The Fifth District Appellate Court affirmed several orders by Madison County Circuit Judge Christopher Threlkeld in a general contractor’s lawsuit alleging its insurer should be compelled to defend an underlying suit involving faulty elevators.
Justice James “Randy” Moore delivered the judgment, which was originally filed as a Rule 23 order on March 4. A motion to publish the decision was granted on March 17. Justices Mark Boie and Barry Vaughan concurred in the ruling.
Plaintiff Korte & Luitjohan Contractors Inc. appealed several orders granted in favor of defendant Erie Insurance Exchange.
In Korte’s breach of contract lawsuit based on a commercial general liability insurance policy, Threlkeld granted Erie’s motion for summary judgment, barred Korte’s expert testimony regarding the meaning of the policy and denied Korte’s motion to compel discovery. The appellate court agreed.
The underlying complaint against Korte alleged that on Sept. 7, 2017, Six Mile Regional Library District sued Korte in the Madison County Circuit Court, alleging Korte entered into a contract with the Library District in September 2013 to perform a construction project at its facility in Granite City. The construction work included the installation of two elevators by subcontractor Custom Home Elevators of St. Louis.
The Library District’s suit alleged that one or both of the elevators failed to function on more than 30 separate occasions.
More specifically, the Library District alleged the elevators temporarily trapped individuals who were riding on the elevators, failed to travel to the specific floors of the library, failed to respond when called, failed to close the doors and operated with excessive noise, alarming patrons and employees.
Korte then filed a complaint against Erie on Jan. 29, 2020, and an amended complaint on March 4, 2020. Korte claims it tendered the Library District’s lawsuit to the insurer on Sept. 1, 2016, requesting Erie to defend and indemnify Korte pursuant to an Ultraflex Package Policy.
Erie denied the request on Sept. 26, 2016. Korte later demanded the insurer pay the $159,464.90 verdict against Korte in the Library District’s lawsuit and to reimburse it for the attorney’s fees it incurred.
Erie again denied Korte’s requests for defense and indemnity “because the underlying complaint did not allege ‘property damage’ caused by ‘an occurrence’ to trigger the ‘products-completed operations hazard’ or the ‘voluntary property damage’ coverages in the policy,” Moore wrote in the appellate decision.
Korte filed a motion to compel discovery on July 8, 2020, which was denied on Oct. 30, 2020.
Erie also filed a motion for summary judgment on Oct. 30, 2020. In response, Korte filed the expert report of Michael Averill. Averill, who was employed in the property and casualty insurance business, opined that “because the failure of the elevators to work properly were not intentional acts of Korte or its subcontractor, such failure were accidents which are included in the definition of ‘occurence’ in the policy.”
Erie filed a motion to bar Averill’s testimony on Jan. 15, 2021, arguing that his opinions are inadmissible legal conclusions under Illinois law. It also argued that defective workmanship does not fall under the definition of “occurrence” in the policy.
Korte filed a motion to reconsider Threlkeld’s order denying its motion to compel.
On July 23, 2021, Threlkeld denied Korte’s motion to reconsider, granted Erie’s motion to bar Averill’s testimony and granted Erie’s motion for summary judgment.
“The circuit court found that the allegations of the underlying complaint do not bring the claim within the potential indemnity coverage of the policy,” Moore wrote. “Moreover, the circuit court found that Mr. Averill’s testimony regarding the drafting history of the policy was improper because the terms of the policy are unambiguous.”
Korte appealed on Aug. 20, 2021.
In regards to the summary judgment issue, the appellate court concluded that “construction defects do not constitute an accident or occurrence necessary to trigger coverage under commercial general liability policies.”
“Because coverage is not triggered at all by the allegations of the underlying complaint, it is unnecessary to determine the application of any of the exclusions,” Moore wrote. “Accordingly, the circuit court did not err when it granted a summary judgment in favor of Erie on both counts of Korte’s complaint.”
In regards to Averill’s testimony, the appellate court found that Threlkeld was correct in his interpretation of the meaning of the insurance policy at issue as it applies to the Library District’s complaint.
As for the motion to compel, the appellate court concluded that the information Korte sought constituted parol evidence, which is “not appropriate to interpret policy language that is facially unambiguous.”
Korte was represented by Thomas Burkart of Burkart Law Offices in Hamel.
Erie was represented by Bruce Lichtcsien and Johnathan Puskar of Hinkhouse Williams Walsh LLP in Chicago.
Madison County Circuit Court case number 20-L-111