Equitable Contribution
The trial court denied plaintiff’s, American States Insurance Company (American States), motion for summary judgment. In denying summary judgment, the court ordered American States to pay Michigan Mutual Insurance Company (Michigan Mutual) half of the settlement that Michigan Mutual paid to International Decorators (International). American States appealed.
CFM Construction Company (CFM) is a general contractor. CFM subcontracted with NF Construction(NF) to provided services for a project in Libertyville, Illinois. American States was the insurer for NF and upon the beginning of the project, CFM was added to the policy. Then, CFM subcontracted with International. International was insured by Michigan Mutual and CFM was added as an additional insured to that policy as well.
The suit arose when an employee of International, Francisco Flores, was injured at the construction site. Flores filed a negligence action against CFM and NF, separately. Michigan Mutual provided the defense for CFM, however American States refused to take part in the defense. American States then filed a declaratory judgment seeking no duty to defend CFM. The trial court disagreed with American States and held that they had a duty to defend CFM.
In the meantime, Flores settled with NF and CFM, rendering Michigan Mutual responsible for $700,000. American States refused to pay any amount on behalf of CFM. Michigan Mutual then filed suit against American States claiming breach of duty to defend and indemnify Flores. Michigan Mutual argued that American States should reimburse based upon the other insurance clause in the policy, and further under the equitable contribution provision in the policy. CFM hired NF to supervise the construction, therefore both American States and Michigan Mutual insured the same risks. When two insurance companies insure the same risk, both companies are equally responsible for the contractual obligations of the policies. On the doctrine of equitable contribution, American States is required to split the costs with Michigan Mutual, for a sum of $350,00 (half of the $700,000 settlement).
American States Ins. Co. v. CFM Const. Co. 398 Ill.App.3d 994, 923 N.E.2d 299 Ill.App. 2 Dist.,2010. January 12, 2010
