’s finding that it owes a duty to defend defendant.
    ANALYSIS
    Plaintiff argues that the circuit court erred in finding that it owed a duty to defend
    defendant. Plaintiff presents two specific arguments in support of this claim. First, plaintiff
    contends that the “parade float clearly falls within the definition of an ‘auto,’ as *** defined by the
    policy.” Plaintiff also contends that “Kaler’s allegations that [defendant] provided the parade float
    in an alleged unsafe and defective condition, failed to warn of the unsafe conditions, and failed to
    provide a safe and competent driver to pull the float, are merely a rephrasing of the fact that the
    claimant’s injuries arose out of the insured’s use of the‘auto’ [pulling the float], and thus, are not
    wholly independent of the negligent operation of the ‘auto.’ ”
    The supreme court in Crum & Forster Managers Corp. v. Resolution Trust Corp., 
    156 Ill. 2d
    384, 
    620 N.E.2d 1073
    (1993), explained the principles courts of review should apply when
    5
    called to interpret an insurance policy and determine whether an insurer owes a duty to defend its
    insured its terms. Specifically, the court stated:
    “The construction of an insurance policy and a
    determination of the rights and obligations thereunder are questions
    of law for the court ***. [Citations.] In construing an insurance
    policy, the primary function of the court is to ascertain and enforce
    the intentions of the parties as expressed in the agreement.
    [Citations.] To ascertain the intent of the parties and the meaning
    of the words used in the insurance policy, the court 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. [Citations.] 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. [Citation.] The court will
    not search for ambiguity where there is none. [Citation.]
    ***
    * * * [I]n determining whether an insurer has a duty to
    defend its insured, the court must look to allegations in the
    underlying complaint and compare these allegations to the relevant
    coverage provisions of the insurance policy. [Citation.] If the facts
    alleged in the underlying complaint fall within, or potentially within,
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    the policy’s coverage provisions, then the insurer has a duty to
    defend the insured in the underlying action. [Citation.] The
    insurer’s duty to defend is much broader than its duty to indemnify
    its insured.” Crum, 
    156 Ill. 2d
    at 
    391-94, 620 N.E.2d at 1077-79
    .
    Initially, we examine plaintiff’s claim that the “parade float clearly falls within the
    definition of an ‘auto,’ as *** defined by the policy.” Specifically, plaintiff argues that “at an
    absolute minimum, a parade float, which is pulled by a vehicle, would be categorized as a trailer,
    and thus would fall squarely within the definition of ‘auto.’ ” We agree.
    Again, the policy defines “auto” as “a land motor vehicle, trailer or semi-trailer designed
    for travel on public roads.” (Emphasis added.) Because the policy does not define the term
    “trailer,” we must give it its plain, ordinary and popular meaning. Outboard Marine Corp. v.
    Liberty Mutual Insurance Co., 
    154 Ill. 2d 90
    , 115, 
    607 N.E.2d 1204
    , 1215 (1992). “ ‘ “Usual and
    ordinary meaning” has been stated variously to be that meaning which the particular language
    conveys to the popular mind, to most people, to the average, ordinary, normal [person], to a
    reasonable [person], to persons with usual and ordinary understanding, to a business[person], or
    to a lay[person].’ ” Outboard 
    Marine, 154 Ill. 2d at 115
    , 607 N.E.2d at 1216, quoting 2 Couch
    on Insurance 2d §15:18 (rev. ed. 1984).
    Merriam-Webster’s Online dictionary (Merriam) defines the term “trailer” as a
    “nonautomotive vehicle designed to be hauled by road as *** a vehicle for transporting
    something.” Merriam-Webster Online Dictionary 2010, available at
    www.merriam-webster.com/dictionary/trailer. Here, we find the float constitutes a “trailer” as
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    contemplated by the policy due to the fact that it was a nonautomotive vehicle being pulled on a
    public road by an automobile while transporting passengers and displays. We believe this fact also
    supports the conclusion that the float was designed “for travel on public roads” as contemplated
    by the policy. The trial court itself recognized that trailers used for travel on public roads are
    frequently converted to parade floats. To the popular mind, to most people, to ordinary
    laypersons, “trailer” connotes a parade float. Thus, we find the float falls within the definition of
    an “auto” as defined by the policy. This determination, however, does not end our inquiry as we
    are still left with the question of whether the underlying complaint’s defective condition claims fall
    within the scope of the auto exclusion.
