                                                                               THIRD DIVISION
                                                                               September 30, 2008




1-07-1807

ZURICH AMERICAN INSURANCE COMPANY,                    )
                                                      )
               Plaintiff-Appellee,                    )              Appeal from the
                                                      )              Circuit Court of
                       v.                             )              Cook County.
                                                      )
KEY CARTAGE, INC., an Illinois Corporation, WEST      )
BEND MUTUAL INSURANCE COMPANY, a                      )
Wisconsin Corporation, TERRY G. WASHINGTON and )
SEVALA SALKIC, as Special Administrator of the Estate )
of Enes Salkic, Deceased,                             )              Honorable
                                                      )              Dorothy Kirie Kinnaird,
               Defendants-Appellant.                  )              Judge Presiding.



       JUSTICE QUINN delivered the opinion of the court:

       Defendants West Bend Mutual Insurance Company (West Bend), Key Cartage, Inc. (Key),

and Terry G. Washington appeal from an order of the circuit court of Cook County granting

summary judgment in favor of plaintiff, Zurich American Insurance Company (Zurich), in a

declaratory judgment action brought by Zurich to determine insurance coverage. The underlying

litigation, a wrongful death action arising from a fatal truck accident, was brought by the estate of

Enes Salkic against West Bend’s insureds, Key and Washington. The circuit court found that West

Bend owes the primary duty to defend and indemnify Key and Washington in the underlying

litigation. On appeal, we determine whether the circuit court properly granted summary judgment
1-07-1807

in favor of Zurich and against West Bend. Within this determination, as a matter of first impression,

we decide whether section 7-317(b)(2) of the Illinois Vehicle Code (625 ILCS 5/7-317(b)(2) (West

2006)) applies to insurance policies issued to commercial truckers. For the following reasons, we

reverse the decision of the circuit court.

                                        I. BACKGROUND

       This insurance coverage action has its origins in a motor vehicle accident that occurred on

October 31, 2002, and resulted in the death of Enes Salkic. At the time of the fatal truck accident,

Washington, an employee of Key, operated the truck. On December 8, 2003, Sevala Salkic, as

special administrator of the estate of Enes Salkic, filed suit in the circuit court of Cook County

against Key, Washington and Rose Cartage Services, Inc. (Rose), alleging that Washington’s

negligent operation of a tractor trailer caused the accident. The underlying plaintiff later amended

her complaint to add Franklin Truck Group, Inc. (Franklin), as a defendant. The underlying plaintiff

seeks damages in excess of $50,000.

       At the time of the accident, Key, Rose and Franklin were all part of a family-run business.

Key is an Illinois corporation with its principal place of business located in Highland, Indiana. Key

is a trucking company owned by Sharon and Corrie Frank. Essentially, Key operates as a “carrier-

for-hire.” Key specializes in hauling heavy oils and asphalt.

       Rose is an Illinois corporation with its principal place of business located in Lansing, Illinois.

Rose is a trucking company owned by David Bult, the brother of Sharon Frank. Like Key, Rose

operates as a “carrier-for-hire.” Rose primarily hauls salt, limestone and other material necessitating

dump trucks. Sharon Frank managed the day-to-day operations of both Key and Rose. Her duties


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included the leasing of equipment and the procuring of insurance coverage for equipment used by

both Key and Rose.

       Franklin is an Illinois corporation with its principal place of business located in Lansing,

Illinois. Franklin, owned by Sharon and Corrie Frank, is an equipment company that leases

semitrailer trucks to other companies. Franklin owned the truck involved in the underlying

accident. In April 1997, Franklin leased the truck, a 1997 Kenworth semitrailer tractor, to Rose.

       In the April 1997 lease agreement, Franklin agreed to give Rose exclusive use, possession

and control of the subject truck. Franklin, as lessor, agreed that “while the [truck] was being

operated for [the lessee, Rose], it shall be used exclusively in the business and service of [Rose] in

compliance with all applicable rules, regulations, instructions and tariffs applicable to [Rose].”

Franklin also agreed to furnish drivers to operate the equipment in question and warranted that those

drivers would be competent and qualified. Rose agreed that, during the term of the lease, “the said

vehicle equipment while being operated for [Rose], shall be solely and exclusively under the

direction and control of [Rose] who shall assume full common carrier responsibility to shippers and

the general public for loss or damage to cargo transported in such motor vehicle equipment and for

the operations of such motor vehicle equipment.”

       In addition, Franklin agreed that, during the term of the lease, it would obtain and maintain,

at its own cost, extensions of its public liability and property damage insurance in such companies

and in such amounts as approved by Rose. Furthermore, Franklin agreed to indemnify and “save

harmless” Rose against legal liability for any loss resulting from injury or death of such operating

personnel and any loss or damage to persons or property resulting from negligence, incompetence


                                                  3
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or dishonesty of any such operating personnel. The lease agreement also stated that Franklin “agrees

that [Rose] shall not be liable for any loss or damage to or destruction of said leased vehicle and

releases [Rose] from and against any claim or demand arising therefrom.” Finally, the lease

agreement stated that “[t]he operations to be conducted under this lease are limited to transportation

performable under the certificates of public convenience and necessity in I.C.C. Docket Number

MC-156863.”

        The subject truck was scheduled on Zurich policy number TRK2725644-00, issued to Rose,

and effective August 24, 2002 through August 24, 2003. The Truckers Coverage Form provides for

“Who Is An Insured” as follows:

                 "a. You for any covered ‘auto’.1

                 b. Anyone else while using with your permission a covered ‘auto’
                 you own, hire or borrow except:

                          (1) The owner or anyone else from whom you hire or borrow
                          a covered ‘private passenger type auto’.

                          (2) Your ‘employee’ or agent if the covered ‘auto’ is a
                          ‘private passenger type auto’ and is owned by that ‘employee’
                          or agent or a member of his or her household.

                          (3) Someone using a covered ‘auto’ while he or she is
                          working in a business of selling, servicing, repairing, parking
                          or storing ‘autos’ unless that business is yours.

                          (4) Anyone other than your ‘employees’, partners (if you are
                          a partnership), members (if you are a limited liability
                          company), a lessee or borrower or any of their ‘employees’,


       1
           The policy defines “auto” as a land motor vehicle, trailer or semitrailer designed for

travel on public roads.

