{ "id": 5767675, "name": "AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. W.H. McNAUGHTON BUILDERS, INC., a/k/a W.H. McNaughton Builders, LLC, Defendant-Appellant", "name_abbreviation": "American Family Mutual Insurance v. W.H. McNaughton Builders, Inc.", "decision_date": "2006-02-06", "docket_number": "No. 2-05-0063", "first_page": "505", "last_page": "515", "citations": [ { "type": "official", "cite": "363 Ill. App. 3d 505" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "160 Ill. App. 3d 146", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3649557 ], "weight": 6, "year": 1987, "pin_cites": [ { "page": "155" }, { "page": "153-54" }, { "page": "155" }, { "page": "155" }, { "page": "155" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/160/0146-01" ] }, { "cite": "134 Ill. App. 3d 134", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3637185 ], "weight": 3, "year": 1985, "pin_cites": [ { "page": "137" }, { "page": "137", "parenthetical": "noting that in conflict situations, \"the insurer's obligation to defend is satisfied by reimbursing the insured for the costs of independent counsel\"" }, { "page": "138" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/134/0134-01" ] }, { "cite": "329 Ill. App. 3d 908", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1472432 ], "weight": 2, "year": 2002, "pin_cites": [ { "page": "921" }, { "page": "921" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/329/0908-01" ] }, { "cite": "88 Ill. 2d 444", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3082811 ], "weight": 7, "year": 1981, "pin_cites": [ { "page": "453-54" }, { "page": "448" }, { "page": "449" }, { "page": "453" }, { "page": "453-54" }, { "page": "453-54" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/88/0444-01" ] }, { "cite": "88 Ill. 2d 469", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3082168 ], "weight": 3, "year": 1981, "pin_cites": [ { "page": "479" }, { "page": "475" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/88/0469-01" ] }, { "cite": "168 Ill. App. 3d 158", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3512354 ], "weight": 8, "year": 1988, "pin_cites": [ { "page": "163" }, { "page": "163" }, { "page": "163" }, { "page": "163" }, { "page": "161" }, { "page": "161" }, { "page": "167-68" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/168/0158-01" ] }, { "cite": "161 Ill. 2d 433", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 783179 ], "year": 1994, "pin_cites": [ { "page": "439" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/161/0433-01" ] }, { "cite": "203 Ill. 2d 141", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 799389 ], "year": 2003, "pin_cites": [ { "page": "150" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/203/0141-01" ] }, { "cite": "215 Ill. 2d 146", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 4059916 ], "year": 2005, "pin_cites": [ { "page": "154" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/215/0146-01" ] }, { "cite": "198 Ill. 2d 249", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 29937 ], "year": 2001, "pin_cites": [ { "page": "255" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/198/0249-01" ] }, { "cite": "215 Ill. 2d 381", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 4059670 ], "year": 2005, "pin_cites": [ { "page": "385" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/215/0381-01" ] } ], "analysis": { "cardinality": 862, "char_count": 27021, "ocr_confidence": 0.766, "pagerank": { "raw": 1.100028269770857e-07, "percentile": 0.568092386853442 }, "sha256": "b9bcb29aca8d5f8aa103d5bcb27a2d34134155bb7cf345c51d7924f290429c15", "simhash": "1:8be907524245d4d7", "word_count": 4394 }, "last_updated": "2023-07-14T18:25:30.372916+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. W.H. McNAUGHTON BUILDERS, INC., a/k/a W.H. McNaughton Builders, LLC, Defendant-Appellant." ], "opinions": [ { "text": "JUSTICE McLAREN\ndelivered the opinion of the court:\nIn 2004, defendant, W.H. McNaughton Builders, Inc., a/k/a W.H. McNaughton Builders, LLC (McNaughton), was sued by Fred and Marianne Begy (the Begy Suit), whose home McNaughton had built in 1991. McNaughton turned the Begy Suit over to its insurer, plaintiff, American Family Mutual Insurance Company (American Family), which, pursuant to its policy with McNaughton, had a duty to defend the suit. American Family agreed to comply with its duty to defend, but reserved the right to later deny coverage if McNaughton were found liable for damage occurring before the inception of the policy in 1994. In response, McNaughton argued that American Family and McNaughton had a conflict of interest, because American Family\u2019s interests would be protected if McNaughton were found liable in the Begy Suit for damage occurring before 1994.\nBecause American Family\u2019s interests would be protected if McNaughton were found liable, McNaughton argued that it should not be forced to defend the Begy Suit with an attorney retained by American Family. Rather, McNaughton argued that it should be permitted to select its own attorney at American Family\u2019s expense in accordance with well-settled law. American Family disagreed. It filed a declaratory judgment action in which it argued that there was no conflict and sought a determination that it had the right to select McNaughton\u2019s attorney. The trial court found that there was no current conflict, and accordingly it granted declaratory judgment for American Family. McNaughton appeals, and we reverse and remand.