                          NO. 4-06-0589       Filed 3/19/07

                     IN THE APPELLATE COURT

                           OF ILLINOIS

                         FOURTH DISTRICT

COUNTRY MUTUAL INSURANCE COMPANY,      )    Appeal from
          Plaintiff-Appellee,          )    Circuit Court of
          v.                           )    Piatt County
STEVE CARR, d/b/a CARR CONSTRUCTION,   )    No. 04L15
          Defendant-Appellant,         )
          and                          )
JON SEEVERS; SEEVERS FARM DRAINAGE,    )
INC.; RUTH ROLLINGS; and DANA BOWYER, )
          Defendants,                  )
          and                          )
STEVE CARR, d/b/a CARR CONSTRUCTION,   )
          Third-Party Plaintiff,       )
          v.                           )    Honorable
HAROLD VOGELZANG,                      )    John P. Shonkwiler,
          Third-Party Defendant.       )    Judge Presiding.
_________________________________________________________________

          JUSTICE KNECHT delivered the opinion of the court:

          On an unspecified date, defendant Steve Carr, d/b/a

Carr Construction, filed an insurance claim with plaintiff

Country Mutual Insurance Company (Country Mutual) with whom he

had a commercial general liability (CGL) policy.   Country Mutual

denied coverage of the claim and, in May 2004, filed a

declaratory-judgment action (case No. 04-L-15) seeking a ruling

it had no duty under the insurance policy to defend or indemnify

defendant.

          In March 2006, Country Mutual asked for leave to file a

third amended complaint for declaratory judgment against

defendant, which the trial court allowed.   In that third amended
complaint, Country Mutual argued it had no duty to defend or

indemnify Carr because (1) the CGL policy excludes damage to

Carr's own work and (2) it alleged no "occurrence" as defined by

the policy.   That same month, Country Mutual renewed its motion

for judgment on the pleadings in case No. 04-L-15.    At the

hearing on the motion for judgment on the pleadings, Country

Mutual's attorney only argued the third amended complaint failed

to allege an "occurrence" as defined by the CGL policy.    Country

Mutual's attorney conceded Country Mutual could no longer rely on

the CGL policy's "own-work" exclusion because the complaint in

the underlying case alleged that a subcontractor may have

performed the work that caused the alleged damage.

          In June 2006, the trial court granted Country Mutual's

renewed motion for judgment on the pleadings.   Carr appeals,

arguing the alleged damage in the underlying case (case No. 04-L-

8) resulted from an "occurrence" covered by his insurance policy

through Country Mutual.   We reverse and remand.

                           I. BACKGROUND

          On an unspecified date, Ruth Rollings and Dana Bowyer

filed a lawsuit (case No. 04-L-8) against Carr.    The record does

not contain a copy of this initial complaint.   Later, Rollings

and Bowyer filed a nine-count third amended complaint against

Carr, John Seevers, and Seevers Farm Drainage, Inc.    Rollings and

Bowyer directed the first three counts of the complaint at Carr.


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Rollings and Bowyer sought $69,830.08 in damages.   Count I

alleged negligence against Carr, claiming either he or his agents

or employees:

          "negligently placed inappropriate backfill in

          and around the basement walls, and there and

          then negligently operated heavy earthmoving

          equipment near said walls resulting in the

          sudden movement of the basement walls, in

          turn resulting in damage to said basement

          walls, and to other portions of the

          residence."

Count II also alleged negligence against Carr.   However, in count

II, Rollings and Bowyer alleged Carr contracted with Jon Seevers,

and/or Seevers Farm Drainage, Inc., to backfill and grade around

the basement after the basement was completed.   According to

count II, Seevers and/or Seevers Farm Drainage, Inc., negligently

placed inappropriate backfill around the basement walls and then

negligently operated heavy earthmoving equipment close to the

basement walls, causing sudden movement and damage to the

basement walls.   Count III alleged Carr breached an implied

warranty to Rollings and Bowyer for the same conduct as was

alleged in count I and for failing to construct other portions of

the residence in a reasonably workmanlike manner.   Rollings and

Bowyer directed the other six counts of the complaint against Jon


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Seevers and Seevers Farm Drainage, Inc.

          In March 2006, Country Mutual renewed its motion for

judgment on the pleadings in case No. 04-L-15 after Rollings and

Bowyer filed their third-amended complaint in case No. 04-L-8.

