Duty To Defend For Negligence Held To Apply To Willful, Wanton Conduct

January 3, 2022 / Writing and Speaking

By Don R. Sampen, published, Chicago Daily Law Bulletin, December 21, 2021

The 2nd District Appellate Court recently held that an insurer had a duty to defend an additional insured based on allegations of “willful and wanton” conduct, despite the fact that the relevant endorsement provided coverage only for “negligent” acts.

The case is West Bend Mutual Insurance Co. v. Community Unit School District 300, 2021 IL App (2d) 210108 (Nov. 12). Insurer West Bend was represented by Cray Huber Horstman Heil & Van Ausdal of Chicago. Dykema Gossett PLLC of Chicago represented the additional insured Community Unit School District 300.

The school district entered into rental agreements with the Boys & Girls Clubs of West Dundee Township, allowing the club to conduct after-school programs at district schools.

As part of the agreements, the club agreed to name the school district as an additional insured on its commercial general liability policies, and to defend the school district against all claims. The club procured the coverage through West Bend.

In 2018 and 2019, the school district and club were named as defendants in several complaints filed on behalf of unnamed minors, for sexual molestation or abuse. The complaints alleged that an after-school program instructor, while acting as agent of the school district or club, engaged in the inappropriate behavior with respect to three children.

Two counts of the underlying complaints alleged that the school district engaged in “willful and wanton” hiring, retention and supervision of the instructor. These allegations were based on background information about the instructor that, according to the complaints, should have led the school district to be more careful.

The West Bend policy contained a physical abuse and sexual molestation liability endorsement. It provided coverage for sums the insured became obligated to pay for, among other things, “sexual molestation” arising out of the “negligent” employment, investigation, supervision, or retention of a person for whom the insured was legally responsible.

The school district apparently became aware of the allegations as early as April or May 2017. It did not notify West Bend, however, until October 2018, which apparently was approximately the time it was served with suit papers.

Upon tender of the suit, West Bend agreed to provide the school district a defense subject to a reservation of rights. It then brought this coverage action arguing that its policy was limited to providing coverage for “occurrences,” which included only acts of negligence, not willful and wanton conduct. It also claimed late notice.

Upon cross-motions for summary judgment, the trial court found that West Bend had a duty to defend, thus granting the school district’s motion and denying West Bend’s. West Bend brought this appeal pursuant to Illinois Supreme Court Rule 304(a).

Negligence v. Willful and Wanton

In an opinion by Justice Ann Brackley Jorgensen, the 2nd District affirmed. She initially addressed West Bend’s argument that it could have no duty to defend “willful and wanton” allegations, when the relevant policy endorsement extended coverage to only “negligent” conduct.

She then observed that, under the Governmental Employees Tort Immunity Act, 745 ILCS 10/1-101, the school district is not liable for ordinary negligence and can only be held liable for willful and wanton misconduct. She further noted that no separate and independent tort exists for willful and wanton misconduct. Rather, it is regarded as a “hybrid” of negligent and intentionally tortious acts.

To plead such acts, she wrote, a plaintiff must initially plead the basic elements of a negligence claim — duty, breach, and proximate cause — and then, in addition, establish either a deliberate intention to harm or a conscious disregard for the plaintiff’s welfare.

In this case, Jorgensen found that the underlying complaints adequately contained allegations setting forth the elements of a negligence action, plus the additional allegations necessary for willful and wanton misconduct.

Thus, even if the plaintiffs ultimately could not establish the heightened allegations for willful and wanton misconduct, they still pleaded the basic negligence cause of action. The negligence allegations existed, moreover, notwithstanding the fact the school district is immune from a negligence suit. West Bend therefore had a duty to defend.

Late Notice

The West Bend notice provisions, like many policies, contained sub-parts requiring prompt notice of the occurrence, prompt notice of a claim, and the immediate transmittal of suit papers in connection with any claim. Jorgensen observed, however, that the obligation to give notice of the occurrence and of the claim was imposed upon “you,” which the policy defined as the named insured.

The named insured here was the club, the owner of the policy, not the additional insured school district. On the other hand, the obligation to immediately transmit suit papers was imposed upon “you and any other involved insured.” Although not the named insured, the school district was an “involved insured.”

West Bend argued that the terms “you” and “insured” were used interchangeably throughout the policy. Jorgensen disagreed, finding no ambiguity in the policy in this regard. She further found that the school district complied with its obligation to promptly transmit suit papers.

The 2nd District thus affirmed West Bend’s duty to defend in favor of the school district.

Key Points

  • According to this court, allegations of willful and wanton misconduct may give rise to the duty to defend by an insurer obligated to defend an insured for negligence, if the allegations include the elements for a negligence action.
  • A policy obligation that applies to “you,” when defined in terms of the named insured, does not apply to an additional insured not included within the definition.
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