\nI. BACKGROUND\nAmerican Family issued a commercial general liability policy (the Policy) to McNaughton in 1994. As part of the Policy, American Family agreed that, in exchange for McNaughton\u2019s payment of annual premiums, American Family would cover expenses for which McNaughton became liable because of \u201cproperty damage\u201d covered by the Policy. According to the Policy, covered property damage was damage that, among other restrictions, occurred during the Policy period and of which the insured was unaware prior to the Policy\u2019s inception. Additionally, in order to be covered by the Policy, the damage had to come within the Policy\u2019s definition of \u201cproperty damage,\u201d which, in relevant part, was as follows:\n\u201ca. Physical Injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the \u2018occurrence\u2019 that caused it.\u201d\nIn turn, the Policy defined \u201coccurrence\u201d as \u201can accident, including continuous or repeated exposure to substantially the same general harmful conditions.\u201d\nAmerican Family added another policy exclusion, effective December 31, 2002. Specifically, as of that time, the Policy excluded from coverage, among other things, \u201cdirect or indirect losses resulting from\u201d \u201cproperty damage *** including] any claim for diminution of value of real or personal property due to its contamination with \u2018mold\u2019 in any form.\u201d The Policy remained current through 2004.\nIn July of that year, the Begys sued McNaughton. In their two-count complaint, the Begys alleged breach of implied warranty and breach of implied warranty of habitability. Count I alleged that, in building the Begys\u2019 home, McNaughton breached an implied warranty requiring it to install in a good and workmanlike manner an exterior insulation and finish system (EIFS). Count II alleged, among other things, that, as a result of McNaughton\u2019s failings, the Begys\u2019 home suffered mold damage. Although the complaint did not allege any dates, the agreement between the Begys and McNaughton was attached to it, and, according to that agreement, construction of the home was to begin in September 1991 and be \u201csubstantial[ly] \u2019 \u2019 completed by June 1992.\nMcNaughton informed American Family of the Begy Suit, and American Family retained counsel to defend McNaughton. Shortly after doing so, however, American Family advised McNaughton that American Family would be defending the Begy Suit under a complete reservation of rights to later deny coverage. In reserving its rights, American Family pointed out that: (1) the Policy did not cover property damage occurring prior to the Policy\u2019s inception in 1994; (2) the Policy did not cover property damage that resulted from mold and occurred after December 31, 2002; and (3) the Policy did not cover property damage that McNaughton knew about before the Policy\u2019s inception in 1994.\nAfter receiving notice of American Family\u2019s reservation of rights, McNaughton advised American Family that, due to a conflict of interest, McNaughton was entitled to hire independent counsel to represent it in the Begy Suit. According to McNaughton, a conflict existed because, although both McNaughton and American Family had a mutual interest in McNaughton\u2019s being found not liable in the Begy Suit, American Family\u2019s interests would be equally protected if McNaughton were found liable for damages not covered by the Policy. McNaughton noted that the Policy did not cover damage that occurred before 1994 or damage that McNaughton knew about before 1994 or damage that was due to mold and that occurred after 2002. McNaughton also noted that the Begys\u2019 claims dealt both with mold damage and with breaches of warranties occurring prior to 1994, that is, when the Begys\u2019 home was built in 1991 and 1992. Finally, McNaughton noted that issues as to the timing of the alleged damage \u2014 issues, that is, that McNaughton said would be resolved in the Begy Suit \u2014 could determine whether McNaughton had coverage under its policy with American Family. For these reasons, McNaughton argued, a conflict of interest existed between McNaugton and American Family, and, therefore, it was improper for American Family to control McNaughton\u2019s defense in the Begy Suit. McNaughton asked American Family to allow McNaughton to retain independent counsel to defend it against the Begys\u2019 allegations.\nAmerican Family responded to McNaughton\u2019s request by filing a declaratory judgment action against McNaughton. In its complaint, American Family asked the trial court to declare that there was no conflict and that, accordingly, American Family should be permitted to select the attorney to control McNaughton\u2019s defense in the Begy Suit.\nThe parties filed cross-motions for judgment on the pleadings. In support of its motion, American Family argued, inter alia, that there was no conflict because there would be no opportunity in the Begy Suit for counsel retained by American Family to shift facts to lay the basis for American Family to later deny coverage to McNaughton. To this end, American Family pointed out that it had reserved the right to deny coverage on the basis of, among other things, the timing of the damage to the Begys\u2019 home. American Family also pointed out that the Begys claimed that McNaughton had failed to properly construct their home and that, as a result, their home had suffered mold damage. This being the case, American Family argued that the Begys\u2019 claims did not raise an issue of when the damage occurred. Thus, American Family argued that there was no conflict, and, consequently, it should be permitted to appoint its own attorney to defend McNaughton in the Begy Suit.