INSURANCE COVERAGE UPDATE

Transcription

1 INSURANCE COVERAGE UPDATE Presented and Prepared by: Patrick D. Cloud Edwardsville, Illinois Heyl, Royster, Voelker & Allen PEORIA SPRINGFIELD URBANA ROCKFORD EDWARDSVILLE CHICAGO 2013 Heyl, Royster, Voelker & Allen C-1

2 INSURANCE COVERAGE UPDATE I. WHO IS AN INSURED... C-3 A. Permissive User and Omnibus Clauses: Hartford Fire Ins. Co. v. Taylor... C-3 B. Definition of Non-Owned Vehicle: Metzger v. Country Mut. Ins. Co.... C-4 II. INSURING AGREEMENTS WITHIN POLICIES... C-4 A. Number of Occurrences: Ware v. First Specialty Ins. Corp.... C-4 B. Definition of Personal Injury: ProLink Holdings Corp. v. Federal Ins. Co.... C-6 III. POLICY EXCLUSIONS... C-7 A. Pollution Exclusion: Village of Crestwood v. Ironshore Specialty Ins. Co.... C-7 B. Professional Liability Exclusions... C-8 1. Patrick Engineering Inc. v. Old Republic General Ins. Co.... C-8 2. National Union Fire Ins. Co. of Pittsburgh, Pa. v. American Motorists Ins. Co.... C-9 C. Renter Pilot Exclusion: Knezovich v. Hallmark Ins. Co.... C-9 D. In Care of Exclusion: Nationwide Ins. Co. v. Central Laborers Pension Fund... C-10 E. Named Insured Exclusion: American Access Cas. Co. v. Reyes... C-11 F. Sexual Abuse Exclusion: National Cas. Co. v. Jewel s Bus Co.... C-12 G. Cancellation for Failure to Pay Premium: Auto-Owners Ins. Co. v. Yocum... C-12 H. Rules of Construction: Pekin Ins. Co. v. Tovar Snow Professionals, Inc.... C-13 The cases and materials presented here are in summary and outline form. To be certain of their applicability and use for specific claims, we recommend the entire opinions and statutes be read and counsel consulted. C-2

3 INSURANCE COVERAGE UPDATE I. WHO IS AN INSURED A. Permissive User and Omnibus Clauses: Hartford Fire Ins. Co. v. Taylor In Hartford Fire Ins. Co. v. Taylor, 11 C 5421, 2012 WL (N.D. Ill. Oct. 17, 2012), a business was insured under a commercial auto policy, defining insureds to include the following: a. You for any covered auto. b. Anyone else while using with your permission a covered auto you own, hire or borrow.... Id. at *6. One of the business employees was driving a company car on a business trip. The employee convinced his wife and employer that he needed to stay in Chicago for a night for business-related reasons. In actuality, he stayed in Chicago to rendezvous with other men, whom he had met over the internet, for the purpose of consuming illicit substances. After the employee fell asleep in a hotel room, one of his acquaintances took his company car to transport another man to a train station. During this trip, he allegedly hit a pedestrian. Id. at *3-5. It was disputed, however, whether this acquaintance had the employee s implied permission to operate the vehicle and if, in fact, this acquaintance was the individual operating the vehicle when the accident occurred. Id. After the acquaintance was sued, the insurer filed a complaint for declaratory judgment, asserting that the acquaintance did not qualify as an insured under the policy. The district court denied the insurer s motion for summary judgment. In reaching its decision, the district court noted that Illinois follows the initial permission rule in cases of automobile insurance coverage disputes. Id. at *21. Under this rule, if the named insured has initially given permission to another person to use the insured automobile, a deviation from the authorized use does not serve to terminate the permission. Id. As a consequence, [w]hen the named insured has initially given permission to another to use his automobile, any use while it remains in the user s possession is with permission under the omnibus clause, even though that use may be for a purpose not contemplated by the named insured when he gave up possession of the automobile. Id. Furthermore, permission can be implied or express. Implied permission involves an inference or circumstances arising from a course of conduct or relationship between the parties in which there is a mutual acquiescence or lack of objection under circumstances signifying permission. Id. at *25 (citation omitted). [T]here is an inference of permission where the third person is engaged in some errand or activity for the benefit, advantage, or purposes of the original permitee. Id. (citation omitted) Conversely, [c]overage under an insurance policy does not extend to a person who gains access to a car via theft or tortious conversion, both of which are exceptions to the initial permission rule. Id. at *22. In light of these facts and principles, the District Court found that there were sufficient disputed C-3

