N0. 4-07-0972 Filed: 8-27-08
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
THE CITY OF COLLINSVILLE, ILLINOIS; ) Appeal from
and PAUL W. MANN, ) Circuit Court of
Plaintiffs and Counter- ) Sangamon County
defendants-Appellants, ) No. 07MR170
v. )
THE ILLINOIS MUNICIPAL LEAGUE RISK )
MANAGEMENT ASSOCIATION, )
Defendant and Counter- )
plaintiff-Appellee, )
and )
OSBORN HOMES, INC., JOSEPH E. OSBORN, ) Honorable
and DONALD P. OSBORN, ) Robert J. Eggers,
Counterdefendants-Appellees. ) Judge Presiding.
_________________________________________________________________
JUSTICE McCULLOUGH delivered the opinion of the court:
Plaintiffs, the City of Collinsville, Illinois, and
Paul W. Mann, appeal from a summary judgment order entered in a
declaratory judgment action in favor of defendant, the Illinois
Municipal League Risk Management Association (Association).
On October 15, 2007, the Sangamon County circuit court
granted the Association's motion and denied a similar motion by
plaintiffs. The controversy arose out of litigation filed in the
Madison County circuit court against plaintiffs and removed to
the United States District Court, Southern District of Illinois.
The litigation alleged plaintiffs violated the constitutional
rights of Osborn Homes, Inc., Joseph E. Osborn, and Donald P.
Osborn (Developers), under section 1983 of the Civil Rights Act
(42 U.S.C. §1983 (2000)). The Sangamon County circuit court
found the Association had no duty to defend or indemnify plain-
tiffs.
Plaintiffs appeal, arguing that the trial court erred
by granting the Association's motion for summary judgment. We
reverse and remand for further proceedings.
The Association is a nonprofit association that pro-
vides self-insurance programs to municipalities. The City is a
member of the Association. As a member, municipal employees are
represented in, and indemnified against, claims arising out of
the performance of their jobs. Mann is an employee of the City.
Effective December 31, 2005, the Association issued
certain coverage grants to the City pursuant to an "Inter-Govern-
mental Cooperation Agreement" (Agreement). RMA 1 (Illinois
Municipal League Risk Management Association General Liability
Coverage Form) provides general liability coverage. RMA 2
(Illinois Municipal League Risk Management Association Comprehen-
sive General Liability Coverage Form) provides an endorsement to
RMA 1. RMA 3 (Illinois Municipal League Risk Management Associa-
tion Liability Exclusions Form) sets forth certain specified
liability exclusions applicable to RMA 1 and 2. RMA 4 (Illinois
Municipal League Risk Management Association Public
Officials/Employees Liability Coverage Form) provides public
officials and employees liability coverage.
- 2 -
RMA 1 sets forth the following:
"Subject to the conditions of form RMA L
[Illinois Municipal League Risk Management
Association Liability Definitions, Exclusions
and Conditions] and of this form and any
endorsements that may be added, the Associa-
tion agrees with the [m]ember to the follow-
ing:
I. COVERAGE
The Association will pay on behalf of the
[m]embers all sums which the [m]embers shall
become legally obligated to pay as damages,
defined as 'ultimate net loss', because of
'bodily injury' or 'property damage' to which
this form applies; caused by an 'occurrence'
within the 'coverage territory'."
RMA 2 is an endorsement to RMA 1 and sets forth a
coverage extension to include "ultimate net loss" because of
"personal injury" or "advertising injury." RMA 3 is an endorse-
ment to RMAs 1 and 2, and sets forth exclusions. RMA 4 is a
separate form that provides for payment by the Association, on
behalf of the City, for all loss which the members shall be
legally obligated to pay because of a "wrongful act" occurring
during the coverage period.
- 3 -
On July 10, 2006, the Developers filed a complaint in
the Madison County circuit court against plaintiffs seeking
monetary damages for alleged violations of the Developers'
constitutional rights under section 1983 of the Civil Rights Act
(42 U.S.C. §1983 (2000)). The Developers alleged (1) the City
wrongfully failed or refused to act upon or approve the Develop-
ers' proposed subdivision plat and (2) Mann approved and actively
participated in the violations of the Developers' rights. The
Association engaged the services of Schrempf, Blaine, Kelly, Mapp
& Darr, Ltd., to serve as counsel for Mann. On August 22, 2006,
Mann removed the action from the Madison County circuit court to
the United States District Court, Southern District of Illinois.
