|
Commercial
Automobile |
Permissive
Use |
|
Contingent
Coverage |
Other
Insurance |
Conditions were icy on Interstate 70 in
Warrenton, Missouri on December 23, 2008. Late that morning, a vehicle driven by
Edwin Sargent was involved in an accident with a vehicle driven by Adam Leninger. Immediately after the accident, both drivers
parked their vehicles along the westbound median of Interstate 70. Sargent got
out of his vehicle and stood between his vehicle and Leninger’s
vehicle.
At approximately noon, a second collision occurred. A
tractor-trailer operated by Derell L. Boyd of Justin
Time Transportation, LLC (Justin Time) collided twice with a tractor-trailer
operated by Jeffrey Kollman. After the second
collision between the two rigs, Boyd's rig slid on the ice and rotated
counterclockwise toward the center median. Boyd's rig struck the median
divider, Sargent’s vehicle, Edwin Sargent, and finally Leninger’s
vehicle. Edwin Sargent died at the scene.
Hogan Truck Leasing (Hogan) leased to Justin Time the truck
involved in the accident.
Edwin Sargent’s estate filed a civil suit
for wrongful death against Hogan and Justin Time. The suit was settled.
Hogan was insured under a commercial
automobile policy with limits of $1 million issued by Harco
National Insurance Company (Harco). This policy
covered permissive users of Hogan’s vehicles. Justin Time and an entity
connected to it, Haag Food (Haag), maintained a commercial automobile liability
policy with a $1 million limit issued by Netherlands Insurance Company
(Netherlands). Justin Time and Haag also had an umbrella liability policy with
a $3 million limit written by Indiana Insurance Company (Indiana). The umbrella
was excess over several policies held by the two entities.
The Harco policy
contained an endorsement concerning leased vehicles. It stated that, “this
endorsement applies when the ‘lease or rental agreement’ in effect at the time
of an ‘accident’ specifies that the lessee or rentee
is responsible for providing primary liability insurance or primary physical damage insurance.”
The Harco policy defined a “leased auto”
as “an auto that you lease to a customer.” The policy stated that the applicable
liability insurance for a
covered auto (a leased or rented auto) was limited to situations where the
insurance that the lease agreement mandated was uncollectible. The policy
specifically stated that “[t]he insurance
provided by this endorsement does not apply if any other insurance is collectible.” The Harco coverage
listed in the endorsement, by its own policy language, was not excess coverage.
Justin Time, Haag, Derell Boyd, and
Indiana (collectively the plaintiffs) brought a declaratory judgment action
asking the trial court to find that Hogan's contingent liability policy with Harco provided insurance
coverage to them. More
specifically, they asked the trial court to find that the contingent coverage endorsement that the policy
included did not apply. Harco contended that the
policy did not provide coverage
to the plaintiffs. Both sides filed motions for summary judgment.
The trial court granted the plaintiffs' motion for summary
judgment. It concluded that the contingent coverage endorsement to the Harco policy
contained ambiguous language that rendered void its purported exclusion of coverage. The trial court also found
that Harco waived its right to raise the endorsement
because Harco did not promptly cite the endorsement
in response to the claims made against the policy. Harco
appealed.
On appeal, the Illinois Appellate Court agreed with Harco’s position that, in a general sense, its policy
provided coverage that was contingent to the coverage written in favor of
Justin Time and Haag. The appellate court then turned to the alleged
ambiguities in the Harco policy that the plaintiffs
cited. In two instances, the court found that the Harco
policy language was not ambiguous. The appellate court then addressed the
plaintiffs’ contention that Harco had waived its
rights to raise provisions contained within the endorsement by not raising them
as affirmative defenses in its first responsive pleading. Failure to raise an
affirmative defense results in waiver.
The appellate court stated: “Despite the lack of coverage, we also note that upon
review of the briefs and the documents cited by both parties in support of
their claims, we find that Harco clearly and
repeatedly stated its contention that the endorsement language barred coverage.”
The appellate court reversed the trial court’s judgment and
entered judgment in favor of Harco.
Justin Time Transportation, LLC, v. Harco
National Insurance Company. State of Illinois Appellate
Court. March 4, 2014. 2014 WL 868634