4 facts to preclude summary judgment, including whether the acquaintance had implied permission from the employee. B. Definition of Non-Owned Vehicle: Metzger v. Country Mut. Ins. Co. In Metzger v. Country Mut. Ins. Co., 2013 IL App (2d) , a masonry company was an insured under a business auto policy that provided coverage for bodily injury or property damage arising out of the use of any non-owned auto in your business by any person. Metzger, 2013 IL App (2d) at 27. The policy defined non-owned auto as any auto you do not own, lease, hire or borrow which is used in connection with your business. Id. The vice-president of the masonry company owned an F-250 that he used in conjunction with the masonry business. The masonry business did not hold title to the vehicle. Rather, the F-250 was titled in the vicepresident s name. The vice president was operating the F-250 when it was involved in a car accident, causing personal property damage and bodily injuries to the other driver. When the vice-president s estate and the masonry company were sued, the claim was submitted under the business auto policy. The insurer denied the claim, maintaining that the F-250 did not qualify as a non-owned auto under the policy. In the ensuing coverage action, the Appellate Court, Second District, found that the F-250 did not meet the definition of non-owned auto. According to appellate court, it was irrelevant whether the masonry company actually owned the F-250 because the record demonstrated that the masonry company borrowed the vehicle. Using a dictionary, the appellate court derived the following definitions of borrow: [t]o take something for temporary use and to receive temporarily from another, implying or expressing the intention either of returning the thing received or of giving its equivalent to the lender: obtain the temporary use of. Id. at 37. Applying these definitions to the facts of this case, the Appellate Court reasoned: Id. at 38. Plaintiff emphasizes that Brian had sole use of the truck, but ignores the reality that Brian s use of the truck for business was actually the corporation s use of it. We note further that the definition of borrow that we are using does not require that the lending arrangement be formalized, which apparently it was not here. Also, though the lending arrangement was, apparently, continuous from the purchase of the Ford F-250 in 2007 to the accident in 2009, Brian retained title to the vehicle, implying that the business was still using it at his pleasure. II. INSURING AGREEMENTS WITHIN POLICIES A. Number of Occurrences: Ware v. First Specialty Ins. Corp. In Ware v. First Specialty Ins. Corp., 2013 IL App (1st) , 983 N.E.2d 1115, a property owner was insured under a general liability insurance policy that had a per occurrence limit of liability C-4

5 of $1 million. The property insured was a multi-story apartment building located in Chicago. Provisions of the policy discussing limits of liability stated as follows: 1. The Limits of Insurance Shown in the Declarations and the rules below fix the most we will pay regardless of the number of: a. Insureds; b. Claims made or suits brought; or c. Persons or organizations making claims or bringing suits. * * * 5. Subject to 2. or 3. above, which ever applies, the Each Occurrence Limits is [sic] the most we will pay for the sum of: a. Damages under Coverage A; and b. Medical expenses under Coverage C because of all bodily injury and property damage arising out of any one occurrence. Ware, 2013 IL App (1st) , at 9. The policy defined occurrence as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Id. On June 29, 2003, tenants at the insured property were having parties, and guests were on porches located on the second and third story of the building. At approximately 12:30 a.m., the porch located on the third story collapsed and crashed into the porch located on the second story, which then collapsed into the first story porch. Twelve individuals died, and twenty nine individuals were injured. Id. at 1. It was agreed that the collapse was not interrupted by any intervening human acts or other preceding or subsequent events. Id. at 5. The injured guests or the estates of the decedents brought a number of lawsuits against the property owner. The property owner reported the claim to his insurer, who asserted that the policy only provided $1 million in coverage for the incident because all of the suits stemmed from a single occurrence. In the ensuing coverage litigation, the court agreed with the insurer s position. According to the court, where the facts of a particular suit make it unclear whether one or many occurrences happened, Illinois courts, as well as courts in a majority of other jurisdictions, will apply the cause theory to determine the number of occurrences by referring to the cause or causes of the damages. Id. at 23. The court noted that this approach is different from the effect theory, which determines the number of occurrences based on the number of claims or injuries resulting from an event. Id. Using this framework, the court concluded that the suits involved only a single occurrence, reasoning: C-5