In a letter dated August 26, 2006, Martin Boyer Com-
pany, Inc., the claims administrator for the City on behalf of
the Association, advised plaintiffs that "this complaint involves
allegations which are clearly excluded from the coverage grants
[and] the Association will not become involved in either the
defense or indemnification of this case." In a letter to Mann
dated May 21, 2007, CCMSI identified itself as the claims admin-
istrator for the City, on behalf of the Association, and advised
Mann it would cease payment for legal services (in the Develop-
ers' case) effective June 12, 2007.
On September 28, 2006, plaintiffs filed a complaint for
declaratory judgment asserting the Association had a duty to
- 4 -
defend or indemnify plaintiffs in the section 1983 action. On
April 20, 2007, the Association filed its counterclaim for
declaratory judgment asserting it had no duty to defend or
indemnify plaintiffs in the section 1983 action because RMA 1 and
RMA 2 were subject to exclusions set forth in RMA 3 applicable to
RMAs 1 and 2. The Association relied upon the following exclu-
sion found in RMA 3:
"This coverage does not apply:
* * *
(L) To actions for or arising out of
condemnation; reverse or inverse condemna-
tion; zoning and land use determinations; the
taking, in whole or in part, of any real or
personal property or any interest therein, or
the right to the possession, benefit, use or
enjoyment thereof; adverse possession; dedi-
cation by adverse possession; trespass; or
similar actions[.]"
Further, the Association asserted that the coverage
granted to the City under RMA 4 was subject to the following
additional exclusions:
"The following additional exclusions
apply only to coverages provided by this
form. The Association should not be liable
- 5 -
to make payments for 'loss' in connection
with any claim made against the [m]embers
based upon or arising out of the following:
* * *
(7) actions for or arising out of con-
demnation; reverse or inverse condemnation;
the taking, in whole or part, of any real or
personal property or any interest therein or
the right to the possession, benefit, use of
enjoyment thereof; adverse possession; dedi-
cation by adverse possession; trespass; or
similar action;
* * *
(15) any violation of civil or constitu-
tional rights."
The Association asserted that the Developers sought
relief based upon "actions for or arising out of zoning and land
use and/or the right to the possession, benefit, use or enjoyment
of real or personal property and/or similar actions" excluded by
paragraph (L) contained in RMA 3, and paragraph (7) contained in
RMA 4. Further, the Association asserted that any claim "deemed
to arise" under RMA 4 was also excluded by paragraph (15) con-
tained in RMA 4. Additionally, the Association asserted that the
Developers' allegations did not involve an occurrence and did not
- 6 -
allege advertising injury, bodily injury, property damage, or
personal injury as defined in RMA L-1.
Upon motions for summary judgment, the circuit court
entered declaratory judgment in the Association's favor. This
appeal followed.
Before addressing the merits of this appeal, we first
address the Association's motion to strike and dismiss, which we
ordered taken with the case. The Association argues that this
court should strike plaintiffs' brief and dismiss this appeal
because plaintiffs "omit the key facts that are completely
devastating to their case" in violation of Supreme Court Rule
341(h)(6) (210 Ill. 2d R. 341(h)(6)). Specifically, the Associa-
tion argues plaintiffs "make no mention, in the facts or argu-
ment, of the exclusions in [the Agreement]."
"The striking of an appellate brief, in whole or in
part, is a harsh sanction" and is "appropriate only when the
alleged violations of *** procedural rules *** interfere with or
preclude review." People v. DeRossett, 237 Ill. App. 3d 315,
325, 604 N.E.2d 500, 507 (1992). We find that our review is not
hindered by the alleged error and decline to strike the Associa-
tion's brief. The record on appeal contains all of the documents
necessary for our review. Accordingly, defendants' motion to
strike and dismiss is denied.
Plaintiffs argue the trial court erred by granting the
- 7 -
Association's motion for summary judgment because the Association
has a duty to defend or indemnify plaintiffs in the section 1983
action.
