Recent Illinois Insurance-Related Opinions Part 1 - Target Tender
In a holding seemingly inconsistent with prior Illinois “target tender” cases, the Illinois First District Appellate Court recently upheld a trial court decision that a general contractor could not “target tender” a subcontractor’s insurance policy where the “other insurance” provision in that policy made the coverage excess over the general contractor’s own primary policy.
River Vill. I, LLC v. Harleysville Lake States Ins. Co., No. 1-08-3529, 2009 Ill. App. LEXIS 1149 (1st Dist. Nov. 20, 2009)
The First District in River Village held that where an “other insurance” provision made a policy “excess” to other valid and collectible insurance, an additional insured under that policy could not target that policy for defense and indemnity where it had its own primary coverage.
As a general contractor for a building project, River Village was an insured under two concurrent insurance policies. First, it was a named insured on a primary policy issued by Harleysville Lake States Ins. Co. (the “Harleysville policy”). Second, pursuant to contract with a subcontractor, it was an additional insured under a commercial general liability policy issued to First Choice Drywall (“First Choice”) by Central Insurance Companies (the “Central policy”). The Central policy contained an “Other insurance – Excess Insurance” provision, which stated that the insurance was excess over “[a]ny other valid and collectible insurance available to the additional insured whether primary, excess, contingent or on any other basis unless a contract specifically requires that this insurance be either primary or primary and noncontributing.” Although the contract between First Choice and River Village required First Choice to add River Village as an additional insured on the Central policy, it did not specify that the coverage provided by the Central Policy must be primary over other coverage available to River Village.
When an employee of First Choice brought suit against River Village to recover for injuries sustained at the project site, River Village attempted to “target tender” the claim under the Central policy. Central denied the tender and sought declaratory judgment that, inter alia, the Central policy was excess to the Harleysville policy and therefore the target tender doctrine did not apply. The trial court, relying on the “unambiguous language” of the Central policy’s other-insurance clause, granted Central’s motion for summary judgment.
On appeal, the First District agreed with the trial court that, based on the language of the other-insurance clause in the Central Policy [1], River Village’s coverage under the Central policy was excess to the Harleysville policy. In the court’s judgment, “the words in the [other insurance] provision are clear and unambiguous: unless there is a contract specifically requiring that Central’s insurance be primary, its coverage of River Village is only excess over and above any other insurance River Village would be able to collect in the event of a loss.” The court emphasized that the contract between River Village and First Choice could have specified that River Village’s coverage under the Central Policy was to be primary, but it did not. Further, citing extensively to Kajima Constr. Servs. Inc. v. St. Paul Fire & Marine Ins. Co., 227 Ill. 2d 102, 879 N.E.2d 305 (Ill. 2007) and State Auto. Mut. Ins. Co. v. Habitat Constr. Co., 377 Ill. App. 3d 281, 875 N.E.2d 1159 (Ill. App. Ct. 1st Dist. 2007), the court held that because it concluded that the situation did not involve concurrent primary insurance, but rather primary and excess insurance, River Village could not invoke the targeted tender doctrine.
Link to opinion:
http://www.state.il.us/court/Opinions/AppellateCourt/2009/1stDistrict/November/1083529.pdf
[1] The Harleysvillle policy also contained an “other insurance” provision, but the court refused to consider it due to River Village’s repeated failure to produce the Harleysville policy, despite discovery requests for the policy and the trial court’s express request that River Village enter the policy into evidence.