6 Id. at 25. Applying the cause theory to the facts of this case leads to the inescapable conclusion that the collapse constituted only one occurrence under the policy. There is no dispute that the collapse was the sole and proximate cause of all plaintiffs injuries, nor is there any allegation that any separate or intervening acts or circumstances contributed to their injuries. The parties stipulated to this in their agreed statement of facts, and plaintiffs have provided no evidence which would tend to support the existence of anything which would deem each such loss to have arisen from a separate occurrence. (citation omitted)... Because the parties are in agreement that the porch collapse was the single cause of all of plaintiffs injuries, there can be no question that, under the cause theory, the collapse constituted only one occurrence under the policy and, therefore, the trial court did not err in granting summary judgment in favor of First Specialty. B. Definition of Personal Injury: ProLink Holdings Corp. v. Federal Ins. Co. In ProLink Holdings Corp. v. Federal Ins. Co., 688 F.3d 828 (7th Cir. 2012), a company that made golf course distance measurement products and course management products was insured under a commercial general liability policy providing personal and advertising injury coverage. The policy defined personal injury as injury, other than bodily injury, property damage or advertising injury, caused by an offense of:... electronic, oral, written or other publication of material that: 1. libels or slanders a person or organization (which does not include disparagement of goods, products, property or services). Id. at 831. One of the company s competitors sued it, alleging that the company engaged in unfair business practices and slandered its title to a patent by falsely asserting that the company had license rights and ownership interests in the patent to investors and others within the golf industry. Id. at 829. After the company sought a defense from its insurer, the insurer filed a complaint for declaratory judgment, maintaining that the claims within the complaint did not fall within the definition of personal injury. The 7th Circuit Court of Appeals agreed, finding that the allegations against the insured only asserted disparagement of property and, thus, was specifically excluded from the definition of personal injury. Considering and distinguishing a number of cases, the 7th Circuit reasoned: [In cases where allegations went beyond disparagement of property], the underlying complaints specifically alleged that the insured made an express statement about the underlying plaintiff. Accordingly, these allegations could be considered claims of slander of a person or organization. Not so here, where ProLink s representation concerned only its own rights to the ˈ518 patent and never identified GPS or accused GPS of any wrongdoing.... Because the underlying complaint s allegations concern only disparagement of property, C-6

7 Id. at 832. which is not covered under the Policy, Federal did not have a duty to defend ProLink in the GPS litigation. III. POLICY EXCLUSIONS A. Pollution Exclusion: Village of Crestwood v. Ironshore Specialty Ins. Co. In Village of Crestwood v. Ironshore Specialty Ins. Co., 2013 IL App (1st) , a village was covered under a public entity general liability which contained the following absolute pollution exclusion, precluding coverage for: bodily injury or property damage which would not have occurred in whole or part but for the actual alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time. Village of Crestwood, 2013 IL App (1st) , at 9. The policy defined pollutants as any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste. Id. The village provided water to its residents. In 1985 or 1986, the IEPA advised the village that its groundwater well was contaminated with PCE and other chemicals. Exposure to these chemicals is linked to human health issues such as cancer, liver damage, and neurological impairment. Id. at 5. Although, starting in 1986, the village represented to its residents that 100 percent of its water came from Lake Michigan, in reality, up to 20 percent of the water provided by the village came from the contaminated well. In 2007, the IEPA received an anonymous tip, shut the contaminated well down, and prevented the continued supply of contaminated water. After the knowledge of the village s practices became public, it was named in a number of lawsuits filed by its residents. The village submitted these claims to its carriers, who filed a declaratory judgment action. During the declaratory judgment action, the appellate court found that the pollution exclusion precluded coverage. The appellate court reasoned: [T]he Village s knowing contamination of the Crestwood water supply with chemical-laden groundwater and subsequent distribution of that contaminated combination to the community is a textbook example of traditional environmental pollution. It is undisputed that the chemicals in the Crestwood water supply were contaminants or pollutants as those terms were used in the insurance policies [at] issue. The policies define pollutants as any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste material. In addition, this court has previously held that [a] common understanding of a pollutant is a substance that pollutes or renders impure a previously unpolluted object, as when chemical wastes leach into a clean water supply. [citation omitted].... The PCE and other chemicals C-7

