United Fire & Casualty v. Keeley & Sons ( 2008 )

NO. 5-06-0307
N O T IC E
D e ci si o n fil e d 05/02/08. The text of
IN THE
this d e cisi on m ay be changed or
co rre cte d prio r to th e filin g of a
APPELLATE COURT OF ILLINOIS
P e t it io n for Re he aring or th e
d i sp o sitio n o f th e same.
FIFTH DISTRICT
_________________________________________________________________________
UNITED FIRE & CASUALTY COMPANY, ) Appeal from the
a Corporation, ) Circuit Court of
) St. Clair County.
Plaintiff-Appellant, )
)
v. ) No. 05-MR-181
)
KEELEY & SONS, INC., TERRY MARTIN, )
ARDITH WYNN, RICKEY VANOVER, )
EGYPTIAN CONCRETE COMPANY, and )
ALLEN HENDERSON & ASSOCIATES, )
INC., ) Honorable
) Patrick M. Young,
Defendants-Appellees. ) Judge, presiding.
_________________________________________________________________________
JUSTICE SPOMER delivered the opinion of the court:
United Fire & Casualty Company (United) appeals the circuit court's order granting
a summary judgment in favor of Keeley & Sons, Inc. (Keeley), and denying United's motion
for a summary judgment on its complaint for a declaratory judgment. For the following
reasons, we reverse and remand with directions to enter a summary judgment in favor of
United.
On June 20, 2005, United filed a two-count complaint for a declaratory judgment in
the circuit court of St. Clair County. The complaint alleged that United issued a commercial
general liability policy (the policy) to Keeley, which included a commercial umbrella liability
policy, with coverage effective from December 31, 2000, to December 31, 2001.
Previously, on May 29, 2001, Terry Martin, Ardith Wynn, and Rickey Vanover (the
employees), all of whom were employed by Keeley, fell from an I-beam and were injured.
The employees filed suit (the underlying lawsuit) against Egyptian Concrete Company and
1
others (the underlying defendants). Counts alleging spoliation of evidence were added
against Keeley on behalf of the employees, due to Keeley's alleged destruction or disposal
of the I-beam. United in turn sent a letter to Keeley, denying coverage for the spoliation
counts.
The underlying defendants filed counterclaims against Keeley, seeking contribution
and damages for spoliation of evidence. Upon receipt of notice of the counterclaims, United
sent a letter to Keeley, reaffirming its denial of coverage for all spoliation claims and further
denying coverage for the counterclaims for contribution.
In count I of the complaint for a declaratory judgment, United sought, inter alia, a
declaration that the policy afforded no coverage to Keeley for the defense of or
indemnification for the claims alleging spoliation of evidence. Count II of the complaint
sought, inter alia, a declaration that the policy afforded no coverage to Keeley for the
underlying defendants' counterclaims for spoliation and contribution and that United was
under no duty to defend or indemnify Keeley for those counterclaims or any other
counterclaims for contribution to be filed concerning injuries to the employees.
On January 17, 2006, United filed a motion for a summary judgment on counts I and
II of its complaint for a declaratory judgment. On February 21, 2006, Keeley filed a response
and cross-motion for a summary judgment. On May 22, 2006, the circuit court granted
Keeley's cross-motion for a summary judgment and denied United's motion for a summary
judgment. United filed a timely notice of appeal on June 20, 2006.
United brings the following sole issue on appeal, which we have restated as follows:
whether the policy issued by United to Keeley provides coverage for claims of spoliation of
evidence. Rulings on motions for a summary judgment are reviewed de novo. Dardeen v.
Kuehling, 213 Ill. 2d 329, 335 (2004).
"An insurance policy is a contract, and the general rules governing the interpretation
2
of other types of contracts also govern the interpretation of insurance policies." Hobbs v.
