Core Constr. Servs. of Ill., Inc. v. Zurich Am. Ins. Co.

2019 IL App (4th) 180411

126 N.E.3d 694

430 Ill.Dec. 606

CORE CONSTRUCTION SERVICES OF ILLINOIS, INC., a corporation, Plaintiff-Appellant,

v.ZURICH AMERICAN INSURANCE COMPANY, Schindler Elevator Corporation, and Michael Dineen, Defendants-Appellees.

NO. 4-18-0411

Appellate Court of Illinois, Fourth District.

Filed April 12, 2019

David B. Mueller and Ian M. White, of Cassidy & Mueller P.C., of Peoria, for appellant.

Robert L. Larsen and Heather A. Begley, of Cunningham, Meyer & Vedrine, P.C., of Warrenville, for appellees Zurich American Insurance Company and Schindler Elevator Corporation.

JUSTICE STEIGMANN delivered the judgment of the court, with opinion.

¶ 1 State Farm is an insurance company with offices in Bloomington, Illinois. Core Construction Services of Illinois (Core) is a construction company. Schindler Elevator Corporation (Schindler) manufactures, installs, and modernizes elevators and escalators. Zurich American Insurance Company (Zurich) is an insurance provider for Schindler.

¶ 2 Core was the general contractor for a construction project at a State Farm facility in Bloomington, Illinois. Core hired Schindler as a subcontractor to perform work on escalators. Michael Dineen was an employee of Schindler. The subcontract agreement required that Schindler name Core and State Farm as additional insureds under its insurance policy. Ultimately, Dineen was injured on the job, and he sued Core and State Farm. Core tendered the claim to Zurich, but Zurich denied coverage.

¶ 3 In June 2017, Core filed a complaint for declaratory judgment, arguing that Zurich was obligated to defend and indemnify it as an additional insured. Core included Schindler as a defendant, arguing that Schindler may have breached the subcontract agreement by failing to purchase adequate insurance. In November 2017, Zurich and Schindler (defendants) filed a motion for judgment on the pleadings, arguing that Core was not owed a defense because "there is not one word within the [underlying complaint] against CORE that alleges any negligent act or omission by Schindler." Core filed a response in which it argued "Dineen's resulting bodily injuries were caused in whole or in part by his employment and therefore in whole or in part by the acts and omissions of his employer, Schindler." The trial court granted defendants' motion for judgment on the pleadings and later denied Core's motion to reconsider.

¶ 4 Core appeals, raising numerous arguments. However, the only relevant issue on appeal is whether the trial court erred by granting defendants' motion for judgment on the pleadings. We conclude that defendants were not entitled to judgment on the pleadings because the allegations in the underlying complaint must be read within the context of the Workers' Compensation Act (Act) ( 820 ILCS 305/1 et seq. (West 2016)), meaning that silence in an underlying complaint as to an employer's possible negligence must be understood as the possible result of tort immunity for employers. Accordingly, we reverse and remand for further proceedings.

¶ 5 I. BACKGROUND

¶ 6 A. Core's Complaint for Declaratory Judgment

¶ 7 In June 2017, Core filed a complaint for declaratory judgment, arguing that Zurich was obligated to defend and indemnify it as an additional insured. The following information derives from this complaint and its attachments.

¶ 8 1. The Subcontract Agreement and Insurance Policy

¶ 9 Core was the general contractor for a construction project at a State Farm facility in Bloomington, Illinois. In March 2015, Core hired Schindler as a subcontractor to work on State Farm's escalators. Their agreement provided that Schindler was responsible for the safety and supervision of its employees.

¶ 10 The subcontract agreement also required Schindler to name Core and State Farm as additional insureds under its insurance policy. As additional insureds, Core and State Farm would be insured against the acts or omissions of Schindler. However, Core and State Farm would not be insured for their own negligent acts or omissions. Schindler's insurance policy, in relevant part, provided as follows:

"A. Section II-Who Is An Insured is amended to include [Core and State Farm] as an additional insured * * * but only with respect to liability for ‘bodily injury’, ‘property damage’ or ‘personal and advertising injury’ caused, in whole or in part, by:

1. [Schindler's] acts or omissions; or

2. The acts or omissions of those acting on [Schindler's] behalf; in the performance of [Schindler's] ongoing operations for the additional insured(s) at the location(s) designated above."

¶ 11 2. The Underlying Complaint

¶ 12 In November 2016, Dineen sued Core and State Farm for injuries he sustained while at the construction site. Dineen did not allege that Schindler was responsible for the accident. Schindler was not named as a defendant in the case.