8 Id. at 19. that were knowingly dispersed into the Crestwood tap water supply were pollutants as that term has been defined by the policies and the Illinois Courts. B. Professional Liability Exclusions 1. Patrick Engineering Inc. v. Old Republic General Ins. Co. In Patrick Engineering, Inc. v. Old Republic General Ins. Co., 2012 Ill. App. (2d) , 973 N.E.2d 1036, a utility company entered into an agreement with an engineering firm to design the relocation of utility poles, requiring the engineering firm to add the utility as an additional insured to its CGL. The utility was only an additional insured for liability arising out of the engineering firm s work. The CGL policy had a professional liability exclusion stating that the insurance did not apply to property damage arising out of the rendering of or failure to render any professional services by you or any engineer, architect or surveyor who is either employed by you or performing work on your behalf in such capacity. Patrick Engineering, Inc Ill. App. (2d) , at 19. The policy defined you as the Named Insured the utility was not included within the definition of you. Id. at 17. The CGL policy contained a severability clause, stating that the policy applied separately to each insured... against whom claim claim [sic.] is made or suit is brought. Id.. After a village sued the utility because it smashed through an underground sewer facility during the project, the utility submitted the suit for a defense under the engineering firm s CGL. The carrier denied the claim, asserting that the professional liability exclusion applied to any claim arising out of the named insured s professional services. Id. 29. In the ensuing coverage litigation, the Appellate Court, Second District, determined that the exclusion did not apply to the claims against the utility. According to the court, in light of the severability clause, if the additional insured did not provide professional services, the insurer had a duty to defend, even if a professional services exclusion would preclude coverage for the named insured. The court reasoned: the professional-services exclusion in the instant policy expressly refers to [the engineering firm], the named insured, as opposed to any insured or any professional, is an irrelevant distinction that, if anything, works against [the insurer]. The general terms used in the cited cases, i.e. an engineer, by or on behalf of any insured, and engineer professional services, implicate both a named insured and any insured that performed the listed professional services. Limiting the exclusion to professional services by or for the named insured, as opposed to any insured or any engineer, would only narrow the applicability of the exclusion and thereby broaden the umbrella of those covered under the policy. C-8

9 Id. 30 (emphasis in original). 2. National Union Fire Ins. Co. of Pittsburgh, Pa. v. American Motorists Ins. Co. In National Union Fire Ins. Co. of Pittsburgh, Pa. v. American Motorists Ins. Co., 707 F.3d 797 (7th Cir. 2013), an architectural firm was insured under a liability policy that excluded coverage for bodily injuries due to rendering or failure to render any professional service by an insured. National Union, 707 F.3d 797, at 802. The policy also had a severability clause specifying that the policy would apply to each insured under the policy separately. Id. The architectural firm entered into a contract with real estate firms to oversee the renovation of windows and exterior walls of the Hancock Center. As part of the contract, the architectural firm was required to add the real estate firms as additional insureds to their contracts. During the renovation, scaffolding on the 42nd floor fell due to high winds and injured and killed individuals below. After the real estate firms were sued in a number of lawsuits, the firms submitted the claims under the architectural firms general commercial liability policy as an additional insured. In the ensuing coverage litigation, the 7th Circuit Court of Appeals ruled that the professional liability exclusion of the policy did not apply, holding: Id. at 802. The services that MCA, the architect on the project, rendered were professional services. But the Shorenstein defendants did not render professional services, and the policy states that the insurance it provides applies separately to each insured against whom claim is made or suit is brought. (citation omitted) C. Renter Pilot Exclusion: Knezovich v. Hallmark Ins. Co. In Knezovich v. Hallmark Ins. Co., 2012 IL App (1st) , 975 N.E.2d 1165, a fixed based airplane operator was an insured under a liability policy. The liability policy specified who was protected by the policy and who was not. Under a section entitled Who Is Not Protected, the policy stated that [y]our bodily injury and property damage coverage does not protect: * * * b. Renter Pilots A renter pilot with respect to any occurrence arising out of the operation of the aircraft by a renter pilot. Knezovich, 2012 IL App (1st) , at 9. The policy defined a renter pilot as any person or organization who is renting the aircraft from you. Id. at 8. On August 8, 2008, a student of the flight school run by the fixed based airplane operator rented an aircraft to perform a solo flight. The student was involved in a mid-air collision while renting the aircraft, killing himself and the individuals in the other aircraft. C-9

