IL App Ct. 2nd Dist. / Sex Abuse

Defense Duty for Additional Insured Because “Willful and Wanton” Not an Independent Tort  

The Appellate Court of Illinois, Second District, in an opinion written by Justice Jorgensen, applying Illinois law, affirmed the circuit court’s grant of summary judgment in favor of an additional insured, Community Unit School District 300 (the “District”), holding that the insurer, West Bend Mutual Insurance Company (“West Bend”), owed a duty to defend the District against sexual abuse claims against an employee of both the District and the named insured, The Boys and Girls Club of Dundee Township (the “Club”).

The Club ran an after-school program for school students on the District’s property. The underlying defendant was an employee of both the District and the Club, against whom allegations of sexual abuse were made for actions taken between 2016 to 2018 in his role as employee of the Club. West Bend insured the Club under a general liability policy, which contained an intentional-act exclusion. Due to the Club’s rental agreements with the District, the District was named as an additional insured to the West Bend policy. The underlying plaintiffs sued both the Club and the District, alleging willful and wanton hiring and retention of the defendant.

West Bend agreed to defend the District as an additional insured under a reservation of rights, before filing a declaratory judgment that it had no duty to defend or indemnify. West Bend argued that the allegations of “willful and wanton” negligence necessarily required an element of intent, thereby bringing the claims within the intentional-act exclusion of the policy. Additionally, West Bend argued that the District provided late notice of the underlying sexual abuse lawsuits.

The District argued that “willful and wanton” negligence was merely an aggravated form of ordinary negligence, as opposed to a separate tort, and, thus, the policy did not exclude coverage for the claim. Additionally, the District argued that the notice requirements on which West Bend relied applied only to the named insured—the Club—and not to the District as an additional insured.

The Appellate Court agreed with the District on both issues. The Appellate Court noted that, in addition to alleging willful and wanton misconduct, the allegations also potentially allege ordinary negligence, such that, even if the underlying plaintiffs cannot prove a special intent, they could prove ordinary negligence, thus bringing the complaint within the policy’s coverage. That the District may ultimately be immune from a negligence suit pursuant to the Tort Immunity Act does not eliminate the duty to defend.

Additionally, the court examined a trio of notice provisions that appeared to distinguish the obligations owed by the named insured and the additional insured. Specifically, some provisions obliged “you,” defined in the policy as the named insured, while others obliged “you and any other involved insured.” Given the clear distinction, the court held that only the provisions obliging “you and any other involved insured” applied to the District as an additional insured, and, thus, they accordingly complied with the notice provisions as applicable to them. W. Bend Mut. Ins. Co. v. Cmty. Unit Sch. Dist. 300, 2021 IL App (2d) 210108 (Nov. 12, 2021).