August 2016 Case Notes & Comments

"If you can't stand the heat, don't go to Cancun in the summer."~Ben Stein

MONTHLY QUIZ: Forest Preserve District (District) plans, organizes, coordinates, and conducts a bicycle riding event. Prior to the event, District performs trail inspections, trims vegetation near the trails, blows debris from the trail surface, installs caution signs, assigns trail sentinels to assist participants and encourages all participants to wear helmets. While participating in the event, Rider swerves off the trail, falls off his bicycle, and incurs serious bodily injuries that result in his death. Rider's Estate sues District alleging, among other things, that a trail sentinel's actions in "suddenly stepp[ing] out into the middle of trail" and blocking the trail, despite District Supervisor's instructions not to, amount to willful and wanton misconduct (i.e. a deliberate intent to cause harm or an utter indifference or conscious disregard for the welfare of others). District files a motion to dismiss, arguing that District is immune from liability under sections 2-109 and 2-201 of the Local Governmental and Governmental Employees Tort Immunity Act (Act). Rider's Estate argues that the trail sentinel's conduct of stepping into the trail in front of Rider amounted to willful and wanton misconduct, for which the Act provides no immunity. District argues that the alleged actions of the trail sentinel could not be considered willful and wanton misconduct. Who is right? Are Estate's claims barred by the Act? You be the judge. (Answer below)

WORKERS' COMPENSATION / AWARD OF PPD IN ABSENCE OF AN AMA RATING REPORT / PPD IMPAIRMENT REPORT: Petitioner, a lineman, allegedly injured his low back while getting out of his work truck. Although neither Petitioner nor his Employer submitted a physician's PPD impairment report to support Petitioner's claimed injuries, Arbitrator made an award that included amounts for medical expenses and 15 weeks' permanent partial disability (PPD) benefits, for a 3% loss of the person as a whole. The Commission affirmed and adopted, finding that Section 8.1b of the Act did not require that either party submit a PPD impairment report for the purposes of determining permanent disability. On appeal, Employer argued that the award of PPD was in err because, among other reasons, Petitioner failed to submit a PPD impairment report as listed in Section 8.1b(2) of the Act. On review, the Appellate Court held that the plain language of Section 8.1b placed no explicit requirement on either party to submit a PPD impairment report as a prerequisite to a PPD award of benefits. DISSENT: Justice Hoffman concluded, however, that in the absence of a PPD impairment report prepared in accordance with the requirements of Section 8.1b(a), the Commission may not award PPD benefits. EDITOR'S NOTE: Given that the issue is still unresolved, the Petitioner's Workers' Compensation Bar advises against Petitioners trying a case without first submitting a PPD impairment report into evidence. Until resolution, submitting a PPD impairment report may also be advisable for employers and insurers. Corn Belt Energy Corp. v. Illinois Workers' Compensation Comm'n, 2016 IL App (3d) 150311WC (Jun. 28, 2016)

INSURANCE COVERAGE / ABSOLUTE POLLUTION EXCLUSION FOUND AMBIGUOUS: The Indiana Department of Environmental Management ("IDEM") required Owner/Operator of a municipal airport to investigate and submit a plan to remediate various substances discovered at the airport, including an oily sheen, benzopyrene, arsenic, and PCBs. Owner tendered the claim to Insurer. Though the Policy did not define the terms "pollution" or "contamination", the Policy excluded "claims directly or indirectly occasioned by, happening through or in consequence of.... pollution and contamination of any kind whatsoever." Subject to a reservation, Insurer initially agreed to hire counsel to assist Owner in dealing with the IDEM, but later filed a declaratory action against Owner. Citing the pollution exclusion, Insurer moved for summary judgment, arguing that Policy's pollution exclusion barred coverage. The Court, however, denied summary judgment, finding that the exclusion was ambiguous under Indiana insurance law, because it failed to specify which substances qualified as "pollution" or "contamination" under the Policy. As a result of the ambiguity, an "ordinary policy holder of average intelligence" would be unable to tell "to a certainty" whether Insurer "would ... be responsible for damages arising out" the claimed pollution. Old Republic Ins. Co. v. Gary-Chicago International Airport Authority, Case No. 2:15-CV-281-JD (N.D. Ind. July 25, 2016).

INSURANCE COVERAGE / FAULTY WORK EXCLUSION: Developer contracted with Roofer in connection with a new condominium building. The contract provided that Roofer must defend and indemnify Developer against liability for Roofer's work and required Roofer to add Developer, as an additional insured, to Roofer's general liability policy. After taking over the building, Association discovered that the roof was defective and sued Developer, alleging fraudulent concealment of the roof defects (but, notably, not alleging general negligence). Developer tendered to Insurer, who declined the tender and filed a declaratory action (but nevertheless defended its policyholder, Roofer, under a reservation of rights). On cross-motions for summary judgment, trial court granted summary judgment for Insurer, holding that there was no duty to defend or indemnify Developer because the complaint did not allege an "occurrence" resulting in "property damage," so as to trigger Insurer's duty to defend. In a split panel, the appellate court affirmed on the grounds that the complaint alleged only non-accidental bad acts of Developer and sought only repair and replacement of faulty work. Although the complaint alleged physical harm to the unit owners' personal property, this allegation did not trigger potential policy coverage because it only bolstered the allegations of faulty work. The individual unit owners were not parties to the lawsuit and the complaint did not specify their claims for damages. DISSENT: The dissent noted that an "insurer's duty to defend does not hinge on the draftsmanship in the underlying complaint of the relative amount of damage sought for particular injuries, and clearly alleged allegations of property damages are not disregarded as 'purely tangential' to other allegations." Westfield v. West Van Buren, LLC, 2016 IL App (1st) 140862 (Jul 20, 2016).

ANSWER TO QUIZ: The District is entitled to dismissal. The claimed actions were not willful and wanton. Even though District Supervisor instructed the trail sentinels not to stand on the path and acknowledged that this action could cause the bicyclists to swerve, the Appellate Court found that such facts, while perhaps incompetent, did not establish an utter indifference or conscious disregard for the welfare of others. Further, District was entitled to immunity under the Act because its actions of placing the trail sentinels at various locations along the path were a "courtesy" to participants and involved an exercise of discretion, to which the Act applied. Lorenc v. Forest Preserve District, 2016 IL App (3d) 150424 (Jul. 22, 2016)