10 After a wrongful death action was filed against the student pilot s estate, the insurer that issued the policy to operator filed a declaratory judgment action. On appeal, the Appellate Court, First District, found that no coverage existed under the policy for claims against the student pilot. In reaching its decision, the appellate court reviewed the following principles for construing insurance policies: When construing the language of an insurance policy, a court s primary objective is to ascertain and give effect to the intentions of the parties as expressed by the words of the policy... Because the court must assume that every provision was intended to serve a purpose, an insurance policy is to be construed as a whole, giving effect to every provision... and taking into account the type of insurance provided, the nature of the risks involved, and the overall purpose of the contract.... If the words used in the policy are clear and unambiguous, they must be given their plain, ordinary, and popular meaning, and the policy will be applied as written, unless it contravenes public policy. Id. at 20. In this case, because it was clear that the student pilot had rented the airplane from the operator and because the plain language of the policy dictated that the policy did not protect renters, no coverage existed under the policy. D. In Care of Exclusion: Nationwide Ins. Co. v. Central Laborers Pension Fund In Nationwide Ins. Co. v. Central Laborers Pension Fund, 704 F.3d 522 (7th Cir. 2013), a CPA was covered under a homeowners insurance policy which contained exclusions, precluding coverage for: property damage to property rented to, occupied or used by or in the care of the insured, and property damage arising out of or in connection with a business conducted from an insured location or engaged in by an insured, whether or not the business is owned or operated by an insured or employs an insured. Nationwide, 704 F.3d at 525. The CPA worked for a firm that performed accounting work for The Central Laborers Pension Fund. One night, the CPA went home with a compact disc within her computer that contained a substantial amount of personal, confidential information about the Fund s participants. The computer was stolen from the CPA s car when she left the computer in the vehicle overnight. Id. at 524. After the Fund expended nearly $200,000 in credit monitoring and insurance expenses, it made a claim under the CPA s policy. The homeowner carrier filed a complaint for declaratory judgment, and the Seventh Circuit found that the above-referenced policy exclusions precluded coverage. C-10

11 The Seventh Circuit reasoned that, under Illinois law, the in care of exclusion has two elements: the property lost or stolen was (1) within the exclusive possessory control of the insured at the time of loss; and (2) a necessary element of the work performed by the insured. Id. at 525. The court agreed that the compact disc stolen from the CPA s vehicle met both of these requirements. Likewise, the court found that the business exclusion applied, finding: The Funds do not dispute that the firm is a business which employs Hentz, and that, according to the state complaint, Hentz had a duty to safeguard the confidential information on the compact disc because she was an accountant employed by the firm. Hentz s failure to safeguard the compact disc was an omission amounting to a breach of that duty. Therefore, the policy s business exclusion applies. Id. at 528 E. Named Insured Exclusion: American Access Cas. Co. v. Reyes In American Access Cas. Co. v. Reyes, 2012 IL App (2d) , 982 N.E.2d 261, an owner of a vehicle purchased a personal automobile insurance policy. Under the policy, the owner of the vehicle was the sole Named Insured. The policy listed the owner as an excluded driver and had a provision excluding bodily injury and property-damage liability coverage for any automobile while in the control of an excluded operator. American Access, 2012 IL App (2d) , at 1. Similarly, the Policy had an endorsement, providing that [the insurer] would not afford any coverage under the policy to any claim or suit that occurred as the result of [the owner] operating any vehicle. Id. The owner of the vehicle subsequently operated her car and struck two pedestrians, killing one and seriously injuring the other. After the owner was sued, the insurer filed a complaint for declaratory judgment, asserting that the exclusionary provisions of the policy precluded the possibility of coverage for the owner. The appellate court found that the exclusion violated public policy and held that the provisions excluding coverage for the owner were invalid. As the appellate court noted, the Illinois Safety and Family Financial Responsibility Law provides that [n]o person shall operate, register, or maintain registration of, and no owner shall permit another person to operate, register or maintain registration of, a motor vehicle designed to be used on a public highway unless the motor vehicle is covered by a liability insurance policy. Reyes, 2012 IL App (2d) at 9, quoting 625 ILCS 5/7-601(a). The Financial Responsibility Law also listed certain requirements for owner policies, including the requirement that the policy [s]hall insure the person named therein. Id., quoting 625 ILCS 5/7-317(b)(2) Because the owner was the only person named in the policy, the language excluding coverage for the owner violated the Financial Responsibility Law and, thus, was unenforceable as being against public policy. Id. at 10. C-11

