Eduardo Guzman was employed by TDH Mechanical, which provided heating, ventilation and air conditioning services. TDH bought an insurance policy from Columbia Insurance Group to cover the period from April 2016 through April 2017. Rockwell Properties owned a part of the property under construction in Chicago.
Prairie Management & Development was the construction manager at this property. In February 2017, Prairie and Rockwell contracted with TDH to provide HVAC services at this property.
The contract contained provisions stating that TDH assumed responsibility and liability for any damages or injury of any kind to all persons and all property growing out of TDH’s work on the project. The contract also specified that both Prairie and Rockwell were to be named as additional insureds on TDH’s insurance policy.
In March 2017, Guzman was doing his work on HVAC at the Chicago building when he fell through an unguarded opening approximately 22 feet to a floor below. He sustained serious injuries. He sued Prairie, Rockwell and others for negligence. Several defendants in this lawsuit filed third-party complaints against TDH for contribution, alleging it chose not to train, failed to maintain a safe workplace and failed to provide proper safety equipment.
Scottsdale Insurance Co. insured Rockwell. Scottsdale named defendants Rockwell and Prairie in the underlying lawsuit, as Columbia refused to defend them. Scottsdale sought to have Columbia take over the defense and reimburse it for defense costs that were incurred up to that time. Scottsdale filed suit, seeking a declaratory judgment that Columbia had a duty to defend Rockwell and Prairie. Scottsdale moved for judgment on the pleadings.
The U.S. District for the Northern District of Illinois granted the motion in part finding that Columbia had a duty to defend and ordered Columbia to pay Scottsdale over $50,000 in defense costs through August 2019. Columbia appealed that order.
The U.S. Court of Appeals for the 7th Circuit in Chicago began by noting that TDH agreed in writing that it would have Prairie and Rockwell named as additional insureds on TDH’s insurance policy. The appeals panel stated that a Certificate of Liability Insurance was issued certifying Rockwell and Prairie would be named as additional insureds to TDH’s insurance policy. Therefore, the appeals panel reasoned, Rockwell and Prairie were in fact additional insureds on Columbia’s insurance policy. Columbia pointed to an exception in the policy, which stated that other organizations would be considered an additional insured only with respect to liability or arising out of TDH’s ongoing operations.
The panel stated that it agreed with the district court that the arising out of limitation did not eliminate Columbia’s duty to defend Prairie and Rockwell.
The U.S. Court of Appeals panel stated that the fall potentially arose in part out of TDH’s then-ongoing operations performed for Prairie and Rockwell, and this potentiality was sufficient to trigger the duty to defend under the insurance policy.
The court of appeals stated that the mere fact that Guzman did not bring a negligence claim against TDH directly was not sufficient to eliminate Columbia’s obligation to defend Prairie and Rockwell. The court concluded that the district court did not err in granting the motion for declaratory judgment, and it therefore affirmed that decision of the U.S. District Court for the Northern District of Illinois in Chicago.
Scottsdale Insurance Company v. Columbia Insurance Group, Inc., No. 19-3315 (Aug. 26, 2020).
Kreisman Law Offices has been handling catastrophic injury lawsuits, construction injury lawsuits, car accident cases, truck crash lawsuits and bicycle accident cases for individuals, families and loved ones who have been injured, harmed or killed by the carelessness or negligence of another for more than 40 years in and around Chicago, Cook County and its surrounding areas, including Northbrook, Riverwoods, Bannockburn, Lake Forest, Vernon Hills, Wheeling, Palatine, Des Plaines, Elk Grove Village, Arlington Heights, Orland Park, Streamwood, Carol Stream, Chicago (Little Village, Bridgeport, Canaryville, Chinatown, Bronzeville, Douglas, Prairie Shores, Grand Boulevard, North Kenwood, Oakland, Little Italy, Ukrainian Village, West Town, Noble Square, East Village, Sheffield Neighbors, Lakeview, Wrigleyville, Rogers Park, Albany Park, Ravenswood, Edgewater Beach), Lincolnwood, Skokie, Schaumburg, Schiller Park, Hawthorne Woods, Naperville, Bolingbrook and Joliet, Ill.
Robert D. Kreisman has been an active member of the Illinois and Missouri bars since 1976.
Related blog posts:
$1 Million Settlement, But No Recovery as Insurer is Placed in Liquidation
Illinois Appellate Court Finds That Each Instance of Under-Insurance Must Be Considered Individually