Nationwide Property and Casualty Co. v. State Farm Fire and Casualty Co.
2022 IL App (1st) 210267 (Ill. App., 2022)Words & Phrases
Duty To Defend: EstoppelTrial Judge
David B. AtkinsAppellate Judge
LavinHolding
Insurer estopped from raising policy defenses because it failed to either defend the underlying suit under a reservation of rights or to timely seek declaratory judgment on whether employee exclusion applied.Fact Summary
This declaratory judgment action stems from an underlying wrongful death suit in which a 13-year-old boy was fatally struck by a dump truck driven by an employee of Davis Concrete Construction Company (Davis Concrete) as he was returning to a road construction project. At the time of the accident, Davis Concrete was insured by Nationwide Property and Casualty Insurance Company (Nationwide), as well as by State Farm Fire and Casualty Company (State Farm).
Davis Concrete tendered its defense of those claims to State Farm. Davis Concrete subsequently sent State Farm three written requests for a response to its tendered defense. As a trial date approached in the underlying litigation, the circuit court ordered State Farm to provide a written response to Davis Concrete's tender. Yet, State Farm failed to do so.
The next year, Davis Concrete informed State Farm of the settlement and demanded that it pay Davis Concrete's legal defense fees and costs and that it fund the $400,000 Schrader settlement amount that Nationwide contributed on behalf of Davis Concrete. Consequently, Nationwide, as Davis Concrete's subrogee, filed, as relevant here, a fourth amended complaint against State Farm, seeking indemnity for the $400,000 settlement amount.
State Farm filed, for the first time, a multi-count counterclaim seeking a declaratory judgment that no coverage was triggered under the CGL policy. Specifically, State Farm asserted that it owed Davis Concrete no duty to defend or indemnify under the CGL policy because the allegations set forth in the underlying complaint were excluded by the policy's automotive exclusion.
Nationwide argued that the CGL policy's automotive exclusion did not apply because the underlying complaint alleged non-automobile-related conduct. Nationwide further argued that State Farm was equitably estopped from asserting any policy defenses to coverage based on State Farm's failure to defend Davis Concrete in the underlying suit and its unreasonable delay in providing a written response to Davis Concrete's tender that effectively forced Davis Concrete to settle the underlying matter.