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Argonaut Insurance Co. v. Safeway Steel Products12/30/2004
Federal Insurance Company (Federal), the intervening plaintiff, appeals from an order of the circuit court of Cook County vacating the grant of Federal's motion to intervene and dismissing its counterclaim for declaratory relief against Transcontinental Insurance Company (Transcontinental), the intervening defendant.
On appeal, Federal raises the following issues: (1) whether the circuit court erred in vacating its order granting Federal's motion to intervene, and (2) whether Federal's amended declaratory judgment complaint against Transcontinental was properly dismissed.
BACKGROUND
Park Newberry (Park) hired Kenny Construction Company (Kenny) to act as the general contractor on a condominium project developed by Park. In turn, Kenny hired Safeway Steel Products, Inc. (Safeway), as a subcontractor to erect and perform all heavy-duty sidewalk canopy work. Pursuant to its contract with Kenny, Safeway added Kenny and Park as additional insureds in its insurance policy with Reliance, Safeway's primary insurance carrier. The contract also required Safeway to provide this insurance as primary and noncontributory to any insurance policies maintained by Kenny and Park.
On December 16, 1996, Donald Hallsten was injured in a collision between his bicycle and a taxicab, allegedly the result of a construction canopy's obstruction of the view around the construction site. Kenny, Park, and Safeway were named as defendants in the lawsuit stemming from the collision. Kenny tendered defense of this suit to Reliance pursuant to Reliance's certificate of insurance naming Kenny and Park as additional insureds on its policy with Safeway. Argonaut, as Kenny and Park's primary insurer, proceeded to defend the suit on behalf of Kenny and Park and, ultimately, settled it for $4 million. Since Argonaut's policy was limited to $1 million, Federal, Kenny's excess insurer, provided the settlement balance of $3 million.
Argonaut, Kenny, and Park filed a declaratory judgment complaint against Reliance to determine whether Reliance had a duty to defend and indemnify Kenny and Park in the foregoing personal injury suit. In their amended complaint, Argonaut, Kenny, and Park alleged that because Reliance failed to provide a defense and indemnification, Argonaut, on behalf of Kenny and Park, was forced to defend and incur expenses that should have been borne by Reliance.
On April 3, 2001, the circuit court ruled, as to count I, that Reliance owed Kenny and Park a duty to defend and indemnify under its policy. The court dismissed Argonaut's request for similar declaratory relief for lack of standing but granted Argonaut leave to amend.
On April 11, 2001, Argonaut filed an amended count I seeking, inter alia, declaratory relief against Reliance based on equitable contribution. Argonaut argued that Reliance was liable to Argonaut for the $1 million paid in the settlement of the personal injury suit as well as $472,566.50 in legal costs incurred to defend it. Argonaut further argued that this liability arose out of Reliance's duty to defend and indemnify Kenny and Park as additional insureds.
On May 3, 2001, Reliance appealed the circuit court's decision granting Kenny and Park declaratory relief. On July 2, 2001, this court dismissed the appeal.
On May 29, 2001, the Commissioner of the Commonwealth of Pennsylvania placed Reliance in rehabilitation, ordering all pending actions against the company to be stayed for 60 days. Reliance moved the circuit court to dismiss Argonaut's amended complaint or, in the alternative, to stay the proceedings.
On June 21, 2001, Federal petitioned the court to intervene in Argonaut's dec
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