Contingent Liability and Collectible Insurance
Bartkowiak v. Underwriters at Lloyd’s, London, __ N.E.3d __, 2015 IL App (1st) 133549 (Ill. August 13, 2015)
In 2009, a truck delivering road-surfacing materials struck and killed plaintiff’s husband. The insured was a truck broker that assigned the job to the at fault truck driver. The insured was named on the truck driver’s automobile liability insurance policy. The insured was also covered by a second contingent policy with defendant. The second policy, by its terms, did not apply if a valid and collectible automobile liability insurance policy of any kind existed. Defendant denied coverage and refused to defend the insured in a wrongful death action where Plaintiff prevailed and received a judgment in excess of the first policy.
Following the wrongful death action, the insured assigned any rights it had under the policy with Defendant to Plaintiff. Under this assignment of rights, Plaintiff filed a declaratory judgment action seeking a declaration that Defendant owed a duty to defend and indemnity the insured. The trial court granted Defendants’ Motion to Dismiss finding that Defendants’ policy with the insured was a contingent policy and the contingency never occurred. Plaintiff appealed.
On appeal, Plaintiff raised three issues, whether: (1) the trial court erred in finding Defendant had no duty to defend the insured by considering facts beyond the pleadings in the wrongful death action; (2) the contingent policy was ambiguous and should be construed in favor of the insured; and (3) Defendant was estopped from denying coverage.
In determining that Defendant had no duty to defend the insured, the trial court considered facts beyond the pleadings including the existence of the truck driver’s first Policy and the fact the first insurance carrier provided a defense and partial indemnification. The Court held that no precedent prevented the trial court from considering relevant, objective and undisputed facts when deciding whether Defendant had a duty to defend so long as the facts considered did not involve deciding the merits of a critical issue of the underlying suit.
Next, Plaintiff asserted that a contingent policy is only collectible when it covers the entire loss. Alternatively, Plaintiff asserted that the definition of collectible was ambiguous and must be construed in favor of the insured. The Court rejected Plaintiff’s arguments holding that Plaintiff’s position would have the effect of transforming a contingent policy into an excess policy. The Court held that the term collectible was not ambiguous as the intent of the term was clear from reading the policy as a whole.
Finally, the Court rejected Plaintiff’s estoppel argument holding that estoppel did not apply as Defendant prevailed that it had no duty to defend. The Appellate Court affirmed the decision of the trial court.