FIRST DIVISION

February 3, 2003

JUSTICE McNULTY delivered the opinion of the court:

In 1998 Balthazar Rodriguez fell while working on aconstruction project. He sued the general contractor, R.A.Faganel Builders (Faganel), seeking to recover damages heincurred due to the fall. Faganel tendered defense of the suitto Northwestern National Casualty Company (Northwestern). Northwestern had issued a policy to Kol Painting (Kol), and thepolicy named Faganel as an additional insured. But the policylimited coverage for Faganel to liability imputed to Faganel forKol's acts. Northwestern refused to defend Faganel against thelawsuit Rodriguez filed.

Illinois Emcasco Insurance Company (Emcasco), which alsoinsured Faganel, accepted Faganel's tender of the defense againstRodriguez's suit. Emcasco then filed the lawsuit now on appeal,seeking a judgment declaring that Northwestern breached itsinsurance contract by refusing to defend Faganel. Although thetrial court acknowledged that Faganel might be liable in theunderlying suit based on imputed liability for Kol's conduct, thecourt found that Rodriguez's complaint did not on its facesufficiently suggest that Faganel's liability would fall underthe coverage of Northwestern's policy. The trial court grantedNorthwestern summary judgment on Emcasco's complaint.

We hold that an insurer has a duty to defend its insuredagainst any complaint that leaves open the possibility ofcoverage. The insurer may refuse to defend only when thecomplaint, considered in light of the insurance policy, precludesthe possibility of coverage. Because we agree with the trialcourt's conclusion that Rodriguez's complaint does not precludecoverage under Northwestern's policy, we hold that Northwesternhad a duty to defend Faganel. Therefore, we reverse the judgmentof the trial court and remand for further proceedings.

In March 1997 Kol purchased commercial general liabilitycoverage from Northwestern. The policy provides:

"[Northwestern] will pay those sums that the insuredbecomes legally obligated to pay as damages because of'bodily injury' *** to which this insurance applies.[Northwestern] will have the right and duty to defendany 'suit' seeking those damages."

Kol paid an additional premium for a modification of thepolicy naming Faganel as another party insured under the policy. The modification provides that the policy covers Faganel "onlywith respect to liability imputed to [Faganel] as a result ofnegligent acts or omissions of [Kol]."

Rodriguez sued Faganel and later added Kol as a codefendant. Rodriguez alleged that Faganel acted as general contractor forconstruction of a residence, and Rodriguez worked as a drywallerand painter on that project. According to the complaint, onJanuary 19, 1998, Rodriguez fell off the floor of the upper levelof the home into a stairwell. He alleged that both Faganel andKol, "through [their] duly authorized agents," violated duties tokeep the worksite reasonably safe, because Faganel and Kol failedto place guardrails or other warnings around the stairwell. Although Rodriguez described Kol as a "contractor orsubcontractor" on the project, he made no allegations regardingthe relationship between Faganel and Kol. The complaint on itsface did not establish whether Kol might count, for purposes ofthe lawsuit, as one of Faganel's duly authorized agents.

When Faganel tendered the suit to Northwestern, Northwesternreplied that it was "unable to accept this tender of defense dueto many unknown facts." Northwestern did not sue for a judgmentdeclaring that it had no duty to defend Faganel.

Faganel's general liability insurer, Emcasco, agreed todefend Faganel, but Emcasco sued for a declaratory judgment andfor damages resulting from Northwestern's breach of its insurancecontract.

Both Northwestern and Emcasco moved for summary judgment onEmcasco's claim against Northwestern for breach of contract. After hearing oral argument on the motions, the court said:

"The Court finds that looking at those pleadings[Rodriguez filed against Faganel], nowhere in them dothey present potential coverage under additionalinsurance endorsement of Northwestern policy.

***

Ultimately it may turn out that the drywall[contractor Kol] here will be found to have been agentof the general contractor.

And that the liability of the general contractormay result from negligence of the drywall contractorbeing imputed to it within the meaning of thisadditional insured endorsement.