\nIn response, McNaughton argued that the Begys\u2019 claims did raise an issue of timing, which would be the subject of discovery in the Begy Suit. McNaughton argued that, if American Family were permitted to control the defense of the Begy Suit, then this discovery would be controlled by attorneys retained by American Family \u2014 attorneys, that is, with a long-standing financial relationship with American Family. Because, depending on what the discovery revealed as to timing, McNaughton could lose coverage under the Policy, McNaughton argued that there was a conflict. Consequently, McNaughton argued, American Family should not be allowed to use its own attorneys to control McNaughton\u2019s defense in the Begy Suit.\nThe trial court rejected McNaughton\u2019s argument. Specifically, at a hearing on the parties\u2019 motions, the trial court found that there was no \u201cclear conflict of interest,\u201d only a \u201cpossible or potential conflict of interest depending on what the discovery shows.\u201d The trial court explained:\n\u201c[A]t this point in time, it is clearly within the mutual interest of both WH. McNaughton and American Family to find that *** there was no property damage of the type that is alleged; only if that question is *** answered in the affirmative would it possibly come into *** the issue of when the damage took place ***.\nBut at this point in time, [the court] do[es]n\u2019t think that there is a conflict of interest which would require or even permit the court to allow the appointment of independent counsel ***.\u201d\nHaving concluded that there was no present conflict, the trial court granted American Family\u2019s motion for judgment on the pleadings. McNaughton appeals.\nII. ANALYSIS\nWe begin with the standard of review. A motion for judgment on the pleadings is properly granted only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Gillen v. State Farm Mutual Automobile Insurance Co., 215 Ill. 2d 381, 385 (2005). Our review of the trial court\u2019s decision on a motion for judgment on the pleadings is de novo. M.A.K. v. Rush-Presbyterian-St. Luke's Medical Center, 198 Ill. 2d 249, 255 (2001).\nThe sole issue in this appeal is whether a conflict of interest exists between McNaughton and American Family that entitles McNaughton to be defended against the Begys\u2019 allegations by an attorney of McNaughton\u2019s choosing. Before turning to that issue, however, it is helpful to begin our analysis with a word about an insurer\u2019s duty to defend its insured.\nAn insurer\u2019s duty to defend its insured is much broader than its duty to indemnify its insured. General Agents Insurance Co. of America, Inc. v. Midwest Sporting Goods Co., 215 Ill. 2d 146, 154 (2005). If a complaint against an insured contains allegations that are even potentially within policy coverage, the insurer is obligated to defend the insured. See Guillen v. Potomac Insurance Co. of Illinois, 203 Ill. 2d 141, 150 (2003). Stated another way, an insurer may not justifiably refuse to defend its insured unless it is clear from the face of the complaint that the complaint has failed to allege facts potentially within the insured\u2019s policy coverage. Dixon Distributing Co. v. Hanover Insurance Co., 161 Ill. 2d 433, 439 (1994). In making this determination, the allegations of the complaint must be liberally construed in favor of coverage. Midwest Sporting Goods Co., 215 Ill. 2d at 155.\nHere, the Begys allege in the underlying suit that McNaughton failed to properly apply an EIFS to their home (which McNaughton apparently built during 1991 and 1992) and that, as a result, their home suffered mold damage. Although the Begys\u2019 home was apparently built prior to the 1994 inception of the Policy, American Family has not alleged here that it does not have a duty to defend McNaughton. Rather, American Family argues that it should get to control McNaughton\u2019s defense. McNaughton, as noted, responds that there is a conflict of interest, and, because there is, McNaughton should be permitted to control its own defense by using its own attorney.\nThe conflict situation is an exception to the rule that the insurer, being charged with the duty of defending its insured, should be permitted to control the insured\u2019s defense. Illinois Masonic Medical Center v. Turegum Insurance Co., 168 Ill. App. 3d 158, 163 (1988). Permitting the insurer to control the insured\u2019s defense allows the insurer to protect its financial interests and to minimize unwarranted liability. Turegum, 168 Ill. App. 3d at 163. At the same time, however, permitting the insurer to control the insured\u2019s defense may lead to problems. This is because, although an attorney retained by an insurer to represent its insured has ethical obligations to both parties, realistically he or she may have closer ties to the insurer and, consequently, a greater desire to protect the insurer\u2019s interests. Turegum, 168 Ill. App. 3d at 163. Of course, this is of no concern when the interests of the insurer and the insured are completely aligned. See, e.g., Clemmons v. Travelers Insurance Co., 88 Ill. 2d 469 (1981). But when those interests diverge, a problem arises. See, e.g., Murphy v. Urso, 88 Ill. 2d 444 (1981); Turegum, 168 Ill. App. 3d 158.