Pekin Insurance Co. v. United Contractor Midwest, Inc. ( 2013 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Pekin Insurance Co. v. United Contractors Midwest, Inc., 2013 IL App (3d) 120803
Appellate Court PEKIN INSURANCE COMPANY, Plaintiff-Appellant, v. UNITED
Caption CONTRACTORS MIDWEST, INC., d/b/a R. A. Cullinan and Son, Inc.,
a Delaware Corporation, and CHARLES HILL, JR., Defendants-
Appellees.
District & No. Third District
Docket No. 3-12-0803
Rule 23 Order filed August 2, 2013
Motion to
publish allowed September 18, 2013
Opinion filed September 18, 2013
Held In an action arising from the injuries suffered by a subcontractor’s
(Note: This syllabus employee when the equipment he was using struck power lines, the trial
constitutes no part of court erred in finding that plaintiff, the subcontractor’s insurer, had a duty
the opinion of the court to defend the general contractor as an additional insured, since the
but has been prepared underlying complaint filed by the injured employee only alleged
by the Reporter of negligence on the part of the general contractor and made no allegation
Decisions for the that the general contractor was vicariously liable for any of the
convenience of the subcontractor’s conduct.
reader.)
Decision Under Appeal from the Circuit Court of Peoria County, No. 11-MR-461; the
Review Hon. Michael E. Brandt, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Robert Marc Chemers (argued) and Richard M. Burgland, both of Pretzel
Appeal & Stouffer, Chtrd., of Chicago, for appellant.
Craig L. Unrath (argued), Gary D. Nelson, Matthew S. Hefflefinger, and
Tyler J. Pratt, all of Heyl, Royster, Voelker & Allen, of Peoria, for
appellees.
Panel PRESIDING JUSTICE WRIGHT delivered the judgment of the court,
with opinion.
Justice Carter concurred in the judgment and opinion.
Justice O’Brien dissented, with opinion.
OPINION
¶1 Pekin Insurance Company (Pekin) filed this declaratory relief action in response to a
separate negligence complaint filed by Charles Hill, Jr. (Hill), in Peoria County, against
United Contractors Midwest, Inc., d/b/a R.A. Cullinan & Son, Inc., a Delaware corporation
(Cullinan), and Central Illinois Light Company (CILCO) in case No. 11-L-165. The
underlying complaint alleged both defendants were independently negligent in supervising,
maintaining and/or providing warnings regarding live overhead power lines near a work site
where Hill’s employer, Durdel & Sons Tree Service & Landscaping, Inc. (Durdel), was
clearing trees. The negligence complaint alleged Hill, as Durdel’s employee, operated
machinery at the work site and struck overhead power lines, while moving logs, causing Hill
to be injured by electricity.
¶2 In Pekin’s action for declaratory relief, Pekin and Cullinan both filed motions for
summary judgment. The court granted summary judgment in favor of Cullinan and against
Pekin, finding Pekin had a duty to defend Cullinan, as an additional insured under Durdel’s
policy, in the negligence action filed by Hill against Cullinan.
¶3 Pekin appeals the circuit court’s decision to grant summary judgment in favor of
Cullinan. We reverse and remand.
¶4 BACKGROUND
¶5 In November of 2009, Cullinan became the general contractor of a construction project
for the Illinois Department of Transportation along Northmoor Road in Peoria, Illinois. As
-2-
the general contractor, Cullinan entered into a 15-page subcontract agreement with Durdel
to clear trees and logs at the work site as an independent contractor/subcontractor.
¶6 On June 3, 2010, Durdel’s employees, including Hill, were clearing trees and logs from
the work site and Hill received injuries from electricity when he operated tree removal
equipment that struck live overhead power lines. Consequently, on May 24, 2011, Hill filed
a two-count negligence complaint, in Peoria County case No. 11-L-165, against Cullinan and
CILCO. Count I of the complaint alleged Cullinan committed “Construction Negligence,”
and count II alleged CILCO committed general negligence. Hill’s complaint did not contain
any allegations that Durdel was negligent in any manner. On April 18, 2012, Cullinan filed
a third-party complaint, in the underlying negligence case, alleging Durdel was solely
negligent for Hill’s injuries.