                                                    4
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                         while moving property to or from a covered ‘auto’.

                         (5) A partner (if you are a partnership), or a member (if you
                         are a limited liability company), for a covered ‘private
                         passenger type auto’ owned by him or her or a member of his
                         or her household.

                 c. The owner or anyone else from whom you hire or borrow a
                 covered ‘auto’ that is a ‘trailer’ [including a semitrailer] while the
                 ‘trailer’ is connected to another covered ‘auto’ that is a power unit, or,
                 if not connected:

                         (1) Is being used exclusively in your business as a ‘trucker’;2
                         and

                         (2) Is being used pursuant to operating rights granted to you
                         by a public authority.

                 d. The owner or anyone else from whom you hire or borrow a
                 covered ‘auto’ that is not a ‘trailer’ while the covered ‘auto’:

                         (1) Is being used exclusive in your business as a ‘trucker’; and

                         (2) Is being used pursuant to operating rights granted to you
                         by a public authority.

                 e. Anyone liable for the conduct of an ‘insured’ described above but
                 only to the extent of that liability."

The Zurich policy also provides that “none of the following is an ‘insured’”:

                 "a. Any ‘trucker’ or his or her agents or ‘employees’, other than you
                 and your ‘employees’:

                         (1) If the ‘trucker’ is subject to motor carrier insurance
                         requirements and meets them by a means other than ‘auto’
                         liability insurance.


       2
           The policy defines “trucker” as “any person or organization engaged in the business of

transporting property by ‘auto’ for hire.”

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                        (2) If the ‘trucker’ is not insured for hired ‘autos’ under an
                        ‘auto’ liability insurance form that insures on a primary basis
                        the owners of the ‘autos’ and their agents and ‘employees’
                        while the ‘autos’ are being used exclusively in the ‘truckers’
                        business and pursuant to operating rights granted to the
                        ‘trucker’ by a public authority."

Zurich has alleged throughout the course of its declaratory judgment action that section a(2) of this

portion of the policy is a reciprocal coverage provision that bars omnibus coverage to Key and

Washington.

        The Zurich policy also includes an endorsement for an additional insured “as required by

contract/agreement,” although Franklin was not specifically listed on the schedule. Another

endorsement, entitled, “Hired Autos Specified As Covered Autos You Own,” included “all hired

autos under long-term contract,” although, again, Franklin was not specifically listed on the schedule.

There was no specific mention of Franklin as an insured in the entire Zurich policy. Zurich defended

Rose and Franklin in the underlying litigation pursuant to its policy.

        Key was insured by West Bend under policy number CPC0292437 04 and an umbrella policy

under policy number CPC0292438, effective June 1, 2002, through June 1, 2003. The truck

involved in the accident was not scheduled on either of the West Bend policies.

        In October 2002, Key had completed its asphalt hauling season and sought additional work

during what was typically considered to be a slow period for construction. Key entered into an oral

agreement to haul garbage for Navajo Transport (Navajo). Navajo had a central staging area where

it would bring all the trash from its route trucks, transfer the trash into trash-hauling trailers, and then

retain carrier-for-hire trucking companies to pull their trailers to various landfills. Key hired

Washington as one of its drivers approximately two weeks before the accident. At the time of the

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accident, Washington was driving the truck that struck the decedent’s automobile. Key had

borrowed the truck from Rose.

       By deposition, Corrie Frank testified regarding the usage of the truck on the date of the

accident:

                      "What we had is we had the leased Freightliners hauling

              asphalt and they had a higher fifth wheel than what we could use.

                      The assets we had available to us was with the Kenworths that

              had the lower profile fifth wheels and they also are equipped with

              hydraulics.

                      That unit [the subject truck] was just employed for a short

              period of time to go ahead and employ this [Navajo garbage hauling

              assignment]. The long term to this thing was to put the tractors back

              with Rose Cartage, because that’s where we used the hydraulics, for

              the dump trucks. And then we’d go out there and lease from

              PacLease or Penske the proper units that have -- would have probably

              the correct fifth wheel setup that doesn’t have hydraulics that we see

              out there because the units are used as a tipper to go into the landfill.

                      So the overall effect was that this was a two-term -- it was

              emergent -- it was an emergency or an on-the-spot thing because we

              had to do something immediately to employ the proper equipment.

                      And then in the long term if this was going to work out then


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1-07-1807

                 we could have still leased other equipment to fit the need for that."

In short, the truck that was leased by Franklin to Rose was borrowed by Key to haul waste on the

date of the accident. According to Corrie Frank, the truck was to be returned to Rose had the

accident not occurred.

        Sharon Frank testified by deposition that Rose did not receive any economic benefit from

Key’s oral agreement with Navajo to haul waste. She stated, “[a]ny time that truck rolled Franklin

benefitted unless, of course, we didn’t get paid for it. But at any time the truck rolled in theory it was

performing service for which it would be paid and of course, that would ultimately benefit Franklin.”

She further explained that “the whole way that the system was set up was that the equipment owners

in the end saw the income realized.” Although Key used the truck, Franklin bought the fuel, paid

maintenance and “whatever else came up.” Key’s signage and Illinois Commerce Commission

(ICC) placards were on the truck at the time of the accident so that shippers could identify Key as

the operator of the truck.3

        The affidavit of Sharon Frank stated that Key never paid Franklin for use of the truck

involved in the accident. The affidavit also stated that, “[b]ecause the tractor involved in the Salkic

accident was scheduled on the Zurich policy, it was [her] expectation that the Zurich policy would

provide primary coverage to Key for the Salkic lawsuit.” In addition, the affidavit stated that “[i]t

was Franklin Truck Group’s understanding that Franklin Truck Group was an additional insured on


        3
            Under section 18c-4701(1) and (2) of the Illinois Vehicle Code (625 ILCS 5/18c-

4701(1), (2) (West 2006)), Key’s placards and ICC registration constituted its operating rights by

a public authority.

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the Zurich policy issued to Rose Cartage based upon the ‘LESSOR-ADDITIONAL INSURED AND

LOSS PAYEE’ endorsement and the ‘HIRED AUTOS SPECIFIED AS COVERED AUTOS YOU

OWN’ endorsements of the Zurich policy.”

