City of Park Ridge v. Clarendon American Insurance Co.

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Appellate Court Date: 2018.01.30

13:55:47 -06'00'

City of Park Ridge v. Clarendon American Insurance Co., 2017 IL App (1st) 170453

Appellate Court THE CITY OF PARK RIDGE, a Municipal Corporation, and

Caption HIGH-LEVEL EXCESS LIABILITY POOL, Plaintiffs-Appellants, v.

CLARENDON AMERICAN INSURANCE COMPANY; A.G., a

Minor, by Her Parents and Next Friends, MARZENA SASSAK and

GREGORY GORMAN, Defendants (Clarendon American Insurance

Company, Defendant-Appellee).

District & No. First District, Third Division

Docket No. 1-17-0453

Filed October 18, 2017

Rehearing denied November 20, 2017

Decision Under Appeal from the Circuit Court of Cook County, No. 16-CH-00806; the

Review Hon. Sophia H. Hall, Judge, presiding.

Judgment Reversed and remanded.

Counsel on Michael Resis and Ellen L. Green, of SmithAmundsen LLC, of

Appeal Chicago, for appellant City of Park Ridge.

Thomas DiCianni, of Ancel, Glink, Diamond, Bush, DiCianni &

Krafthefer PC, of Chicago, for other appellant.

Keith Moskowitz and Kathleen Kinsella, of Dentons US LLP, of

Chicago, for appellee.

Panel JUSTICE LAVIN delivered the judgment of the court, with opinion.

Presiding Justice Cobbs and Justice Howse concurred in the judgment

and opinion.

OPINION

¶1 This appeal arises from the trial court’s order, granting summary judgment to defendant

Clarendon American Insurance Company (Clarendon). On appeal, plaintiffs City of Park

Ridge (Park Ridge) and its excess carrier, High-Level Excess Liability Pool (HELP), contend

that the trial court erroneously granted defendant’s motion for summary judgment because the

court erred in determining that emergency medical services fell within the scope of the

“Products-Completed Operations Hazard” provision under the insurance policy, which

affected how much Clarendon would have to pay in two separate claims. We reverse the trial

court’s order of summary judgment in Clarendon’s favor and remand the case for the trial court

to enter summary judgment for plaintiffs Park Ridge and HELP.

¶2 BACKGROUND

¶3 This insurance dispute arises out of monies paid to two plaintiffs who sued Park Ridge for

two separate occurrences. In the first, defendants Marzena Sassak and Gregory Gorman sued

in federal court after a confrontational traffic stop ended in personal injury. After a later, but

related, suit was filed on behalf of their minor child, Gorman settled his case for an amount in

excess of $600,000, the first $250,000 of which was paid by Park Ridge because it had a

self-insured retention in that amount. The remainder was paid by Clarendon.

¶4 The second lawsuit involved allegations that Park Ridge paramedics failed to provide any

treatment whatsoever to a 15-year-old boy whose father summoned paramedics when he was

found to be unresponsive around 1:10 a.m. Some hours later, the paramedics were summoned

again, when the boy was unresponsive and blue. He was transported to the hospital where he

was diagnosed as brain dead owing to a drug overdose. He later died.

¶5 The deceased boy’s mother, Jo Ann Abruzzo, filed a survival action and wrongful death

action, which was dismissed by the trial court. The dismissal was affirmed by the appellate

court, only to be reversed by the Illinois Supreme Court. The court determined that the

Emergency Medical Services (EMS) Systems Act (EMS Act) (210 ILCS 50/3.150(a) (West

2004)) applied to plaintiff’s allegations rather than sections of the Local Governmental and

Governmental Employees Tort Immunity Act (Tort Immunity Act) (745 ILCS 10/6-105,

6-106(a) (West 2004)) and remanded the case for further proceedings. Abruzzo v. City of Park

Ridge, 231 Ill. 2d 324, 348 (2008). All of these legal peregrinations are fully explicated in our

opinion which affirmed the jury’s subsequent verdict of $5,187,500. See Abruzzo v. City of

Park Ridge, 2013 IL App (1st) 122360. In that opinion, we found that the evidence established

a complete lack of any assessment, diagnosis, treatment, or professional judgment by the

responding emergency medical technicians or paramedics in the first trip to the family home.