According to the renewed motion, paragraph 7 of count II of the

underlying third amended complaint in case No. 04-L-8 alleged the

damage was caused by the negligence of subcontractor Jon Seevers

and/or Seevers Farm Drainage, Inc.    According to Country Mutual's

renewed motion for judgment on the pleadings:

               "This additional allegation could have

          the effect of negating the allegations

          contained in [p]aragraph 10 of the

          plaintiff's [s]econd [a]mended [c]omplaint

          for [d]eclaratory [j]udgment, which alleges

          the insurance policy in question barred

          coverage for damage to the insured's own

          work."

As a result, Country Mutual focused its arguments for a judgment

on the pleadings on whether an "occurrence" as defined by the

insurance policy in question took place.

          In May 2006, the trial court heard arguments on Country

Mutual's motion for judgment on the pleadings.   At the hearing,

the attorney for Country Mutual stated:

          "The cases I've cited in my various filings


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           in support of my [m]otion for [j]udgment on

           the [p]leadings make it clear that under

           Illinois law, a construction defect resulting

           from improper workmanship or poor

           construction practices does not constitute an

           occurrence within the definition of a

           standard commercial liability policy.   That's

           the basis of my argument, that there is no

           occurrence."

Later during the hearing, Country Mutual's attorney conceded the

policy's "own-work" exclusion, on which Country Mutual had

previously relied, was "negated by the allegation that the

subcontractor may have performed the work."

           The trial court allowed Country Mutual's motion for

judgment on the pleadings, finding no "occurrence."

           This appeal followed.

                              II. ANALYSIS

           Carr argues the third amended complaint in the

underlying case (case No. 04-L-8) alleges an "occurrence" covered

by his CGL policy through Country Mutual.

                          A. Standard of Review

           The standard of review for reviewing a trial court's

decision to grant a motion for judgment on the pleadings is de

novo.   Board of Trustees of the University of Illinois v. City of


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Chicago, 317 Ill. App. 3d 569, 571, 740 N.E.2d 515, 517 (2000).

The same is true for reviewing a trial court's interpretation of

an insurance policy.   Travelers Insurance Co. v. Eljer

Manufacturing, Inc., 197 Ill. 2d 278, 292, 757 N.E.2d 481, 491

(2001).   In this appeal, we must determine whether the trial

court erred in finding the complaint in the underlying case did

not allege an "occurrence."

               B. Insurance Company's Duty To Defend

           The underlying issues in case No. 04-L-15 from which

this appeal arises are whether Country Mutual has a duty to

defend and possibly indemnify Carr in case No. 04-L-8.    An

insurance company's duty to defend its policyholder is much

broader than its duty to indemnify that same policyholder.

Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.

2d 90, 125, 607 N.E.2d 1204, 1220 (1992).    To determine whether

an insurance company has a duty to defend, the court must compare

the allegations in the underlying complaint to the language of

the insurance policy at issue.     Outboard Marine Corp., 154 Ill.

2d at 125, 607 N.E.2d at 1220.    In so doing, the court must give

the allegations in the complaint a liberal construction in favor

of the insured.   Outboard Marine Corp., 154 Ill. 2d at 125, 607

N.E.2d at 1220.   Further, the court must liberally construe the

provisions of the insurance policy in favor of coverage.       State

Security Insurance Co. v. Burgos, 145 Ill. 2d 423, 438, 583


                                 - 6 -
N.E.2d 547, 554 (1991).   After giving both the allegations in the

complaint and the provisions of the policy a liberal construction

in favor of the insured having coverage, the court must determine

if the "allegations fall within, or potentially within, the

policy's coverage."   (Emphasis in original.)     Outboard Marine

Corp., 154 Ill. 2d at 125, 607 N.E.2d at 1220.     If the court

finds this to be so, "the insurer has a duty to defend the

insured against the underlying complaint."      Outboard Marine

Corp., 154 Ill. 2d at 125, 607 N.E.2d at 1220.     Even if only one

of several theories of recovery put forward by a plaintiff is

within the potential coverage of the policy, the insurer has a

duty to defend the insured on all theories of recovery.      National

Union Fire Insurance Co. of Pittsburgh, Pennsylvania v. Glenview

Park District, 158 Ill. 2d 116, 124, 632 N.E.2d 1039, 1042-43

(1994).   However, even if an insurer has a duty to defend,

whether the insurer will have a duty to indemnify the insured

will only be ripe for determination after the insured has

incurred liability in the underlying claim against it.      Outboard

Marine Corp., 154 Ill. 2d at 127, 607 N.E.2d at 1221.

