Illinois Construction Law Blog : Illinois Construction Lawyer & Attorney : Foran Glennon Palandech Ponzi & Rudloff Law Firm : Chicago IL

As we’ve said before, making sure your covered under some policy of insurance requires a bit of attention to the details in your contract and the details in the policy language. Our last installment regarding this issue involved the ability of a certificate of insurance to stand alone as evidence of coverage.

In this installment, the opinion in United States Fidelity and Guaranty v. Shorenstein provides an additional bit of policy language to be aware of.

The plaintiff, an insurance company, sought a declaration that it had no duty to defend and indemnify the defendants to a lawsuit under a policy issued to a non-party for an accident at a construction site involving a scaffolding collapse in 2002. The entities seeking indemnification and defense owned the building and had entered into a construction contract with a non-party to the underlying suits in 2000 and the insurance coverage required by that agreement lasted into the time of the accident.

The construction contract required the construction company to name the defendants as additional insureds on its policy. The policy also included language stating that if someone was to be added to a policy as an additional insured by another written contract (i.e. the construction contract) then if a certificate of insurance had been issued naming that person, the person would be an additional insured.

The plaintiff argued that because a certificate of insurance had not issued until after the time of the accident, coverage did not exist where the existence of the certificate was expressly required by the language of the policy. The court found otherwise.

The court held that where the construction company and the defendants had specifically contracted for additional insured coverage, and the certificates had all the limiting language we saw in our previous entry on this topic, the interpretation that there was no coverage until the certificate issued would limit the term of the coverage to something other than the entire year it provided for. Reasoning that the certificate could not change the terms of the coverage given the clauses printed on the certificate specifically disclaiming that it modified any contract, the court in essence found that the date of the certificates issuance was a nullity, despite the language requiring that a certificate be issued in the actual policy.

Again, don’t just rely on the certificates. No matter what your position under the certificate, it’s becoming unlikely that they will afford you relief or protection apart from the policy and your contract.

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On November 25, 2008, in Ready v. United/Goedecke Services, Inc., Docket No. 103474, the Illinois Supreme Court, in a plurality decision, held that section 2-1117 of the Code of Civil Procedure does not apply to tortfeasors or defendants who have settled before judgment.   As a result, the Court found that settling defendants should not be included in the apportionment of fault for the purposes of determining relative liability pursuant to section 2-1117.

In doing so, the Illinois Supreme Court ostensibly resolved a conflict among the Illinois Appellate Courts.  Justice Freeman construed the statutory language "defendants sued by the plaintiff" to be ambiguous, citing the diverse appellate holdings and the majority's disagreement with the dissenting opinion. The plurality relied upon:  (1) the Legislature's failure to amend the statute after it was first construed not to apply to settled parties in Blake v. Hy Ho Restaurant, Inc., 273 Ill.App.3d 372 (5^th Dist. 1995); and (2) the 1995 tort reform amendments (deemed unconstitutional in Best v. Taylor Machine Works, 179 Ill.2d 367 (1997)) which had included settling defendants in the apportionment of fault as evidence that section 2-1117, as enacted in 1986, was never intended to include settling tortfeasors in the allocation of fault.  In a special concurrence that supplied the fourth vote to reverse, Justice Kilbride agreed that section 2-1117 was unclear but concluded that the meaning was clear from an examination of the statute as a whole.  Justice Thomas took no part in the decision. Justice Garman, in a dissent in which Justice Karmeier concurred, would have found the plain meaning of section 2-1117 to be unambiguous based on dictionary definitions of the word "sued" and disagreed with the plurality's reliance on certain tools of statutory construction. The dissent concluded that the result reached by the plurality was contrary to the goals of the legislature in striking a balance between fully compensating injured parties and fair imposition of liability upon tortfeasors. 

As a result of this decision, a minimally responsible defendant may not be allowed to present evidence of the fault of settled parties or other tortfeasors who might have been responsible for the plaintiff's injuries.   A lone defendant, which may be only 1% at fault, could be liable for 100% of the judgment, less the amount of the settlements with the more culpable defendants.  Similarly, defendants confident that they are less than 25% at fault in comparison to other parties may find themselves jointly and severally liable because the more culpable defendants settle at the eve of trial.  On the other hand, plaintiffs benefit from only needing to present their cases against defendants at trial rather than having to deal with the empty chairs of the settling, and potentially more culpable, defendants.  While the non-settling defendants are entitled to an offset of any settlement amount, it appears from this decision that the fault of the settling defendant is not to be considered by the jury in allocating fault.  It is unknown at this time whether the legislature will address this ruling through an amendment to section 2-1117.

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The Illinois Supreme Court has granted leave to appeal in Weather-Tite, Inc. v. University of St. Francis. The case involved whether a subcontractor could recover money from an owner when the owner had not complied with the withholding provisions of the mechanic’s lien act once it received the final notice from the GC and did not withhold the funds stated in the notice for the subcontractor.

We previously covered and discussed this opinion here. 

The Court’s determination that it will accept briefing on the matter means that it could address issues related to striking a balance between the statute and the reality that payments are often disbursed to a GC by an owner without meticulously following the act and withholding payments when a balance is owed to subs.

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