12 F. Sexual Abuse Exclusion: National Cas. Co. v. Jewel s Bus Co. In National Cas. Co. v. Jewel s Bus Co., 880 F. Supp. 2d 914 (N.D. Ill. 2012), an insurer issued a business automobile insurance policy to a school bus company containing the following exclusion: This policy does not apply to bodily injury, property damage or personal injury sustained by any person arising out of or resulting from sexual and/or physical abuse by any person who actively participates in any act of sexual and/or physical abuse. We shall have no duty to defend any suit against you seeking payment in connection with any claim made against you for sexual and/or physical abuse. National, 880 F. Supp. 2d at 916. After a school bus driver employed by the company sexually abused a passenger, the passenger sued the school bus driver, the bus company, and the school district. The claims against the bus company and school district included theories such as negligent supervision, negligent hiring, and negligent retention. When the claims were turned in to the insurer, the insurer filed a complaint for declaratory judgment, asserting that the abovereferenced sexual abuse exclusion precluded coverage for any of the claims. The district court disagreed, finding that the sexual abuse exclusion was ambiguous because the first paragraph of the exclusion only applied to individuals who actively participated in the sexual abuse while the second paragraph does not clearly limit the exclusion to claims made only against active participants for sexual abuse. Id. at 917. The court further found that it could not give an interpretation to the sexual abuse exclusion that rendered the actively participated requirement of the first paragraph superfluous. Id. Thus, the district court ruled that the sexual abuse exclusion only applied to the claims against the driver (who actively participated in the sexual abuse) but that it did not apply to the claims against the bus company and school district. Id. at 918. G. Cancellation for Failure to Pay Premium: Auto-Owners Ins. Co. v. Yocum In Auto-Owners Ins. Co. v. Yocum, 2013 IL App (2d) , an insured purchased an automobile insurance policy insuring two vehicles for the policy period of June 23, 2004 through June 23, In April, 2005, the insured added an additional vehicle to the policy, increasing the premium. Between May and June 2005, the insured had difficulty making his premium payment. After the insurer sent a notice of cancellation on June 3, 2005, the insured paid the remaining premium owned for the policy period and paid the premium for two months in the policy period. The insured s premium payment was based on the policy insuring three vehicles. In June 2005, two of the vehicles covered by the policy were damaged in a traffic accident and were no longer being used. The reduction in vehicles reduced the insured s monthly premium from $ to $104. In July 2005, the insured failed to make his monthly premium payment. On August 3, 2005, the insurer sent the insured a notice of cancellation, C-12

13 asking the insured to make two premium payments of $ The insured did not pay in response to the notice of cancellation. On August 31, 2005, the insurer sent the insured a letter stating that the policy had been canceled on August 25, On September 7, the insurer sent the insured a check refunding the insured $ in unearned premium because the insured had previously made advanced premium payments during the policy period based on a monthly premium charge of $257.25, as opposed to the reduced monthly premium of $104. On September 22, 2005, one of the insured s employees was involved in a fatal car accident, and the insured was subsequently sued. In the ensuing declaratory judgment action, the parties challenged the effectiveness of the insurer s cancellation. In that litigation, the Appellate Court, Second District agreed with the insured, finding that the insurer s cancellation was ineffective. According to the appellate court, the insurer inappropriately issued a notice of cancelation for failure to pay premium based on the alleged failure to pay the July 2005 premium because the insurer had an excess premium on account. Because the insurer had excess premium on account, it should have applied that premium to any amount due from the insured. H. Rules of Construction: Pekin Ins. Co. v. Tovar Snow Professionals, Inc. In Pekin Ins. Co. v. Tovar Snow Professionals, Inc., 2012 IL App (1st) , 970 N.E.2d 534, a snow removal company was an additional insured under a policy issued to a subcontractor. The additional insured endorsement provided as follows: The Additional Insured is covered only with respect to vicarious liability for bodily injury or property damage imputed from You to the Additional Insured as a proximate result of: (1) Your ongoing operations performed for that Additional Insured during the Policy Period; or (2) Your work performed for the Additional Insured during the Policy Period, but only for bodily injury or property damage within the products completed operations hazard. Pekin Ins., 2012 IL App (1st) , at 11. The Additional Insured Endorsement had the following heading: Additional Insured When Required By Written Construction Contract For Ongoing Operations Performed By You For An Additional Insured and/or Your Completed Operations. Id. The snow removal company was sued after an individual slipped and fell in an area where it had performed snow removal activities. The insurer asserted that the claim was not covered because the heading of the additional insured endorsement limited the endorsement to construction contracts and the snow removal contract did not qualify as a construction contract. The Appellate Court, First District, rejected the insurer s interpretation. According to the court, [t]he law is clear in Illinois that a heading or caption or title to a section of an insurance policy does not modify the coverage provided by the actual textual language C-13

