No.3-04-0701

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2005

JUSTICE LYTTON delivered the Opinion of the court:

Both plaintiff, Virginia Surety Company, Inc., and defendant,Northern Insurance Company, insured De Graf Concrete Construction,Inc. Plaintiff filed a declaratory judgment action, seeking adeclaration that defendant had a duty to defend and indemnify DeGraf with respect to a third-party complaint filed by CapitalConstruction Group, Inc. against De Graf. Plaintiff and defendantfiled motions for summary judgment. The trial court granteddefendant's motion. We affirm.

I. FACTS

Capital was the general contractor at a construction site. Capital hired De Graf to work as a subcontractor at the site. Section 4.6.1 of the contract between Capital and De Graf containedthe following indemnification provision:

"To the fullest extent permitted by law, theSubcontractor WAIVES ANY RIGHT OF CONTRIBUTION AGAINSTAND shall indemnify and hold harmless, the Owner,Contractor, Architect, Architect's consults, and agentsand employees of any of them from and against claims,damages losses and expenses * * * arising out of orresulting from performance of the Subcontractor's Workunder this Subcontract, provided that such claim,damage, loss or expense is attributable to bodilyinjury, sickness, disease or death, or to injury to ordestruction of tangible property (other than the Workitself) including loss of use therefrom WHICH IS causedin whole or in part by negligent acts or omissions ofthe Subcontractor, the Sub-contractor's subcontractors,anyone directly or indirectly employed by them or anyfor whose acts they may be liable, regardless ofwhether or not such claim, loss or expenses is causedin part by a party indemnified hereunder."The contract between Capital and De Graf also required De Grafto obtain a commercial general liability (CGL) policy of insurance. De Graf obtained a CGL policy from defendant. The CGL policycontained, in pertinent part, the following employer's liabilityexclusion:

"This insurance does not apply to:

***

'Bodily injury' to:

(1) An 'employee' of the insured arising out of and inthe course of:

(a) Employment of the insured; or

(b) Performing duties related to the conduct ofthe insured's business; or

* * *

This exclusion applies:

(1) Whether the insured may be liable as anemployer or in any other capacity; and

(2) To any obligation to share damages with orrepay someone else who must pay damages because ofthe injury.

This exclusion does not apply to liability as assumed bythe insured under an 'insured contract.'"

"[I]nsured contract" is defined as:

"That part of any other contract pertaining to yourbusiness * * * under which you assume the tort liabilityof another party to pay for 'bodily injury,' 'propertydamage' or 'personal liability' to a third person ororganization. Tort liability means a liability thatwould be imposed by law in the absence of any contract oragreement."

In addition to the CGL policy issued by defendant, De Graf obtaineda worker's compensation and employer's liability policy fromplaintiff. James Smith, an employee of De Graf, was injured while workingat the construction site. Smith sued Capital to recover for hisinjuries. Capital filed a third-party complaint against De Graf,seeking contribution. Capital's complaint alleged that DeGrafcommitted ten negligent acts or omissions that caused James Smith'sinjuries. The complaint specifically referenced the IllinoisContribution Among Joint Tortfeasors Act and requested thefollowing relief: "in the event judgment is entered in favor of theplaintiff, James Smith, and against the defendant/third-party plaintiff, Capital Construction Group, Inc., onplaintiff's First Amended Complaint at Law, then in thatevent judgment should be entered against the third-party/defendant, De Graf Concrete Construction, Inc., insuch amount by way of contribution as permitted by law."

De Graf tendered the defense of the complaint to plaintiff anddefendant. Plaintiff accepted the tender, but defendant refused todefend or indemnify De Graf pursuant to the employer's liabilityexclusion in its CGL policy. Plaintiff filed a declaratoryjudgment action, seeking a declaration that defendant had a duty todefend and indemnify De Graf in the contribution action.

Both plaintiff and defendant filed motions for summaryjudgment. The trial court granted defendant's motion.

II. ANALYSIS

Summary judgment is proper where the pleadings, depositionsand admissions reveal that there is no genuine issue as to anymaterial fact and that the moving party is entitled to judgment asa matter of law. 735 ILCS 5/2-1005(d) (West 2004). Where bothparties file cross-motions for summary judgment, the parties agreethat no material issue of fact exists and that only a question oflaw is involved. Board of Education v. Cunningham, 346 Ill. App.3d 1027, 1030, 806 N.E.2d 1219, 1221 (2004). We review a grant ofsummary judgment de novo. City of Chicago v. Holland, 206 Ill. 2d480, 487, 795 N.E.2d 240, 245 (2003). We can affirm the trialcourt's ruling on any basis in the record. Ashley v. Pierson, 339Ill. App. 3d 733, 737, 791 N.E.2d 666, 670 (2003).

Whether an insurer has a duty to defend depends on whether the allegations in the complaint trigger the relevant provisions of theinsurance policy. See Outboard Marine Corp. v. Liberty MutualInsurance Co., 154 Ill. 2d 90, 107-08, 607 N.E.2d 1204 (1992).

Here, plaintiff argues that the Second District's decisions ofMichael Nicholas, Inc. v. Royal Insurance Co., 321 Ill. App. 3d909, 748 N.E.2d 786 (2d Dist. 2001) and West Bend Mutual InsuranceCo. v. Mulligan Masonry Company, Inc., 337 Ill. App. 3d 698, 786N.E.2d 1078 (2d Dist. 2003) require defendant to defend DeGraf. Inthose cases, the Second District ruled that the definition of"insured contract" was ambiguous and had to be construed liberallyin favor of coverage. Defendant responds that the FourthDistrict's decision of Hankins v. Pekin Insurance Co., 305 Ill.App. 3d 1088, 713 N.E.2d 1244 (4^th Dist. 1999) establishes that theindemnity provision at issue is not an "insured contract."

However, we need not look to these decisions for guidance, asthe procedural posture of this case differs from those cases. Unlike the third-party plaintiffs in Hankins, Royal and Mulligan,Capital did not file a claim for indemnification against De Graf.

In its third-party complaint, Capital sought contribution forthe negligent acts and omissions committed by De Graf itself. Thethird-party complaint did not contain a claim against De Graf forindemnification based on Capital's own acts of negligence.

Claims for contribution differ from claims for indemnity:"There is an important distinction between contribution,which distributes the loss among the tortfeasors by requiringeach to pay his proportionate share, and indemnity, whichshifts the entire loss from one tortfeasor who has beencompelled to pay it to the shoulders of another who shouldbear it instead." Prosser, Law of Torts, sec. 51, at 310 (4^thed. 1971). An "insured contract" exception to an employer's liabilityexclusion only applies when one contracting party agrees toindemnify the other contracting party from and against the otherparty's own negligence. Hankins, 305 Ill. App. 3d at 1093, 713N.E.2d 1244. For the exception to apply, De Graf must have"assume[d] the tort liability of another party to pay for 'bodilyinjury.'" Thus, the "insured contract" issue is joined only whenindemnification is sought.

Here, Capital's third-party complaint does not request thatDe Graf indemnify Capital for Capital's negligence. The complaintonly alleges that De Graf should pay for its own negligence. Thus,the complaint does not trigger the "insured contract" exceptioncontained in the CGL policy, and defendant does not have a duty todefend De Graf. See Outboard Marine Corp. v. Liberty MutualInsurance Co., 154 Ill. 2d 90, 107-08, 607 N.E.2d 1204 (1992).

III. CONCLUSION

The judgment of the circuit court of Will County is affirmed.

Affirmed.

BARRY and HOLDRDIGE, JJ., concurring.