Claimant’s ‘Public Safety’ Allegation Construed As Avoiding Auto Exclusion

June 7, 2022 / Writing and Speaking

By Don R. Sampen, published, Chicago Daily Law Bulletin, June 7, 2022

The 1st District Appellate Court recently held that the auto and commercial general liability insurer for a sub-subcontractor owed not just auto coverage but also CGL coverage for an additional insured subcontractor, in connection with an accident involving the sub-subcontractor’s truck and a boy on a bicycle.

The case is Nationwide Property & Casualty Insurance Co. v. State Farm Fire & Casualty Co., 2022 IL App (1st) 210267 (May 10). State Farm was the insurer for the sub-subcontractor, RJ&R Trucking and Excavating Inc., and was represented by Burke Warren MacKay & Serritella P.C. of Chicago. Swanson, Martin & Bell LLP of Chicago represented Nationwide, the insurer for the subcontractor, Davis Concrete Construction Co.

The general contractor for a street rehabilitation project in Burbank, Illinois, Crowley-Sheppard Asphalt Inc., subcontracted with Davis Concrete, which sub-subcontracted with RJ&R. Davis Concrete’s contract with Crowley required that Davis Concrete provide additional insured coverage for Crowley.

And RJ&R’s contract with Davis Concrete required that RJ&R provide both CGL and auto coverage for Davis Concrete as additional insured. Davis Concrete procured its direct coverage from Nationwide, while RJ&R procured its coverage from State Farm.

In 2016, a dump truck driven by an RJ&R employee struck and killed a 13-year-old boy, Brian Schrader, on a bicycle. The boy’s mother brought suit initially against RJ&R, Crowley, and others, and later added Davis Concrete. Crowley tendered to Davis Concrete and Nationwide, and they tendered Crowley’s defense to State Farm, which accepted the tender.

The allegations later added against Davis Concrete included claims that it failed to take measures at the construction site to ensure public safety and permitted the dump truck to turn into the wrong lane and to operate in excess of the allowable weight. Once these allegations were made, Davis Concrete tendered its defense to State Farm, but State Farm failed to respond.

The parties ultimately settled the underlying case, with State Farm paying $3 million, thereby exhausting its automobile coverage for RJ&R. Crowley through its insurer paid $100,000, and Nationwide paid $400,000 on behalf of Davis Concrete.

Nationwide then brought the instant declaratory action against State Farm. It claimed that, even though State Farm eventually reimbursed Nationwide for defense costs on behalf of Davis Concrete, State Farm should also reimburse Nationwide its $400,000 indemnity payment.

State Farm took the position that it had exhausted the auto coverage for RJ&R, and the CGL policy contained a motor vehicle exclusion. Because all the underlying allegations related to automobile use, State Farm said no CGL coverage could apply.

The trial court agreed that State Farm had no duty to defend or indemnify as to Davis Concrete under the CGL policy. Nationwide, as Davis Concrete’s subrogee, then took this appeal.

CGL Coverage

In an opinion by Justice Terrence J. Lavin, the 1st District affirmed in part and reversed in part. Lavin initially observed that State Farm could have no duty to indemnify under the CGL policy in the absence of a duty to defend. So the question became whether the underlying allegations triggered a duty to defend under the CGL policy.

Lavin found they did. He focused particularly on the allegations that Davis Concrete was negligent in failing to take precautionary measures to ensure public safety. Even though this allegation was included in the same count as other allegations complaining about the movement of the dump truck, the public safety allegation, he said, was not encompassed by the plain language of the motor vehicle exclusion.

Rather, Lavin found the allegation to be “entirely independent of a motor vehicle” because it did not mention a dump truck and could be referring to bikers and pedestrians who encountered the construction area. Because the boy who was killed could have been injured by other “public safety failures” at the construction site, this allegation was “outside of the CGL policy’s automotive exclusion,” and State Farm had a duty to defend under the CGL policy.


In addition, Lavin found that State Farm was estopped to raise coverage defenses. It was estopped because, as just indicated, it had a duty to defend but instead declined to defend and failed to file a timely declaratory action. While State Farm did file a counterclaim in Nationwide’s declaratory action, it did not file the counterclaim until after the parties settled the underlying action. Its filing therefore was untimely as a matter of law.

As a result, State Farm owed indemnity coverage to Nationwide, as Davis Concrete’s subrogee, in the amount of Nationwide’s $400,000 settlement payment.

The 1st District therefore reversed the trial court’s judgment to the extent of finding that State Farm had a duty to defend Davis Concrete and owed indemnity coverage.

Key Points

  • According to this court, an allegation of a defendant’s failure to ensure “public safety,” if it does not expressly refer to an automobile, may be sufficient to avoid the operation of an auto exclusion in a CGL policy, even if the context involves an automobile accident.
  • An insurer that declines to defend an insured in the face of a duty to defend, and also fails to timely file a declaratory action regarding coverage, may be estopped from raising policy defenses.
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