{ "id": 381811, "name": "SPORTMART, INC., Plaintiff-Appellant, v. DAISY MANUFACTURING COMPANY et al., Defendants-Appellees", "name_abbreviation": "Sportmart, Inc. v. Daisy Manufacturing Co.", "decision_date": "1994-12-15", "docket_number": "No. 1\u201493\u20142660", "first_page": "974", "last_page": "980", "citations": [ { "type": "official", "cite": "268 Ill. App. 3d 974" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "424 N.E.2d 1316", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "100 Ill. App. 3d 33", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5496145 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/100/0033-01" ] }, { "cite": "574 N.E.2d 198", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "214 Ill. 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App. 3d", "case_ids": [ 3503056 ], "weight": 2, "pin_cites": [ { "page": "485" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/150/0479-01" ] }, { "cite": "438 N.E.2d 943", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "108 Ill. App. 3d 69", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3011719 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/108/0069-01" ] }, { "cite": "388 N.E.2d 23", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1982, "opinion_index": 0 }, { "cite": "69 Ill. App. 3d 422", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3238884 ], "year": 1982, "pin_cites": [ { "page": "429" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/69/0422-01" ] }, { "cite": "430 N.E.2d 1079", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "88 Ill. 2d 444", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3082811 ], "opinion_index": 0, "case_paths": [ "/ill-2d/88/0444-01" ] }, { "cite": "384 N.E.2d 335", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "74 Ill. 2d 132", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2994842 ], "year": 1981, "opinion_index": 0, "case_paths": [ "/ill-2d/74/0132-01" ] }, { "cite": "516 N.E.2d 544", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "163 Ill. App. 3d 149", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3547330 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/163/0149-01" ] }, { "cite": "386 F.2d 413", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 2088104 ], "opinion_index": 0, "case_paths": [ "/f2d/386/0413-01" ] }, { "cite": "416 N.E.2d 758", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "92 Ill. App. 3d 1066", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5534140 ], "weight": 2, "pin_cites": [ { "page": "1068" }, { "page": "1069" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/92/1066-01" ] }, { "cite": "596 N.E.2d 59", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "231 Ill. App. 3d 269", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5203799 ], "pin_cites": [ { "page": "275" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/231/0269-01" ] }, { "cite": "553 N.E.2d 39", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 3, "opinion_index": 0 }, { "cite": "195 Ill. App. 3d 660", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2493025 ], "weight": 3, "pin_cites": [ { "page": "665" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/195/0660-01" ] }, { "cite": "466 N.E.2d 1091", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "opinion_index": 0 }, { "cite": "126 Ill. App. 3d 150", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3596668 ], "weight": 5, "pin_cites": [ { "page": "154" }, { "page": "154" }, { "page": "154" }, { "page": "154" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/126/0150-01" ] }, { "cite": "442 N.E.2d 245", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "92 Ill. 2d 388", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3098596 ], "pin_cites": [ { "page": "393" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/92/0388-01" ] }, { "cite": "578 N.E.2d 926", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1982, "opinion_index": 0 }, { "cite": "144 Ill. 2d 64", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5592135 ], "weight": 3, "year": 1982, "pin_cites": [ { "page": "73" }, { "page": "73" }, { "page": "74" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/144/0064-01" ] }, { "cite": "570 