          C. Relevant Policy Provisions and Their Meanings

           According to the general-coverage provision of the CGL

policy at issue in this case:

           "This insurance applies to 'bodily injury'

           and 'property damage' only if:


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                (1) The 'bodily injury' or 'property

          damage' is caused by an 'occurrence' that

          takes place in the 'coverage territory'; and

                (2) The 'bodily injury' or 'property

          damage' occurs during the policy period."

The CGL policy at issue in this case assigns definitions to

certain terms used in the policy.    According to these

definitions, the policy defines "property damage" as:

                "a. Physical injury to tangible

          property, including all resulting loss of use

          of that property.   All such loss of use shall

          be deemed to occur at the time of the

          physical injury that caused it; or

                b. Loss of use of tangible property that

          is not physically injured.     All such loss of

          use shall be deemed to occur at the time of

          the 'occurrence' that caused it."

The policy defines an "occurrence" as "an accident, including

continuous or repeated exposure to substantially the same general

harmful conditions."

          However, the CGL policy at issue does not define

"accident."   The term has been interpreted in different ways as

evidenced by our discussion below.     Therefore, the term

"accident" in the policy in question is ambiguous.     Eljer


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Manufacturing, 197 Ill. 2d at 293, 757 N.E.2d at 491.     As a

result, for purposes of determining whether the damage to

Rollings and Bowyer's residence is the result of an accident, we

must give the term a liberal construction in favor of coverage.

Burgos, 145 Ill. 2d at 438, 583 N.E.2d at 554.     One popular

dictionary defines an "accident" as follows:

          "1a: an unforeseen and unplanned event or

          circumstance b: lack of intention or

          necessity: CHANCE *** 2a: an unfortunate

          event resulting esp. from carelessness or

          ignorance b: an unexpected and medically

          important bodily event esp. when injurious

          *** c: an unexpected happening causing loss

          or injury which is not due to any fault or

          misconduct on the part of the person injured

          but for which legal relief may be sought ***

          3: a nonessential property or quality of an

          entity or circumstance ***."   Merriam

          Webster's Collegiate Dictionary 7 (11th ed.

          2003).

Courts have defined an accident as "an unforeseen occurrence,

usually of an untoward or disastrous character or an undesigned

sudden or unexpected event of an inflictive or unfortunate

character."   Aetna Casualty & Surety Co. v. Freyer, 89 Ill. App.


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3d 617, 619, 411 N.E.2d 1157, 1159 (1980).   Some courts have also

stated that the "natural and ordinary consequences of an act do

not constitute an accident."   Aetna Casualty & Surety Co., 89

Ill. App. 3d at 619, 411 N.E.2d at 1159; see also State Farm Fire

& Casualty Co. v. Tillerson, 334 Ill. App. 3d 404, 409, 777

N.E.2d 986, 990 (2002); Monticello Insurance Co. v. Wil-Freds

Construction, Inc., 277 Ill. App. 3d 697, 703, 661 N.E.2d 451,

455 (1996).

           The Supreme Court of Illinois has stated a court should

not determine whether something is an accident by looking at

whether the actions leading to the damage were intentionally

done.   According to the court, the real question is whether the

person performing the acts leading to the result intended or

expected the result.   If the person did not intend or expect the

result, then the result was the product of an accident.   United

States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill.

2d 64, 77-78, 578 N.E.2d 926, 932 (1991); see also Yates v.

Bankers Life & Casualty Co., 415 Ill. 16, 19, 111 N.E.2d 516,

517-18 (1953); Lyons v. State Farm Fire & Casualty Co., 349 Ill.

App. 3d 404, 409, 811 N.E.2d 718, 723 (2004).   We apply this

definition to the CGL policy at issue in this case.

                        D. Property Damage

           To determine if the CGL policy applies to a claim in

which a third party is seeking damages against the insured, the


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trial court must first determine if the third party has suffered

"bodily injury" or "property damage" as defined by the policy.

At issue in this case is whether Rollings and Bowyer suffered

"property damage."

           Rollings and Bowyer allege in the underlying complaint

in case No. 04-L-08 that the negligent actions of defendant, his

employees, agents, and/or subcontractors resulted in damage to

their basement walls and other parts of the residence.   They do

not allege they only suffered intangible property losses, such as

an economic loss, which courts do not usually consider "property

damage."   Viking Construction Management, Inc. v. Liberty Mutual

Insurance Co., 358 Ill. App. 3d 34, 42, 831 N.E.2d 1, 6-7 (2005).