¶7 Cullinan contacted Pekin claiming it had a duty to defend Cullinan in Hill’s negligence
case, No. 11-L-165, as an additional insured under Durdel’s policy. Pekin refused to
represent Cullinan, claiming Durdel’s policy did not cover Cullinan when the complaint
alleged Cullinan was directly negligent for Hill’s injuries, and not vicariously liable for
Durdel’s negligent actions. Thereafter, on November 10, 2011, Pekin filed a two-count
complaint for declaratory relief, in Peoria County case No. 11-MR-461, against defendants
Cullinan and Hill, asking the trial court to declare that: (1) Durdel’s policy did not confer
rights of insurance coverage to Cullinan for its own negligent acts or omissions, and (2)
Pekin did not have a duty to defend Cullinan, as an additional insured under Durdel’s
insurance policy, for its own negligent actions alleged in Hill’s underlying negligence
complaint, No. 11-L-165. Both Pekin and Cullinan filed cross-motions for summary
judgment in the instant case and attached copies of the relevant subcontract agreement,
insurance policy, and the pleadings filed in case No. 11-L-165.
¶8 As part of the motions for summary judgment, the record contains a copy of the 136-page
“Commercial Line Policy,” issued by Pekin to Durdel for the period from June 3, 2010, to
March 11, 2011, that lists Cullinan as one of 14 “additional insured” parties to this policy.
The relevant clause in the “additional insured” portion of the policy provides:
“Section II–Who Is An Insured is amended to include as an insured any person or
organization for whom you [Durdel] are performing operations, when you and such
person or organization have agreed in a written contract *** and executed prior to the
‘bodily injury’ or ‘property damage’ for which coverage is sought, that you must add that
person or organization as an additional insured on a policy of liability insurance
(hereinafter referred to as the ‘Additional Insured’).
The Additional Insured is covered only with respect to vicarious liability for ‘bodily
injury’ or ‘property damage’ imputed from You [Durdel] to the Additional Insured
[Cullinan] as a proximate result of:
(1) Your ongoing operations performed for that Additional Insured during the Policy
Period; or
(2) ‘Your work’ performed for the Additional Insured during the Policy Period, but
only for ‘bodily injury’ or ‘property damage’ within the ‘products–completed operations
hazard.’
-3-
***
C. With respect to the coverage afforded to the Additional Insured, the following
additional exclusions apply:
This insurance does not apply to:
(1) Liability for ‘bodily injury’ or ‘property damage’ arising out of the rendering of,
or the failure to render, any professional services, including, but not limited to:
(a) The preparing, approving, or failing to prepare or approve, maps, shop drawings,
opinions, reports, surveys, field orders, change orders or drawings and specifications; or
(b) Supervisory, inspection, architectural or engineering activities.
(2) Liability for ‘bodily injury’ or ‘property damage’ arising out of or in any way
attributable to the claimed negligence or statutory violation of the Additional Insured,
other than vicarious liability which is imputed to the Additional Insured solely by virtue
of the acts or omissions of the Named Insured [Durdel].”
¶9 I. Pleadings in the Underlying Negligence Case
¶ 10 Hill’s negligence complaint, in case No. 11-L-165, contained allegations of negligence
based on acts or omissions by Cullinan and CILCO directly. The relevant portions of count
I of Hill’s complaint alleged:
“3. That at the aforesaid time and place and prior thereto, Cullinan, individually and
through their agents, servants and employees, were present during the course of such
design, supervision, erection, construction, repairs, alteration, improvement, paving
and/or removal of structures. Cullinan participated in coordinating the work being done
and designated various work methods, maintained and checked work progress and
participated in the scheduling of the work and the inspection of the work. In addition
thereto, at that time and place, Cullinan had the authority to stop the work, refuse the
work and materials and order changes in the work, in the event the work was being
performed in a dangerous manner or for any other reason.
