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Home Insurance Co. v. Cincinnati Insurance Co.12/2/2004
ame loss" as the primary insurer. This requirement looks retrospectively at the loss suffered. Here, Allied suffered only one loss, and if Allied's liability arose at all out of Western's work then Cincinnati was wholly liable for that loss as the primary insurer, and Home was only secondarily liable for that loss as the excess insurer. By definition, primary and excess insurers insure different risks. Under the appellate court's approach, an excess insurer would never be able to recover from a primary insurer under a subrogation or reimbursement theory because the parties insure different risks. Cincinnati does not cite any case, nor are we aware of any, that has taken the same approach as the appellate court here. Accordingly, we reverse the appellate court's finding.
We further find that Home was entitled to summary judgment on its equitable subrogation claim as a matter of law. While Home would only be entitled to recovery if it could be shown that Cincinnati owed coverage to Allied because Allied's liability arose at least in part out of Western's work, there is a presumption that the injured worker in the underlying suit would have prevailed on all of his theories of liability where the case is settled prior to trial. Certain Underwriters at Lloyd's London, 729 F.2d at 1134 (court was entitled to assume that worker would have prevailed on his design negligence claim if the case had not settled, and in subsequent contribution action, defendant insurance company was asking the "impossible" when it maintained that plaintiff insurance company must show what portion of the settlement was paid to settle the allegation of design negligence).
Here, none of the deposition testimony and affidavits on file were sufficient to create a genuine issue of fact and to overcome the presumption that Allied's liability arose at least in part out of the work of Western. Cunningham admitted in his deposition that Cincinnati paid $40,000 to settle the suit against Western at least in part because of the possibility that Cincinnati might lose its pending summary judgment motion and be found liable to Fisher at trial. Cunningham further acknowledged that there was a chance that Western could have been found liable in the Fisher suit. He also correctly acknowledged that the "arising out of" language is read broadly in favor of coverage. See, e.g., Casualty Insurance Co. v. Northbrook Property & Casualty Insurance Co., 150 Ill. App. 3d 472, 475 (1986). Moreover, Cincinnati agreed to pay $100,000 toward Allied's settlement with Fisher, presumably because Cincinnati believed that Allied's liability arose at least in part out of the work of Western. Under the circumstances, we find that Home was entitled to summary judgment as a matter of law on its subrogation claim. As we will explain more fully below, we also find that Home waived a portion of this claim.
III. Waiver
The circuit court found that Home completely waived its subrogation claim by not reserving its rights in the letter to Allied when it accepted the defense of the Fisher suit and by not raising the effect of its being an excess insurer sooner than when it filed the declaratory judgment action.
Waiver arises from an affirmative act, is consensual, and consists of an intentional relinquishment of a known right. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 396 (1993). A waiver may be either expressed or implied, arising from acts, words, conduct, or knowledge of the insurer. Crum & Forster Managers Corp., 156 Ill. 2d at 396; Western Casualty & Surety Co. v. Brochu, 105 Ill. 2d 486, 499 (1985). An implied waiver arises when conduct of the person against whom waiver is asserte
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