N.E.2d 528", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "211 Ill. App. 3d 586", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2528885 ], "pin_cites": [ { "page": "591" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/211/0586-01" ] }, { "cite": "430 N.E.2d 1104", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1991, "opinion_index": 0 }, { "cite": "88 Ill. 2d 469", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3082168 ], "year": 1991, "pin_cites": [ { "page": "476" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/88/0469-01" ] } ], "analysis": { "cardinality": 765, "char_count": 14844, "ocr_confidence": 0.789, "pagerank": { "raw": 2.4331007592784315e-07, "percentile": 0.8022643405078829 }, "sha256": "f6c506eb849140afd9c8da61112ef683d2d73989a40bd7c293c9e5561b1d304c", "simhash": "1:1a92214e29e1ffdf", "word_count": 2339 }, "last_updated": "2023-07-14T18:15:47.504806+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "SPORTMART, INC., Plaintiff-Appellant, v. DAISY MANUFACTURING COMPANY et al., Defendants-Appellees." ], "opinions": [ { "text": "PRESIDING JUSTICE HOFFMAN\ndelivered the opinion of the court:\nPlaintiff Sportmart, Inc., brought this declaratory judgment action seeking a determination that defendants, Continental Casualty and Continental\u2019s insured, Daisy Manufacturing, were required to defend and indemnify Sportmart in a personal injury suit involving a Daisy product. Following cross-summary judgment motions, the trial court granted judgment for defendants. On appeal, plaintiff raises the following issues: (1) whether the court erred in determining that Continental had no duty to defend plaintiff; and (2) whether Continental is estopped to deny coverage under its policy by its improper refusal to defend plaintiff.\nThe following facts are substantially undisputed. Sportmart operates a retail sporting goods chain in the Chicago area. Daisy manufactures \"BB\u201d guns and the .177-caliber pellets used as ammunition in them. Through its subsidiary, Olympic Distributors, Sport-mart contracted with Daisy to sell the guns and pellets in a local retail store. As part of this contract, a certificate of insurance was issued to Olympic on Daisy\u2019s behalf. Daisy then procured a comprehensive general liability policy issued by Continental, which was effective from November 15, 1987, through November 15, 1988. Continental\u2019s policy contained an \"Additional Insured \u2014 Vendors\u201d endorsement, which provided coverage for vendors of products manufactured by Daisy, \"but only with respect to 'bodily injury\u2019 or 'property damage\u2019 arising out of '[Daisy\u2019s] products\u2019 *** which are distributed or sold in the regular course of the vendor\u2019s business.\u201d The vendor\u2019s endorsement also contained the following exclusion:\n\"The insurance afforded [Sportmart] does not apply to:\n* * *\ne. Any failure to make such inspections, adjustments, tests or servicing as [Sportmart] has agreed to make or normally undertakes to make in the usual course of business, in connection with the distribution or sale of the products ***.\u201d\nOn or about November 17, 1989, Anthony Miceli, through his father Frank Miceli, Jr., brought a negligence action against Sport-mart and another sporting goods store. The complaint charged that on December 2, 1987, 15-year-old Anthony Miceli was shooting a BB gun near his home using pellets he purchased from Sportmart. A pellet ricocheted off of a light pole and penetrated his left eye, causing him to partially lose his sight. The complaint alleged Sportmart and its employees were negligent in that they (a) sold ammunition to plaintiff, who was under 21 years old, in violation of section 1 of the Firearm Owners Identification Card Act (Ill. Rev. Stat. 1987, ch. 38, par. 83\u20141 et seq.); (b) sold the ammunition to a minor under 16 years of age in contravention of established store policy; (c) sold the ammunition to the minor plaintiff when it knew or should have known that his use of the ammunition could result in injury; and (d) failed to determine plaintiff\u2019s age prior to selling the ammunition to him. There were no allegations of product liability. Sportmart filed an answer denying each of these allegations.