¶ 13 Dineen noted that during August 2015, he was "an employee of Schindler * * * and was working at the State Farm facility located in Bloomington, Illinois." Dineen alleged that while he was working on an escalator, Core and State Farm "permitted unfettered and unrestrained access to the worksite, and permitted unskilled workers to suddenly approach and engage heavy equipment, unannounced and without any training, thus causing [Dineen] to come into contact with 1,700 pounds of equipment and resulting in serious injury * * *." Dineen alleged that Core and State Farm were negligent in one or more of the following respects:

"a. failed to provide a safe, suitable and proper work site;

b. failed to properly plan and organize the escalator replacement project so as to prevent non-essential and untrained staff from running through the project site;

c. failed to properly schedule and staff the construction project prior to permitting untrained staff to assist in the movement of heavy equipment;

d. failed to inform Plaintiff and Schindler that untrained staff would be permitted access to the escalator renovation in a hazardous manner;

e. failed to hold proper safety meetings concerning the safety precautions required prior to performance of work;

f. permitted its employees, agents, designees, invitees, contractors and subcontractors to work in proximity to the escalator repair site and its heavy equipment without providing or distributing notice or warning, when Defendant[s] knew, or should [have] known, such provision and distribution would have eliminated and/or minimized accidental and/or inadvertent operation and/or injury resulting from careless conduct by unskilled or untrained persons; and g. failed to use reasonable care in the exercise of control over the construction work related to the escalators."

¶ 14 3. The Denial of Coverage

¶ 15 In January 2017, Core tendered Dineen's claim to Zurich. In March 2017, Zurich declined to defend or indemnify Core as an additional insured because "coverage would not be triggered under the additional insured endorsements as the injury did not arise solely out of Schindler's negligent acts, errors or omissions or liability caused in whole or in part by Schindler."

¶ 16 B. The Procedural History of This Case

¶ 17 In June 2017, Core filed a complaint for declaratory judgment, arguing that Zurich was obligated to defend and indemnify it as an additional insured. Core included Schindler as a defendant, arguing that Schindler may have breached the subcontract agreement by failing to purchase adequate insurance. In November 2017, defendants, Zurich and Schindler, filed a motion for judgment on the pleadings. Defendants argued that the policy only provided coverage to Core when Core was vicariously liable for the acts or omissions of Schindler. To that point, defendants noted that "there is not one word within the [underlying complaint] against CORE that alleges any negligent act or omission by Schindler."

¶ 18 In January 2018, Core filed a response in which it argued "it must be presumed that the accident and Dineen's resulting bodily injuries were caused in whole or in part by [his] employment and therefore in whole or in part by the acts and omissions of his employer, Schindler." Core also discussed State Farm's third-party complaint for contribution against Schindler in which State Farm alleged that Schindler was partially responsible for Dineen's injuries. The trial court took judicial notice of this third-party complaint.

¶ 19 In March 2018, the trial court granted defendants' motion for judgment on the pleadings. In May 2018, the court denied Core's motion to reconsider. The trial court did not provide a written explanation of either of its rulings, and the record does not include transcripts of the proceedings below.

¶ 20 This appeal followed.

¶ 21 II. ANALYSIS

¶ 22 Core appeals, raising numerous arguments. However, the only relevant issue on appeal is whether the trial court erred by granting defendants' motion for judgment on the pleadings. We conclude that defendants were not entitled to judgment on the pleadings because the allegations in the underlying complaint must be read within the context of the Workers' Compensation Act, meaning that silence in an underlying complaint as to an employer's possible negligence must be understood as the possible result of tort immunity for employers. Accordingly, we reverse and remand for further proceedings.

¶ 23 A. The Applicable Law

¶ 24 "Any party may seasonably move for judgment on the pleadings." 735 ILCS 5/2-615(e) (West 2016). Judgment on the pleadings is proper when (1) the pleadings disclose no genuine issue of material fact and (2) the moving party is entitled to judgment as a matter of law. In re Appointment of Special Prosecutor , 2019 IL 122949, ¶ 52, ––– Ill.Dec ––––, ––– N.E.3d –––– ; Allstate Property & Casualty Insurance Co. v. Trujillo , 2014 IL App (1st) 123419, ¶ 15, 379 Ill.Dec. 684, 7 N.E.3d 110. For purposes of resolving the motion, a court should consider as admitted all well-pleaded facts as set forth in the pleadings of the nonmoving party and any fair inferences...