Chicago Federal District Court Finds Insurer Obligated to Indemnify for Work Injury

The issue in this case was whether there was insurance coverage for South Shore Iron Works under the $1 million auto policy GD Carriers purchased from National Casualty Co. This involved the injuries suffered by Julio Delgado, a GD employee, who fell from a parked flatbed trailer owned by South Shore Iron Works.

Delgado hooked GD’s tractor to South Shore’s trailer while it was being loaded with steel beams. He was scheduled to transport the beams to a construction project in Rochelle, Ill.

The tractor was covered under National Casualty’s insurance policy. The incident occurred allegedly because of South Shore’s negligence in positioning the beams. Apparently the beams were not secured when Delgado climbed onto the trailer to secure the load.

South Shore qualified as an insured under National Casualty’s insurance policy if it was “using” the tractor. But National, suing for declaratory judgment thirteen months after it rejected South Shore’s request for coverage, argued that South Shore was not using the vehicle because it was parked when Delgado was injured. National invoked a policy exception for situations in which the insured was “moving property to and from a covered auto.”

After briefs were submitted into the declaratory judgment action, South Shore settled with Delgado for $2.5 million. U.S. District Court Judge Charles R. Norgle Sr. concluded: South Shore was using the insured vehicle when Delgado was insured; the “moving property” exception didn’t apply; and National Casualty, which breached its duty to defend South Shore, was obligated to indemnify South Shore up to the $1 million policy limit.

According to the policy, the following definition for whomever qualifies as an “insured” is as follows:

“Anyone while using with your permission a covered ‘auto’ you own, hire or borrow.”

There was no dispute that the tractor driven by Delgado to South Shore’s facility was a covered auto owned by GD Carriers. However, the parties disagreed as to whether South Shore was “using” GD Carriers’ tractor at the time of Delgado’s injury. The insurance policy did not define “using.”

In this case, both parties relied on an Illinois Supreme Court case Schultz v. Illinois Farmers Insurance Co., 237 Ill.2d 391 (2010) for providing the definition for “using.” In the Schultz case, the Illinois Supreme Court held that the plain and ordinary meaning of the word “use” is to “Employ, utilize, apply, avail. It is general and it indicates any putting to service of a thing.”

Importantly it was found that the “use” is not limited to operating or driving a motor vehicle. It also includes riding in one as a passenger.

In this case, National Casualty argued that because GD Carriers’ tractor remained parked while it was being loaded, it was never “put to service,” and therefore South Shore was not “using” the tractor at the time of Delgado’s injury.

South Shore, on the other hand, argued that it was “using” the tractor to transport steel beams to the Rochelle project, which necessarily included the tractor being connected to the trailer and securing the load for transport. The court agreed with South Shore.

The court agreed that there was no dispute that the underlying lawsuit was settled for $2.5 million. Thus, the court must consider whether the underlying lawsuit and resulting settlement fell within the policy’s coverage. National Casualty makes two arguments against indemnification: (1) South Shore is not an insured; and (2) the other condition set in the indemnification have not been satisfied.  As South Shore was an insured under the policy, the only remaining issue was whether the conditions of indemnification of the policy have been satisfied.

The insurance policy provided in relevant part that: “National Casualty will pay all sums that an ‘insured’ legally must pay as damages because of ‘bodily injury’ to which this insurance applies, caused by an ‘accident’ and resulted from the ownership maintenance or use of a covered ‘auto’.”

It was undisputed that South Shore settled the underlying lawsuit with Delgado for $2.5 million, wherein Delgado claimed he was injured in an accident caused by South Shore’s negligent acts and omissions. The court has already concluded that Delgado’s injury resulted from South Shore’s “use” of GD Carriers’ tractor because Delgado was injured while he was attempting to secure the load of steel beams for transport. Based on these undisputed facts, National Casualty has a duty to indemnify South Shore for the settlement of the underlying lawsuit up to the policy limits of $1 million.

National Casualty Co. v. South Shore Iron Works, 2018 U.S. Dist. Lexis 159225 (Sept. 14, 2018).

Kreisman Law Offices has been handling worksite injury lawsuits, construction injury lawsuits, catastrophic injury cases and truck accident lawsuits for individuals, families and loved ones who have been injured, harmed or killed by the carelessness or negligence of another for more than 40 years in and around Chicago, Cook County and its surrounding areas, including Orland Park, Wakefield, Western Springs, Morton Grove, Niles, Des Plaines, Skokie, Evergreen Park, Countryside, Chicago (Gresham, Wicker Park, Hyde Park, Wrigleyville, Chinatown, Rogers Park, Albany Park, Jefferson Park, Garfield Park, West Loop), Elmhurst, Long Grove and Hinsdale, Ill.

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