They allege physical injury to tangible property, their basement

walls.   This falls within the broad definition of "property

damage" given by the policy.

                            E. Occurrence

           If property damage occurred, the trial court must then

determine if that property damage resulted from an "occurrence"

as defined by the policy.   In the underlying complaint in case

No. 04-L-8, the two negligence counts against Carr simply allege

that either Carr himself, his agents or employees, or his

subcontractor used inappropriate backfill around the basement

walls and then negligently operated heavy earthmoving equipment

immediately adjacent to the basement walls.   The counts allege


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these activities resulted in the sudden movement of the basement

walls.   The counts further allege the movement of the walls

resulted in damage to those same walls and other parts of the

residence.   The underlying complaint does not contain allegations

that defendant, his employees or agents, or subcontractors

intended or expected, by their use of allegedly inappropriate

backfill material or their allegedly negligent operation of heavy

earthmoving equipment near the basement walls, that the walls

would move or be damaged.   Under our supreme court's definition

of what constitutes an "accident," the allegations of the

complaint in case No. 04-L-8 allege an "accident."

           As a result, we find the allegations in the underlying

complaint describe an "occurrence" as defined by the policy at

issue.   The allegations in counts I and II of the underlying

complaint fall within the provisions of the general coverage

provisions of the policy at issue.

                       F. Policy Exclusions

           Because the policy's definitions for "occurrence" and

"property damage" are so broad, it would appear the policy could

be in danger of being construed as something akin to a

performance bond.   Our supreme court has stated:

           "'[C]omprehensive general liability policies

           *** are intended to protect the insured from

           liability for injury or damage to the persons


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          or property of others; they are not intended

          to pay the costs associated with repairing or

          replacing the insured's defective work and

          products, which are purely economic losses.

          [Citations.]   Finding coverage for the cost

          of replacing or repairing defective work

          would transform the policy into something

          akin to a performance bond.'"   Eljer

          Manufacturing, 197 Ill. 2d at 314, 757 N.E.2d

          at 503, quoting Qualls v. Country Mutual

          Insurance Co., 123 Ill. App. 3d 831, 833-34,

          462 N.E.2d 1288, 1291 (1984).

The policy in this case is not akin to a performance bond given

the "exclusions" section of the policy.   The "exclusions" section

excludes numerous types of injuries and liabilities that would

otherwise fall within the broad category of events to which this

insurance would apply.

          However, Country Mutual failed to identify any specific

exclusions contained in the underlying policy into which the

allegations in the underlying complaint would fall.    It is the

insurer's burden to affirmatively demonstrate the applicability

of an exclusion.   As a result, in the posture of this case,

Country Mutual will have to establish a policy exclusion applies

if it wants to avoid defending Carr in case No. 04-L-8.


                              - 13 -
                G. Authority Cited by Country Mutual

          Country Mutual cites several cases decided by other

districts of the Illinois Appellate Court in support of its

position that an occurrence did not take place in this case.    See

Indiana Insurance Co. v. Hydra Corp., 245 Ill. App. 3d 926, 615

N.E.2d 70 (1993); Wil-Freds, 277 Ill. App. 3d 697, 661 N.E.2d

451; Tillerson, 334 Ill. App. 3d 404, 777 N.E.2d 986; Viking, 358

Ill. App. 3d 34, 831 N.E.2d 1.   While these decisions are

relevant, they are not determinative of whether the alleged

negligent acts of defendant, his employees or agents, and his

subcontractor constitute an "occurrence" in the case at bar.

          Further, these cases are distinguishable from the

instant case as the underlying complaints in those cases alleged

contractual or warranty breaches, not negligence as in the

instant case.   See Hydra, 245 Ill. App. 3d at 929, 615 N.E.2d at

73; Wil-Freds, 277 Ill. App. 3d at 699, 661 N.E.2d at 452;

Tillerson, 334 Ill. App. 3d at 406, 777 N.E.2d at 988; Viking,

358 Ill. App. 3d at 36, 831 N.E.2d at 2.   This is not to say that

a breach-of-contract claim can never allege an "occurrence."

          Most important, while past decisions might help in

interpreting an insurance policy, a court must make the ultimate

determination in each case whether an "occurrence" took place

pursuant to the allegations in the underlying complaint and the

terms of the insurance policy at issue in that case.


                               - 14 -
                         III. CONCLUSION

          For the reasons stated, we reverse and remand the trial

court's judgment.

          Reversed and remanded.

          COOK and TURNER, JJ., concur.




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