\nPursuant to the vendor\u2019s endorsement, Sportmart tendered defense of the complaint to Daisy. In correspondence of January 31, 1991, Daisy refused the tender on the basis that the Micelis\u2019 complaint was premised upon Sportmart\u2019s negligence in selling the ammunition rather than upon any defect in Daisy\u2019s product. Sport-mart\u2019s insurer then tendered the defense to Continental, apparently on or about October 7, 1992. Continental similarly rejected the tender on October 14, 1992.\nOn November 23, 1992, Sportmart filed its first-amended complaint for declaratory judgment, seeking a determination that Daisy and Continental were obligated to defend it in the Miceli lawsuit. Daisy and Continental moved for summary judgment, arguing that the vendor\u2019s endorsement covered only injuries resulting from a defect in Daisy\u2019s product. Sportmart responded with a cross-motion for summary judgment, claiming that it was entitled to coverage for any injury arising from the product regardless of whether any defect was alleged. Following a hearing, the trial court denied Sportmart\u2019s motion and entered summary judgment for Daisy and Continental. Sportmart then filed the instant appeal.\nThe primary issue on appeal turns upon the meaning of the phrase \"arising out of\u201d in the vendor\u2019s endorsement. Sportmart argues that this language unambiguously required Continental to defend it in all bodily injury claims resulting from the Daisy product. Alternatively, Sportmart contends that even if the language is ambiguous, all ambiguities must be construed in favor of Sportmart as the insured. Defendants respond that the purpose of the vendor\u2019s endorsement was to cover Sportmart for claims resulting from defects in the product rather than from Sportmart\u2019s own fault. Thus, because the Micelis\u2019 complaint was premised solely upon Sportmart\u2019s negligence in selling the pellets to a minor, the case was beyond policy coverage.\nIn determining the extent of an insurer\u2019s duty to defend, we look exclusively to the terms of the policy and the allegations of the underlying complaint. (Clemmons v. Travelers Insurance Co. (1981), 88 Ill. 2d 469, 476, 430 N.E.2d 1104; Employers Mutual Cos./Illinois Emcasco Insurance Co. v. Country Cos. (1991), 211 Ill. App. 3d 586, 591, 570 N.E.2d 528.) If the underlying complaint alleges facts potentially within the policy\u2019s coverage, the insurer is obligated to defend its insured even if the allegations are groundless, false, or fraudulent. (United States Fidelity & Guaranty Co. v. Wilkin Insulation Co. (1991), 144 Ill. 2d 64, 73, 578 N.E.2d 926; Conway v. Country Casualty Insurance Co. (1982), 92 Ill. 2d 388, 393, 442 N.E.2d 245.) The insurer cannot justifiably refuse to defend unless the face of the complaint clearly fails to state facts which bring the case potentially within the policy\u2019s coverage. (Wilkin, 144 Ill. 2d at 73.) Moreover, the underlying complaint and policy must be construed liberally in favor of the insured; any doubts or ambiguities should be resolved against the insurer who drafted the policy. Wilkin, 144 Ill. 2d at 74; Maryland Casualty Co. v. Chicago & North Western Transportation Co. (1984), 126 Ill. App. 3d 150, 154, 466 N.E.2d 1091.\nIn the instant case, the policy language at issue provided as follows:\n\"ADDITIONAL INSURED \u2014 VENDORS\n* * *\nWHO IS AN INSURED *** is amended to include as an insured any [vendor] ***, but only with respect to 'bodily injury\u2019 or 'property damage\u2019 arising out of 7Daisy products]\u2019 *** which are distributed or sold in the regular course of the vendor\u2019s business ***.\u201d (Emphasis added.)