McKenna Law Update – September 2012
Illinois Supreme Court Rules on Duty Owed to Trespassing Children for Obvious Dangers
On September 20, 2012, the Illinois Supreme Court issued an opinion regarding the duty owed to trespassing children in Choate v. Indiana Harbor Belt R. Co., 2012 IL 112948. Because this opinion is recent, it is still subject to revision or withdrawal by the court.
The minor plaintiff was 12 years and nine months old and had just completed the sixth grade. On July 30, 2003, plaintiff and five other children between the ages of 12 and 13 met in the parking lot of an apartment building. The defendant’s railroad tracks were adjacent to the north side of the parking lot. The nearest railroad crossings were approximately three-quarters of a mile northwest and one-quarter mile southeast. Only segments between these two crossings were fenced. On the north side of the tracks at the parking lot, a chain link fence was torn open and rolled back to enable people towalkthoughittocrossthetracks. On the south side of the tracks, a chain link fence ended east of the parking lot with a sign posted at the west end that stated: “DANGER NO TRESPASSING NO DUMPING.” Plaintiff testified he did not see this sign on July 30, 2003.
While the children were in the parking lot, a freight train approached on the tracks moving approximately 10 miles per hour. Plaintiff and one of his friends attempted to jump onto the moving train. Plaintiff attempted to do so three times – the first two times he lost his grip and fell. On his third attempt, plaintiff managed to grab hold of a ladder, pull his body up toward the train and put his right foot on the ladder. Plaintiff slipped from the ladder and fell and his left foot was severed above his toes by the train wheel resulting in an amputation below the knee.
The case was tried before a jury who assessed plaintiff’s damages at $6.5 million but reduced that amount to $3.9 million after finding that the plaintiff was 40% comparatively negligent. A judgment on the verdict was entered for $3,875,000. The defendants filed a motion for j.n.o.v asserting they did not have a duty to protect plaintiff from the possibility that he may injure himself by confronting an obvious danger, that plaintiff’s alleged remedy for eliminating the dangerous condition was not reasonable and requesting a new trial. The circuit court denied defendant’s motion which was affirmed by the appellate court.
The Illinois Supreme Court reversed the finding that the defendant railroad company owed a duty toward the plaintiff, citing the general rule that a landowner is under no duty of reasonable care for the safety of trespassers, even if they are children and even when the premises is a railroad right of way. The Court noted that a landowner does have a duty to exercise reasonable care to remedy a dangerous condition on the premises, or otherwise protect children from injury resulting from the dangerous condition where: 1) the landowner knew or should have known children habitually frequent the property; 2) a defective structure or dangerous condition was present on the property; 3) the defective structure or dangerous condition was likely to injure children because they are incapable, based on age and maturity, of appreciating the risk involved; and 4) the expense and inconvenience of remedying the defective structure or dangerous condition was slight when compared to the risk to children. When these elements are satisfied, harm to children is deemed sufficiently foreseeable for the law to impose a duty of reasonable care on the landowner.
The defendants in Choate argued that the third and fourth elements had not been satisfied. Regarding the third element, whether the plaintiff could appreciate the risk involved in attempting to jump aboard a train, the Court explicitly recognized that a moving train is an obvious danger that a child of the plaintiff’s age would be expected to appreciate and avoid. The test for assessing liability is the foreseeability of harm to the child, but there can be no recovery for injuries caused by a danger found to be obvious. A landowner is free to rely on the assumption that any child old enough to be allowed at large by his parents will appreciate certain obvious dangers. Regarding the fourth element, the Court held that Illinois law does not impose a requirement on a railroad company to fence its property to prevent trespassing children from boarding its moving trains.
Ultimately, the Court found that the defendants did not owe the plaintiff any duty and the judgments of the appellate court and circuit court were reversed.
For further information, contact Kelly Purkey at 312.558.3906 or firstname.lastname@example.org.
First District Addresses Policy Endorsement for Liability Arising Out of the Insured's Ongoing Operations
The use of the Additional Insured Endorsement is a common construction industry practice. By requiring a subcontractor to add the owner, general contractor, and others to the subcontractor’s Commercial General Liability (“CGL”) Policy as additional insureds, the general contractor shifts the liability risk for construction accidents to its subcontractors. Given the “targeted tender rule” in Illinois, the result often is that the subcontractor’s CGL carrier may have to bear the entire risk. Faced with this common construction industry practice, insurers writing liability coverage have long sought to limit the scope of coverage for additional insureds. Several standard ISO additional insured endorsement forms have been used in the policy, reflecting insurers’ intent to limit the scope of additional insured coverage.