       An April 28, 2003, coverage opinion letter from West Bend’s counsel to West Bend’s senior

claim representative stated that West Bend “will have a primary duty to defend and indemnify Key

Cartage, Inc., as well as its driver, Terry Washington. Zurich’s policy will also serve as a co-primary

policy with your policy, and you will split all defense and indemnity obligations.” West Bend’s

counsel pointed out “a unique situation” because of the fact that West Bend issued a commercial

auto coverage form to Key, whereas Zurich issued a trucker’s coverage form to Rose. Each form

has a different “other insurance clause.” West Bend’s counsel noted the language from Zurich’s

“other insurance clause” provides excess coverage for any covered “auto” while hired or borrowed

from another trucker. West Bend’s “other insurance clause” provides excess coverage for any

covered “auto” not owned by Key. Because the policies contain “mutually repugnant other insurance

clauses” where the insurers are claiming to be excess carriers, the “other insurance” clauses from

both policies essentially “cancel each other out.” West Bend’s counsel stated for this reason, Zurich

and West Bend are co-primary insurers.

       Zurich initially filed its complaint for declaratory judgment on February 5, 2004, against Key,

West Bend, Washington and Salkic. On November 12, 2004, Zurich filed its first amended

complaint for declaratory judgment, in which it asserted that its policy requires reciprocal coverage

for the owners of vehicles it insures in exchange for coverage under its policy. Zurich noted that,

under the West Bend policy , a party other than Key or its employees is covered only while that party


                                                  9
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is using a covered auto. Zurich asserted that, because Rose was not using the vehicle at the time of

the accident, the West Bend policy does not provide reciprocal coverage and, therefore, Zurich was

precluded from coverage of Key and Washington as insureds for the underlying accident.

          West Bend counterclaimed, arguing that, because Key and Washington were using the

subject truck, which Rose had hired and given permission for Key to use, Key and Washington

qualify as insureds under Zurich’s policy section providing, “Who Is An Insured.” West Bend also

contended that Zurich’s reciprocal coverage provision violates Illinois public policy requiring the

insurer of a vehicle to provide primary insurance to the permissive user of said vehicle. West Bend

requested that the circuit court enter a declaratory judgment that Zurich owes a primary duty to

defend and indemnify Key and Washington.

          On October 31, 2005, Franklin and Rose were both voluntarily dismissed from the underlying

action.

          On June 27, 2006, counsel for West Bend entered into a stipulation agreement, which stated

that West Bend has not reserved its rights to deny coverage for the underlying action and is providing

a defense to Key and Washington. West Bend acknowledged its duty to indemnify Key and

Washington for any judgment entered against them in the underlying action subject to the limits of

liability in the West Bend policy. West Bend entered into the stipulation agreement without

prejudice to its contention that Zurich owes the primary duty to defend and indemnify Key and

Washington.

          On July 7, 2006, Zurich moved for summary judgment on all claims with respect to its first

amended complaint for declaratory judgment and against defendants on all claims as set forth in their


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amended counterclaims. West Bend, Key and Washington filed a cross-motion for summary

judgment on August 2, 2006.

       On October 26, 2007, the circuit court conducted a hearing on the parties’ cross-motions for

summary judgment. Initially, the parties agreed that there were no facts in dispute that would

prevent the court from deciding the cross-motions. Counsel for Zurich stated that there was a

provision within the lease agreement between Franklin and Rose that required Rose to provide

insurance to Franklin. Counsel for Zurich stated that, “pursuant to an additional insured endorsement

on the back of the Zurich policy there is an argument that Franklin qualified as an insured under the

Zurich policy.” Counsel for Zurich agreed that Sharon Frank did not procure insurance specifically

for Franklin.

       Zurich argued that its reciprocal coverage provision does not violate Illinois public policy.

Zurich contended that the Illinois Supreme Court’s holding in State Farm Mutual Automobile

Insurance Co. v. Universal Underwriters Group, 182 Ill. 2d 240 (1998), that a liability policy issued

to the owner of a vehicle must provide omnibus coverage to permissive drivers, was limited in scope

to the portion of the Illinois Vehicle Code encompassing the Safety and Family Financial

Responsibility Law (625 ILCS 5/7-100 et seq. (West 2006)) (Family Responsibility Law). Zurich

also argued that section 7-601(b)(2) of the Illinois Vehicle Code (625 ILCS 5/7-601(b)(2) (West

2006)), includes an exception to the requirement to provide omnibus coverage for “vehicles required

to file proof of liability insurance with the Illinois Commerce Commission.”

       The circuit court asked Zurich’s counsel if there was Illinois authority that determined

whether the omnibus coverage requirement applies to the Illinois Commercial Transportation Law


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(625 ILCS 5/18c-1101, et seq. (West 2006)). Counsel for Zurich replied, “no,” and stated that West

Bend gave far too expansive of an interpretation of the Universal Underwriters case. Zurich argued

that the Commercial Transportation Law, which governs trucks, is administered independently of

the Family Responsibility Law and, therefore, is a completely independent statutory scheme.

       The circuit court next questioned Zurich with respect to its reciprocal coverage provision.

The court stated:

                       "[C]an you tell me what in the world in the Zurich’s policy

               this Subsection (a)(2) means? That is written so obtusely. I had to

               read it back and forth a zillion times. What does that mean?"

Zurich explained that the reciprocal coverage provision says that any trucker, in this case, Key, who

fails to insure the owner of the truck, in this case, Franklin, on a primary basis and who is using the

truck for their exclusive use and pursuant to operating rights granted by the ICC must provide

reciprocal coverage to Franklin. Without reciprocal coverage provided by Key to Franklin, Zurich

is precluded from primary coverage for West Bend’s insureds.

       West Bend responded that, although no Illinois courts have addressed whether the omnibus

coverage requirement applies to commercial transportation vehicles, the Illinois Appellate Court,

Fourth District, in Pekin Insurance Co. v. Fidelity & Guaranty Insurance Co., 357 Ill. App. 3d 891

(2005), held that a business exclusion for coverage of a permissive user in the business of selling,

servicing, repairing, parking, or storing autos violated Illinois public policy. West Bend pointed out

that the Pekin Insurance case involved a tow truck towing a commercial van. In regard to whether

Zurich’s reciprocal coverage provision is ambiguous, West Bend asserted that the cases Zurich cited


                                                  12
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in support of its argument that the provision is unambiguous were not applicable because they did

not consider the validity or ambiguity of that provision.