The Association argues it has no duty to defend or
indemnify plaintiffs in the section 1983 action because the
section 1983 action "arise[s] out of zoning and land use determi-
nations, the taking in whole or in part of any real or personal
property, or any interests therein, the right to the possession
benefit, use or enjoyment of real or personal property, or
similar actions" for which exclusions apply. The Association
does not challenge plaintiffs' use of section 1983 as a vehicle
to present plaintiffs' claims. Instead, the Association contends
that various exclusions apply that relieve the Association of its
duty to defend or indemnify plaintiffs in the section 1983
action.
Initially, the Association contends that plaintiffs
waived "any argument before this court that [plaintiffs] may have
had with respect to the applicability of the exclusions to the
[Developers'] suit" because plaintiffs (1) failed to "mention"
the exclusions in their appellate brief, (2) failed to "discuss
them" in their motion for summary judgment, and (3) did not
respond to the Association's motion for summary judgment. The
Association cites no authority for the proposition that it is the
insured's burden to affirmatively demonstrate an exclusion is not
- 8 -
applicable, and we have found none. But see Pekin Insurance Co.
v. Miller, 367 Ill. App. 3d 263, 267, 854 N.E.2d 693, 697 (2006)
(the insurer has the burden to affirmatively demonstrate the
applicability of an exclusion). Accordingly, we reject the
Association's argument.
In support of the Association's argument that it has no
duty to defend or indemnify plaintiffs in the section 1983
action, it relies upon the following exclusion set forth in RMA
3:
"This coverage does not apply:
* * *
(L) To actions for or arising out of
condemnation; reverse or inverse condemna-
tion; zoning and land use determinations; the
taking, in whole or in part, of any real or
personal property or any interest therein, or
the right to the possession, benefit, use or
enjoyment thereof; adverse possession; dedi-
cation by adverse possession; trespass; or
similar actions[.]"
Further, the Association relies upon the following
exclusion set forth in RMA 4:
"The following additional exclusions
apply only to coverages provided by this
- 9 -
form. The Association should not be liable
to make payments for 'loss' in connection
with any claim made against the [m]embers
based upon or arising out of the following:
* * *
(7) actions for or arising out of con-
demnation; reverse or inverse condemnation;
the taking, in whole or part, of any real or
personal property or any interest therein or
the right to the possession, benefit, use of
enjoyment thereof; adverse possession; dedi-
cation by adverse possession; trespass; or
similar action[.]"
The Association cites in support of its argument "a
number of Illinois decisions interpreting similar language" as
found in the Agreement in this case. However, none of the cases
the Association cites allege a valid claim under section 1983.
A trial court's grant of summary judgment is subject to
a de novo review upon appeal. Outboard Marine Corp. v. Liberty
Mutual Insurance Co., 154 Ill. 2d 90, 102, 607 N.E.2d 1204, 1209
(1992). Under Illinois law, an insured contracts for and has a
right to expect two separate and distinct duties from an insurer:
(1) the duty to defend him if a claim is made against him; and
(2) the duty to indemnify him if he is found legally liable for
- 10 -
the occurrence of a covered risk. Conway v. Country Casualty
Insurance Co., 92 Ill. 2d 388, 394, 442 N.E.2d 245, 247 (1982);
Empire Fire & Marine Insurance Co. v. Clarendon Insurance Co.,
267 Ill. App. 3d 1022, 1026, 642 N.E.2d 790, 793 (1994). The
duty to defend an insured is much broader than the duty to
indemnify. Crum & Forster Managers Corp. v. Resolution Trust
Corp., 156 Ill. 2d 384, 393-94, 620 N.E.2d 1073, 1079 (1993). An
insurer may be required to defend its insured even when there
will ultimately be no obligation to indemnify. Zurich Insurance
Co. v. Raymark Industries, Inc., 118 Ill. 2d 23, 52, 514 N.E.2d
150, 163 (1987).
A liability insurer's duty to defend arises when the
insured tenders defense of a suit against him that alleges facts
which, when taken as true, raise the potential for coverage
occurring during the effective policy period. Empire Fire &
Marine, 267 Ill. App. 3d at 1026, 642 N.E.2d at 793. In
determining whether it has a duty to defend a suit, an insurer is
limited to comparing the bare allegations of the complaint with
the face of the policy of insurance. Crum & Forster, 156 Ill. 2d
at 393, 620 N.E.2d at 1079.