14 appearing in the policy. Id. at 14. In this case, despite the language in the heading, [t]he actual text of the Pekin insurance policy endorsement affords coverage to a written contract effective during the policy period; within the endorsement, [t]he word contract is not limited only to construction contracts, but requires only a written contract. Id. C-14

15 Patrick Cloud - Partner Patrick, a native of the Saint Louis area, joined the firm in the Edwardsville office following graduation from law school in 2004 and became a partner in He worked at the firm as a summer associate in 2002 and While in law school, he served as an Associate Editor for the Washington University Global Studies Law Review. "Bankruptcy and Insured versus Insured Exclusions Did Not Apply to Claims by Trustee against Company Directors," IDC Defense Update, Vol. 12, No. 15 (2011) "Equitable Subrogation and Reimbursement Did Not Apply to a Self-Insured Municipality," IDC Defense Update, Vol. 12, No. 15 (2011) Patrick concentrates his practice on toxic tort matters, insurance coverage litigation, complex civil litigation, and governmental law. As part of his practice, Patrick routinely takes a lead role in the preparation and argument in significant pretrial motions and briefs, such as those involving issues concerning the doctrine of forum non conveniens, venue, the Illinois Frye doctrine, consumer fraud, choice-of-law issues, and insurance coverage matters. Patrick also regularly defends the firm's clients in depositions in asbestos litigation pending in Illinois and Missouri. Significant Cases Rix v. Heartland Regional Medical Center, No (5th Dist. 2008) - Affirmation of dismissal of class action claim brought pursuant to the Illinois Consumer Fraud Act regarding hospital pricing of services provided to uninsured patients. Publications "Unintended Consequences of Additional Insured Endorsements: Coverage for an Additional Insured Where the Claim Arose from the Named Insured's Professional Services," Illinois Defense Counsel Quarterly (2013) Co-author, "Intentional Act Exclusion," chapter in Commercial and Professional Liability Insurance Practice Handbook, Illinois Institute for Continuing Legal Education Handbook (2012) Co-author, "In the Wrong Place at the Wrong Time: Defense Counsel as Ethically Challenged or Merely in a Position where Appearance of Impropriety Exists when Insurer and Insured have Conflict of Interest?," Illinois Defense Counsel Quarterly Monograph (2012) Public Speaking Insurance Coverage Update Heyl Royster s 27th Annual Claims Handling Seminar (2012) Personal Auto Policy: The Fundamentals PLRB/LIRB Claims Conference & Insurance Services Expo, Orlando, Florida (2012) Personal Auto Policy: The Fundamentals PLRB/LIRB Claims Conference & Insurance Services Expo, Nashville, TN (2011) Professional Recognition Named to the 2012 and 2013 Illinois Super Lawyers Rising Stars list. The Super Lawyers Rising Stars selection process is based on peer recognition and professional achievement. Only 2.5 percent of Illinois lawyers under the age of 40 or who have been practicing 10 years or less earn this designation. Professional Associations Illinois State Bar Association Madison County Bar Association Illinois Association of Defense Trial Counsel Court Admissions State Courts of Illinois and Missouri United States District Court, Central and Southern Districts of Illinois United States Court of Appeals, 8th Circuit Education Juris Doctor (Order of the Coif), Washington University School of Law, 2004 Bachelor of Arts-Economics (Summa Cum Laude), University of Notre Dame, 2001 C-15 Learn more about our speakers at