       Zurich replied with respect to the holding in Universal Underwriters that “in the context of

what the court was addressing, it is an awful big stretch to suggest that they were ruling on this grand

basis that this provision was going to govern everything within the context of the vehicle code

because that is not what is before the court.” Zurich also argued that Pekin Insurance was not

applicable because that case involved a tow truck covered by an automobile insurance policy rather

than a commercial truck insurance policy.

       On June 5, 2007, the circuit court entered summary judgment in favor of Zurich on its first

amended complaint for declaratory judgment and in favor of Zurich on West Bend’s counterclaim

and defendants’ cross-motion for summary judgment. The court found:

               "(a)    the ‘reciprocal coverage’ provision in Zurich’s policy

                       is valid and unambiguous;

               (b)     since West Bend’s policy does not provide reciprocal

                       coverage to Franklin or Rose Cartage, no coverage is

                       afforded for Key Cartage or Washington under the

                        Zurich policy;

               (c)     at the time of the accident, the truck in question was

                        in the ‘exclusive use’ of Key Cartage and being used

                       pursuant to the ‘operating rights’ granted to Key

                       Cartage by a ‘public authority,’ here the Illinois


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                       Commerce Commission pursuant to 625 ILCS 5/18c-

                       4701(1) and (2); and

               (d)     Zurich’s policy does not violate public policy of the

                       State of Illinois, and neither section 5/7-317(b)(2)

                       [(625 ILCS 5/7-317(b)(2) (West 2006))] nor section

                       5/7-601(a) of the Family Responsibility Law apply to

                       Franklin, Rose Cartage or Key Cartage which were

                       operating at the time of the accident under the

                       jurisdiction of the Illinois Commerce Commission and

                       governed by the Illinois Commercial Transportation

                       Law. 625 ILCS 5/18c-1101, et seq."

Defendants timely appeal.

                                          II. ANALYSIS

       Defendants argue on appeal that: (1) Zurich’s reciprocal coverage provision is unenforceable

because it violates Illinois public policy; (2) section 7-601(b)(2) of the Illinois Vehicle Code does

not exempt insurance policies issued for commercial vehicles from the omnibus coverage

requirement; (3) Illinois authority supports the extension of omnibus coverage under Section 7-

317(b)(2) to West Bend’s insureds, Key and Washington; and (4) Zurich’s reciprocal coverage

provision cannot be enforced because it is ambiguous. Defendants request that this court reverse the

circuit court’s entry of summary judgment in favor of Zurich and enter summary judgment in favor

of defendants or, alternatively, reverse the circuit court’s judgment in favor of Zurich and remand


                                                 14
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this cause to the circuit court with directions to enter summary judgment in favor of defendants.

       Zurich responds that the circuit court did not err by granting summary judgment in Zurich’s

favor. Zurich asserts that its reciprocal coverage provision does not violate Illinois public policy.

Zurich argues that commercial trucking, specifically, “motor carriers of property,” are governed by

a separate and distinct regulatory scheme under the Commercial Transportation Law. Zurich

contends that section 7-601(b)(2) of the Family Responsibility Law specifically provides that

vehicles required to file proof of liability insurance with the ICC are exempt from the requirements

of section 7-317(b)(2) and instead are governed by the Commercial Transportation Law. In addition,

Zurich asserts that the circuit court properly ruled that the reciprocal coverage provision is

unambiguous, valid and enforceable.

                                      A. Standard of Review

       Summary judgment is granted properly where the pleadings, depositions, admissions and

affidavits, which are construed strictly against the moving party and liberally in favor of the

opponent (RLI Insurance Co. v. Illinois National Insurance Co., 335 Ill. App. 3d 633, 643 (2002)),

show there is no genuine issue as to any material fact and the moving party is entitled to judgment

as a matter of law. 735 ILCS 5/2-1005(c) (West 2006). Summary judgment is a drastic means of

disposing of litigation and should be allowed only when the right of the moving party is clear and

free from doubt. Travelers Insurance Co. v. Eljer Manufacturing, Inc., 197 Ill. 2d 278, 292 (2001);

Spirit of Excellence, Ltd. v. Intercargo Insurance Co., 334 Ill. App. 3d 136, 144-45 (2002). Reversal

of summary judgment is warranted if, on review, a material issue of fact or an inaccurate

interpretation of the law exists. Spirit of Excellence, 334 Ill. App. 3d at 145. Summary judgment


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and statutory construction matters are reviewed de novo. Midstate Siding & Window Co. v. Rogers,

204 Ill. 2d 314, 319 (2003); Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90,

102 (1992).

 B. Enforceability of Zurich’s Reciprocal Coverage Provision Pursuant to Illinois Public Policy

       Defendants assert Zurich’s argument that its reciprocal coverage provision is not subject to

the omnibus coverage requirement found in section 7-317(b)(2) is based upon a misinterpretation

of section 7-601(b)(2). Defendants point out that there is no dispute that policies of insurance issued

to commercial truckers such as Rose and Key are subject to the insurance provisions contained in

the ICC. Defendants argue that the Illinois Supreme Court on two occasions has ruled that the

omnibus coverage requirement of section 7-317(b)(2) applies throughout the Illinois Vehicle Code.

Defendants contend that the omnibus coverage requirement of section 7-317(b)(2) applies to the

insurance provisions pursuant to the Commercial Transportation Law, which is part of the Illinois

Vehicle Code.

       Zurich responds that the public policy concern regarding a permissive user of a motor

vehicle, who may borrow a vehicle and cause injury or damage to others, simply does not exist in

the intrastate trucking context. Zurich argues that defendants’ arguments are based upon the wrong

statutory scheme and should be rejected. Zurich contends that the Commercial Transportation Law,

not the Family Responsibility Law, governs operation of intrastate motor carriers of property such

as Key and Rose. Zurich asserts that, because Rose and Key were required to file proof of liability

insurance with the ICC in order to obtain the necessary registration numbers to operate on public

roadways as carriers of property for hire, the Commercial Transportation Law governs this dispute.


