On March 1, 2018, an Illinois appellate court held an insurer breached its duties to defend and indemnify a grocer after gang members shot and killed a young woman and injured another outside of the Chicago grocer. The court interpreted “liability arising out of . . . premises” language in an additional insured endorsement, broadly holding that if the basis for imposing liability arises out of the premises, the party qualifies as an insured regardless of how the injury occurs. Dominick’s Finer Foods v. Indiana Ins. Co., 2018 IL App (1st) 161864, ¶ 66. Thus, a premises defect, such as an icy sidewalk or poor lighting, was not required. However, the court refused to find the insurer committed statutory bad faith, explaining “[t]here is a difference between disagreeing with a party’s position and finding that position so untenable as to be unreasonable and evidence of bad faith.” Id. at ¶ 95.
Background
According to the underlying complaint, the shooters first confronted the victims inside the Dominick’s supermarket, and followed them outside to the parking lot where the shooting occurred. The deceased’s estate sued Dominick’s, Kennedy Plaza (the premises owner in which Dominick’s was a tenant), and the security companies working on location. The estate alleged Dominick’s possessed, operated, and controlled the store and had a duty “to ensure the safety of [its] patrons and invitees,” but breached that duty by negligently failing to supervise or otherwise protect “store patrons and invitees,” such as the victims, from harm.
Netherlands Insurance Company provided commercial general liability insurance to Kennedy, under which Dominick’s was an additional insured. After Dominick’s requested a defense, the insurer denied coverage. Dominick’s ultimately contributed $1.3 million to settle the underlying litigation. Dominick’s then filed suit against Netherlands. After cross-motions for summary judgment, the Cooke County Circuit Court held Dominick’s was not entitled to coverage and entered judgment in Netherlands’ favor. Aggrieved, Dominick’s appealed.
Analysis
In ascertaining the duty to defend, Illinois courts examine the allegations in the underlying complaint—where the complaint alleges facts within or potentially within coverage, the insurer must defend. U.S. Fid. & Guar. Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 73, 161 Ill.Dec. 280, 578 N.E.2d 926 (1991). Further, where a policy provision is subject to more than one reasonable...