But realistically pleadings do not fairly presentthe policy."

On that basis, the trial court held that Northwestern had no dutyto defend Faganel, so the court granted Northwestern summaryjudgment on Emcasco's complaint.

We review the summary judgment de novo. Travelers InsuranceCo. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278, 292 (2001). Courts look to the allegations of the underlying complaint todetermine an insurer's duty to defend its insured. United StatesFidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64,73 (1991). The insurer has a duty to defend if the complaintalleges facts potentially within policy coverage. Wilkin, 144Ill. 2d at 73. "An insurer may not justifiably refuse to defendan action against its insured unless it is clear from the face ofthe underlying complaints that the allegations fail to statefacts which bring the case within, or potentially within, thepolicy's coverage." (Emphasis omitted.) Wilkin, 144 Ill. 2d at73. The court must resolve all doubts concerning the scope ofcoverage in favor of the insured. Wilkin, 144 Ill. 2d at 74.

The court in Wilkin further explained the standard inapplying it to the insurer's arguments in that case. The courtheld that the insurer had a duty to defend because the policy'sprovisions "do not preclude potential coverage under the policy."Wilkin, 144 Ill. 2d at 81. This application merely rephrased thetest stated previously: an insurer must defend if the insurancecontract might possibly cover the alleged source of liability. The insurer may refuse to defend only if the insurance contractcannot possibly cover the liability arising from the factsalleged, and the contract cannot possibly cover that liabilityonly when the terms of the policy clearly preclude thepossibility of coverage. As the court said in Insurance Co. ofthe State of Pennsylvania v. Protective Insurance Co., 227 Ill.App. 3d 360, 367 (1992), "an insurer can justifiably refuse todefend only when the allegations of the complaint clearly show ontheir face that the claim is beyond the coverage of the policy." See also Korte Construction Co. v. American States Insurance, 322 Ill. App. 3d 451, 457 (2001); Hankins v. Pekin Insurance Co., 305Ill. App. 3d 1088, 1092 (1999). Thus, if the insurance coversthe liability on any set of facts consistent with the allegationsneeded to support recovery on any theory raised in the complaint,the insurance company cannot simply refuse to defend, withoutsuing for a judgment declaring that it has no duty to defend.

Our supreme court acknowledged the continuing validity ofthe Wilkin standards in Employers Insurance of Wausau v. EhlcoLiquidating Trust, 186 Ill. 2d 127 (1999). The court held:

"[W]here a complaint alleges facts potentially withinthe policy's coverage, an insurer taking the positionthat a claim is not covered cannot simply refuse todefend the suit. Rather, the insurer must eitherdefend the suit under a reservation of rights or seek adeclaratory judgment that there is no coverage. If theinsurer fails to take either of these actions, theestoppel doctrine applies." Ehlco, 186 Ill. 2d at 153.

The trial court here found that in the underlying action,Kol's negligence might be imputed to Faganel, and Faganel mightbe found liable on the basis of that imputed negligence. Thus,the court found that a set of facts consistent with at least onetheory advanced for Faganel's liability might fall within thecoverage of Northwestern's policy. Northwestern effectivelyconceded this: when Faganel first sent Northwestern Rodriguez'scomplaint, Northwestern responded that it could not determinewhether it owed a duty to defend because of "many unknown facts." That is, both Northwestern and the trial court concluded thatRodriguez's complaint, on its face, did not state sufficientfacts to preclude the possibility of coverage under the policy. Nonetheless the trial court held that Northwestern had no duty todefend because the "pleadings [did] not fairly present thepolicy."