The threshold a complaint must meet to present a claim
for potential coverage, and thereby raise a duty to defend, is
minimal. West Bend Mutual Insurance Co. v. Sundance Homes, Inc.,
238 Ill. App. 3d 335, 337-38, 606 N.E.2d 326, 328 (1992). Any
- 11 -
doubts about potential coverage and the duty to defend are to be
resolved in favor of the insured. West Bend, 238 Ill. App. 3d at
338, 606 N.E.2d at 328.
In this case, the Developers sought to redress viola-
tions of constitutional rights. Had the suit been based solely
on "zoning and land use determinations, the taking in whole or in
part of any real or personal property, or any interests therein,
the right to the possession benefit, use or enjoyment of real or
personal property, or similar actions" as the Association con-
tends, it would have involved purely state law questions and
would not have been cognizable in federal court, absent diver-
sity. The Developers' suit against plaintiffs is a suit to
vindicate constitutional rights and was not excluded by paragraph
(L) set forth in RMA 3 or paragraph (7) set forth in RMA 4.
In support of plaintiffs' argument, RMA 2 sets forth
the following:
"II. 'PERSONAL INJURY' *** LIABILITY
COVERAGE EXTENSION.
The Association will pay on behalf of
the [m]embers all sums which the [m]embers
shall become legally obligated to pay, de-
fined as 'ultimate net loss', because of
'personal injury' *** to which this coverage
applies, sustained by any person or organiza-
- 12 -
tion and arising out of the conduct of the
[m]ember's business during the 'coverage
period', within the 'coverage territory'."
RMA L defines "personal injury" as an injury arising
out of "discrimination against an individual or group on any
basis prohibited by the law of Illinois or of the United States
of America" and committed during the coverage period.
In further support of plaintiffs' argument, RMA 2 also
sets forth the following:
"VIII. CIVIL/CONSTITUTIONAL RIGHTS ***
COVERAGE EXTENSION.
The Association will pay on behalf of
the [m]embers all sums which the [m]embers
shall become legally obligated to pay, de-
fined as 'ultimate net loss', because of:
(1) *** 'personal injury' *** arising
out of a violation of civil or constitutional
rights *** but only if such damages are
sought in a civil suit brought under one or
more of the following civil rights statutes:
United States Code Title 42 [section] 1981,
1982, 1983, 1985, or 1986[.]"
As stated above, RMA L defines "personal injury" as an injury
arising out of "discrimination against an individual or group on
- 13 -
any basis prohibited by the law of Illinois or of the United
States of America" and committed during the coverage period.
In this case, the Developers filed a complaint against plaintiffs
seeking monetary damages for alleged violations of the Develop-
ers' constitutional rights under section 1983 of the Civil Rights
Act. See 42 U.S.C. §1983 (2004).
The Association admits "there is no civil or constitu-
tional rights act violation exclusion that applies to [RMA 1 and
RMA 2] coverage grants." However, the Association argues an
exclusion set forth in RMA 4 applies and "[f]or this reason, the
trial court's decision should be affirmed."
RMA 4 is a separate form and not an endorsement to RMA
1, 2, or 3. RMA 3 is an endorsement to forms RMA 1 and 2, but
not RMA 4. RMA 4 provides for payment by the Association on
behalf of the City because of a "'wrongful act' occurring during
the 'coverage period'." In this case, plaintiffs do not argue
the Association has a duty to defend or indemnify plaintiffs in
the section 1983 action because the Developers alleged a "wrong-
ful act" as contained in RMA 4. Plaintiffs argue the Developers
alleged a "personal injury" or "property damage" as contained in
RMA 1 and 2. An exclusion set forth in RMA 4 does not apply to
RMA 1 and 2; nor does an exclusion set forth in RMA 3 apply to
RMA 4.
Because we have found the Developers alleged a "per-
- 14 -
sonal injury" as defined by the Agreement, which, if taken as
true, raises the potential for coverage during the effective
policy period and thus, the Association's duty to defend plain-
tiffs against the claims of the Developers, we need not discuss
whether the Developers also alleged "property damage" as defined
by the Agreement.
For the reasons stated, we reverse the trial court's
judgment and remand for further proceedings consistent with the
views expressed herein.
Reversed and remanded.
APPLETON, P.J., and TURNER, J., concur.
- 15 -