                                     2016 IL App (1st) 152036
                                           No. 1-15-2036
                                     Opinion filed June 30, 2016
                                                                                   Second Division


                                               IN THE

                                  APPELLATE COURT OF ILLINOIS

                                          FIRST DISTRICT


                                                        )
     BRIAN HARWELL,                                           Appeal from the Circuit Court
                                                        )
                                                              of Cook County.
                                                        )
           Plaintiff-Appellant,
                                                        )
                                                        )
     v.                                                       No. 13 CH 24479
                                                        )
                                                        )
     FIREMAN’S FUND INSURANCE COMPANY
                                                        )
     OF OHIO and KIPLING DEVELOPMENT                          The Honorable
                                                        )
     CORPORATION,                                             Diane J. Larsen,
                                                        )
                                                              Judge, presiding.
                                                        )
           Defendants-Appellees.
                                                        )


           JUSTICE HYMAN delivered the judgment of the court, with opinion.
           Presiding Justice Pierce and Justice Simon concurred in the judgment and opinion.

                                                OPINION

¶1         Plaintiff Brian Harwell appeals from the trial court’s grant of summary judgment in favor

     of defendant Fireman’s Fund, Inc., which insured Kipling Development Corporation. A jury

     found Kipling, as general contractor, negligent in supervising the construction site where

     Harwell was injured. Fireman’s Fund refused to pay damages to Harwell, an employee of a

     subcontractor, claiming that Kipling had not complied with an endorsement to the insurance

     policy. Because equitable principles estop Fireman’s Fund from asserting that endorsement
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     against Harwell, we hold that the trial court erred in granting summary judgment for Fireman’s

     Fund and should have granted summary judgment to Harwell.

¶2                                          BACKGROUND

¶3          In 2006, Kipling was building a home in Will County, Illinois. As general contractor,

     Kipling hired subcontractors to handle specific aspects of the job, including Speed-Drywall and

     United Floor Covering. When service technician Brian Harwell entered the site to replace a

     furnace filter, the stairs leading from the first floor to the basement collapsed beneath Harwell,

     sending him falling into the basement. Harwell sustained injuries and filed suit against Kipling as

     the general contractor of the building site. He alleged that Kipling was negligent in failing to

     properly supervise and direct construction and failing to furnish Harwell with a safe workspace

     and a safe stairway. Harwell also sued Speed-Drywall and United Floor Covering, alleging they

     had modified or failed to secure the stairwell. In September 2007, Kipling’s attorneys (paid for

     by Fireman’s Fund, as the insurance company had a duty to defend Kipling) filed an answer to

     Harwell’s interrogatories stating that Kipling had liability insurance with Fireman’s Fund

     Insurance Company, and that the maximum liability limit under the policy was $1 million.

¶4          Kipling’s policy with Fireman’s Fund included an endorsement requiring Kipling to

     obtain certificates of insurance and hold harmless agreements from all subcontractors. If Kipling

     failed to do so “at the time of an ‘occurrence’ involving a subcontractor,” then Fireman’s Fund

     would pay a maximum of $50,000 for all damages and defense costs due to any “bodily injury”

     “arising out of any covered acts” of the subcontractor. In 2008, after Kipling’s attorneys had

     answered Harwell’s interrogatories, Fireman’s Fund sent Kipling a series of letters informing

     Kipling that, because Kipling had failed to comply with the endorsement, the limits of Fireman’s

     Fund’s liability had been reduced to $50,000 from $1 million. Fireman’s Fund reiterated this


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     position in 2011. But Kipling’s attorneys (who also represented Fireman’s Fund) did not amend

     the interrogatory answer to reflect this change, and Harwell’s attorneys had no knowledge of the

     change.

¶5          In 2012, the matter went to jury trial against only Kipling, with Kipling’s defense funded

     by Fireman’s Fund. Harwell argued that the drywall contractor damaged the staircase, while

     Kipling’s counsel argued that the flooring contractor was responsible. Harwell prevailed. The

     jury found Kipling negligent and awarded $255,186 in damages. (United Floor Covering had

     been dismissed without prejudice, and Speed-Drywall settled with Harwell for $45,000 (reducing

     Kipling’s damages by that amount)).

¶6          Kipling went out of business and had no assets to satisfy the judgment. In 2013, Harwell

     brought suit for declaratory judgment against Kipling and Fireman’s Fund, asking for a

     declaration that Fireman’s Fund’s policy on Kipling covered Harwell’s damages. In response,

     Fireman’s Fund alleged that the endorsement limited its liability to $50,000, and the $50,000

     limit had been reached in paying for Kipling’s defense.

¶7          Both parties moved for summary judgment. The trial court granted Fireman’s Fund’s

     motion.

¶8                                     STANDARD OF REVIEW

¶9          We review a trial court’s grant of summary judgment de novo. Argonaut Midwest

     Insurance Co. v. Morales, 2014 IL App (1st) 130745, ¶ 14. Summary judgment may be granted

     where there is no triable issue of material fact and the movant is entitled to judgment as a matter

     of law. 735 ILCS 5/2-1005(c) (West 2010). Genuine issues of material fact exist where the

     material facts are disputed or, if undisputed, reasonable persons might draw different inferences

     from those facts. Id.


