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Home Insurance Co. v. Cincinnati Insurance Co.12/2/2004
UNPUBLISHED
Docket No. 97873-Agenda 34-September 2004.
The Home Insurance Company (Home) brought a two-count declaratory judgment action against the Cincinnati Insurance Company (Cincinnati), attempting to recover money paid to settle an underlying personal injury action. On cross-motions for summary judgment, the circuit court granted Cincinnati's motion on both counts and denied Home's motion. The appellate court, with one justice dissenting, affirmed the circuit court. 345 Ill. App. 3d 40. We allowed Home's petition for leave to appeal (177 Ill. 2d R. 315). We also allowed Liberty Mutual Insurance Company to file an amicus brief in support of Home (155 Ill. 2d R. 345(a)). For the reasons that follow, we affirm in part and reverse in part.
BACKGROUND
Allied Asphalt Paving Company (Allied) was the general contractor for a renovation project on the Kennedy Expressway. Allied subcontracted work on the project to Aldridge Electric Company, Inc. (Aldridge), and Western Industries, Inc. (Western). Matthew Fisher, an employee of Aldridge, was injured while installing lights in an underpass on the project. The accident occurred at 2 a.m., when an intoxicated driver drove through the construction area and struck Fisher.
Fisher sued numerous parties, including Allied and Western. In his third amended complaint, Fisher alleged that Allied and Western had agreed to assume responsibility for all safety aspects of the project, and that Allied and Western breached their duty to provide proper safety signs, traffic cones, barricades, warning lights, flagmen, and other traffic control devices at the location where he was working.
At the time of the accident, Allied was named as an additional insured under two insurances policies: a commercial liability policy issued to Western by Cincinnati; and a policy issued to Aldridge by Home. Each policy contained a $1 million limit of liability for each occurrence. Additionally, each policy contained the following endorsement:
"WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of `your work' for that insured by or for you."
The term "your work" was defined as follows under each policy:
"a. Work or operations performed by you or on your behalf, and
b. Materials, parts or equipment furnished in connection with such work or operations."
It is undisputed that Home's policy was an excess policy, while Cincinnati's was a primary policy.
Allied tendered the defense of the Fisher action to both Cincinnati and Home. In a June 23, 1997, letter, Cincinnati accepted the defense of Allied, but reserved its rights to deny coverage with respect to any work or conduct that was not performed by Western on behalf of Allied. In a September 14, 1999, letter, Home accepted the defense of Allied. However, Home's acceptance letter stated that Home "will agree to share the cost of Allied's defense and indemnity with the insurance carrier for Western * on a 50/50 basis subject to a review of both policies and any reservation of rights."
In October 1999, Cincinnati settled Fisher's claim against Western for $40,000. Thereafter, Fisher agreed to settle his suit against Allied for $600,000. Home paid $500,000 toward this settlement, but Cincinnati paid only $100,000 of the total settlement amount.
On November 8, 2000, Home filed the present declaratory judgment action, asserting theories of equitable subrogation and equitable contribution. Count I sought a declaration that Cincinnati was the sole primary insur
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