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       The supreme court in Universal Underwriters was the first to address the scope of section 7-

317(b)(2). The question before the Universal Underwriters court was “whether a car dealer’s garage

insurance policy covers the liability of a separately insured customer who is involved in an accident

while test-driving one of the dealer’s vehicles.” Universal Underwriters, 182 Ill. 2d at 241. During

a test-drive, the customer, Rodney Luckhart, negligently collided with another vehicle owned by

Vivian Carter, but operated by Raun Calinee. Luckhart had automobile liability coverage under a

policy issued by the plaintiff, which paid a total of $9,092.15 to Carter and Calinee for personal

injuries and property damage from the accident. The car dealership, Joyce Pontiac, was insured

under a garage policy issued by the defendant. The plaintiff sought reimbursement for the accident

from the defendant, alleging that the defendant’s policy afforded primary coverage to Luckhart while

test-driving Joyce Pontiac’s vehicle. The defendant argued that a test-driver was only “required by

law” to be insured if the test-driver did not have a liability insurance policy.

       Initially, the Universal Underwriters court noted the language included in section 7-317(a)

that defines the term “motor vehicle liability policy” and section 7-317(b)(2) as follows:

                       " ‘§ 7-317 “Motor vehicle liability policy” defined. (a)
               Certification. -- A “motor vehicle liability policy”, as that term is
               used in this Act, means an “owner’s policy” or an “operator’s policy”
               of liability insurance, certified as provided in Section 7-315 or
               Section 7-316 as proof of financial responsibility for the future ***.

                       (b) Owner’s Policy. -- Such owner’s policy of liability
                       insurance:

                       ***
                       2. Shall insure the person named therein and any other person
               using or responsible for the use of such motor vehicle or vehicles with
               the express or implied permission of the insured.’ " (Emphasis added
               and in original.) Universal Underwriters, 182 Ill. 2d at 244, quoting

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               625 ILCS 5/7-317(West 2006).

The court then noted that the definition in section 7-317(a) appears in article III of chapter 7 of the

Illinois Vehicle Code, “which requires that certain motorists submit proof of financial responsibility

for the future as a condition of enjoying driving privileges.” Universal Underwriters, 182 Ill. 2d at

244-45. The defendant argued that section 3-317's omnibus clause only applies to liability policies

used as proof of future responsibility in accordance with article III of chapter 7.

       The supreme court disagreed, stating that the statutory definition of “motor vehicle liability

policy” applied to the term as it is “ ‘used in this Act.’ ” Universal Underwriters, 182 Ill. 2d at 245.

“The word ‘Act,’ in turn, refers to the Illinois Vehicle Code, unless the context clearly indicates

another meaning.” (Emphasis added.) Universal Underwriters, 182 Ill. 2d at 245. The court held

that “the definition set forth in section 7-317 applies throughout the [Illinois Vehicle] Code and thus

applies to the mandatory insurance requirement set forth in section 7-601(a).”               Universal

Underwriters, 182 Ill. 2d at 245.

       The defendant in Universal Underwriters also argued that it was excused from the

requirements of section 7-317 under a statutory exemption for “ ‘vehicles complying with laws

which require them to be insured in amounts meeting or exceeding the minimum amounts required

under [section 7-601]’ ” 182 Ill. 2d at 245, quoting 625 ILCS 5/7-601(b)(6) (West 1996). The

supreme court stated that the exemption which the defendant referred to applies only when the

insurance required by law provides the type of coverage required under the mandatory insurance

statute. The court ruled that “the insurance must contain an omnibus clause insuring those driving

a vehicle with the owner’s permission.” Universal Underwriters, 182 Ill. 2d at 245-46. The court


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stated that the defendant’s policy must cover Luckhart’s liability as a permissive user regardless of

whether the exemption under section 7-601(b)(6) of the Family Responsibility Law applies. Finally,

the court stated that, even assuming the defendant was correct in its interpretation of the language

in its policy, to give effect to that language would violate Illinois public policy. Universal

Underwriters, 182 Ill. 2d at 246.

       Pertinent to this case, the defendant in Universal Underwriters also argued that, to the extent

its policy covered Luckhart, the policy only provided excess coverage after other insurance covering

Luckhart was exhausted. The supreme court stated, “pursuant to custom in the insurance industry,

primary liability is generally placed on the insurer of the owner of an automobile rather than on the

insurer of the operator.” Universal Underwriters, 182 Ill. 2d at 246.

       The supreme court in State Farm Mutual Automobile Insurance Co. v. Smith, 197 Ill. 2d 369

(2001) held that an automobile business exclusion violated Section 7-317(b)(2) of the Illinois

Vehicle Code and, therefore, Illinois public policy, because it precluded coverage of any person

driving the owner’s vehicle with the express or implied permission of the owner. The policy

exclusion at issue in Smith provided as follows

               ‘THERE IS NO COVERAGE:

               1. WHILE ANY VEHICLE INSURED UNDER THIS SECTION IS:

                                      *    *   *

                       b. BEING REPAIRED, SERVICED OR USED BY ANY

                       PERSON EMPLOYED OR ENGAGED IN ANY WAY IN

                       A CAR BUSINESS.’


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1-07-1807


197 Ill. 2d at 372-73. The term “car business” was defined as “a business or job where the purpose

is to sell, lease, repair, service, transport, store or park land motor vehicles or trailers.” Smith, 197

Ill. 2d at 373.

        The underlying incident in Smith involved a valet parking service. Maurice Barnes,

accompanied by Ruby Smith, drove his vehicle to Harrah’s Casino Cruises-Joliet. Barnes gave his

vehicle to Harrah’s valet service for parking. When Barnes and Smith left the casino, the valet driver

employed by Harrah’s, Jeremy Fisher, retrieved Barnes’ automobile. Smith alleged that, as she

entered the passenger door, the vehicle rolled backwards, striking her and knocking her to the

ground, causing injury. Fisher and Harrah’s tendered their defense to Barnes’ insurer, State Farm

Mutual Automobile Insurance Company (State Farm). State Farm refused the tender and filed a

declaratory judgment action arguing that it had no duty to defend or indemnify Fisher or Harrah’s

based upon its automobile business exclusion clause, as quoted above.