In so ruling the trial court apparently relied on AmericanCountry Insurance Co. v. Cline, 309 Ill. App. 3d 501 (1999). Inthat case Cline sued Pepper, a general contractor, for injuriesCline suffered while he worked for Pepper's subcontractor,Hinsdale. Pepper tendered defense of the suit to AmericanCountry Insurance (American), which had issued a policy toHinsdale naming Pepper as an additional insured. American suedfor a judgment declaring that it had no duty to defend. Cline'scomplaint did not allege that Hinsdale had charge of the work orthat it acted negligently, but the complaint also did not allegethat Hinsdale was not in charge of the work or that it acted withdue care. The appellate court said that American had no duty todefend because "[t]he allegations in Cline's complaint do notraise the possibility that Hinsdale was in charge of work or thatits conduct caused the underlying injury." Cline, 309 Ill. App.3d at 515. The court found, as one of the bases for thedecision, that Cline's failure to name Hinsdale as the negligentactor relieved American of the duty to defend, because Cline'scomplaint did not sufficiently suggest that Pepper would beliable based on imputed misconduct.

We cannot agree with Cline insofar as it suggested that thefailure to specifically identify Hinsdale as the negligent actorrelieved American of the duty to defend. "[T]he duty to defenddoes not require that the complaint allege or use languageaffirmatively bringing the claims within the scope of the policy. The question of coverage should not hinge on the draftsmanshipskills or whims of the plaintiff in the underlying action."International Insurance Co. v. Rollprint Packaging Products,Inc., 312 Ill. App. 3d 998, 1007 (2000). The insurer's duty todefend does not depend upon a sufficient suggestion of liabilityraised in the complaint; instead, the insurer has the duty todefend unless the allegations of the underlying complaintdemonstrate that the plaintiff in the underlying suit will not beable to prove the insured liable, under any theory supported bythe complaint, without also proving facts that show the lossfalls outside the coverage of the insurance policy. See KorteConstruction, 322 Ill. App. 3d at 457; Hankins, 305 Ill. App. 3dat 1092; Protective Insurance, 227 Ill. App. 3d at 367; Novak v.Insurance Administration Unlimited, Inc., 91 Ill. App. 3d 148,151 (1980); Elas v. State Farm Mutual Automobile Insurance Co.,39 Ill. App. 3d 944, 947 (1976). The insurer may simply refuseto defend only if the allegations of the underlying complaintpreclude any possibility of coverage.

Northwestern here argues that certain documents apart fromRodriguez's complaint and the insurance contract establish thatliability for Kol's negligence will not be imputed to Faganelbecause Kol worked as an independent contractor. The complainton its face does not establish Kol's status as an independentcontractor. While an insurer that brings a declaratory judgmentaction may have the right to rely on such extraneous evidence toshow that it has no duty to defend, an insurer that simplyrefuses to defend may lose the right to present such evidence.See Ehlco, 186 Ill. 2d at 153.

Assuming the documents admissible here, we agree with thetrial court's finding that the evidence did not preclude thepossibility of imputed liability. The fact that Kol considersitself an independent contractor, or that it counts as anindependent contractor for some purposes, is not alonedispositive of the possibility of imputed liability for negligentacts. Hamilton v. Family Record Plan, Inc., 71 Ill. App. 2d 39,49 (1966). Imputation of liability may depend on the degree ofcontrol the general contractor maintains over the subcontractor.Hamilton, 71 Ill. App. 2d at 49-50; Great American Insurance Co.v. West Bend Mutual Insurance Co., 311 Ill. App. 3d 534, 537-38(2000); Kozerski v. Deer Run Homeowners Ass'n, 217 A.D.2d 841,843, 629 N.Y.S.2d 518, 521 (1995).

The possibility of imputed liability that the complaint leftopen required Northwestern to defend Faganel. Northwesternbreached that duty. We reverse the trial court's decisiongranting Northwestern summary judgment on Emcasco's complaint,and we remand for determination of the appropriate relief for thebreach of contract. Northwestern did not defend Faganel under areservation of rights, and it did not bring a declaratoryjudgment action to establish the lack of coverage. Under Ehlco,Northwestern is estopped, in proceedings on remand, from raisingpolicy defenses to coverage.

Reversed and remanded.

GORDON, P.J. and SMITH, J., concur.