Country Mut. Ins. Co. v. Hagan

Page 271

698 N.E.2d 271

298 Ill.App.3d 495, 232 Ill.Dec. 433

COUNTRY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. John Martin HAGAN III, Defendant-Appellant (John Martin Hagan et al., Defendants).

No. 2-97-1058.

Appellate Court of Illinois Second District.

July 31, 1998.

Joseph G. McGraw, Joseph G. McGraw, Ltd., Rockford, for John Martin Hagan III.

Karen L. Kendall, Brad A. Elward, John C. Mulgrew, Jr., Heyl, Royster, Voelker & Allen, Peoria, Douglas J. Pomatto, Janet E. Lanpher, Heyl, Royster, Voelker & Allen, Rockford, for Country Mut. Ins. Co.

Justice BOWMAN delivered the opinion of the court:

This case arises from an insurance coverage dispute between plaintiff, Country Mutual Insurance Company (Country Mutual), and defendant John Martin Hagan III (Marty Hagan). At issue is whether Country Mutual must defend and indemnify Marty Hagan in a lawsuit filed by defendant Jennifer Hardwick. Hardwick filed a complaint against Marty Hagan and his parents, defendants John Martin Hagan and Carol Hagan, alleging that Marty Hagan had sexually abused her when she was 6 years old and he was 14. The Hagans tendered their defense in this action to Country Mutual, which insured them under a homeowner's policy. Subsequently, Country Mutual filed a declaratory judgment action, in which it asserted that it owed neither indemnification nor a defense to the Hagans because Hardwick's complaint alleged intentional acts. The trial court granted summary judgment in favor of John and Carol Hagan and against Country Mutual, and neither party appeals that ruling. Marty Hagan, however, appeals the trial court's judgment granting summary judgment against him and in favor of Country Mutual. We reverse.

In her five-count fourth amended complaint, Hardwick alleged that, during the summer of 1982, Marty Hagan invited Hardwick and her seven-year-old brother to his room to play. In his room, Marty Hagan performed certain sexual acts with Hardwick, such as forcing her to perform oral sex and attempting to rape her. Based on these allegations, Hardwick alleged that Marty Hagan was liable for assault and battery, for intentional infliction of emotional distress, for negligence, and for willful and wanton conduct.

Although Hardwick does not state claims against John and Carol Hagan in her fourth amended complaint (at some point during the proceedings, they were dismissed from the action with prejudice), the record indicates that her original complaint initially contained two counts against them. In these counts, she alleged that they were negligent in failing to restrict Marty Hagan's access to other minors.

At the time of the acts alleged in Hardwick's complaint, the Hagans were insured under a homeowner's policy issued by Country Mutual. On March 12, 1996, Marty Hagan and his parents tendered their defense in this action to Country Mutual. After refusing the tender of the Hagans' defense, Country Mutual filed a complaint for declaratory judgment against the Hagans and Hardwick.

In its complaint, Country Mutual alleged that there was no coverage, based on the following exclusion contained in the policy:

"Exclusions--Section 1

Liability and Medical Payments, Coverages A & B, does not apply to bodily injury or property damage:

1. caused intentionally by or at the direction of an insured."

According to Country Mutual, Hardwick's complaint contained allegations of intentional conduct, and, therefore, there was no coverage under the policy pursuant to this exclusion and thus no duty to defend or indemnify the Hagans.

In addition, Country Mutual alleged that there was no coverage according to the coverage provisions of the policy, which provided in relevant part:

"Liability, Coverage A

We promise to pay on behalf of an insured for damages resulting from bodily injury or property damage caused by an occurrence, if the insured is legally obligated."

Country Mutual maintained that the intentional conduct alleged in Hardwick's complaint could not be considered an "occurrence," because the policy defined "occurrence" as "an accident, * * * which results in bodily injury or property damage." According to Country Mutual, under this language, it owed no duty to defend or indemnify Marty Hagan and also was not obligated to defend or indemnify John and Carol Hagan because their alleged conduct "arose out of" Marty's intentional conduct.

Country Mutual, therefore, asked the trial court to declare that (1) it is not liable to the Hagans under the policy for any judgment or settlement based on Hardwick's complaint; and (2) it is not obligated to provide the Hagans with a defense to Hardwick's complaint.