4. That on June 3, 2010[, Hill] was *** removing logs located adjacent to the street
and in close proximity to power lines located overhead in his capacity as an employee for
[Durdel] per the design, plan and supervision of Cullinan[,] their employees, agents, and/
or assigns.
5. That while removing said logs, [Hill] was electrocuted when the machinery [Hill]
was using to perform said work pursuant to the direction, design, supervision and/or plan
of the Cullinan’s [sic] came in contact with one of the overhead power lines.
6. That at the aforesaid time and place, and prior thereto, Cullinan’s design,
supervision, plan, erection, construction, repairs, alteration, improvement, paving and/or
removal of structures *** placed [Hill] in a position on and adjacent to the
aforementioned property and Cullinan either knew or in the exercise of reasonable care
should have known was dangerous and likely to result in physical harm to [Hill].
7. That at all times material to this Complaint, Cullinan had a duty to exercise
reasonable care *** to either prevent or protect individuals while working adjacent to the
-4-
property or warn of the hazards present therein.
8. Notwithstanding its duty, at said time and place, Cullinan, by and through their
agents, servants and employees, were then and there guilty of one or more of the
following careless and negligent acts and/or omissions.”
The balance of the complaint asserts or restates various claims of alleged negligence against
Cullinan relating to its: failure to inspect, design and supervise the work site; failure to
provide adequate warnings or inspect for hazards at the site; and allowing an electrocution
hazard to exist by acquiescing to Durdel’s conduct allowing the removal of logs in close
proximity to active power lines. The complaint further alleges that Cullinan’s careless or
negligent acts or omissions were the proximate cause of Hill’s injuries.1
¶ 11 Cullinan filed a motion for summary judgment with a memorandum of law which
contained attached exhibits, including Cullinan’s “Amended Third-Party Complaint,” filed
against Durdel in Hill’s negligence action, case No. 11-L-165, on April 18, 2012. Cullinan
also attached the subcontract agreement between Cullinan and Durdel, which detailed the
terms of the work to be performed by Durdel as a subcontractor at the work site.
¶ 12 The subcontract agreement provided that Durdel was hired to remove approximately 200
trees from the site. The subcontract agreement required the subcontractor to procure its own
insurance coverage for the project and name the contractor as an additional insured.
¶ 13 The subcontract agreement also stated the “[s]ubcontractor does hereby agree to furnish,
erect, and install all materials and perform all work,” and “[s]ubcontractor shall, at all times,
have a competent foreman and superintendent, satisfactory to Contractor, present on the
project with full authority to take such actions and maintain such equipment as may be
required to perform the work under this Subcontract Agreement, and procure such labor and
materials to diligently perform the subcontract work.” This agreement required Durdel to
“employ sufficient crews and work sufficient hours or shifts so as not to hinder or delay the
actual progress of Contractor” and included a provision that the subcontractor would fully
comply with all OSHA safety requirements. Finally, the subcontract agreement contained an
“indemnification” clause requiring the subcontractor, Durdel to “defend, indemnify and hold
harmless Contractor [Cullinan], its officers, directors, employees, agents and consultants,
from and against all claims, including jurisdictional claims, liabilities, damages, demands,
losses, and expenses (including attorneys’ fees and costs), arising out of, relating to, or
resulting from [Durdel’s] performance, or failure to perform the work under this Subcontract
Agreement.”
¶ 14 II. The Declaratory Relief Proceedings
¶ 15 In Pekin’s action for declaratory relief, both Pekin and Cullinan filed cross-motions for
summary judgment and legal memoranda supporting their respective positions. Pekin argued
it did not have a duty to defend Cullinan for Cullinan’s own negligence, based on the
1
Nothing in the complaint refers to any negligent acts or omissions by Hill’s employer,
Durdel, the “named insured” in the insurance policy at issue.