        The circuit court held that the automobile business exclusion applied and that State Farm had

no duty to defend or indemnify Fisher or Harrah’s. The appellate court held that the automobile

business exclusion violated Illinois public policy and, therefore, was unenforceable. The supreme

court agreed with the appellate court and explained:

                         "Section 7-317(b)(2) is clear. It mandates that a motor

                  vehicle liability policy, or a liability insurance policy, cover

                  the named insured and any other person using the vehicle with

                  the named insured’s permission. [Citations.] When a vehicle

                  owner gives his vehicle to a person engaged in an automobile

                                                20
1-07-1807

                business, the owner is also giving that person the express or

                implied permission to use the vehicle. Therefore, a provision

                written into an insurance policy that excludes coverage for

                persons engaged in an automobile business necessarily

                excludes coverage for persons who are using an insured’s

                vehicle with the insured’s express or implied permission. The

                exclusion thus violates section 7-317(b)(2) of the Illinois

                Vehicle Code." Smith, 197 Ill. 2d at 374.


The supreme court’s holding, however, was limited to only the automobile business exclusion from

the policy, stating “[t]he permissibility of other possible policy exclusions is not before us today, and

we express no opinion as to any other exclusion.” Smith, 197 Ill. 2d at 379.

        Following the decision in Smith, the Fourth District addressed whether a business exclusion

of liability coverage for a permissive user was void as against public policy. See Pekin Insurance,

357 Ill. App. 3d at 904-05. In Pekin Insurance, a business van owned by Sanfilippo and Sons, Inc.

(Sanfilippo) and insured by the defendant, Fidelity and Guaranty Insurance Company (Fidelity) broke

down. The driver called for a tow and Brown’s Vehicle Inspection (Brown’s Towing), a business

owned by Larrie Brown, responded with a tow truck insured by the plaintiff, Pekin Insurance

Company (Pekin). The tow truck driver hitched the delivery van and proceeded to drive toward

Quincy, Illinois. During the trip, the van broke free, crossed into oncoming traffic, and injured the

driver and passenger of an oncoming vehicle. The injured driver and passenger sued Larrie Brown,

both individually and as Brown’s Towing, the tow truck driver, Sanfilippo and the delivery van

                                                   21
1-07-1807

driver. Pekin brought a declaratory judgment action against Fidelity, seeking a declaration that

Fidelity owed a duty to defend Brown’s Towing and its driver and that Pekin owed no duty to defend

the delivery van owner and its driver. The circuit court granted judgment on the pleadings that

Fidelity’s policy provided no coverage for Brown’s Towing and the tow truck driver and that Pekin

breached its duty to defend Sanfilippo and its driver.

       The business exclusion provision in Fidelity’s policy provided an exclusion from coverage

for “ ‘[s]omeone using a covered “auto” while he or she is working in a business of selling,

servicing, repairing, parking[,] or storing “autos” unless that business is yours.’ ” Pekin Insurance,

357 Ill. App. 3d at 904. The Pekin Insurance court found that the business exclusion applied to

Brown’s Towing. The Pekin Insurance court compared the Fidelity business exclusion with the

relevant insurance provision from Smith and found that the Fidelity exclusion violates public policy.

The court stated:

                       "The fact that tow trucks are required to carry their own

               insurance [under 625 ILCS 5/12-606(d) (West 2006)] does not mean

               that towed vehicles should be allowed to except tow trucks from their

               coverage. The policy of protecting the public is best served by having

               both the tow truck’s policy and the towed vehicle’s policy as

               available insurance." Pekin Insurance, 357 Ill. App. 3d at 904.

The court held that, because Fidelity’s business exclusion violates public policy as stated in State

Farm, the circuit court improperly denied Pekin judgment on the pleadings as to this claim. Pekin

Insurance, 357 Ill. App. 3d at 904-05.


                                                 22
1-07-1807

        Pekin also claimed that it owed no duty to defend or indemnify anyone because Brown’s

Towing and its driver “deselected” their coverage under the Pekin policy and “targeted” the Fidelity

policy, which was similar to the claim in John Burns Construction Co. v. Indiana Insurance Co., 189

Ill. 2d 570 (2000). The Pekin Insurance court found that allowing Brown’s Towing and its driver

to “deselect” their statutory Pekin policy and target the Fidelity policy violates Illinois public policy.

The court stated:

                        "Insurance is mandatory for tow trucks on public highways in

                order to protect the public from damage arising from the use of tow

                trucks. To allow the owner of a policy mandated by this statute [(625

                ILCS 5/12-606(d) (West 2006))] to deselect that coverage in favor of

                the coverage of the vehicle it tows would render the statute and its

                purpose virtually meaningless." Pekin Insurance, 357 Ill. App. 3d at

                902.

The court distinguished the facts of John Burns, where the contractor was named on both policies

and both insurers were primary carriers. In Pekin Insurance, Brown’s Towing and its driver were

not named insureds or additional insureds on the Fidelity policy, but were omnibus insured. 357 Ill.

App. 3d at 902-03. The Pekin Insurance court did not specifically refer to section 7-317(b)(2) in this

portion of the opinion, but revisited the fact that Fidelity’s policy required omnibus coverage under

section 7-317(b)(2) when discussing and comparing the holding in Smith. In sum, the Pekin

Insurance court considered that insurance policies for tow trucks, which require mandatory insurance

under Section 12-606(d) of the Illinois Vehicle Code, also require omnibus coverage pursuant to


                                                   23
1-07-1807

section 7-317(b)(2).

       Another recent supreme court decision, State Farm Mutual Automobile Insurance Co. v.

Illinois Farmers Insurance Co., 226 Ill. 2d 395 (2007), determined whether a “step-down” provision,

which reduces the policy limits for permissive users, was violative of Illinois public policy pursuant

to section 7-317(b)(2). Unlike Universal Underwriters, Smith and Pekin Insurance, the supreme

court did not consider whether the pertinent step-down provision violated section 7-317(b)(2) for

precluding coverage to permissive users. Instead, the Illinois Farmers court considered whether a

permissive user required an equal amount of coverage as provided to the named insured.