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¶ 10                                             ANALYSIS

¶ 11          Years before Harwell asked Fireman’s Fund to pay the damages for his accident–indeed,

       years before Harwell litigated a jury trial to determine Kipling’s negligence for the accident–

       Fireman’s Fund had already informed Kipling that it was limiting its liability to $50,000. Yet

       Kipling’s lawyers (paid for by Fireman’s Fund, as required by its policy with Kipling), who had

       earlier told Harwell that the policy limit was $1 million, failed to inform Harwell of this material

       change in position. This violated Illinois Supreme Court Rule 213(i) (eff. July 1, 2002), which

       states that “[a] party has a duty to seasonably supplement or amend any prior answer or response

       whenever new or additional information subsequently becomes known to that party.”

¶ 12          Our supreme court has instructed that their rules “are not mere suggestions. Rather, they

       have the force of law, and the presumption must be that they will be obeyed and enforced as

       written.” People v. Houston, 226 Ill. 2d 135, 152 (2007). The disclosure requirements of Rule

       213 are mandatory and subject to strict compliance by the parties. Sullivan v. Edward Hospital,

       209 Ill. 2d 100 (2004). To allow a party to ignore its plain language “defeats its purpose and

       encourages tactical gamesmanship.” Clayton v. County of Cook, 346 Ill. App. 3d 367, 378

       (2003). Enforcing the rule may even go so far as to reverse a jury verdict and remand for a new

       trial. See, e.g., Copeland v. Stebco Products Corp., 316 Ill. App. 3d 932, 946 (2000).

¶ 13          The impact of this violation is obvious: had Harwell known in 2008 that Fireman’s Fund

       was limiting its liability to only $50,000, he could have sought settlement with Kipling or

       changed his trial strategy. It does Fireman’s Fund no good to argue that it owed its duty to

       disclose only to Kipling, its insured; Harwell was the opposing party in the original lawsuit,

       Fireman’s Fund was controlling Kipling’s defense, and Fireman’s Fund therefore had a duty to

       be forthcoming under supreme court rules. Nor does it help to argue that Fireman’s Fund


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       answered the interrogatory accurately because the original policy did have a limit of $1 million;

       the asserted limit of $50,000 qualified as “additional” information that Fireman’s Fund should

       have disclosed through Kipling because it represented the maximum liability limit under the

       policy. The $1 million figure was no longer accurate.

¶ 14          Instead of disclosing this information, Fireman’s Fund went forward with trial, handling

       Kipling’s defense. At oral argument, Fireman’s Fund’s counsel admitted that no matter what the

       outcome at trial, Fireman’s Fund would not have paid out on the policy (because of the

       endorsement limiting liability to $50,000 due to subcontractor involvement in Harwell’s injury).

       In other words, by not supplementing the interrogatory, Kipling and Fireman’s Fund’s counsel

       fashioned a “heads I win, tails I win” outcome. But, like so many best-laid plans, this one

       backfired.

¶ 15          Fireman’s Fund’s agenda seems clear: deny coverage to Kipling, control the flow of

       information to Harwell, fight Harwell tooth and nail through the original case, and after losing

       the trial–reveal the endorsement. This smacks of sandbagging, which we do not condone.

       Instead, we find that equity demands that Fireman’s Fund be estopped from asserting the

       endorsement against Harwell. This adheres to a fundamental maxim of the common law, which

       applies when dealing with improper discovery disclosures–a party should not be permitted to

       take advantage of a wrong, which he or she has committed.

¶ 16          Estoppel is a defensive action that will “prevent a party’s disavowal of previous conduct

       if such repudiation would not be responsive to the demands of justice and good conscience.”

       (Internal quotation marks omitted.) Nationwide Mutual Insurance Co. v. Filos, 285 Ill. App. 3d

       528, 533 (1996). More specifically, it “prevents the assertion of a contractual condition by a

       party who, through words or conduct, has fostered the impression that the condition will not be


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       asserted as a legal defense.” Id. A party claiming the benefit of an estoppel must show reasonable

       reliance on the acts of the other party, without “knowledge or convenient means” of learning the

       truth. National Ben Franklin Insurance Co. v. Davidovitch, 123 Ill. App. 3d 88, 93 (1984). The

       reliance must have resulted in prejudice or detriment. Id. Here, Fireman’s Fund represented to

       Harwell in the answer to interrogatories that Kipling’s insurance policy had a liability limit of $1

       million. Afterwards, Fireman’s Fund changed its position on the liability limit but did not tell

       Harwell, who was relying on Fireman’s Fund’s truthful representations while it was handling

       Kipling’s defense. Harwell relied on this to his detriment and Fireman’s Fund is now preventing

       him from collecting his damages.

¶ 17          Typically, this doctrine of estoppel attaches when an insurance company withholds

       information from, or misleads, the insured party. See, e.g., RLI Insurance Co. v. Illinois National

       Insurance Co., 335 Ill. App. 3d 633, 645 (2002). Here, Kipling was the insured and Farmer’s

       Fund informed Kipling early on about the endorsement’s effect on the liability limit. But Kipling

       went out of business at some point in the litigation and in any event seemed to play no role in

       either suit. It was Harwell who needed to know about the endorsement and the liability limit to

       make informed decisions about the litigation, and Harwell to whom Kipling’s attorneys–the ones

       paid for by Fireman’s Fund–owed a duty to supplement the interrogatory under supreme court

       rules. Broad principles of equity–the desire to prevent fraud and injustice—dictate that Fireman’s

       Fund should not benefit from its attempted ruse.

¶ 18          Given we reverse, we need not address the parties’ other arguments.

¶ 19          Reversed and remanded.




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