Part of that proof involved an admission made by a Park Ridge lawyer in a reply brief in which

the city was claiming immunity because their paramedics provided “no treatment” at the first

stop.

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¶6 When confronted with the sizeable judgment affirmed by this court, Park Ridge made

efforts to resolve the Abruzzo case, but ran into resistance from Clarendon, which sought to

apply the monies paid in the Gorman matters to a $2 million aggregate limit in its policy with

the city. After some negotiations, Park Ridge and HELP agreed to provide the necessary funds

to settle the case, while leaving the matter of Clarendon’s potential contribution to be litigated

later, with Park Ridge claiming that Clarendon was obligated to pay its $2 million

“occurrence” limit and Clarendon claiming that the money paid in the Gorman matter should

have been subtracted from its $2 million “aggregate” limit under another section of the policy.

¶7 The Insurance Litigation

¶8 Appellants filed a three-count complaint against Clarendon. Count I sought declaratory

relief that Clarendon was obligated to pay a $2 million occurrence limit in Abruzzo because the

facts of that case took it out of the “aggregate” limit provided for “Personal Injury,” “Public

Officials’ Errors and Omissions,” or the “Products-Completed Operations Hazard” as

punctiliously detailed in the relevant policy. Count II claimed a breach of contract owing to the

refusal to pay the $2 million. Count III sought additional monies from Clarendon owing to its

obligation to indemnify and defend Park Ridge in the second Gorman suit, alleging that the

aggregate limit was not fully eroded in the previous Gorman lawsuit. Clarendon filed

counterclaims, which were answered by Park Ridge and HELP, and ultimately, the disputes

culminated with dueling motions for summary judgment, which will be analyzed below.

¶9 The Clarendon Policy

¶ 10 We will recite the relevant portions of the Clarendon policy before analyzing the trial

court’s interpretation thereof which led to its contested ruling. The policy held that:

“[s]ubject to the other provisions of this policy, the Company will pay on behalf of the

Insured that portion of the Ultimate Net Loss in excess of the Retained Amount, which

the Insured shall have become legally obligated to pay as damages and related Claims

Expense because of Bodily Injury, Property Damage, Personal Injury or Public

Officials’ Errors and Omissions to which this insurance applies.”

The relevant self-insured retention was listed as $250,000, and the Ultimate Net Loss

specifically included costs of defense.

¶ 11 Further, the policy separately enumerated the amount of coverage thusly: “Each

Occurrence or Wrongful Act, or Combination of Occurrence and Wrongful Act: $2,000,000,”

while the “Aggregate Limit for Personal Injury Liability, Products-Completed Operations

Hazard and Public Officials’ Errors and Omissions Combined: $2,000,000.” Among the many

definitions within the policy, and pertinent to our ruling, is the definition of “Incidental

Medical Malpractice,” which included allegations “arising out of emergency professional

medical services rendered or which should have been rendered *** by any duly qualified

medical practitioner, nurse, or technician, employed by or acting on behalf of the Insured.” In

addition, “personal injury” is defined in the policy as “injury, other than Bodily Injury or

Public Officials’ Errors or Omissions arising out of *** false arrest, detention, imprisonment

[or] Malicious prosecution.”

¶ 12 Another section of the policy that seems particularly focused on construction-related

claims was central to the trial court’s decision. It states:

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“N. Products-Completed Operations Hazard

1. Includes all Bodily Injury and Property Damage occurring away from the

premises the Insured owns or rents and arising out of the Insured’s Product or the

Insured’s Work, except:

a. Products that are still in the physical possession of the Insured; or

b. Work that has not yet been completed or abandoned. However, the Insured’s

Work will be deemed completed at the earliest of the following times:

1) When all of the work called for in the Insured’s contract has been

completed.

2) When all of the work to be done at the site has been completed if the

Insured’s contract calls for more work at more than one site.

c. When that part of the work done at a job site has been put to its intended use

by any person or organization other than another contractor or subcontractor

working on the same project.”