Hartford Insurance Co. of the Midwest, 214 Ill. 2d 11, 17 (2005). "The court's primary
objective in construing an insurance policy is to ascertain and give effect to the intentions of
the parties as expressed in the policy language." Illinois Farmers Insurance Co. v. Hall, 363
Ill. App. 3d 989, 993 (2006) (citing Gillen v. State Farm Mutual Automobile Insurance Co.,
215 Ill. 2d 381, 393 (2005)). "If the policy language is unambiguous, the policy will be
applied as written, unless it contravenes public policy." Hobbs, 214 Ill. 2d at 17. "Whether
an ambiguity exists turns on whether the policy language is subject to more than one
reasonable interpretation." Hobbs, 214 Ill. 2d at 17. "If the policy language is susceptible
to more than one reasonable meaning, it will be considered ambiguous and will be construed
against the insurer." Illinois Farmers Insurance Co., 363 Ill. App. 3d at 993 (citing Gillen,
215 Ill. 2d at 393). "Although 'creative possibilities' may be suggested, only reasonable
interpretations will be considered." Hobbs, 214 Ill. 2d at 17 (quoting Bruder v. Country
Mutual Insurance Co., 156 Ill. 2d 179, 193 (1993)). "Thus, we will not strain to find an
ambiguity where none exists." Hobbs, 214 Ill. 2d at 17. "Although policy terms that limit
an insurer's liability will be liberally construed in favor of coverage, this rule of construction
only comes into play when the policy is ambiguous." Hobbs, 214 Ill. 2d at 17.
As a threshold matter, we note that United addressed the issue of coverage for the
spoliation claims, as well as the counterclaims for contribution, in both its complaint for a
declaratory judgment and its motion for a summary judgment. Keeley, on the other hand,
referenced coverage for the spoliation claims in its cross-motion for a summary judgment,
but it did not address the coverage issue with regard to the counterclaims for contribution.
Likewise, in its order the circuit court addressed the issue of coverage only for the spoliation
claims and omitted any reference to the counterclaims for contribution. Nevertheless, the
circuit court granted Keeley's cross-motion for a summary judgment and denied United's
3
motion for a summary judgment. Although on appeal neither party briefed the issue of
coverage for the counterclaims for contribution or brought it up at oral argument, it was
nonetheless a substantive part of United's motion for a summary judgment, which was denied
in its entirety by the circuit court.
The issue of coverage for the counterclaims seeking contribution could be deemed
waived (forfeited) on appeal because it was not briefed. See A.J. Maggio Co. v. Willis, 316
Ill. App. 3d 1043, 1048 (2000). However, "the waiver doctrine is an admonition to the
parties and not a limitation upon the power of a reviewing court to address issues of law as
the case may require." Mayfield v. ACME Barrel Co., 258 Ill. App. 3d 32, 37 (1994) (citing
Schutzenhofer v. Granite City Steel Co., 93 Ill. 2d 208, 211 (1982)). However, the lack of
briefing in the circuit court and on appeal seems to suggest that the parties treated the
coverage for the contribution counterclaims as a "nonissue." This may be because coverage
for the contribution counterclaims is clearly excluded by the following language in the
commercial general liability policy:
"2. Exclusions
This insurance does not apply to:
***
e. Employer's Liability
'Bodily injury' to:
(1) An 'employee' of the insured arising out of and in the course
of:
(a) Employment by the insured; or
(b) Performing duties related to the conduct of the
insured's business ***."
In addition, the commercial umbrella liability policy contains language identical to the above
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exclusion in all relevant aspects. Accordingly, we reverse the circuit court's order denying
United's motion for a summary judgment to the extent that it might be construed to find
coverage for the contribution counterclaims.
We turn now to the issue of whether the policy issued by United to Keeley provides
coverage for claims of spoliation of evidence. The commercial general liability policy
contains the following language regarding coverage and exclusions:
"SECTION I–COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE
LIABILITY
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. 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. We may, at our
discretion, investigate any 'occurrence' and settle any claim or 'suit' that may
result. ***
***
2. Exclusions
This insurance does not apply to:
a. Expected or Intended Injury
'Bodily Injury' or 'property damage' expected or intended from the standpoint
of the insured. ***
***
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j. Damage to Property
'Property damage' to:
(1) Property you own, rent, or occupy;
***
(4) Personal property in the care, custody[,] or control of the
insured ***."
The policy defines "property damage" as follows:
"SECTION V–DEFINITIONS
***
17. 'Property damage' means:
a. Physical injury to tangible property, including all resulting loss of
use of that property. All such loss of use shall be deemed to occur at the time
of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All
such loss of use shall be deemed to occur at the time of the 'occurrence' that
caused it."
The commercial umbrella liability policy contains language regarding coverage and
exclusions identical to the above language in all relevant aspects.