John and Carol Hagan filed a motion for summary judgment with respect to the declaratory judgment complaint, and, in December 1996, the trial court granted their motion in part. It held that the intentional conduct exclusion in the insurance policy did not apply to the allegations against them because the complaint charged them with negligence, not intentional conduct. The trial court, therefore, held that Country Mutual must provide them with a defense. It declined, however, the parents' request for summary judgment on the issue of indemnification. Neither party has appealed this ruling.

The appeal in this case stems from Marty Hagan's separate motion for summary judgment against Country Mutual, which he filed on June 20, 1997. He argued that Country Mutual owed him a defense because Hardwick's complaint contained allegations of negligence, which was not excluded from coverage of the policy. In addition, he contended that Country Mutual's request for the court to rule on the issue of coverage was premature.

A few days later, Country Mutual filed a cross-motion for summary judgment against Marty Hagan. It argued that there was no coverage for the acts alleged in the assault, battery, intentional infliction of emotional distress, and "willful and wanton" counts of the complaint because the intentional conduct alleged in these counts could not be considered an "accident" within the coverage language of the policy and because such conduct fell within the policy's exclusionary language.

Country Mutual argued that the negligence count of the complaint also did not trigger coverage or its duty to defend because, despite the fact that this count was couched in terms of negligence, the factual allegations on which it was based were those of intentional conduct. In addition, it argued that an insured's intent to injure is presumed in cases involving sexual abuse of a minor. Country Mutual, therefore, asked the trial court to find that it was not required to indemnify John, Carol, or Marty Hagan and that it owed no defense to Marty.

After hearing the arguments of the parties, the trial court granted summary judgment in favor of Country Mutual and against Marty Hagan. On October 3, 1997, it held that Country Mutual had no obligation to indemnify the Hagans and that it did not owe a defense to Marty Hagan. Thereafter, Marty Hagan filed this timely appeal.

On appeal, Marty Hagan contends that the trial court erred in finding, as a matter of law, that the acts alleged in Hardwick's complaint were excluded from the coverage of the Country Mutual policy. He argues that the negligence count of the complaint was within the coverage of the policy and that the trial court erred in concluding that there is a presumption that a minor who sexually abuses another minor does so with an intent to injure. According to Marty Hagan, whether he performed the acts alleged in the complaint and whether he did so with an intent to injure Hardwick are questions of fact, which preclude summary judgment. Based on this fact question, Marty Hagan argues that it was improper for the court to grant Country Mutual's summary judgment motion.

Country Mutual counters that summary judgment in its favor was appropriate because it may be inferred, as a matter of law, that an insured intends to cause injury by sexually abusing a minor. Consequently, the acts alleged in the complaint were not "accidents" as required by the coverage language of the policy and were intentional injuries expressly excluded from the policy.

Summary judgment is appropriate when the pleadings, depositions, admissions, and affidavits on file show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Evanston Hospital v. Crane, 254 Ill.App.3d 435, 440, 193 Ill.Dec. 870, 627 N.E.2d 29 (1993). In determining whether a genuine question of material fact exists, a court must construe matters in the record against the party moving for summary judgment and liberally in favor of the opponent. Bysom Enterprises, Ltd. v. Peter Carlton Enterprises, Ltd., 267 Ill.App.3d 1, 6, 204 Ill.Dec. 408, 641 N.E.2d 838 (1994). Although summary judgment is encouraged to expeditiously dispose of a lawsuit, it is a drastic means of disposition of litigation and should be allowed only when the resolution of the case depends on a question of law and the moving party's right to judgment is free and clear from doubt. Lily Lake Road Defenders v. County of McHenry, 156 Ill.2d 1, 8, 188 Ill.Dec. 773, 619 N.E.2d 137 (1993). When parties file cross-motions for summary judgment, they invite the court to decide the issues as questions of law, but summary judgment is nevertheless inappropriate when there are questions of material fact. Rumford v. Countrywide Funding Corp., 287 Ill.App.3d 330, 334, 222 Ill.Dec. 757, 678 N.E.2d 369 (1997). The appellate court's review of a ruling on summary judgment is de novo. Castaneda v. Community Unit School District No. 200, 268 Ill.App.3d 99, 102, 205 Ill.Dec. 845, 644 N.E.2d 61 (1994).

In this case, the trial court granted summary judgment in favor of Country Mutual with respect to both its duty to defend Marty Hagan and its duty to indemnify the Hagans. We begin our analysis with a review of the court's ruling on the duty to defend...