Emtech Machining & Grinding v. CNA Insurance Cos.

May 21, 1998

No. 2--97--0040
_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
_________________________________________________________________

EMTECH MACHINING AND GRINDING, ) Appeal from the Circuit Court
INC., ) of McHenry County.
)
Plaintiff-Appellee, ) No. 96--MR--13
)
v. )
)
TRANSCONTINENTAL INSURANCE )
COMPANY, ) Honorable
) James C. Franz,
Defendant-Appellant. ) Judge, Presiding.
_______________________________________________________________

JUSTICE INGLIS delivered the opinion of the court:
Plaintiff, Emtech Machining & Grinding, Inc. (plaintiff or
Emtech), filed a verified complaint for declaratory judgment against
defendant, Transcontinental Insurance Company (defendant or
Transcontinental), seeking a determination that plaintiff was
entitled to reimbursement for $19,693 in attorney fees and other
costs incurred in defending against an underlying action for
retaliatory discharge brought against plaintiff by a former
employee, Randall W. Phelps. Plaintiff averred that it was entitled
to reimbursement under a 1991 commercial general liability policy
issued by defendant and insuring plaintiff against losses resulting
from certain types of "personal injury" defined in the policy.
The parties filed cross-motions for summary judgment. After
a hearing on the motions, the circuit court granted judgment to
plaintiff and denied judgment to defendant, the effect of which
wasto require defendant to indemnify plaintiff. Defendant timely
appeals. We reverse.
Defendant contends that the trial court erred in finding that
the retaliatory discharge claim came within the definition of
personal injury stated in the policy. The pleadings and exhibits
from the underlying retaliatory discharge action disclose that
Emtech's employee, Phelps, filed a complaint against it as a result
of the termination of his employment in October 1991. That
complaint alleged that, as a result of an injury to his back and
foot while working for Emtech, Phelps applied for and received
workers' compensation. Phelps further alleged that, in a letter
dated October 18, 1991, Emtech informed him that he was discharged
as the direct result of his fraudulent misrepresentation to the
company regarding whether he had previously filed a workers'
compensation claim. Phelps claimed that his discharge from
employment violated Illinois public policy, and he sought
compensatory and punitive damages from Emtech. It appears that the
trial court granted Emtech's motion for summary judgment in the
underlying action.
Emtech then filed an action for declaratory judgment, asserting
that a claim for retaliatory discharge was one of the torts for
which the policy provided indemnification to plaintiff. The
specific issue to be decided is whether that claim falls within the
policy's definition of personal injury. Section V of the policy
states:
" 'Personal injury' means injury, other than 'bodily injury',
arising out of one or more of the following offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. Wrongful entry into, or eviction of a person from, a
room, dwelling or premises that the person occupies;
d. Oral or written publication of material that slanders or
libels a person or organization or disparages a person's
or organization's goods, products or services; or
e. Oral or written publication of material that violates a
person's right of privacy."
In reviewing the granting of summary judgment, this court
inquires "whether the pleadings, together with all other matters of
record, pose any genuine issue of material fact"; if any issue of
material fact exists, then the trial court will be deemed to have
erred in granting summary judgment. Dixon Distributing Co. v.
Hanover Insurance Co., 244 Ill. App. 3d 837, 840 (1993). De novo
review applies in this case. Crum & Forster Managers Corp. v.
Resolution Trust Corp., 156 Ill. 2d 384, 390 (1993). It is clear
from the face of the underlying complaint that there is no
possibility of coverage for retaliatory discharge under the policy
in question. See Dixon, 244 Ill. App. 3d at 840 (insurance company
cannot justifiably refuse to defend unless it is clear from the face
of the complaint that there is no possibility of coverage).
In resolving the issue before us, we find instructive JG
Industries, Inc. v. National Union Fire Insurance Co., 218 Ill. App.
3d 1061 (1991). In JG, there was a similar listing under the
coverage provision for personal injury liability. The reviewing
court determined that, because retaliatory discharge was not
expressly listed, there was no coverage for this type of injury.
As in JG, retaliatory discharge is not on the list of expressly
covered personal injuries (offenses). As in JG, it would be a
strained interpretation of the plain language of the policy
provisions to conclude that retaliatory discharge is one of the
"offenses" for which the insured should be indemnified. The plain
language of the policy is fairly strong evidence that the parties
did not intend this type of claim to be covered. JG, 218 Ill. App.
3d at 1066. The principle of " '[l]iberal construction of an
insurance policy in favor of the insured must yield to rules of
reasonable construction.' " JG, 218 Ill. App. 3d at 1066, quoting
Bohnen International, Inc. v. Liberty Mutual Insurance Co., 120 Ill.
App. 3d 657, 666 (1983).
Plaintiff's reliance on Dixon is misplaced. There, the
reviewing court construed an insurance policy which was more broadly
worded than the one here and defined personal injury as " 'injury,
such as but not limited to libel, slander, defamation of character,
discrimination, false arrest, false imprisonment, wrongful eviction,
wrongful detention, malicious prosecution or humiliation ***
sustained by a natural person.' " (Emphasis added.) Dixon, 244
Ill. App. 3d at 842 (quoting policy). An occurrence was defined as
" 'an offense which results in personal injury, other than an
offense committed with actual malice or the willful violation of a
penal statute or ordinance.' " Dixon, 244 Ill. App. 3d at 842
(quoting policy). Because of the more expansive language used in
the policy in that case, the Dixon court could reasonably infer that
a tort or offense which was similar to those listed should be
covered under the umbrella policy. The Dixon court held that the
policy potentially covered the tort of retaliatory discharge and
that the insurer breached its duty to defend the insured (Dixon, 244
Ill. App. 3d at 853-54).
We find no ambiguity in the language of the policy here which
would require this court to conclude, as a matter of law, that
retaliatory discharge was a covered injury. A court should consider
the plain meaning of the policy language and should not search for
a nonexistent ambiguity. Dash Messenger Service, Inc. v. Hartford
Insurance Co., 221 Ill. App. 3d 1007, 1010 (1991).
Furthermore, we disagree with plaintiff's argument that
retaliatory discharge must be a covered injury since it was not
specifically excluded from the coverage. Under the circumstances
here, Transcontinental was not required to exclude expressly any and
all torts and offenses that were not listed. An exclusion serves
the purpose of taking out persons or events otherwise included
within the defined scope of coverage. Hartford Accident & Indemnity
Co. v. Case Foundation Co., 10 Ill. App. 3d 115, 124 (1973). Here,
there was no need to create an exception or exclusion for
retaliatory discharge where it was clear what types of coverage were
expressly included, and retaliatory discharge would not normally be
construed, either expressly or by implication, as one of the
enumerated injuries covered. We do not believe that the language
of this policy would lead a reasonable purchaser of insurance to
conclude that this risk was covered. Cf. Dash Messenger Service,
221 Ill. App. 3d at 1015 (language of policy and exclusions could
lead reasonable purchaser to conclude that risk was covered where
risk was inherent in the business covered).
The circuit court erred in entering summary judgment for
plaintiff. Under the provisions of the policy we have examined,
defendant had no duty to defend, much less indemnify, plaintiff.
See Crum & Forster, 156 Ill. 2d at 398.
The judgment of the circuit court of McHenry County is
reversed.
Reversed.
GEIGER, P.J., and RATHJE, J., concur.