dissenting:
I respectfully dissent because the majority decided the wrong appeal. The majority chose to analyze an endorsement to the CGL policy and thereby concluded that the insurance company (National Union) has the duty to defend the additional insured (Glenview Park District) on both the Structural Work Act and negligence counts of the underlying complaint. I would prefer to decide this case on the cross-appeal of the Glenview Park District which challenges the validity of the endorsement’s exclusion. This would moot the appeal decided by the majority.
This court cannot ignore the pleas of the Glenview Park District and the Illinois Director of Insurance, who invoke Illinois laws designed to protect purchasers of insurance in this State. For this reason, I depart from the majority.
The facts are not in dispute. National Decorating Service (NDS) purchased a comprehensive general liability policy (CGL) from National Union. A CGL policy provides an insured with comprehensive bodily injury and property damage coverage for "occurrences” which happen due to the insured’s negligence or accidental causes. Generally, one of the insured’s primary purposes in purchasing a CGL policy is to insure itself against potential loss due to its negligence.
NDS also purchased an endorsement to its CGL policy entitled "Blanket Additional Insured Endorsement.” By this endorsement, NDS was able to name other third parties as additional insureds under its CGL policy from National Union. Generally, anyone named as an additional insured under a policy of insurance receives the same coverage as the named insured.
The Glenview Park District solicited bids from painting contractors for work to be done on a park fácility. NDS submitted a bid. The Glenview Park District, as a condition precedent to awarding the painting contract, required NDS to name the Glenview Park District as an additional insured under a CGL policy. The Glenview Park District’s bid contract required NDS to:
"secure and maintain in his own name with Glenview Park District specifically noted as additional insured, Public Liability Insurance covering Bodily Injury and Property Damage with limits of not less than one million dollars ***.’’
In satisfaction of this contractual condition, the Glenview Park District thereafter received a certificate of insurance providing that it was an additional insured under NDS’ CGL policy with National Union. The certificate of insurance also contained boilerplate language indicating that the coverage was subject to exclusions contained in the master policy. However, neither National Union nor NDS provided the Glenview Park District with a copy of the master policy.
In reliance upon the certificate of insurance, the Glenview Park District awarded the painting contract to NDS. While performing the painting on the park facility, an NDS employee was injured and sued both NDS and the Glenview Park District (underlyling complaint). The Glenview Park District tendered the defense of the underlying complaint to National Union and National Union undertook the defense under a reservation of rights. National Union then filed this declaratory, judgment action against the Glenview Park District, seeking a declaration that it has no duty to defend or indemnify the Glenview Park District with respect to the underlying complaint. The underlying complaint alleged two counts against the Glenview Park District: a Structural Work Act count and a negligence count. Both counts allege fault basically due to the same conduct on the part of the Glenview Park District, although the allegations use terminology suitable for each specific theory of liability.
Before the trial court, both parties filed cross-motions for summary judgment as to each of the two counts in the underlying complaint. The trial court granted National Union’s motions for summary judgment with respect to both the Structural Work Act count and the negligence count, on the basis of the negligence exclusion contained in National Union’s additional insured endorsement.
The Glenview Park District appealed to the appellate court. The appellate court affirmed the trial court’s grant of summary judgment in favor of National Union with respect to the negligence count, upholding the validity of the negligence exclusion contained in the additional-insured endorsement. The appellate court, however, reversed the trial court’s grant of summary judgment in favor of National Union on the Structural Work Act count. We granted National Union’s petition for leave to appeal from the appellate court’s reversal of summary judgment on the Structural Work Act count. The majority opinion addresses National Union’s appeal, and I concur with the majority opinion with respect to those issues.
However, the Glenview Park District has cross-appealed from the appellate court’s ruling upholding the grant of summary judgment in favor of the insurer with respect to the negligence count. The majority has declined to address the Glenview Park District’s cross-appeal, and I must dissent from this determination. I believe it is imperative for this court to address the appellate court ruling at issue in the Glenview Park District’s cross-appeal. Resolution of the Glenview Park District’s cross-appeal is particularly important under the facts presented because the challenged appellate court ruling could be outcome determinative when the duty to indemnify issue is resolved on remand.
A close look at the allegations in the Structural Work Act count, however, reveals that the underlying complaint charges the Glenview Park District with negligent conduct, in violation of the Structural Work Act (740 ILCS 150/1 et seq. (West 1992)). Left unaddressed, the appellate court holding is the law of the case with respect to negligence alleged in both the Structural Work Act count and the negligence count. If the Glenview Park District is found liable under either count, the appellate court ruling upholding the exclusion with respect to negligence will effectively determine the indemnity issue in favor of the insurer. The Glen-view Park District has appealed from this ruling and, since it will in all probability determine the indemnity issue, this court would be well advised to resolve the issues raised in the cross-appeal.