-5-
language of Durdel’s insurance policy listing Cullinan as an additional insured. Pekin argued
Hill’s negligence complaint did not contain any allegations of liability that could be
vicariously imputed to Cullinan based on Durdel’s conduct.
¶ 16 Cullinan’s cross-motion for summary judgment alleged Pekin had a duty to defend
Cullinan because the third-party complaint, filed by Cullinan in case No. 11-L-165, together
with extrinsic evidence, including the subcontract agreement and Durdel’s answer to the
third-party complaint, gave rise to potential issues related to vicarious liability arising out of
Durdel’s conduct at the work site.
¶ 17 Both parties filed legal briefs and presented argument regarding their motions for
summary judgment. Subsequently, on September 12, 2012, the court entered the following
written order:
“Motion for summary judgment is granted in favor of [Cullinan]. [Pekin] owes
[Cullinan] a duty to defend because the underlying complaint shows the potential that
liability arises from Durdel’s (the sub-contractor) actions or omissions. Essentially the
underlying plaintiff [Hill] is alleging that [Cullinan] sufficiently retained control over
operative details of the work to make it vicariously liable. (See pars. 3 to 5 in the
underlying plaintiff’s complaint). In addition[,] the third-party complaint in the
underlying action (an item beyond the underlying complaint) likewise establishes a
potential that [Cullinan] is liable for Durdel’s actions or omissions. See Pekin Insurance
v. Wilson, 237 Ill. 2d 446 (2010); Pekin Insurance v. Pultke [sic] Home Corporation, 404
Ill. App. 3d 336 (1st Dist. 2010). Wilson authorizes the instant examination; there is no
conflict between Appellate Courts. Wilson at p. 459. Pultke [sic] applies Wilson to facts
very similar to the case at bar.” (Emphases in original.)
¶ 18 Pekin filed a timely appeal challenging the court’s finding that Pekin had a duty to defend
Cullinan in the underlying negligence complaint, case No. 11-L-165, and granting summary
judgment in favor of Cullinan.
¶ 19 ANALYSIS
¶ 20 The subcontract agreement between Durdel, an independent contractor, and Cullinan, the
general contractor, required Durdel to obtain an insurance policy naming the general
contractor, Cullinan, as an additional insured. Durdel fulfilled this contractual obligation
through a Pekin insurance policy. The trial court granted summary judgment in favor of the
general contractor, Cullinan, after finding Pekin had a duty to defend Cullinan, in Hill’s
underlying negligence complaint, as an additional insured. On appeal, Pekin contends the
trial court erred by allowing Cullinan’s motion for summary judgment and denying Pekin’s
cross-motion for summary judgment in the declaratory relief action.
¶ 21 It is well established that, in a declaratory judgment action such as the case at bar, where
the issue is whether the insurer has a contractual duty to defend pursuant to an insurance
policy, a court ordinarily looks first to the allegations in the underlying complaint and
compares those allegations to the relevant provisions of the insurance policy. Wilson, 237 Ill.
2d at 455; Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 107-08
(1992). “An insurer may not justifiably refuse to defend an action against its insured unless
-6-
it is clear from the face of the underlying complaints that the allegations fail to state facts
which bring the case within, or potentially within, the policy’s coverage.” (Emphasis in
original.) United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 73
(1991). Therefore, if the facts alleged in the underlying complaint fall within, or potentially
within, the policy’s coverage, the insurer’s duty to defend arises. Wilson, 237 Ill. 2d at 455;
Outboard Marine, 154 Ill. 2d at 107-08.