       The court in Illinois Farmers reiterated its holding in Universal Underwriters that an omnibus

clause “must be read into every liability insurance policy.” 226 Ill. 2d at 402. The court also stated

that liability insurance required by section 7-601 of the Illinois Vehicle Code must comply with the

requirements of section 7-317(b)(2). The court held, however, that nothing in the pertinent statutory

language required a liability policy providing the named insured with coverage in excess of the

statutory minimum pursuant to section 7-203 of the Illinois Vehicle Code (625 ILCS 5/7-203 (West

2006)) to provide the same level of coverage to permissive users. Illinois Farmers, 226 Ill. 2d at 403-

04.

       In Progressive Universal Insurance Co. v. Liberty Mutual Fire Insurance Co., 215 Ill. 2d 121

(2005), Shirley Abbinante owned a vehicle insured under a policy issued by the plaintiff, Progressive

Universal Insurance Company (Progressive). Abbinante allowed her son, Ronald, to use the insured

vehicle to deliver pizzas for his employer, Casale Pizza, Inc. Ronald was compensated by a flat fee

for each pizza he delivered. During one of his deliveries, he struck a pedestrian, who sustained


                                                  24
1-07-1807

severe injuries. Progressive’s policy contained a “ 'food delivery exclusion,' ” which precluded

coverage for bodily injury or property damage while an insured vehicle was “‘being used to carry

persons or property for compensation for a fee, including, but not limited to, delivery of *** food,

or any other products.’” The supreme court determined whether Progressive had a duty to defend

and indemnify Ronald in the underlying action.

       The defendant, Liberty Mutual Fire Insurance Company (Liberty Mutual), argued that the

food exclusion violated public policy because it conflicted with section 7-317(b)(2). Liberty Mutual

contended that, because Ronald was using the vehicle with his mother’s express permission at the

time he struck the pedestrian, section 7-317(b)(2) required Progressive to defend and indemnify

Ronald in the underlying litigation.

       Once again, the supreme court reiterated that the omnibus clause as required by statute “must

be read into every such policy.” Progressive, 215 Ill. 2d at 128. The court noted the principal

purpose of this state’s mandatory liability insurance requirement is to protect the public by securing

payment of their damages. The court further explained Illinois public policy on this issue:

               "It is axiomatic that a statute that exists for protection of the public

               cannot be rewritten through a private limiting agreement. One reason

               for that rule is that ‘the members of the public to be protected are not

               and, of course, could not be made parties to any such contract.’

               [Citation.] In accordance with these principals, a statute’s

               requirements cannot be avoided through contractual provisions.

               Where liability coverage is mandated by the state’s financial


                                                 25
1-07-1807

               responsibility law, a provision in an insurance policy that conflicts

               with the law will be deemed void. The statute will continue to

               control." Progressive, 215 Ill. 2d at 129.

The supreme court stated that whether a contractual agreement is void as against public policy

“ultimately depends on the particular facts and circumstances of each case.” Progressive, 215 Ill.

2d at 133. The court distinguished the facts in Smith, in which the business exclusion applied only

to permissive users. The exclusion in Smith meant that conduct which would be covered if

undertaken by the insured would not be covered if undertaken by someone who was using the vehicle

with the insured’s permission. In comparison, the food delivery exclusion in Progressive provided

that no one was exempt. The food delivery exclusion applied with equal force to the named insured,

Shirley Abbinante, and the permissive user, Ronald. The court stated, “[b]ecause the exclusion in

Progressive’s policy does not differentiate between the insured and those using the vehicle with the

insured’s permission, there is no possibility, as there was in Smith, that liability insurance coverage

afforded the insured would also not be extended to permissive users of the vehicle.” Progressive,

215 Ill. 2d at 134. The court held that the “food delivery exclusion” did not conflict with Section

7-317(b)(2) and, therefore, did not violate public policy.

       In sum, the above cases show that: (1) section 7-317(b)(2) requiring omnibus coverage

applies to the entire Illinois Vehicle Code; and (2) an insurance provision violates section 7-

317(b)(2) and, therefore, Illinois public policy, if it provides coverage to the named insured and

precludes coverage to an express or implied permissive user.

       There is no Illinois authority that has determined whether section 7-317(b)(2) applies to


                                                  26
1-07-1807

commercial truck liability coverage under the Commercial Transportation Law. Section 7-317(b)(2)

does not include any specific language limiting omnibus coverage to passenger vehicles.

        Zurich argues that section 7-317(b)(2) does not apply to the Commercial Transportation Law

because Key and Rose were both required to file proof of liability insurance with the I.C.C. in order

to operate on public roadways, thereby fulfilling the purpose of this state’s mandatory liability

insurance requirement to protect the public from damage arising from the use of commercial trucks.

Zurich asserts that section 7-601(b)(2) expressly excludes carriers of intrastate or interstate property

from the mandatory insurance requirement in section 7-601(a). These statutes provide in pertinent

part:

                       § 7-601. Required liability insurance policy.
                       (a) No person shall operate, register or maintain registration
               of, and no owner shall permit another person to operate, register or
               maintain registration of, a motor vehicle designed to be used on a
               public highway unless the motor vehicle is covered by a liability
               insurance policy.
                       * **
                       (b) The following vehicles are exempt from the requirements
               of this Section:
                       ***
                       (2) vehicles required to file proof of liability insurance with
                       the Illinois Commerce Commission. 625 ILCS 5/7-601 (West
                       2006).


        Zurich’s argument that Section 7-317(b)(2) does not apply because of the exemption in

section 7-601(b)(2) is misplaced. As noted above, the defendant in Universal Underwriters also

argued that it was excused from the requirements of section 7-317(b)(2) under a statutory exemption

pursuant to section 7-601(b)(6) of the Illinois Vehicle Code, which applies to “other vehicles

complying with laws which require them to be insured in amounts meeting or exceeding the

                                                  27
1-07-1807

minimum amounts required under [section 7-601].” The court in Universal Underwriters ruled that

“the insurance must contain an omnibus clause insuring those driving a vehicle with the owner’s

permission.” Universal Underwriters, 182 Ill. 2d at 245-46. The court stated that the defendant’s

policy must cover the liability of Luckhart, the test-driver, as a permissive user regardless of whether

the exemption under section 7-601(b)(6) applies.