Turning to the Glenview Park District’s cross-appeal, the challenged endorsement provision provides, in relevant part:
"The Persons Insured provision of this policy is amended to include as an insured any Persons or organization whom [NDS] has agreed by contract, either oral or written, prior to loss, to include as an Insured with respect to operations performed by or on behalf of [NDS]. Such insured shall hereinafter be referred to as Addl. insureds, and the insurance afforded in paragraph A above shall not apply to damages arising out of the negligence of the Addl. Insured(s) ***.” (Emphasis added.)
The Glenview Park District contends that this endorsement violates public policy and is, therefore, void. The Glenview Park District argues that the "coverage” provided under National Union’s endorsement is illusory, in that it grants broad coverage to an additional insured under a comprehensive liability policy in one breath, while deceptively sweeping that coverage away in the next via its exclusion of coverage for damages resulting from the additional insured’s negligence. The Glenview Park District points out that claims alleging its negligence in relation to the NDS painting contract are the most likely to be brought against it and the type for which it sought coverage initially. The Glen-view Park District contends that if the additional insured endorsement does not provide coverage for claims due to its negligence, it provides no coverage at all. The Illinois Director of Insurance has submitted an amicus brief in support of the Glenview Park District’s argument.
National Union, on the other hand, argues that its endorsement provides coverage to the Glenview Park District for claims resulting from the negligence of NDS for which the Glenview Park District may be vicariously liable. Additionally, National Union argues that its negligence exclusion is clear and unambiguous.
Section 143 of the Illinois Insurance Code requires all companies who offer liability insurance in Illinois to file all policy forms with the Illinois Director of Insurance, the amicus in this case, for review and approval. Upon review, the Director may prohibit the use of any policy provision if it "contains exceptions and conditions that will unreasonably or deceptively affect the risks that are purported to be assumed by the policy.” (215 ILCS 5/143(2) (West 1992).) National Union never filed its additional insured endorsement with the Director.
In its amicus brief in support of the cross-appeal of the Glenview Park District, the Illinois Director of Insurance states: "It is the Director of Insurance’s position that the exception in National Union’s 'additional insured’ endorsement unreasonably and deceptively affects the risks that the NDS policy assumed.”
The legislature has determined that insurers may be prohibited from using policy exclusions which unreasonably or deceptively limit or affect the risk that the policy purports to cover. This is the clearly enunciated public policy of in Illinois. Clearly, National Union’s additional insured endorsement to its CGL policy undercuts the entire coverage that CGL policies purport to assume, i.e., coverage for the insured’s negligence. Moreover, National Union’s endorsement purports to insure the Glenview Park District, as an additional insured under a comprehensive liability policy, not, as National Union contends, under a policy for vicarious liability. The Glenview Park District does not need, nor did it seek, coverage for vicarious liability in connection with the NDS painting contract! NDS is an independent contractor and the Glenview Park District cannot be held vicariously liable for its acts except under a narrow exception. Even if it was to be held vicariously liable for the acts of NDS, the Glenview Park District would have an action for indemnity against NDS and, therefore, would have no need for vicarious liability coverage on the painting contract. The endorsement is illusory and provides no coverage at all. Since the negligence exclusion deceptively aifects the general liability risks that the endorsement purports to assume, the endorsement’s exclusion violates public policy and should not be enforced.
This is particularly true under the facts of this case. Nowhere in the certificate of insurance which was issued to the Glenview Park District did National Union indicate that the endorsement contained such an extraordinary and broad exclusion of coverage. The certificate merely provided boilerplate language that it was subject to the exclusions in the master policy. The insured must receive more notice than a boilerplate disclaimer in order for such an expansive exclusion to be enforceable against a certificate holder. (Van Vactor v. Blue Cross Association (1977), 50 Ill. App. 3d 709 ("Significant policy exclusions contained in a master contract but omitted from the brochure distributed to policyholders should not be enforced”).) The Glenview Park District relied on the certificate of insurance in awarding the painting contract to NDS and is entitled to the standard coverage which it was led to believe that National Union was providing.
Clearly, under these facts, the endorsement’s exclusion should not be enforced. Accordingly, the appellate court’s grant of summary judgment in National Union’s favor with respect to the negligence count should be reversed.
I would decide the cross-appeal in favor of the Glen-view Park District and hold that the exception in National Union’s additional insured endorsement is void. Therefore, the Glenview Park District is entitled to full coverage as an additional insured under the CGL policy. This includes the Structural Work Act count and the negligence count.
For these reasons, I dissent.
JUSTICE HEIPLE joins in this dissent.