¶ 22 Summary judgment is appropriate where the pleadings, depositions, and admissions on
file, together with any affidavits and exhibits, when viewed in the light most favorable to the
nonmoving party, indicate there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2010). Here, the parties
agree, since this case involved the court’s ruling on cross-motions for summary judgment,
we conduct a de novo review. Wilson, 237 Ill. 2d at 455; Outboard Marine, 154 Ill. 2d at 102.
¶ 23 When construing the language of an insurance policy, a court’s primary objective is to
ascertain and give effect to the intentions of the parties as expressed in their insurance
contract. Wilson, 237 Ill. 2d at 455. In order to ascertain the meaning of the policy’s language
and the parties’ intent, the court must construe the policy as a whole and consider the type
of insurance purchased, the nature of the risks involved, and the overall purpose of the
insurance contract. Travelers Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278, 292
(2001); Outboard Marine, 154 Ill. 2d at 108. If the words of a policy are clear and
unambiguous, a court must afford them their plain and ordinary meaning. Id. The
construction of the provisions of an insurance policy involves a question of law for which
we conduct a de novo review. Wilson, 237 Ill. 2d at 455, Outboard Marine, 154 Ill. 2d at 108.
¶ 24 With these principles in mind, we first review the provisions of Durdel’s insurance policy
issued by Pekin. We will compare the language of the policy to the allegations of Hill’s
complaint to determine whether Pekin has a duty to defend Cullinan, as an additional
insured, according to the terms of the policy. The applicable language of Durdel’s policy,
defining the scope of coverage for an additional insured, provides:
“The Additional Insured is covered only with respect to vicarious liability for ‘bodily
injury’ or ‘property damage’ imputed from You [Durdel] to the Additional Insured as a
proximate result of:
(1) Your ongoing operations performed for that Additional Insured during the Policy
Period; or
(2) ‘Your work’ performed for the Additional Insured during the Policy Period, but
only for ‘bodily injury’ or ‘property damage’ within the ‘products–completed operations
hazard.’ ”
The policy also lists the following exclusions to the coverage for an additional insured:
“This insurance does not apply to:
***
(2) Liability for ‘bodily injury’ or ‘property damage’ arising out of or in any way
attributable to the claimed negligence or statutory violation of the Additional Insured,
other than vicarious liability which is imputed to the Additional Insured solely by virtue
-7-
of the acts or omissions of the Named Insured [Durdel].” (Emphasis added.)
Based on these provisions, the parties agree the policy at issue clearly names Cullinan as an
additional insured. We note the policy requires Pekin to defend Cullinan only against claims
arising out of Durdel’s work or “ongoing operations performed for that Additional Insured
during the Policy Period.”
¶ 25 Generally, a person who employs an independent contractor is not vicariously liable for
the acts or omissions of an independent contractor except under very specific circumstances
where the general contractor retains control over the independent contractor’s work. See
Moiseyev v. Rot’s Building & Development, Inc., 369 Ill. App. 3d 338, 344 (2006) (citing
Restatement (Second) of Torts § 414 (1965)). In Moiseyev, this court applied the restatement,
examined similar cases, and concluded that courts have had “difficulty interpreting the term
‘control’ and distinguishing between control which exposes a defendant to liability and
control which is considered merely supervisory.” Moiseyev, 369 Ill. App. 3d at 345.
¶ 26 Next, we review the allegations of Hill’s underlying negligence complaint to determine
whether the complaint alleges sufficient facts alleging Durdel’s “ongoing operations
performed for that Additional Insured during the Policy Period” to warrant coverage and a
duty to defend Cullinan, as an additional insured, based on a theory of vicarious liability
resulting from Durdel’s performance. This theory would also require allegations that
Cullinan exercised such control over Durdel’s “ongoing operations” such that the general
contractor could be held vicariously liable for the acts of the insured subcontractor, Durdel.
¶ 27 Hill’s complaint alleges Cullinan, as a general contractor, owed a duty to use reasonable
care to supervise, inspect, and provide a safe work site for Hill by protecting him from or
warning him about existing hazards. However, Hill did not allege any facts in his complaint
identifying a negligent act performed by Durdel which resulted from the stringent directives
of the general contractor and additional insured (Cullinan).
