{ "id": 3624524, "name": "SAMUEL O'BANNON et al., Plaintiffs-Appellees, v. NORTHERN PETROCHEMICAL COMPANY et al., Defendants-Appellees.-(Hartford Accident and Indemnity Company, Intervening Appellant.)", "name_abbreviation": "O'Bannon v. Northern Petrochemical Co.", "decision_date": "1983-03-30", "docket_number": "No. 81-2983", "first_page": "734", "last_page": "740", "citations": [ { "type": "official", "cite": "113 Ill. App. 3d 734" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "655 F.2d 818", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1262073 ], "opinion_index": 0, "case_paths": [ "/f2d/655/0818-01" ] }, { "cite": "401 N.E.2d 1032", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "81 Ill. App. 3d 776", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3228162 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/81/0776-01" ] }, { "cite": "408 N.E.2d 1129", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1980, "opinion_index": 0 }, { "cite": "87 Ill. App. 3d 374", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3179673 ], "year": 1980, "opinion_index": 0, "case_paths": [ "/ill-app-3d/87/0374-01" ] }, { "cite": "226 N.E.2d 630", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "37 Ill. 2d 273", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2865152 ], "opinion_index": 0, "case_paths": [ "/ill-2d/37/0273-01" ] }, { "cite": "193 N.E.2d 123", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "43 Ill. App. 2d 184", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 5245650 ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/43/0184-01" ] }, { "cite": "404 N.E.2d 895", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "83 Ill. App. 3d 1083", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5555652 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/83/1083-01" ] }, { "cite": "384 N.E.2d 335", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1980, "opinion_index": 0 }, { "cite": "74 Ill. 2d 132", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2994842 ], "year": 1980, "opinion_index": 0, "case_paths": [ "/ill-2d/74/0132-01" ] }, { "cite": "362 N.E.2d 382", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "48 Ill. App. 3d 152", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3374144 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/48/0152-01" ] }, { "cite": "313 N.E.2d 274", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "19 Ill. App. 3d 1001", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2699934 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/19/1001-01" ] } ], "analysis": { "cardinality": 667, "char_count": 14060, "ocr_confidence": 0.778, "pagerank": { "raw": 1.8219143849732882e-07, "percentile": 0.7193353743789695 }, "sha256": "ab5193e0f61447b93a2b664dd53492eddf23987fa1f5c3268f3525bad15d9ea6", "simhash": "1:eaf517ce4c491487", "word_count": 2183 }, "last_updated": "2023-07-14T20:40:35.449940+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "SAMUEL O\u2019BANNON et al., Plaintiffs-Appellees, v. NORTHERN PETROCHEMICAL COMPANY et al., Defendants-Appellees.\u2014(Hartford Accident and Indemnity Company, Intervening Appellant.)" ], "opinions": [ { "text": "PRESIDING JUSTICE McNAMARA\ndelivered the opinion of the court:\nThis appeal arises out of the settlement of an action based upon alleged violations of the Structural Work Act. Subsequent to the settlement and dismissal of the action, Hartford Accident & Indemnity Company, an insurer for two of the defendants, petitioned to intervene and to vacate a portion of the settlement order. The trial court denied both motions and Hartford appeals.\nOn October 4, 1977, plaintiff Samuel O\u2019Bannon, an employee of Morrison Construction Company, brought this suit seeking $1,400,000 in damages for injuries sustained by plaintiff on December 6, 1976, when he fell from a scaffold while working at a construction site owned by defendant Northern Petrochemical Company. Northern, acting as its own general contractor, had issued contracts to six prime contractors to perform certain aspects of the work. Among those prime contractors were plaintiff\u2019s employer Morrison and defendant Charles O\u2019Brien & Son Construction Co., Inc. Plaintiff alleged in an amended complaint that O\u2019Brien had erected the scaffold and that violations of the Act by Northern and O\u2019Brien had caused his injuries. Morrison, having paid Workmen\u2019s Compensation to plaintiff, intervened in order to protect its lien.