United Fire & Casualty Co. v. Prate Roofing & Installations LLC, No. 19-3043 (7th Cir. 2021)Annotate this Case
All Seasons inspected SparrowHawk's warehouse roofs and discovered hail damage. Because All Seasons did not hold an Illinois roofing license, it arranged for Prate to serve as general contractor with All Seasons as subcontractor. All Seasons was to provide materials and labor, maintain safety, and supervise the project. All Seasons purchased a commercial general liability policy and general liability extension endorsement from United, listing Prate as an “additional insured” in a “vicarious liability endorsement.” All Seasons then subcontracted with Century. Ayala, a Century employee was working on a SparrowHawk warehouse when he fell to his death.
The Illinois workers’ compensation system provided limited death benefits but precluded tort remedies against his direct employer, Century. Ayala’s estate sued Prate, All Seasons, and SparrowHawk. Prate tendered the defense to United, which declined to defend and sought a declaratory judgment. All Seasons and United reached a settlement with the estate, paying the policy limits.
The district court granted Prate summary judgment. The Seventh Circuit affirmed, rejecting United’s argument that because its named insured was an independent contractor, Illinois law would not impose any liability on the additional insured and there was no risk of covered liability. The duty to defend depends on the claims the plaintiff asserts, not on their prospects for success. The settlement of the underlying claims against the named insured, however, removed any possibility that the additional insured might be held vicariously liable for actions of the named insured; the duty to defend ended when that settlement was consummated.