¶ 13 Summary Judgment Proceedings

¶ 14 Along with the policy and the relevant motions and arguments, the trial court considered

our earlier opinion that affirmed the multi-million dollar judgment. Abruzzo, 2013 IL App (1st)

122360. As briefly mentioned above, the underlying claim regarded a father who called Park

Ridge paramedics to come to his home, where he was having trouble awakening his

15-year-old child who was known to have a drug problem. The father, Larry Furio, was able to

awaken his child, who told his father that he hadn’t taken any drugs. Then the paramedics

arrived. At that time, Furio sought to reassure them that his son was okay and that it was

probably just asthma causing his breathing problems. As related above, the paramedics left

without any specific assessment of the patient. They didn’t even take his vital signs and made

no report of their interaction. Hours later, the child was found unresponsive and ultimately died

of a drug overdose.

¶ 15 The plaintiff’s theory of liability was simply that the paramedics owed the decedent the

duty to examine, assess, and transport him to the hospital. At trial, Park Ridge was ensnared by

its earlier defense that it was entitled to immunity under the Tort Immunity Act (745 ILCS

10/6-105, 6-106 (West 2004)) because it had “provided no medical care of any kind, including

evaluation, assessment, diagnosis, treatment, or documentation.” Abruzzo, 2013 IL App (1st)

122360, ¶ 33. This argument persuaded the supreme court to rule that the city wasn’t entitled to

immunity if it provided no treatment. The case was remanded for trial, where a jury signed a

general verdict, rejecting Park Ridge's arguments that the child was responsible for his own

death, due to ingestion of narcotics, and that his father was also to blame for failing to give an

accurate history to the paramedics.

¶ 16 ANALYSIS

¶ 17 We review the trial court’s order granting summary judgment de novo. Weather-Tite, Inc.

v. University of St. Francis, 233 Ill. 2d 385, 389 (2009). Summary judgment is proper where

the pleadings, admissions, depositions, and affidavits demonstrate that there is no genuine

issue of material fact and that the movant is entitled to judgment as a matter of law. Ioerger v.

Halverson Construction Co., 232 Ill. 2d 196, 201 (2008); 735 ILCS 5/2-1005 (West 2016). In

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determining whether a genuine issue of material fact exists, the court must consider such items

strictly against the movant and liberally in favor of its opponent. Williams v. Manchester, 228

Ill. 2d 404, 417 (2008).

¶ 18 The construction of an insurance policy and a determination of the rights and obligations

thereunder are questions of law for the court that are appropriate subjects for disposition by

way of summary judgment. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156

Ill. 2d 384, 391 (1993). Duties of an insured are controlled by the terms and conditions of its

insurance contract. American Country Insurance Co. v. Bruhn, 289 Ill. App. 3d 241, 247

(1997). In construing an insurance policy, the primary function of the court is to ascertain and

enforce the intentions of the parties as expressed in the agreement. Outboard Marine Corp. v.

Liberty Mutual Insurance Co., 154 Ill. 2d 90, 108 (1992). All provisions of an insurance

contract should be read together to determine whether any ambiguity exists. General

Insurance Co. of America v. Robert B. McManus, Inc., 272 Ill. App. 3d 510, 514 (1995). If the

words in the policy are unambiguous, a court must afford them their plain, ordinary, and

popular meaning. Insurance Co. of Illinois v. Stringfield, 292 Ill. App. 3d 471, 473-74 (1997).

But if the words in the policy are susceptible to more than one reasonable interpretation, they

are ambiguous and will be construed in favor of the insured and against the insurer who drafted

the policy. Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352, 363

(2006); Outboard Marine Corp., 154 Ill. 2d at 108-09.

¶ 19 During the briefing process in the trial court, Clarendon filed a supplementary brief that

focused on the aforementioned “Products-Completed Operations Hazard” and argued that the

City’s “work” on the struggling child had been “completed” when the paramedics first left the

residence. It was on this basis that the trial court ruled that the “aggregate” coverage applied. In

so doing, it plainly ignored the language in the policy that directly covered the paramedics’

failure to provide any treatment. Specifically, in the coverage that was not subject to the

aggregate, Clarendon was to pay up to $2 million, per occurrence, for “incidental medical

malpractice *** which should have been rendered *** by any duly qualified medical

practitioner, nurse or technician employed by *** the Insured.” (Emphases added.) Thus, the

only reasonable construction of this insurance contract is that the failure to assess, treat, and

transport the child by the paramedics and emergency medical technicians (EMTs) is not

subject to the aggregate amount. We further observe that while the parties only use the term

“paramedics” in their briefs, our supreme court opinion makes it clear that Park Ridge

“dispatched a fire engine and an ambulance staffed by emergency medical technicians

(EMTs), paramedics, and firefighters.” Abruzzo, 231 Ill. 2d at 328. Therefore, as the language

in the policy related to “Incidental Medical Malpractice” specifically mentions “duly qualified

medical practitioner[s]” and “technicians,” the presence of paramedics and EMTs squarely

invokes this provision, which is plainly subject to the per occurrence, not aggregate, coverage.