\nThe contract between O\u2019Brien and Northern required O\u2019Brien to provide insurance coverage for any liability Northern might have for injuries arising out of work performed by O\u2019Brien for Northern. O\u2019Brien purchased such a policy from Hartford. Morrison, pursuant to similar contractual obligations to Northern, purchased an insurance policy from Continental Insurance Company to cover Northern\u2019s liability for injuries arising out of work performed by Morrison for Northern. Each of these policies had a limit of liability of $1,000,000.\nContinental retained the law firm of Garretson & Santora to defend Northern in this suit. In a letter dated July 29, 1980, Northern tendered the defense of this suit to O\u2019Brien under the insurance coverage O\u2019Brien had purchased from Hartford. Northern received no response. Shortly after that, Garretson & Santora wrote demanding O\u2019Brien\u2019s cooperation in the defense of this suit. This letter informed O\u2019Brien of a pretrial hearing set for September 9, 1980, and demanded that a representative of either O\u2019Brien or Hartford be present. The letter noted that plaintiff was suing Northern for an amount in excess of the Continental policy limits. Again no response was received.\nOn September 12, 1980, Northern filed a complaint against Hartford and O\u2019Brien seeking a declaratory judgment that Hartford had a duty to defend and to indemnify Northern. It was Hartford\u2019s position that plaintiff\u2019s injuries were not covered by the Hartford policy because they had not arisen out of any work performed by O\u2019Brien. Nevertheless, in response to Northern\u2019s tender of defense, Hartford agreed, in a letter dated October 27, 1980, while the declaratory judgment action was still pending, to participate in Northern\u2019s defense but only under a full and complete reservation of rights. Specifically, Hartford stated that it would share defense costs paid to Garretson & Santora if it were determined that Hartford\u2019s policy was primary over that of Continental. Hartford asserted further that if Northern wished to retain its own counsel Hartford would reimburse Northern for reasonable attorney fees in the event Hartford\u2019s policy was found to be primary.\nBy order of February 2, 1981, the trial court ruled in the declaratory judgment action that Hartford did have a contractual duty to defend Northern subject to Hartford\u2019s reservation of rights. The indemnification issue was found to be premature.\nWhile the declaratory judgment action was pending, Northern\u2019s counsel kept Hartford advised of pretrials and continually requested Hartford\u2019s participation. Hartford\u2019s attorneys did attend three pretrials but made no settlement offer.\nBy letter dated May 27, 1981, Hartford was advised that Continental was entering into active negotiations with plaintiff\u2019s attorney. Although Hartford\u2019s participation was requested, it took no part in the negotiations. In Hartford\u2019s absence a settlement agreement was reached between the parties whereby plaintiff received $975,000, $935,000 from Continental on Northern\u2019s behalf and the balance from O\u2019Brien. Morrison agreed to reduce its workmen\u2019s compensation lien claim from $130,000 to $70,000 in exchange for Northern\u2019s waiver of any indemnity claims it might have against Morrison. Pursuant to this agreement, the trial court, on June 23, 1981, entered an order which provided that \u201cthe above titled cause, including any and all counterclaims, third party claims and Workmen\u2019s Compensation claims, be and the same hereby are dismissed with prejudice and without costs.\u201d\nOn July 21, 1981, Hartford filed its petition to intervene, alleging that it had interests in the suit which were not adequately represented and that it might be bound by the order of dismissal. Hartford had been advised the declaratory judgment action would be reinstated against it unless Hartford voluntarily reimbursed Continental for one half of the $935,000 Continental had paid plaintiff on Northern\u2019s behalf. Although Hartford still denied that Northern was covered for plaintiff\u2019s injuries under its policy with Hartford, Hartford asserted that in the event the declaratory judgment action was reinstated, Hartford, as subrogee of Northern would want to file for indemnity against Morrison. Hartford expressed concern that the language in the court\u2019s order purporting to dismiss all counterclaims and third-party claims might be misconstrued to preclude Hartford from seeking such indemnity. Noting that Continental insured both Northern and Morrison, Hartford charged that the parties had included this language in the order for the specific purpose of preventing Hartford from exercising its subrogation rights against Morrison.