¶ 28 Rather, Hill’s complaint alleged Cullinan, acting alone, negligently violated Cullinan’s
duty of care to Hill by failing to supervise and warn Hill of the dangers posed by the live,
overhead power lines on or near the work site. The failure to specify a negligent act
committed by Durdel not only fails to trigger coverage to an additional insured in Durdel’s
insurance policy, but also defeats a theory of vicarious liability. Simply stated, we conclude
a general contractor, such as Cullinan, cannot be found to be vicariously liable for its own
acts. Thus, based on the complaint alone, the trial court erred in granting summary judgment
in favor of Cullinan.
¶ 29 However, our analysis does not end here because the trial court looked beyond the
underlying complaint and considered Cullinan’s third-party complaint when determining
Pekin’s duty to defend Cullinan, as the additional insured in this case. The trial judge’s order
includes this language:
“In addition[,] the third-party complaint in the underlying action (an item beyond the
underlying complaint) likewise establishes a potential that [Cullinan] is liable for
Durdel’s actions or omissions.” (Emphasis added.)
Although some courts have recognized that a trial court can properly review a third-party
complaint as extrinsic evidence in a declaratory relief action, pursuant to the authority
-8-
discussed in Wilson, 237 Ill. 2d at 458-62, there are limitations on whether the trial court
must necessarily consider a third-party complaint prepared by the additional insured seeking
coverage. See National Fire Insurance of Hartford v. Walsh Construction Co., 392 Ill. App.
3d 312, 322 (2009); American Economy Insurance Co. v. DePaul University, 383 Ill. App.
3d 172, 180 (2008).
¶ 30 For example, the trial court refused to allow a putative additional insured to bolster its
claim of coverage by referencing its own third-party complaint in the DePaul University
case. DePaul University, 383 Ill. App. 3d at 180. The appellate court held that, under those
facts, a third-party complaint cannot be used to bolster that same third-party plaintiff’s own
claim, as a putative additional insured, where the facts are deficient in the underlying
negligence complaint and other extrinsic evidence to potentially fall within the policy’s
coverage. Id. These facts are distinguishable from a companion case, cited by Cullinan,
American Economy Insurance Co. v. Holabird & Root, 382 Ill. App. 3d 1017 (2008).
¶ 31 The National Fire case involved facts similar to DePaul where Walsh, an additional
insured and a defendant in an underlying negligence case, asked the court to consider facts
alleged in Walsh’s own third-party complaint to establish that the insurance company had
a duty to defend him as an additional insured. National Fire, 392 Ill. App. 3d at 322. In that
case, the court noted Walsh filed the third-party complaint after the declaratory relief action
was filed by the insurance company. Based on this observation, the court concluded Walsh
filed his third-party complaint to supply the missing allegations from the original complaint
in an attempt to gain coverage as the additional insured under the policy. Id. Accordingly,
the trial court in that case properly refused to consider the third-party complaint. Id.
¶ 32 We consider this approach to be the correct approach in the case at bar. Similarly, the
additional insured (Cullinan) filed its third-party complaint in this case after Pekin initiated
the declaratory action. Consequently, when examining the court’s ruling on summary
judgment de novo, we will not consider Cullinan’s potentially self-serving, third-party
complaint for purposes of summary judgment due to this existing case law.
¶ 33 We conclude the underlying complaint did not contain any facts alleging Durdel
negligently conducted its ongoing operations, performed as a subcontractor for the additional
insured, that would support a vicarious liability claim against the general contractor. In this
case, the underlying complaint stated a claim based solely on the negligence of the general
contractor alone. Therefore, the trial court erred in finding that Pekin Insurance had a duty
to defend the general contractor as an additional insured since the complaint did not allege
the general contractor was vicariously liable for Durdel’s conduct.