¶ 20 In light of our determination that this is a case of inaction on the part of Park Ridge’s

paramedics and EMTs, we are unpersuaded by Clarendon’s reliance on cases finding no

liability in the latter instances. Cf. Baker v. National Interstate Insurance Co., 103 Cal. Rptr.

3d 565 (Ct. App. 2009) (where the court concluded that the “products-completed operations

hazard” provision excluded coverage for injuries arising from the insured’s negligent work off

premises, i.e., the inspection of a bus); State Auto Property & Casualty Insurance Co. v.

Midwest Computers & More, 147 F. Supp. 2d 1113, 1117 (W.D. Okla. 2001) (where the court

determined that the “products-completed operations hazard” provision provided coverage only

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if the work was completed, but since the insured sought damages for loss of computer data

during the time services were still being provided, the damages were not covered under the

policy as the work was still ongoing).

¶ 21 Even if we were to attempt to apply the “Products-Completed Operations Hazard”

language to these circumstances, we would still construe this provision in favor of the insured

as we must. While Illinois courts have not previously addressed this issue, courts in other states

have held that the term “products-completed operations hazard” generally applies to

construction activities, maintenance, and related trades, not to professional services, such as

EMTs or paramedics. For instance, in American Red Cross v. Travelers Indemnity Co. of

Rhode Island, 816 F. Supp. 755 (D.D.C. 1993), the district court held that HIV-contaminated

blood claims did not fall within the scope of the “completed operations hazard” provision of

the insurance policy, and thus, the aggregate limit of the provision was inapplicable to the

claim because each act of distribution constituted a separate “occurrence” under the policy.

The court reasoned that the plain language of this provision did not apply to professional

services contracts, such as medical personnel, but was “intended to apply to construction and

maintenance work, such as work performed on the premises of others by contractors and

subcontractors.” Id. at 760; See Visteon Corp. v. National Union Fire Insurance Co. of

Pittsburg, PA, 777 F.3d 415, 420-21 (7th Cir. 2015) (the Seventh Circuit noted that most courts

have interpreted “completed operations hazard” narrowly to refer to “accidents caused by

defective workmanship which arise after completion of work by the insured on construction or

service contracts” (internal quotation marks omitted)); Hydro Systems, Inc. v. Continental

Insurance Co., 929 F.2d 472, 477 (9th Cir. 1991) (the Ninth Circuit observed that

products-completed operations hazard exclusions generally arise after completion of work by

the insured on construction or service contracts); Visteon Corp. v. National Union Fire

Insurance Co. of Pittsburg, PA, 30 F. Supp. 3d 792, 798-99 (S.D. Ind. 2014) (the court

concluded that the references in products-completed operations hazard provision to “ ‘another

contractor or subcontractor’ and ‘job site’ reflect that this provision is intended to cover offsite

contractor work,” not environmental contamination claims); HVAW v. American Motorists

Insurance Co., 968 F. Supp 1178, 1183 (N.D. Tex. 1997) (the court noted that

products-completed operations hazard “generally applies to construction activities,

maintenance, and related trades,” and thus, the insured’s legal services did not fall under this

provision).

¶ 22 We find the above case law persuasive and any fair reading of the “Products-Completed

Operations Hazard” provision at issue (which is specifically included in aggregate coverage)

has everything to do with construction operations undertaken by Park Ridge and nothing to do

with a failure of treatment and transport by their EMTs and paramedics. Accordingly, the trial

court erred in granting summary judgment to Clarendon.

¶ 23 CONCLUSION

¶ 24 Based on the foregoing, we reverse the judgment of the circuit court of Cook County in

Clarendon’s favor and remand the case for the trial court to enter summary judgment for

plaintiffs Park Ridge and HELP.

¶ 25 Reversed and remanded.

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