Illinois Emcasco Insurance Co. v Nationwide Insurance Co.
2015 IL App (1st) 140928-U (Ill. App., 2015)Words & Phrases
Duty To Defend: Conflict Of InterestTrial Judge
Kathleen PantleAppellate Judge
ConnorsHolding
No conflict of interest based on financial incentives between two insurers who both owed duties to defend and indemnify their insured.Fact Summary
Rule 23
No conflict of interest exists in the absense of substandard conduct on the part of the insureds' attorneys. As a matter of law, the situation at hand is not a conflict of interest. Nationwide has not supplied, nor has our own research uncovered, a case that stands for the proposition that a defending insurer is necessarily conflicted if the insurer shares the costs of judgment against the additional insured but not the named insured. Instead, Nationwide relies on cases that have one or more of the following characteristics: (1) underlying allegations that are not covered by the insured’s policy; (2) an insured who becomes responsible for a judgment in the underlying case if certain facts are proven true; (3) opposing defense strategies for each insured. The instant case has none of the three characteristics and therefore is distinguishable from all of the cases relied on by Nationwide.
A primary insurer does not owe a duty to settle to the excess insurer when the primary insurer does not control the underlying defense. While we find the control element lacking and therefore, do not impose a duty to settle on Nationwide, our decision does not imply that Nationwide is free to take advantage of its own inaction in the underlying litigation and settlement in order to avoid having "control" over the litigation and thereby, avoid a duty to settle. Our decision, while stopping short of imposing a duty to settle on Nationwide, by no means condones Nationwide's conduct of ignoring requests for its policy and not actively managing its insured's liability in Orange. Therefore, we find that the trial court's ruling in favor of Emcasco and against Nationwide on Amended Count IV of Emcasco's complaint is reversed.