       Accordingly, we follow the supreme court’s decision in Universal Underwriters and its

progeny to require the application of omnibus coverage pursuant to section 7-317(b)(2) to Zurich’s

Reciprocal Coverage provision. We find that section 7-601(b)(2) does not exempt insurance policies

issued for commercial vehicles from the omnibus coverage requirement pursuant to section 7-

317(b)(2). Illinois authority and public policy support this finding.

       The supreme court’s public policy analysis in Illinois Farmers is applicable. The court stated

that “[t]he legislature is vested with the power to enact the laws and if the legislation as enacted

‘seems to operate in certain cases unjustly or inappropriately, the appeal must be to the General

Assembly, and not to the court.’ ” Illinois Farmers, 226 Ill. 2d at 413-14, quoting People v. Garner,

147 Ill. 2d 467, 475-76 (1992). The court noted new legislation with an effective date of January

1, 2008, which mandates that “ ‘any policy of private passenger automobile insurance must provide

the same limits of *** coverage to all persons insured under that policy, whether or not an insured

person is a named insured or permissive user under the policy.’ ” Illinois Farmers, 226 Ill. 2d at 414,

quoting Pub. Act 95-395, eff. January 1, 2008 (now 215 ILCS 5/143.13a (West Supp. 2007)).

Finally, the court stated, “when the legislature intends different types of coverage in excess of the

minimum statutory requirements mandated by section 7-203 of the Illinois Safety and Family


                                                  28
1-07-1807

Financial Responsibility Law to be the same, it chooses plain, unambiguous language to indicate its

intent. It has now done so, effective January 1, 2008.” Illinois Farmers, 226 Ill. 2d at 414.

       In this case, the unambiguous language of section 7-317(b)(2) provides that an owner shall

insure “any other person using or responsible for the use of such motor vehicle or vehicles with the

express or implied permission of the insured.” 625 ILCS 5/7-317 (West 2006). If the legislature

intended to limit the mandatory omnibus coverage requirement solely to passenger vehicles, it would

have chosen plain, unambiguous language to indicate its intent.

       Furthermore, Illinois public policy requiring omnibus coverage for all motor vehicle liability

policies is reflected in the Illinois Vehicle Code (625 ILCS 5/100 et seq. (West 2006)). Both Rose

and Key were businesses engaged in commercial trucking operations, as governed by the

Commercial Transportation Law (625 ILCS 5/18c-1101 et seq. (West 2006)), which is within the

Illinois Vehicle Code. The Commercial Transportation Law requires all motor carriers of property

to maintain liability insurance (625 ILCS 5/18c-4901 (West 2006)). Although the Commercial

Transportation Law provides no specific language requiring omnibus coverage for commercial

truckers, the supreme court has interpreted that section 7-317(b)(2) must be read into every liability

policy. Illinois Farmers, 226 Ill. 2d at 402.

       As a matter of public safety, Illinois public policy warrants mandatory omnibus coverage for

commercial truckers that should not be limited by private agreement. See Progressive, 215 Ill. 2d

at 129-30 (“[a]n agreement will not be invalidated on public policy grounds unless it is clearly

contrary to what the constitution, the statutes or the decisions of the courts have declared to be the

public policy or unless it is manifestly injurious to the public welfare”). If we were to accept


                                                 29
1-07-1807

Zurich’s argument that section 7-317(b)(2) does not apply to commercial truckers, persons injured

by permissive drivers of commercial trucks would be unable to secure payment of their damages,

in violation of public policy. See Smith, 197 Ill. 2d at 376 (noting the principal purpose of

mandatory automobile liability insurance is to protect the public by securing payment of their

damages). Protection of the public is best served by requiring omnibus insurance because the

legislature “intended to insure that the common and often unavoidable practice of entrusting one’s

vehicle to someone else does not foreclose an injured party from obtaining payment for otherwise

covered losses resulting from operation of the vehicle.” Progressive, 215 Ill. 2d at 137. The

supreme court has held that section 7-317(b)(2) applies throughout the Vehicle Code (Progressive,

215 Ill. 2d at 128; Universal Underwriters, 182 Ill. 2d at 245) and there is no statutory language

precluding commercial truckers from the omnibus insurance requirement in the statute. Accordingly,

we find that section 7-317(b)(2) applies to insurance policies for commercial truckers issued

pursuant to section 18c-4901 and, for the purposes of this case, to Zurich’s reciprocal coverage

provision.

       In this case, because Zurich’s reciprocal coverage provision precludes omnibus coverage for

Key and Washington, the reciprocal coverage provision violates section 7-317(b)(2) and, therefore,

Illinois public policy. Smith, 197 Ill. 2d at 372 (“insurance policy provisions that conflict with a

statute are void”). Accordingly, we find that the circuit court erred by granting summary judgment

in favor of Zurich on this issue.

    C. Enforceability of Zurich’s Reciprocal Coverage Provision On The Issue Of Ambiguity

       Defendants’ second ground for arguing that Zurich’s reciprocal coverage provision is


                                                30
1-07-1807

unenforceable is based on their contention that the provision is ambiguous. In light of our finding

that Zurich’s reciprocal coverage provision is violative of section 7-317(b)(2) and, therefore, void

(Progressive, 215 Ill. 2d at 129; Smith, 197 Ill. 2d at 372), we need not reach the issue of whether

the Reciprocal Coverage provision is ambiguous.

                                        III. CONCLUSION

       In conclusion, the circuit court erred by granting summary judgment in favor of Zurich and

against West Bend. As a matter of first impression, we hold that section 7-317(b)(2) of the Illinois

Vehicle Code applies to insurance policies issued to commercial truckers. In addition, we find that

Zurich’s reciprocal coverage provision violated section 7-317(b)(2) and, therefore, is void as against

Illinois public policy. This cause is reversed and remanded with directions to reverse summary

judgment in favor of Zurich and enter summary judgment in favor of defendants.

       Reversed and cause remanded with directions.

       THEIS and CUNNINGHAM, JJ., concur.




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