Pekin Insurance Company v. Wilson

SUPREME COURT CASES

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State: Illinois

Docket No: 108799 Rel

Case Date: 05/20/2010

Preview:Docket No. 108799.

IN THE SUPREME COURT OF THE STATE OF ILLINOIS

PEKIN INSURANCE COMPANY et al. (Pekin Insurance Company, Appellant), v. JACK O.WILSON et al. (Jack O. Wilson, Appellee). Opinion filed May 20, 2010.

JUSTICE KARMEIER delivered the judgment of the court, with opinion. Chief Justice Fitzgerald and Justices Freeman, Thomas, Kilbride, Garman, and Burke concurred in the judgment and opinion.

OPINION In this insurance coverage dispute, we are asked to determine whether the duty to defend the insured may be triggered by allegations of self-defense in the insured's counterclaim filed in response to an underlying lawsuit alleging the insured's intentional acts, where the policy contains both an exclusion for intentional acts and a selfdefense exception to that exclusion. For the reasons which follow, we hold that the duty to defend is triggered. BACKGROUND This case has its origins in a lawsuit filed in Jefferson County circuit court by Terry Johnson against the appellee herein, Jack O. Wilson, alleging causes of action for assault, battery, and intentional

infliction of emotional distress stemming from an incident in October 2002 and one in January 2004. Wilson tendered the defense of the Johnson suit (or underlying lawsuit) to the appellant herein, Pekin Insurance Company (Pekin), which had issued a commercial general liability policy to Wilson for the period September 22, 2002, through September 23, 2003. Wilson also tendered the defense of the Johnson suit to Farmers Automobile Insurance Association (Farmers), which had issued a homeowner's policy to Wilson covering the period of November 3, 2003, through May 3, 2004. On April 25, 2005, Pekin and Farmers jointly filed a complaint for a declaratory judgment, each asking the court for a determination that it did not owe Wilson a duty to defend the underlying lawsuit.1 Johnson filed an amended complaint in the underlying lawsuit on August 31, 2005, adding a count alleging negligence against Wilson. In the amended complaint, Johnson alleged that on October 31, 2002, an incident occurred at D&J Tarp Service, where, Johnson alleged, he had been "assisting Debi Wilson at her place of business" when Wilson arrived and began screaming expletives at him and "brandished" a steel pipe. Johnson alleged that Wilson struck him with the pipe in the shoulder and lacerated Johnson's right hand with a knife. Johnson alleged that, in order to protect himself, he subdued Wilson and restrained him, as Wilson continued his attempt to physically harm Johnson. After Johnson released Wilson, Wilson continued to scream expletives and threatened to go home to get a gun to shoot Johnson and Debi Wilson. It was further alleged that more than one year later, in January 2004, Wilson approached Johnson at a Wal-Mart store and showed him "what appeared to be the handle of a pistol." Johnson alleged that Wilson said he could "end it right now." In the negligence count, Johnson realleged all the factual assertions from the intentional tort counts (assault, battery, and intentional infliction of emotional distress). Johnson then alleged that Wilson had breached his duty of ordinary care by failing to "adequately use tools of his employment in a safe manner[,] causing

Farmers secured a declaratory judgment that it owed no duty to defend and the appellate court agreed. Farmers is therefore not a party to this appeal.

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physical harm," that Wilson had failed to "properly maintain tools and knives in a protective manner," and that he had failed to "use tools for their intended purpose[,] causing physical harm." Finally, Johnson alleged that Wilson's negligence was the proximate cause of his injuries. Pekin's policy covered Wilson as the "insured," and it described his business as a "private warehouse." In the coverages section, Pekin agreed to cover bodily injury and property damage liability as follows: "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 any `suit' seeking those damages. We may at our discretion investigate any `occurrence' and settle any claim or `suit' that may result." Pekin listed the following exclusion to its bodily injury coverage: " `Bodily injury' or `property damage' expected or intended from the standpoint of the insured" (the intentional-act exclusion). To the intentional-act exclusion, Pekin provided the following exception: "This exclusion does not apply to `bodily injury' resulting from the use of reasonable force to protect persons or property" (the self-defense exception). In an endorsement to the policy, Pekin limited its coverage for bodily injury to occurrences "arising out of *** [t]he ownership, maintenance[,] or use of the premises shown in the Schedule and operations necessary or incidental to those premises." On October 5, 2005, Pekin filed an amended complaint for a declaratory judgment, again seeking a finding that it did not owe Wilson a duty to defend him in the underlying lawsuit. The amended complaint for a declaratory judgment was in response to Johnson's amended complaint in the underlying lawsuit, in which he added the negligence count against Wilson. On October 11, 2005, Wilson filed an answer to the amended complaint in the underlying lawsuit. As a part of his answer, Wilson filed a counterclaim against Johnson, alleging that, during the incident at D&J Tarp Service, Johnson was the aggressor and Wilson was defending himself. The counterclaim alleged that Johnson was guilty of assault, battery, and intentional infliction of emotional distress. In addition to the allegations that Johnson had been the aggressor in the altercation at D&J Tarp Service, Wilson also alleged in each of the three counts: -3-

"6. Because of the physical size difference of *** Wilson and *** Johnson, [Wilson] picked up a piece of thin wall conduit used in the tarp service and, without moving in any threatening manner but merely possessing the pipe as to defend himself from *** Johnson, renewed his demand that *** Johnson leave the premises. 7. Thereupon, Johnson, with knowledge and intent, without provocation and without authority to remain upon the premises, came forward, grabbed Wilson, took the pipe away from him, and smashed his head and face into the wall." On March 3, 2006, Wilson filed an answer to the amended complaint for a declaratory judgment, denying that Pekin had no duty to defend him in the underlying lawsuit. Wilson contended that the allegations of the underlying lawsuit were covered by the Pekin policy, citing the amended complaint in the underlying lawsuit which alleged that "the occurrence took place during normal business hours at the premises where [Wilson's] business is located and to which the Pekin policy extends coverage." Wilson also filed a counterclaim against Pekin, alleging counts of breach of contract and vexatious and unreasonable delay in violation of section 155 of the Illinois Insurance Code (215 ILCS 5/155 (West 2006)), given that, inter alia, "the Pekin policy gives rise to a duty on the part of Pekin to defend Wilson against covered claims." On September 18, 2006, Pekin filed a motion for judgment on the pleadings pursuant to section 2

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