\nThe phrase \"arising out of\u201d repeatedly has been recognized as being broad as well as vague. (Maryland Casualty, 126 Ill. App. 3d at 154; Aetna Casualty & Surety Co. v. Prestige Casualty Co. (1990), 195 Ill. App. 3d 660, 665, 553 N.E.2d 39.) It must therefore be construed strictly against the insurer. (Illinois Founders Insurance Co. v. Smith (1992), 231 Ill. App. 3d 269, 275, 596 N.E.2d 59.) In worker\u2019s compensation claims and insurance litigation, this language is considered satisfied by a mere causal connection and does not necessarily require proximate causation. (Consolidated Rail Corp. v. Liberty Mutual Insurance Co. (1981), 92 Ill. App. 3d 1066, 1068, 416 N.E.2d 758; Maryland Casualty, 126 Ill. App. 3d at 154.) Synonymous with \"arising out of\u2019 are the terms \"connected with,\u201d \"incidental to,\u201d \"originating from,\u201d \"growing out of,\u201d and \"flowing from.\u201d Maryland Casualty Co., 126 Ill. App. 3d at 154; Consolidated Rail Corp., 92 Ill. App. 3d at 1069.\nContrary to defendants\u2019 position in this case, there is nothing in Continental\u2019s policy limiting coverage to claims alleging a product defect. Further, provided the product is sold in the same condition as when it left Daisy\u2019s control, there is no policy exclusion for injuries directly caused by the product which are also attributable to the negligence of another party. Therefore, the broad language must be construed against the insurer to require coverage for all bodily injury \"growing out of\u2019 or resulting from Daisy\u2019s product. (See Maryland Casualty, 126 Ill. App. 3d 150, 466 N.E.2d 1091; Aetna Casualty & Surety Co. v. Ocean Accident & Guarantee Corp. (3d Cir. 1967), 386 F.2d 413.) Indisputably, Miceli\u2019s injury would not have occurred but for his use of the pellets. Therefore, defendants\u2019 argument must fail and summary judgment must be reversed.\nBoth the trial court and defendants relied upon Dominick\u2019s Finer Foods, Inc. v. American Manufacturers Mutual Insurance Co. (1987), 163 Ill. App. 3d 149, 516 N.E.2d 544, as controlling in this case. In that case, we held that coverage under a vendor\u2019s endorsement was limited to injuries caused by the product itself; thus, it did not encompass an injury to a delivery man who sued the vendor when, while delivering the product, he slipped and fell on the vendor\u2019s loading dock. Unlike in the case at bar, however, it was clear in Dominick\u2019s that there was no causal link between the product and the injury; instead, the injury stemmed from the condition of the vendor\u2019s loading dock. That case and the cases upon which it relies do not address the applicability of a vendor\u2019s endorsement where the injury resulted from the use of the product and also the vendor\u2019s negligence. Thus, Dominick\u2019s is not decisive in this case.\nDefendants further claim that they were absolved from providing coverage under the following policy exclusion:\n\"The insurance afforded [Sportmart] does not apply to:\n* * *\ne. Any failure to make such inspections, adjustments, tests or servicing as [Sportmart] has agreed to make or normally undertakes to make in the usual course of business, in connection with the distribution or sale of the products ***.\u201d\nDefendants argue that \"inspections\u201d which plaintiff \"agreed\u201d or \"normally undertook to make\u201d included verifying the ages of prospective purchasers of the BB pellets. However, there was no evidence that plaintiff ever represented that it had a policy of verifying the age of its customers or that such verification was a condition of coverage. Nor was there any coverage restriction for the vendor\u2019s failure to adhere to laws regarding the sale of the product. Had defendants intended to so limit the policy, it was incumbent upon them to provide the desired exclusion.\nPlaintiff also seeks to estop Continental from asserting any policy defenses because it failed to either defend the underlying case with a reservation of rights or file a declaratory judgment action. Continental does not dispute this failure, but maintains that estoppel is not warranted because an action to adjudicate the parties\u2019 rights was filed by plaintiff, and plaintiff was thus not prejudiced.