¶ 34 CONCLUSION
¶ 35 For the foregoing reasons, we reverse the judgment of the circuit court of Peoria County
granting summary judgment for Cullinan and remand and order that the circuit court enter
summary judgment in favor of Pekin, finding that Pekin does not owe a duty to defend
Cullinan in Hill’s negligence case No. 11-L-165.
¶ 36 Reversed and remanded.
-9-
¶ 37 JUSTICE O’BRIEN, dissenting.
¶ 38 For the following reasons, I respectfully dissent from the majority decision.
¶ 39 The majority considers the underlying complaint alleges that Cullinan alone was
negligent, and because Cullinan cannot be vicariously liable for its own negligence, the
possibility of coverage is precluded under the policy. According to the majority, the
underlying complaint failed to allege facts identifying a negligent act by Durdel that resulted
from Cullinan’s supervisory directives. I consider that the allegations in the complaint are
sufficient to satisfy the low threshold necessary to implicate Pekin’s duty to defend. Pekin
Insurance Co. v. Hallmark Homes, L.L.C., 392 Ill. App. 3d 589, 594 (2009) (duty to defend
exists where allegations in underlying complaint fall even potentially within policy’s
coverage). The underlying complaint alleges that Cullinan was in charge of the typical
functions of a jobsite, including the removal of trees, and that “Cullinan, individually and
through their agents, servants and employees were present during the course of such design,
supervision, *** and/or removal of structures”; participated in coordinating the work, and
designated the work methods used in the tree removal; checked work progress; scheduled
work; inspected the work; and had the authority to stop or refuse work and to order changes
in the work. The complaint further alleges that Hill was injured while removing logs “in his
capacity as an employee for [Durdel] per the design, plan and supervision of Cullinan[,] their
employees, agents, and/or assigns.”
¶ 40 As I read the underlying complaint, it alleges both direct and indirect negligence against
Cullinan, asserting allegations against “Cullinan, individually and through their agents,
servants and employees.” Moreover, Hill specifically alleges that he was moving logs in
accord with his employment by Durdel pursuant to work methods designated by Cullinan.
I agree with the trial court’s assessment that Hill alleged in the underlying complaint that
Cullinan “sufficiently retained control over operative details of the work to make it
vicariously liable.” Moiseyev v. Rot’s Building & Development, Inc., 369 Ill. App. 3d 338,
351 (2006) (enumerating circumstances that establish the requisite retention of control to
establish general contractor’s duty to an independent contractor). The allegations assert that
Cullinan designated work methods, maintained supervisory authority effecting the means and
methods of Durdel’s work, and participated in, coordinated and inspected Durdel’s work.
The complaint alleges facts that could establish Cullinan’s role went beyond mere
supervision and retained control such that it could be liable for Durdel’s negligence. Larson
v. Commonwealth Edison Co., 33 Ill. 2d 316, 324-25 (1965); Restatement (Second) of Torts
§ 414, cmt. c (1965) (general contractor typically not liable for subcontractor’s negligence
except where the general contractor retains the right to control the subcontractor’s work such
that the subcontractor is not “entirely free to do the work in his own way”).
¶ 41 Significantly, the policy language provides coverage for vicarious liability proximately
resulting from Durdel’s “ongoing operations performed for” Cullinan. The allegations in the
underlying complaint suggest that Hill’s injury arose from Durdel’s ongoing operations, i.e.,
tree removal, performed at Cullinan’s direction and per its work methods. Under these facts,
Cullinan could be found vicariously liable based on Durdel’s sole negligence. In my view,
-10-
the allegations trigger a duty to defend. I find that the allegations in the underlying complaint
do not preclude that Cullinan could be liable under a theory of vicarious liability and that
Pekin has a duty to defend Cullinan as an additional insured under Durdel’s policy.
