A co-insurer for Southwestern Illinois College argues that it is not responsible for defending a rape case involving a St. Clair County transit bus because its policy only covers educational operations.
Defendant Catlin Indemnity Company answered the complaint on Dec. 16 through attorney Dana Edwards of Guin Mundorf LLC in Collinsville.
In its affirmative defenses, Catlin Indemnity argues that its policy and the policy provided by plaintiff Arch Insurance Company “did not, and were not intended to, provide overlapping or concurrent coverage.”
Lynch
The defendant explains that the Arch policy insured the Southwestern Illinois College Alternative Transportation Systems (ATS)/SWIC and was specifically intended to cover the transportation system and related services and losses. The Catlin policy did not name ATS and was only intended to cover educational operations.
The underlying lawsuit filed by Peggy Kachadorian is based on the alleged willful and wanton conduct during community transportation services provided by ATS, meaning the Catlin policy does not cover the loss.
Catlin Indemnity also argues that it was not the “targeted or selected insurer” to defend and cover Kachadorian’s lawsuit.
“SWIC did not and has still not notified Catlin of the underlying lawsuit,” the answer states. “Catlin received untimely notification of the underlying lawsuit only from Arch, not its insured.”
The defendant adds that it wasn’t notified of the mediation by Arch Insurance until about 36 days prior to the mediation and more than three years after Kachadorian’s lawsuit was filed.
“Given the lack of timely notice, Catlin did not have sufficient opportunity to participate in the defense,” the answer states.
Catlin Indemnity previously moved to dismiss the complaint on July 2, arguing that the complaint “does not plead direct or inferential allegations that Catlin is primarily liable to the insured for a loss under a policy of insurance or that plaintiff is secondarily liable to the insured for the same loss under its policy.”
District Judge David Dugan denied the motion to dismiss on Dec. 2, concluding that Arch Insurance’s “pleadings are sufficient to allow this court to draw the reasonable inference that plaintiff could prove all facts necessary to establish SWIC’s right to recover against defendant, the reasonableness of the amount plaintiff paid to SWIC on its behalf, and an identity between plaintiff and defendant’s policies with respect to their insurable interests and risks.”
Arch Insurance filed the two-count complaint for declaratory judgment on May 3 through attorney John Lynch Jr. of Cremer Spina Shaughnessy Jansen & Siegert LLC in Chicago.
According to the complaint, the case involves an underlying lawsuit filed by Kachadorian seeking recovery for damages after she was allegedly raped by Paul Rongey on a St. Clair County Transit District bus on April 12, 2016. Rongey was driving the bus, which had an Alternative Transportation Systems (ATS) logo. Kachadorian alleges SWIC entered into a contract with Metro-East Transit District of St. Clair County, doing business as St. Clair County Transit District, to provide the bus transportation services. She also alleges SWIC does business as ATS and is vicariously liable for harm caused by Rongey.
Arch Insurance provided defense for SWIC against Kachadorian’s lawsuit. On June 20, 2020, Arch Insurance allegedly advised Catlin Indemnity that a mediation was scheduled for July 22, 2020, and demanded Catlin participate and share in the defense. Catlin Indemnity allegedly informed Arch Insurance that it would not be participating and disclaimed coverage.
Kachadorian’s case was settled for $865,000 on July 22, 2020. Arch Insurance allegedly paid $750,000 on behalf of SWIC. The remainder was paid on behalf of the other defendants in the action. The following day, Arch Insurance advised Catlin Indemnity of the settlement and demanded reimbursement for its proportionate share.
On July 24, 2020, Catlin Indemnity allegedly declined coverage, arguing that the policies were not intended to provide overlapping coverage and that its policy was not intended to cover the community transportation services. Arch Insurance argues that the allegations in Kachadorian’s complaint implicate coverage under Catlin Indemnity’s policy.
“Specifically, the Sexual Misconduct Declaratory Endorsement of the Catlin Policy provides that Catlin ‘will pay those sums that the insured becomes legally obligated to pay as damages because of ‘sexual misconduct’ to which this insurance applies’ and that Catlin has ‘the right and duty to defend the insured against any ‘suit’ seeking those damages,’” the suit states.
Arch Insurance argues that Catlin Indemnity’s policy does not include any exclusions for certain operations, including community transportation services.
Arch Insurance seeks an order declaring that Catlin Indemnity is a primary co-insurer of SWIC and has an obligation to contribute and participate in SWIC’s defense. The plaintiff seeks reimbursement for Catlin Indemnity’s share of the settlement and costs.
U.S. District Court for the Southern District of Illinois case number 3:21-cv-444