United Fire & Casualty v. Keeley & Sons

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State: Illinois

Court: 5th District Appellate

Docket No: 5-06-0307 Rel

Case Date: 05/02/2008

Preview:N O T IC E D e ci si o n fil e d 05/02/08. The text of this d e cisi on m ay be changed or co rre cte d prio r to th e filin g of a P e t it io n for Re he aring or th e

NO. 5-06-0307 IN THE APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT _________________________________________________________________________ UNITED FIRE & CASUALTY COMPANY, a Corporation, ) ) ) Plaintiff-Appellant, ) ) v. ) ) KEELEY & SONS, INC., TERRY MARTIN, ) ARDITH WYNN, RICKEY VANOVER, ) EGYPTIAN CONCRETE COMPANY, and ) ALLEN HENDERSON & ASSOCIATES, ) INC., ) Appeal from the Circuit Court of St. Clair County. No. 05-MR-181

d i sp o sitio n o f th e sam e.

Honorable ) Patrick M. Young, Defendants-Appellees. ) Judge, presiding. _________________________________________________________________________ JUSTICE SPOMER delivered the opinion of the court: United Fire & Casualty Company (United) appeals the circuit court's order granting a summary judgment in favor of Keeley & Sons, Inc. (Keeley), and denying United's motion for a summary judgment on its complaint for a declaratory judgment. For the following reasons, we reverse and remand with directions to enter a summary judgment in favor of United. On June 20, 2005, United filed a two-count complaint for a declaratory judgment in the circuit court of St. Clair County. The complaint alleged that United issued a commercial general liability policy (the policy) to Keeley, which included a commercial umbrella liability policy, with coverage effective from December 31, 2000, to December 31, 2001. Previously, on May 29, 2001, Terry Martin, Ardith Wynn, and Rickey Vanover (the employees), all of whom were employed by Keeley, fell from an I-beam and were injured. The employees filed suit (the underlying lawsuit) against Egyptian Concrete Company and

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others (the underlying defendants). Counts alleging spoliation of evidence were added against Keeley on behalf of the employees, due to Keeley's alleged destruction or disposal of the I-beam. United in turn sent a letter to Keeley, denying coverage for the spoliation counts. The underlying defendants filed counterclaims against Keeley, seeking contribution and damages for spoliation of evidence. Upon receipt of notice of the counterclaims, United sent a letter to Keeley, reaffirming its denial of coverage for all spoliation claims and further denying coverage for the counterclaims for contribution. In count I of the complaint for a declaratory judgment, United sought, inter alia , a declaration that the policy afforded no coverage to Keeley for the defense of or indemnification for the claims alleging spoliation of evidence. Count II of the complaint sought, inter alia , a declaration that the policy afforded no coverage to Keeley for the underlying defendants' counterclaims for spoliation and contribution and that United was under no duty to defend or indemnify Keeley for those counterclaims or any other counterclaims for contribution to be filed concerning injuries to the employees. On January 17, 2006, United filed a motion for a summary judgment on counts I and II of its complaint for a declaratory judgment. On February 21, 2006, Keeley filed a response and cross-motion for a summary judgment. On May 22, 2006, the circuit court granted Keeley's cross-motion for a summary judgment and denied United's motion for a summary judgment. United filed a timely notice of appeal on June 20, 2006. United brings the following sole issue on appeal, which we have restated as follows: whether the policy issued by United to Keeley provides coverage for claims of spoliation of evidence. Rulings on motions for a summary judgment are reviewed de novo . Dardeen v. Kuehling, 213 Ill. 2d 329, 335 (2004). "An insurance policy is a contract, and the general rules governing the interpretation

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of other types of contracts also govern the interpretation of insurance policies." Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill. 2d 11, 17 (2005). "The court's primary objective in construing an insurance policy is to ascertain and give effect to the intentions of the parties as expressed in the policy language." Illinois Farmers Insurance Co. v. Hall , 363 Ill. App. 3d 989, 993 (2006) (citing Gillen v. State Farm Mutual Automobile Insurance Co., 215 Ill. 2d 381, 393 (2005)). "If the policy language is unambiguous, the policy will be applied as written, unless it contravenes public policy." Hobbs , 214 Ill. 2d at 17. "Whether an ambiguity exists turns on whether the policy language is subject to more than one reasonable interpretation." Hobbs , 214 Ill. 2d at 17. "If the policy language is susceptible to more than one reasonable meaning, it will be considered ambiguous and will be construed against the insurer." Illinois Farmers Insurance Co. , 363 Ill. App. 3d at 993 (citing Gillen, 215 Ill. 2d at 393). "Although 'creative possibilities' may be suggested, only reasonable interpretations will be considered." Hobbs , 214 Ill. 2d at 17 (quoting Bruder v. Country Mutual Insurance Co., 156 Ill. 2d 179, 193 (1993)). "Thus, we will not strain to find an ambiguity where none exists." Hobbs , 214 Ill. 2d at 17. "Although policy terms that limit an insurer's liability will be liberally construed in favor of coverage, this rule of construction only comes into play when the policy is ambiguous." Hobbs , 214 Ill. 2d at 17. As a threshold matter, we note that United addressed the issue of coverage for the spoliation claims, as well as the counterclaims for contribution, in both its complaint for a declaratory judgment and its motion for a summary judgment. Keeley, on the other hand, referenced coverage for the spoliation claims in its cross-motion for a summary judgment, but it did not address the coverage issue with regard to the counterclaims for contribution. Likewise, in its order the circuit court addressed the issue of coverage only for the spoliation claims and omitted any reference to the counterclaims for contribution. Nevertheless, the circuit court granted Keeley's cross-motion for a summary judgment and denied United's

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motion for a summary judgment. Although on appeal neither party briefed the issue of coverage for the counterclaims for contribution or brought it up at oral argument, it was nonetheless a substantive part of United's motion for a summary judgment, which was denied in its entirety by the circuit court. The issue of coverage for the counterclaims seeking contribution could be deemed waived (forfeited) on appeal because it was not briefed. See A.J. Maggio Co. v. Willis, 316 Ill. App. 3d 1043, 1048 (2000). However, "the waiver doctrine is an admonition to the parties and not a limitation upon the power of a reviewing court to address issues of law as the case may require." Mayfield v. ACME Barrel Co., 258 Ill. App. 3d 32, 37 (1994) (citing Schutzenhofer v. Granite City Steel Co., 93 Ill. 2d 208, 211 (1982)). However, the lack of briefing in the circuit court and on appeal seems to suggest that the parties treated the coverage for the contribution counterclaims as a "nonissue." This may be because coverage for the contribution counterclaims is clearly excluded by the following language in the commercial general liability policy: " 2. Exclusions This insurance does not apply to: *** e. Employer's Liability 'Bodily injury' to: (1) An 'employee' of the insured arising out of and in the course of: (a) Employment by the insured; or (b) Performing duties related to the conduct of the insured's business ***." In addition, the commercial umbrella liability policy contains language identical to the above

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exclusion in all relevant aspects. Accordingly, we reverse the circuit court's order denying United's motion for a summary judgment to the extent that it might be construed to find coverage for the contribution counterclaims. We turn now to the issue of whether the policy issued by United to Keeley provides coverage for claims of spoliation of evidence. The commercial general liability policy contains the following language regarding coverage and exclusions: " SECTION I

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