\nAn insurer\u2019s duty to defend is triggered as soon as allegations in an underlying complaint show that the suit is potentially within policy coverage. (Thornton v. Paul (1978), 74 Ill. 2d 132, 384 N.E.2d 335; Murphy v. Urso (1981), 88 Ill. 2d 444, 430 N.E.2d 1079.) Where the complaint presents a case of potential coverage, the insurer must either defend under a reservation of rights or seek a declaratory judgment that there is no coverage; if the insurer fails to do so, it is estopped from raising policy defenses in a subsequent action and is liable for any award against the insured. (Murphy, 88 Ill. 2d at 451.) Estoppel, however, is generally based upon conduct by the insurer which misleads the insured to its detriment or otherwise causes some demonstrable prejudice to the insured. (Salloum Foods & Liquor, Inc. v. Parliament Insurance Co. (1979), 69 Ill. App. 3d 422, 429, 388 N.E.2d 23.) The burden of proving prejudice lies with the insured and must be met with clear and convincing evidence. Royal Globe Insurance Co. v. Tutt (1982), 108 Ill. App. 3d 69, 438 N.E.2d 943.\nIn support of their argument, defendants rely upon Northbrook Property & Casualty Insurance Co. v. United States Fidelity & Guaranty Co. (1986), 150 Ill. App. 3d 479, 501 N.E.2d 817, and Prestige (195 Ill. App. 3d 660, 553 N.E.2d 39). In both of these cases, primary carriers who refused to defend sought to avoid estoppel on the basis that their insureds, both of whom had judgments entered against them, had nonetheless been defended by other insurers and therefore suffered no prejudice. This court held that primary insurers could not escape liability merely owing to the \" 'fortuitous existence of another insurer who is willing to meet its own obligations.\u2019 \u201d Northbrook, 150 Ill. App. 3d at 485, quoting Aetna Casualty & Surety Co. v. Coronet Insurance Co. (1976), 44 Ill. App. 3d 744, 748-49, 358 N.E.2d 914; see also Prestige, 195 Ill App. 3d 660, 553 N.E.2d 39.\nMore in line with the case at bar is Village of Melrose Park v. Nautilus Insurance Co. (1991), 214 Ill. App. 3d 864, 574 N.E.2d 198. In that case, as here, the insured initiated declaratory judgment proceedings to determine whether coverage existed, and the carrier responded with a motion for summary judgment. This court held that this was sufficient to defeat the insured\u2019s later estoppel claim, because it was \"the fact of the declaratory judgment that [was] of legal import, and not the identity of the party initiating the proceeding.\u201d Village of Melrose Park, 214 Ill. App. 3d at 867, citing Ayers v. Bituminous Insurance Co. (1981), 100 Ill. App. 3d 33, 35 n.1, 424 N.E.2d 1316.\nIn the case at bar, Sportmart initiated the instant action about one month after Continental refused its tender. Continental and Daisy responded with summary judgment motions, thereby seeking a determination of their responsibilities under the policy. Sportmart has not alleged prejudice from the fact that it was the one to initiate declaratory proceedings. Therefore, its claim for estoppel is without merit.\nFor the foregoing reasons, the judgment of the circuit court is reversed, and partial summary judgment is entered for Sportmart and against Continental on the duty to defend issue as raised in Sport-mart\u2019s first amended complaint. This court makes no judgment as to Continental\u2019s duty to indemnify Sportmart in the event of a judgment against it.\nReversed and remanded for proceedings consistent with this opinion.\nJOHNSON and CAHILL, JJ., concur.\nJustice Johnson concurred in the disposition of this appeal before his retirement.", "type": "majority", "author": "PRESIDING JUSTICE HOFFMAN" } ], "attorneys": [ "Baker & McKenzie, of Chicago (Francis D. Morrissey, Michael A. Pollard, Michael J. Wagner, Michael Tarpey, and Mark M. Burden, of counsel), for appellant.", "Coles, Grasso, Fencl & Skinner, Ltd., of Chicago (Glenn F. Fencl and Jennifer E. O\u2019Leary, of counsel), for appellees." ], "corrections": "", "head_matter": "SPORTMART, INC., Plaintiff-Appellant, v. DAISY MANUFACTURING COMPANY et al., Defendants-Appellees.\nFirst District (4th Division)\nNo. 1\u201493\u20142660\nOpinion filed December 15, 1994.\nBaker & McKenzie, of Chicago (Francis D. Morrissey, Michael A. Pollard, Michael J. Wagner, Michael Tarpey, and Mark M. Burden, of counsel), for appellant.\nColes, Grasso, Fencl & Skinner, Ltd., of Chicago (Glenn F. Fencl and Jennifer E. O\u2019Leary, of counsel), for appellees." }, "file_name": "0974-01", "first_page_order": 992, "last_page_order": 998 }