Keeley asserts that it is entitled to coverage because it is being sued for damages
"because of" property damage under the insuring agreement. It is possible to characterize
the property damage for which Keeley seeks coverage in two ways. First, it could be said
that Keeley is being sued because of the damage to and loss of the use of the I-beam itself.
This would seem to conform with the definition of property damage in the policy, because
the loss of the use of the I-beam as evidence w as a result of physical injury to tangible
property. However, if we characterize property damage to include damage to the I-beam,
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coverage is clearly excluded because the I-beam was under the care, custody, and control of
Keeley at all relevant times.
In order to characterize the property damage so that it falls outside of the "care,
custody[,] or control" exclusion, Keeley attempts to characterize the property damage at issue
by asserting that it is being sued for damage to the lawsuit of the employees and the
codefendants in the underlying action. However, if we characterize property damage to
include damage to a lawsuit, coverage does not apply because only injury to tangible
property is included under the insuring agreement. Illinois law provides as follows:
"Property damag[e] is limited to damage to tangible property. The damage to [a] cause of
action is not damage to tangible property." Essex Insurance Co. v. Wright, 371 Ill. App. 3d
437, 440 (2007).
Keeley attempts to characterize the property damage for which it is seeking coverage
as (a) damage to the I-beam when analyzing the insuring agreement and (b) damage to the
employees' product liability claim when analyzing the "care, custody[,] or control" exclusion.
However, the insuring agreement clearly states that United "will pay those sums that
[Keeley] becomes legally obligated to pay as damages because of *** 'property damage' to
which this insurance applies." (Emphasis added.) This language requires that the property
analyzed under the insuring agreement must be the same as the property analyzed under the
exclusions. As explained above, neither of the characterizations of the property damage that
has been advanced by Keeley can be so analyzed in favor of coverage. Accordingly, the
circuit court erred when it granted Keeley's cross-motion for a summary judgment and denied
United's motion for a summary judgment.
For the reasons set forth above, we reverse and remand with directions to enter a
summary judgment in favor of United.
7
Reversed; cause remanded with directions.
STEWART, P.J., and WEXSTTEN, J., concur.
8
NO. 5-06-0307
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
___________________________________________________________________________________
UNITED FIRE & CASUALTY COMPANY, ) Appeal from the
a Corporation, ) Circuit Court of
) St. Clair County.
Plaintiff-Appellant, )
)
v. ) No. 05-MR-181
)
KEELEY & SONS, INC., TERRY MARTIN, )
ARDITH WYNN, RICKEY VANOVER, )
EGYPTIAN CONCRETE COMPANY, and )
ALLEN HENDERSON & ASSOCIATES, )
INC., ) Honorable
) Patrick M. Young,
Defendants-Appellees. ) Judge, presiding.
___________________________________________________________________________________
Opinion Filed: May 2, 2008
___________________________________________________________________________________
Justices: Honorable Stephen L. Spomer, J.,
Honorable Bruce D. Stewart, P.J., and
Honorable James M. Wexstten, J.,
Concur
___________________________________________________________________________________
Attorneys Richard E. Boyle, Curtis R. Picou, Gundlach, Lee, Eggmann, Boyle & Roessler,
for LLC, 5000 West Main Street, Box 23560, Belleville, IL 62223
Appellant
___________________________________________________________________________________
Attorneys Russell K. Scott, Dayna L. Johnson, Greensfelder, Hemker & Gale, P.C., 12 Wolf
for Creek Drive, Suite 100, Swansea, IL 62226 (for Keeley & Sons, Inc.); Bruce R.
Appellees Cook, Cook, Ysursa, Bartholomew, Brauer & Shevlin, Ltd., 12 W est Lincoln Street,
Belleville, IL 62220 (for Terry M artin, Ardith W ynn, & Rickey Vanover); Dennis
E. Rose, Kenneth M . Nussbaumer, Donovan, Rose, Nester & Joley, P.C., 8 East
Washington Street, Belleville, IL 62220 (for Egyptian Concrete Co.); John L.
McMullin, Esq., Brown & James, P.C., 1010 Market Street, 20th Floor, St. Louis,
MO 63101 (for Allen Henderson & Associates, Inc.)
___________________________________________________________________________________