\nOn the same date Hartford also filed a motion to vacate that part of the June 23 order purporting to dismiss \u201call counterclaims [and] third party claims ***.\u201d After a hearing the trial court denied both petitions.\nOn appeal, Hartford contends that it should have been allowed to intervene pursuant to the Civil Practice Act. Ill. Rev. Stat. 1979, ch. 110, par. 26.1(l)(b).\nTimeliness of a petition to intervene is a matter for the discretion of the trial court. (Avery v. Moseley (1974), 19 Ill. App. 3d 1001, 313 N.E.2d 274.) Hartford\u2019s petition was filed after the case was settled and dismissed. Although intervention is usually allowed only before judgment, it may be granted after judgment when necessary to protect the rights of the intervener. (Moore v. McDaniel (1977), 48 Ill. App. 3d 152, 362 N.E.2d 382.) Where, however, as in the present case, the intervenor was not only aware of the original suit but had ample opportunity to intervene prior to judgment, a post-judgment petition to intervene will be denied as untimely unless failure to intervene prior to judgment can be adequately explained. Moore v. McDaniel.\nHartford raises two arguments in its attempt to explain why it did not petition to intervene earlier in the proceedings. First, relying on Thornton v. Paul (1978), 74 Ill. 2d 132, 384 N.E.2d 335, and Home Insurance Co. v. Lorelei Restaurant Co. (1980), 83 Ill. App. 3d 1083, 404 N.E.2d 895, Hartford maintains that, because of a conflict of interest between it, as insurer, and Northern as the insured, it would not have been permitted to intervene in the suit prior to settlement. Second, Hartford urges that its petition was timely because it was unaware that its interests were not being adequately represented until after settlement and dismissal and that it immediately sought to intervene at that time.\nConsideration of Hartford\u2019s conflict of interest argument requires that we look to the applicable principles of insurance law. Generally, an insurer is required to defend an action against its insured whenever the complaint alleges facts potentially within coverage of the policy. This is true even where the insurer\u2019s own investigation reveals such allegations to be false. (Thornton v. Paul; Sims v. Illinois National Casualty Co. (1963), 43 Ill. App. 2d 184, 193 N.E.2d 123.) Where an insurer wrongfully refuses to defend its insured it is es-topped to deny policy coverage in a subsequent lawsuit by the insured or the insured\u2019s assignee. Thornton v. Paul.\nThere is an exception to the general rule, however, where a conflict of interest exists between the insurer and its insured. In such case the insurer is not permitted to participate in the defense itself. Instead, its obligation to provide a defense is satisfied by reimbursing the insured for the costs of independent counsel. (Thornton v. Paul.) Furthermore, the insurer\u2019s rightful refusal to participate in the defense of such an action does not estop it from raising the defense of noncoverage in a subsequent proceeding. (Thornton v. Paul.) Therefore, since the insurer is not bound by the order in the action against the insured, it is not entitled to intervene as a matter of right. Home Insurance Co. v. Lorelei Restaurant Co.\nIn effect, Hartford\u2019s argument is that it had a conflict of interest with Northern which prohibited Hartford not only from participating in Northern\u2019s defense but also from intervening. We reject this argument because we fail to find a conflict of interest. Both Thornton and Lorelei are distinguishable in that regard.\nIn Thornton the defendant putative insured was charged with both negligence and battery. Battery was outside policy coverage. Although both the insurer and the insured would have benefited from a finding that the insured was not liable at all, the insurer\u2019s interests would have been just as well served by a finding that the insured committed a battery. Such a finding would obviously have been in conflict with the insured\u2019s best interests.\nSimilarly in Lorelei the complaint against the insured alleged both negligent and intentional acts on the part of the insured, the latter of which were outside policy coverage. Again the court found a conflict of interest where the insurer had an interest in proving a set of facts which would have had the effect of subjecting the insured to greater liability.