SECOND DIVISION
May 24, 2005

PRESIDING JUSTICE BURKE delivered the opinion of the court:

Defendant Liberty Mutual Insurance Company (Liberty Mutual) appeals froman order of the circuit court entering summary judgment in favor of VikingConstruction Management, Inc. (Viking)⁽¹⁾ in Viking's declaratory judgment action,declaring that Liberty Mutual owed a duty to defend and indemnify Viking in anunderlying lawsuit filed by the Woodland Community School District (Woodland). On appeal, Liberty Mutual contends that the trial court erred in granting summaryjudgment in favor of Viking because: (1) a breach of contract claim, such asWoodland's, is not covered by its insurance policy; (2) the Woodland complaintfailed to allege an "occurrence" covered under the policy; (3) the "your work"policy exclusion bars coverage; (4) Liberty Mutual is not barred, under theestoppel doctrine, from asserting coverage and defense issues; and (5) LibertyMutual had no duty to indemnify Viking because its policy limits had beenexhausted. For the reasons set forth below, we reverse.

On June 8, 1995, Woodland contracted with Viking to provide constructionmanagement services with respect to the design and construction of a new middleschool. Pursuant to this agreement, Viking was responsible for, inter alia,determining whether construction was proceeding in accordance with contractdocuments, guarding Woodland against defects and deficiencies in work, managingthe quality program, apprising Woodland of practices that were potentiallylibelous to Woodland due to safety or other concerns, noting all activities ofan unusual or significant nature, reporting to Woodland if it observed activitiesor situations that were unsafe, and observing the quality of work.

On January 26, 1996, Woodland retained Frederick Quinn as the generalcontractor, who was required to procure a commercial general liability (CGL)insurance policy naming Viking as an additional insured. Quinn did so throughNationwide Insurance Company (Nationwide). On March 26, Quinn hired Crouch-Walker as the masonry subcontractor. Pursuant to their contract, Crouch-Walkerwas required to obtain insurance, naming Viking as an additional insured. Inthis regard, Crouch-Walker obtained a CGL policy in the amount of $1 million fromLiberty Mutual as well as an excess policy in the amount of $10 million. Vikingwas named as an additional insured under both.

The CGL policy contained the following general coverage provision:

"SECTION I - COVERAGES

a. We will pay those sums that the insuredbecomes legally obligated to pay as damages because of'bodily injury' or 'property damage' to which thisinsurance applies.

***

(2) Our right and duty to defend endwhen we have used up the applicable limitof insurance in the payment of judgments orsettlements under Coverages A or B ormedical expenses under Coverage C."

The policy applied to "property damage" only if it was "caused by an'occurrence.' " Section I also set forth numerous exclusions. However, with theexception of exclusion (a),⁽²⁾ the exclusions were not applicable to additionalinsureds, like Viking, pursuant to an endorsement attached to the policy anddiscussed below.

Section II of the policy defines "WHO IS AN INSURED" and was amended byseveral endorsements. One, entitled "Additional Insured - Owners, Lessees orContractors (Form A)," under which Viking was added as an additional insured,provides:

"WHO IS AN INSURED (Section II) is amended toinclude as an insured the person or organization (called'additional insured') shown in the Schedule but onlywith respect to liability arising out of:

A. Your ongoing operations performed for theadditional insured(s) at the location designated above;or

B. Acts or omissions of the additional insured(s)in connection with their general supervision of suchoperations."

This endorsement provided that exclusions (b), (j), (k), (l), and (n) underSection I, Coverages, did not apply to the additional insureds. However, thisendorsement included several exclusions relative to additional insureds, none ofwhich are relevant here. Section V defined various terms used in the policy. "Occurrence" "means an accident, including continuous or repeated exposure tosubstantially the same general harmful conditions." "Property damage" means"[p]hysical injury to tangible property, including all resulting loss of use ofthat property."

On October 10, 1996, during the course of construction, portions of amasonry wall collapsed due to inadequate temporary bracing, installed by Crouch-Walker, causing property damage and injuring one of the construction workers. On October 6, 1997, the construction worker, Anita Kratz, filed a personal injurylawsuit against Woodland, Viking, Quinn, and Crouch-Walker (Kratz lawsuit). OnAugust 14, 1998, Woodland filed a lawsuit against Viking (Woodland lawsuit)claiming damages for the repair and replacement of damaged property as a resultof the wall collapse. Specifically, Woodland alleged, in its generalallegations, that "On October 11, 1996, the north portion of the 'E' section ofthe Woodland Middle School Project collapsed under normal, foreseeable, andexpected conditions due to a lack of required bracing and/or constructiondefects." Woodland then alleged, "[a]s a result of the aforementioned collapse,plaintiff sustained damages ***, representing the fair and reasonable cost torepair and replace the damaged section of the building." Woodland then set forthcount I, the sole count of its complaint, for breach of contract, identifying thefollowing ways in which Viking breached its duties under the contract: failingto warn Woodland of the potential collapse of the wall; failing to warn of theimproper bracing; failing to inform Woodland that the construction of section Ewas not proceeding in compliance with the contract documents; failing to reportunsafe conditions; failing to inform of acts or construction practices libelousto Woodland due to safety concerns; and failing to perform its services in aworkmanlike manner. Woodland then alleged, "[a]s a direct, proximate andforeseeable result of defendant Viking's breach of contract, plaintiff sustaineddamages, including, without limitation, the cost to repair and replace thedamaged portion of the subject middle school building."

