Within the Policy’s Coverage, Is There a Duty to Defend?
Defendant (Pulte Home Corporation, a homebuilding company) turned over its defense in a bodily injury lawsuit with Kenneth Kaiser to Pekin Insurance Company. Pekin had issued a policy to Kunde Construction Pulte was named as an additional insured under the policy. Pekin did not provide a defense to Pulte. The additional insured provision of the policy did not provide coverage for Pulte’s own acts or omissions or those in which Pulte played a role. The trial court found that Pekin had a duty to defend Pulte in the Kaiser lawsuit.
Pekin argued no duty to defend because the underlying complaint did not allege that Pulte is “solely liable”. Pekin claimed that Pulte only faces direct liability for its own allegedly negligent conduct and not vicarious liability for the negligent acts of Kunde Construction. The complaint it the underlying case alleged that “defendants by and through their agents, servants and employees” were guilty of one or more careless or negligent acts or omissions that were the cause of Kaiser’s injuries. This triggered Pekin’s argument that the liability alleged against Pulte is independent of any liability alleged against Kunde. Since Kaiser did not allege that Pulte is solely liable because of some act or omission of Kunde, the additional insured coverage does not extend to Pulte in this case.
Pekin argued therefore that since Pulte is not considered an additional insured under the policy and therefore had no duty to defend. However, the court disagreed with this argument based upon the allegations “potential” to fall within the coverage of the policy. Further, in the contract between Pulte and Kunde, Kunde agreed to defend and indemnify Pulte only with respect to liability incurred solely as a result of some act or omission and not for its own independent negligence or statutory violation.
The court found that Pekin does have a duty to defend Pulte in the underlying litigation because there are facts in the allegations which bring the case within or potentially within the policy’s coverage. The court emphasized “potentially” within the policy’s coverage.
Because of the language in the subcontract between Kunde Construction and Pulte in conjunction with the pleadings in the underlying case, the court found that there was a possibility that Pulte could be held solely liable for Kunde’s conduct. Therefore, this type of conduct would be covered under the policy and Pekin would have a duty to defend.