¶ 42 The third-party complaint filed by Cullinan against Durdel and the subcontract between
Durdel and Cullinan also support the potential for coverage. Both documents demonstrate
the circumstances concerning Durdel’s ongoing operations performed for Cullinan and
provide facts supporting the possibility that Cullinan could be vicariously liable for Durdel’s
negligence based on the degree of control Cullinan retained over the manner in which Durdel
performed its work, triggering Pekin’s duty to defend. The trial court looked to Cullinan’s
complaint against Durdel, where Cullinan alleged that Durdel undertook and supervised all
aspects of the tree removal and that Cullinan was not on the jobsite when the accident
occurred. The complaint included claims for contribution and indemnity. The trial court also
looked to the subcontract between Cullinan and Durdel, which obligated Durdel to provide
materials and perform the tree removal at the jobsite. Per the Cullinan/Durdel subcontract,
Durdel was required to “employ sufficient crews and work sufficient hours so as not to
hinder” Cullinan’s progress and/or its compliance with Cullinan’s contract with the property
owner. Cullinan had the right to determine and change “the time, order and priority” in which
Durdel’s work was performed and to issue mandatory change orders to Durdel. Durdel could
not assign the subcontract or sublet work under it without Cullinan’s written consent. Durdel
was to perform its work “in such manner as [Cullinan] may regard as best calculated to
coordinate” with Cullinan’s work and the work of other contractors on the project. Finally,
the subcontract granted Cullinan the right to seek the removal of any Durdel employees,
agents or representatives Cullinan “deemed objectionable” and to approve Durdel’s choice
of jobsite foreman and superintendent. The contract also included an indemnity provision
protecting Cullinan for Durdel’s negligent acts or omissions. These additional facts further
support Pekin’s duty to defend.
¶ 43 The majority rejected the trial court’s use of extrinsic evidence in determining whether
Pekin owed Cullinan a duty to defend. In my view, the trial court properly considered
Cullinan’s third-party complaint against Durdel and the Cullinan/Durdel subcontract as aids
in construing the parties’ intent regarding coverage of the additional insured. Pekin Insurance
Co. v. Wilson, 237 Ill. 2d 446, 459 (2010) (a trial court may look beyond the complaint to
other evidence so long as it does not decide an issue critical to the underlying action). The
majority relies on American Economy Insurance Co. v. DePaul University, 383 Ill. App. 3d
172, 180 (2008), and National Fire Insurance of Hartford v. Walsh Construction Co., 392
Ill. App. 3d 312, 322 (2009). The reviewing courts in both cases found significant that the
third-party plaintiffs were also the parties claiming coverage in the declaratory judgment
action and that the third-party complaints were filed to add missing allegations. DePaul, 383
Ill. App. 3d at 180; National Fire, 392 Ill. App. 3d at 322. Neither case, however, discussed
the import of an indemnity clause in an underlying contract as existed between Durdel and
Cullinan in the case at bar. The Cullinan/Durdel contract was not filed to fill in information.
Rather, it is evidence regarding the parties’ intent that Durdel bear the responsibility for
defending and indemnifying Cullinan for any actions related to Durdel’s work on the
Cullinan jobsite. Pekin Insurance Co. v. Pulte Home Corp., 404 Ill. App. 3d 336, 344 (2010)
-11-
(noting that indemnity clause in contract between general contractor and subcontractor
supported duty to defend where subcontractor could be found solely liable per allegations in
underlying complaint). While the majority characterizes the third-party complaint as
potentially self-serving, I see it as a vehicle for Cullinan to enforce the indemnity provisions
of its contract with Durdel. Both the third-party complaint and the Cullinan/Durdel contract
indicate the parties intended that Cullinan would not be liable for Durdel’s negligent acts or
omissions. The trial court’s use of them did not decide an issue critical in the underlying
action and its consideration of them was not improper.
¶ 44 I would find that there was no error in the trial court’s use of the extrinsic evidence and
would affirm the trial court’s finding that Pekin owed Cullinan a duty to defend.
-12-