One of these standard ISO additional insured endorsements contains “ongoing operations” language, attempting to restrict coverage to an additional insured to only that liability that comes from the work of a Named Insured while that work is being performed. This limitation, if effective, would limit coverage to situations where an injury occurred while the Named Insured was actually working and would cover only those injuries that occurred directly as a result of the Named Insured’s work. The term “ongoing operations” within this endorsement has not been defined by courts in Illinois. However, a recent decision from the First District Court in Indiana Insurance Company v. Powerscreen of Chicago, Ltd. ruled in favor of an additional insured, creating another obstacle to the insurers who have used “ongoing operations” language in the additional insured endorsement. By affirming the trial court’s summary judgment, the First District Court interpreted the “ongoing operations” language as being similar to “arising out of” and, therefore, utilized the “but for” test, expanding the scope of additional insured coverage which is limited to liability arising out of “ongoing operations.”
In Powerscreen, Terrell Materials leased a concrete crusher from Powerscreen to be used in connection with a road construction site. Pursuant to the rental agreement entered into between Terrell Materials and Powerscreen, Terrell Materials was required to “at its own costs, operate and maintain the equipment with factory authorized parts and to make any repairs which may become necessary” and “to return the equipment to [Powerscreen] in the same condition as received.” In addition, the rental agreement required Terrell Materials to name Powerscreen as an additional insured on its liability policy.
An employee of another subcontractor at the construction site was allegedly injured in the process of moving the concrete crusher. The injured employee filed a personal injury suit against Terrell Materials and Powerscreen. When sued, Hartford, on behalf of Powerscreen, tendered the defense of the underlying lawsuit to Indiana Insurance, claiming that Powerscreen was an additional insured under the Indiana Insurance Policy issued to Terrell Materials. Indiana Insurance denied the tender, contending that Powerscreen was not an additional insured under the Indiana Insurance Policy because Terrell Materials was not performing “ongoing operations” for Powerscreen at the time of the employee’s injury. It further argued that Terrell Materials’ obligations under the rental agreement did not constitute “ongoing operations” conducted for Powerscreen.
Having concluded that the rental agreement between Terrell Materials and Powerscreen satisfied the “writing” requirement under the additional insured endorsement, the Court considered the allegations of the underlying complaint to determine whether “the liability at issue arose out of Terrell Materials’ ‘ongoing operations’ performed for Powerscreen.”
Relying on Cincinnati Ins. Co. v. Dawes Rigging & Crane Rental, Inc., 321 F. Supp.2d 975 (C.D. IL. 2004), the District Court concluded that Terrell Materials’ contractual obligation under the rental agreement to perform necessary maintenance work satisfied the "ongoing operations" language under the policy. Therefore, its alleged failure to do so potentially fell within the terms of the policy, triggering coverage, obligating Indiana Insurance to provide additional insured coverage to Powerscreen, stating that “but for Terrell Materials’ use, maintenance and failure to repair the concrete crusher under the rental agreement, John’s injury would not have occurred.”
The First District Court’s opinion in Powerscreen has shown the courts’ reluctance to find a distinction between
liability “arising out of your work,” and liability “arising out of your ongoing operations” despite different terms used in additional insured endorsements. It also provides a basis to apply an expansive “but for” analysis to find additional insured coverage, creating a hardship on insurers writing policies to limit the scope of additional insured coverage.
For further information contact Sumi Yang at 312.558.8306 or syang@mckenna- law.com
Lien Act Amended to Allow Injured Plaintiffs to Receive Higher Award Ratio
Effective January 1, 2013, the Health Care Services Lien Act will be changed to allow medical insurance company claims to be cut proportionally to the drop in a plaintiff's recovery. The new law reduces the amount insurers can collect from a plaintiff's award when full damages are not paid out.
For example, if a person sustains an injury worth $1 million, but settles for the $100,000 in insurance coverage held by the defendant, any lienholders' claims would also drop by 90 percent. The change in the law was advocated by plaintiffs’ attorneys who argued that at times the insurance companies were receiving more from a settlement than the injured plaintiff received after deducting for the insurance company’s lien. Some plaintiffs’ attorneys believe this change will prevent lienholders from holding a case hostage because they have refused in the past to reduce their lien, thus making it difficult to reach a settlement.
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