    We begin with the principle that if the underlying complaint alleges several theories of
    recovery against the insured, the duty to defend arises even if only one such theory is within the
    potential coverage of the policy. See National Union Fire Insurance Co. of Pittsburgh v.
    Glenview Park District, 
    158 Ill. 2d 116
    , 124, 
    632 N.E.2d 1039
    , 1042-43 (1994). Clearly, Kaler’s
    claims regarding negligent operation of the “auto”/float fall within the scope of the auto exclusion.
    Both the trial court and defendant, however, believe that plaintiff still owes a duty to defend due
    to the fact that Kaler’s defective condition claims do not allege bodily injury arising “out of the
    ownership maintenance, use or entrustment to others” of the “auto”/float. We disagree.
    We find the recent holding in State Farm § Fire Casualty Co. v. Perez, 
    387 Ill. App. 3d 549
    , 
    899 N.E.2d 1231
    (2008), to be instructive. The insurer in Perez sought a declaratory
    judgment that a homeowner’s policy did not provide coverage for a civil action arising from a
    traffic accident. The driver was an insured under the homeowner’s policy, but the policy excluded
    coverage for claims arising out of the use of a motor vehicle. The passenger filed a complaint
    8
    against the driver alleging that the driver: (1) negligently operated the vehicle, and (2) negligently
    modified the vehicle’s seats and restraint system, leading to the passenger’s injuries in the
    accident. On appeal, the passenger argued that the motor vehicle exclusion found in the
    homeowner’s policy was inapplicable because the negligent modification claim did not allege
    bodily injury arising out of the ownership, maintenance, use, loading or unloading of the driver’s
    vehicle. Specifically, the passenger alleged that the negligent modification allegations were
    “wholly independent” from the allegation that the driver negligently operated the vehicle. In
    rejecting the passenger’s argument the court stated:
    “Here, [the passenger’s] negligent modification claim
    against [the driver] arose from injuries she sustained while the car
    was being used in a manner consistent with its customary use. The
    alleged problem with the modified seats and safety restraint system,
    and [the driver’s] alleged failure to warn [the passenger] about
    these alterations, only created a risk to [the passenger], as was the
    case here, when the car was in motion and used as a mode of
    transportation -- an actual legitimate purpose of the car
    contemplated by the parties to the insurance contract. Because the
    exclusion in the homeowner’s policy did not define the term ‘use,’
    we must give it its plain, ordinary and popular meaning. We thus
    construe it in light of the reasonable person standard and note that a
    reasonable person would find the phrase ‘use of a motor vehicle’ to
    mean driving and operating a vehicle. We cannot think of a more
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    inherent activity one may do with a car than to drive it. [Citation.]
    *** [The driver] was driving the car at the time of the accident, an
    activity that squarely falls under the ‘use of a motor vehicle’
    language in the exclusion and was an actual legitimate purpose of
    the car. *** [A] causal relation existed here between [the
    passenger’s] injuries and [the driver’s] use of the car, causing her
    injuries to come within the policy’s exclusion because the
    involvement of the car was not incidental to [the passenger’s]
    injuries, it was the cause of her injuries. Further, the negligent
    modification claim was only a rephrasing of the fact that [the
    passenger’s] injuries arose out of [the driver’s] use of the car and,
    thus, was not wholly independent of the negligent operation of the
    car. Therefore, we hold that the exclusion applies and [the insurer]
    has no duty to defend [the driver] in the underlying lawsuit.”
    
    Perez, 387 Ill. App. 3d at 556-57
    , 899 N.E.2d at 1238.
    Here, Kaler’s defective condition claims arose from injuries she sustained while the
    “auto”/float was being used in a manner consistent with its customary use. Kaler’s entire
    complaint revolves around her being “thrown from the float” while the float was being “pulled.”
    In light of these alleged facts, we find the alleged defective condition only created a risk to her
    when the float was in motion. Clearly, a causal relation exists between Kaler’s injuries and the
    use of the “auto”/float. We therefore find that the defective condition claims are not wholly
    independent of the alleged negligent operation or use of the float. Accordingly, we hold that the
    10
    auto exclusion applies and plaintiff has no duty to defend defendant in the underlying lawsuit.
    For the foregoing reasons, we reverse the judgment of the circuit court of LaSalle County
    and remand for further proceedings.
    Reversed and remanded.
    CARTER and SCHMIDT, JJ., concur.
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