On February 10, 1999, Viking tendered defense of the Kratz litigation toLiberty Mutual, which it accepted. On March 3, Viking tendered defense of theWoodland litigation to Liberty Mutual. In July, Viking tendered defense of theWoodland litigation to Nationwide under Quinn's policy. On July 12, LibertyMutual denied tender of the defense and coverage to Viking in the Woodlandlawsuit and, on December 2, Nationwide did the same. On December 7, Kratzsettled her lawsuit with Liberty Mutual on behalf of Viking and Crouch-Walker for$966,409.56. On December 13, Viking and its insurance carrier settled theWoodland lawsuit for $600,000.

On October 10, 2000, Viking filed a 13-count declaratory action againstLiberty Mutual, Nationwide, and Quinn, with counts I to IV being against LibertyMutual. In count I, Viking alleged that Liberty Mutual owed it a duty to defendbecause the Woodland lawsuit sought property damages as a result of the wallcollapse. In count II, Viking alleged that Liberty Mutual owed Viking a duty toindemnify. In count III, Viking alleged a cause of action for unjust enrichmentand, in count IV, alleged a claims of equitable estoppel against Liberty Mutual. Viking's claims against Liberty Mutual were premised upon the CGL policy only.

On April 13, 2001, Nationwide filed a cross-claim against Quinn and LibertyMutual and then, on August 23, it filed a motion for summary judgment. OnDecember 21, Viking filed a motion for summary judgment against Liberty Mutual.

On April 8, 2002, Liberty Mutual filed its response to Viking's motion forsummary judgment, arguing that a claim for breach of contract was not coveredunder the CGL policy, the policy limits had been exhausted, and it did not actin bad faith in refusing to defend Viking. On May 14, Viking filed its reply insupport of its motion for summary judgment against Liberty Mutual, relyingprincipally on Prisco Serena Sturm Architects, Ltd. v. Liberty Mutual InsuranceCo., 126 F.3d 886 (7th Cir. 1997) (Prisco).

On June 26, the trial court granted summary judgment in favor of Viking andagainst Liberty Mutual, finding that Liberty Mutual owed a duty to defend toViking, that it breached its duty, and that it was estopped from asserting its$100,000 policy limits. However, the trial court did not find that it could sayLiberty Mutual's refusal to defend Viking was "vexatious and unreasonable." Ultimately, the court found Liberty Mutual responsible for the $600,000settlement. With respect to Nationwide's motion for summary judgment againstViking, the court denied this motion, finding there was insufficient evidence todetermine whether Viking was an additional insured under the policy.

On July 16, Liberty Mutual filed a motion to reconsider, arguing that thetrial court's ruling that estoppel was applicable was erroneous because it wasagainst Illinois law, it cannot be required to pay in excess of its policy limitswithout a finding of bad faith, and the trial court failed to address the factthat the Woodland complaint alleged only a claim for breach of contract, nor howa potential for coverage existed. On November 1, the trial court denied LibertyMutual's motion to reconsider, without prejudice.

On January 2, 2003, Viking's attorney wrote to Liberty Mutual's attorney,stating that it had recently discovered the existence of the $10 million excesspolicy and requested a copy of same. On January 3, Nationwide filed a motion forsummary judgment against Viking, arguing that there were no allegations in theWoodland complaint that Viking's liability resulted from Quinn's conduct andthere was no coverage because Viking was not an additional insured. Thereafter,on April 24, the trial court granted Nationwide's motion. In reaching itsdecision, the court stated that "[t]he Woodland litigation was a breach ofcontract action for property damages."

On May 21, Viking moved to reconsider summary judgment in favor ofNationwide, arguing that Viking's alleged liability arose out of Quinn'soperations because Quinn was responsible for actually installing the bracing. According to Viking, it was not involved in the design or bracing of the walland, therefore, was not responsible for its collapse. The trial court deniedthis motion on June 19.

On July 10, Viking filed a motion for entry of final order with respect tothe trial court's June 26, 2002, order in connection with Liberty Mutual. Thereafter, Liberty Mutual filed its response, arguing that the trial court'sJune 26 order left unresolved certain issues between Viking and Liberty Mutual,including the question of whether Liberty Mutual acted in bad faith, which mustbe resolved before it could be required to pay in excess of its policy limits. Liberty Mutual further argued that the trial court's orders of April 24 and June19, 2003, established that Viking was not entitled to coverage in the Woodlandlitigation by Liberty Mutual because it was only a breach of contract action, notsubject to coverage.

On August 8, Liberty Mutual filed a motion for summary judgment againstViking based on the trial court's April 24 and June 19 orders. Liberty Mutualmaintained that the trial court's ruling that Woodland was strictly a breach ofcontract action established that Viking was not entitled to coverage. On August13, Viking filed its reply in support of final order, arguing that LibertyMutual's recent motion for summary judgment was really its second motion toreconsider the trial court's June 26, 2002, order. On August 18, the trial courtordered Liberty Mutual to refile its motion for summary judgment as a motion toreconsider. Liberty Mutual did so the next day. On September 2, Viking filedits brief in opposition to the motion to reconsider and on September 9 LibertyMutual filed its reply, arguing that because Nationwide was not required todefend Viking, Liberty Mutual should not be required to do so because the claimwas based on the same underlying breach of contract action. According to LibertyMutual, if the Woodland allegations did not trigger a duty on the part ofNationwide, they could not do so on its part.

On September 25, the trial court denied Liberty Mutual's motion toreconsider and entered final judgment in favor of Viking against Liberty Mutual. This appeal followed.

A motion for summary judgment is properly granted when the pleadings,depositions, admissions, and affidavits on file establish that no genuine issueas to any material fact exists and, therefore, the moving party is entitled tojudgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2002); Cramer v.Insurance Exchange Agency, 174 Ill. 2d 513, 530, 675 N.E.2d 897 (1996). Adefendant can demonstrate it is entitled to summary judgment in two ways. 4 R.Michael, Illinois Practice