\nHartford here had an interest in showing that plaintiff\u2019s injuries were not covered by Northern\u2019s policy with Hartford. To this end it may have attempted to show that such injuries were unrelated to any work done by O\u2019Brien for Northern. Unlike Thornton and Lorelei, however, such a showing would not have been in serious conflict with Northern\u2019s best interests; nor would it have subjected Northern to greater liability.\nThe charges are contradictory as to whether O\u2019Brien or Morrison built the scaffold. In either case, however, Northern could have also been subject to liability since more than one party may be in charge of the work and thus liable. Although Northern may have been able to seek active-passive indemnity from the prime contractor who built the scaffold, such indemnification could have been sought from Morrison, if it were the actively negligent party, as well as from O\u2019Brien. Morrison\u2019s payment of workmen\u2019s compensation to plaintiff did not insulate Morrison from third-party suits for indemnification with regard to liability for plaintiff\u2019s injuries. Miller v. DeWitt (1967), 37 Ill. 2d 273, 226 N.E.2d 630.\nThe authorities are divided as to whether a construction company\u2019s purchase of liability insurance to cover the property owner, pursuant to the company\u2019s contractual obligations, bars a suit for indemnification by the owner against the company. (Compare Vandygriff v. Commonwealth Edison Co. (1980), 87 Ill. App. 3d 374, 408 N.E.2d 1129, with Rome v. Commonwealth Edison Co. (1980), 81 Ill. App. 3d 776, 401 N.E.2d 1032.) Again, however, O\u2019Brien and Morrison are similarly situated in that regard since both purchased such insurance for Northern pursuant to contractual obligations.\nThe only real detriment to Northern from a finding that O\u2019Brien was not involved would be that Northern could not look to Hartford for coverage. It is clear, however, that an insurer\u2019s interest in negating policy coverage does not in itself create a sufficient conflict to excuse the insurer from conducting the defense. (Maneikis v. St. Paul Insurance Co. (7th Cir. 1981), 655 F.2d 818.) A contrary holding would not only overturn the estoppel rule set forth in Sims v. Illinois National Casualty Co., but would in effect nullify the insurer\u2019s contractual obligation to defend whenever it could show potential application of some policy exclusion.\nWe also reject Hartford\u2019s contention that the petition was timely because it was unaware, prior to settlement and dismissal, that its interests were not being adequately represented. Hartford was long aware of the diverse interests of the parties involved. We find that Hartford has failed to show that it exercised reasonable diligence in seeking intervention.\nSince we find that the trial court properly denied Hartford\u2019s petition to intervene, we need not address the substance of Hartford\u2019s motion to vacate a portion of the dismissal order.\nFor the reasons stated, the judgment of the circuit court of Cook County is affirmed.\nJudgment affirmed.\nMcGILLICUDDY and WHITE, JJ., concur.", "type": "majority", "author": "PRESIDING JUSTICE McNAMARA" } ], "attorneys": [ "Rooks, Pitts, Fullagar & Poust, of Chicago (Terrance E. Kiwala and James J. Stamos, of counsel), for appellant.", "Clausen, Miller, Gorman, Caffrey & Witous, of Chicago (William E. Hourigan, James T. Ferrini, and Thomas J. Burke, of counsel), for appellee Morrison Construction Company.", "Jerome H. Torshen, Ltd. and Garretson & Santora, both of Chicago (Jerome H. Torshen and Abigail K. Spreyer, of counsel), for appellee Northern Petrochemical Company." ], "corrections": "", "head_matter": "SAMUEL O\u2019BANNON et al., Plaintiffs-Appellees, v. NORTHERN PETROCHEMICAL COMPANY et al., Defendants-Appellees.\u2014(Hartford Accident and Indemnity Company, Intervening Appellant.)\nFirst District (3rd Division)\nNo. 81\u20142983\nOpinion filed March 30, 1983.\nRooks, Pitts, Fullagar & Poust, of Chicago (Terrance E. Kiwala and James J. Stamos, of counsel), for appellant.\nClausen, Miller, Gorman, Caffrey & Witous, of Chicago (William E. Hourigan, James T. Ferrini, and Thomas J. Burke, of counsel), for appellee Morrison Construction Company.\nJerome H. Torshen, Ltd. and Garretson & Santora, both of Chicago (Jerome H. Torshen and Abigail K. Spreyer, of counsel), for appellee Northern Petrochemical Company." }, "file_name": "0734-01", "first_page_order": 756, "last_page_order": 762 }