\nTo determine whether there is a conflict, we must compare the allegations of the underlying complaint against the insured to the terms of the insurance policy at issue. Turegum, 168 Ill. App. 3d at 163. That complaint includes exhibits, such as contracts, which are attached to it. See Bianchi v. Savino Del Bene International Freight Forwarders, Inc., 329 Ill. App. 3d 908, 921 (2002). If, after comparing the complaint to the insurance policy, it appears that factual issues will be resolved in the underlying suit that would allow insurer-retained counsel to \u201clay the groundwork\u201d for a later denial of coverage, then there is a conflict between the interests of the insurer and those of the insured. See Clemmons, 88 Ill. 2d at 479. Put another way, if, in the underlying suit, insurer-retained counsel would have the opportunity to shift facts in a way that takes the case outside the scope of policy coverage, then the insured is not required to defend the underlying suit with insurer-retained counsel. See Clemmons, 88 Ill. 2d at 475; Nandorf, Inc. v. CNA Insurance Cos., 134 Ill. App. 3d 134, 137 (1985). Rather, the insured is entitled to defend the suit with counsel of its choosing at the insurer\u2019s expense. See Nandorf, 134 Ill. App. 3d at 137 (noting that in conflict situations, \u201cthe insurer\u2019s obligation to defend is satisfied by reimbursing the insured for the costs of independent counsel\u201d).\nHere, McNaughton argues, among other things, that there is a conflict because American Family\u2019s interests will be served if McNaughton is found liable in the Begy Suit for damage occurring prior to the inception of the Policy. The trial court rejected this argument, reasoning that (1) there was only a potential conflict, depending on what discovery in the Begy Suit showed; and (2) at this point, the interests of McNaughton and American Family are aligned, and they will diverge only if McNaughton is found liable. We take these points in reverse order.\nWith regard to the trial court\u2019s second point, it is not dispositive that McNaughton and American Family would both benefit from McNaughton\u2019s being found not hable in the Begy Suit. Indeed, an insurer and its insured will always have a shared interest in the insured\u2019s being absolved of liability. After all, if the insured is found not liable, then the insurer avoids the possibility of paying indemnification expenses down the road. But this is not the end of the inquiry. Instead, granting that the insurer and the insured have a shared interest in a finding of no liability, the question becomes whether the insurer\u2019s interest would be equally protected by a finding that would not be in the interest of the insured. If so, there is a conflict. See Murphy, 88 Ill. 2d at 453-54; Nandorf, 134 Ill. App. 3d at 138.\nThis is the lesson of the supreme court\u2019s decision in Murphy. There, a bus crashed, injuring a passenger. Murphy, 88 Ill. 2d at 448. The passenger sued both the bus driver and the bus owner. The passenger alleged that the owner was liable because the driver was using the bus with the owner\u2019s permission. Murphy, 88 Ill. 2d at 449. If that was the case, then the driver would be covered as a permissive user under the owner\u2019s insurance policy. If, however, the driver was using the bus without permission, the driver would not be covered. Because coverage potentially extended to the driver, the owner\u2019s insurer had a duty to defend the driver. Murphy, 88 Ill. 2d at 453.\nThe supreme court found that the situation involved a conflict. Murphy, 88 Ill. 2d at 453-54. Specifically, the court pointed out that both the driver and the insurer shared an interest in the driver\u2019s being found not liable, but that the insurer\u2019s interests would be equally protected if the driver were found to have used the bus without permission. Murphy, 88 Ill. 2d at 453-54. If he had, then the policy would not extend to the driver; in other words, the insurer could not be liable for any damages resulting from the driver\u2019s conduct.\nSimilarly, in the present case, both American Family and McNaughton share an interest in McNaughton\u2019s being found not liable for any damage to the Begys\u2019 home. But American Family\u2019s interests would be equally served if McNaughton were found liable for damage that occurred prior to the Policy\u2019s inception in 1994. Thus, here, as in Murphy, although the insurer and the insured share an interest, their interests also diverge. Therefore, there is a conflict.\nAmerican Family argues that Murphy is distinguishable from the present case. To this end, American Family points out that, in Murphy, the issue of permission would be resolved in the underlying suit against the owner and the driver, because the driver\u2019s alleged permission to use the bus was the basis on which the passenger sought to hold the owner liable for the driver\u2019s conduct. Conversely, American Family argues, in the present case the issue of the timing of the alleged damage to the Begys\u2019 home will not be resolved in the Begys\u2019 suit against McNaughton. Thus, American Family argues, Murphy does not support the conclusion that there is a conflict here.\nThere are two serious flaws in American Family\u2019s argument. First, the argument is inconsistent with the facts of this case. Although the Begys\u2019 complaint contains no dates (it alleges only poor workmanship and damages), the construction agreement between the Begys and Me-Naughton does contain dates (it states that work on the Begys\u2019 home was to occur during 1991 and 1992), and that agreement is attached to the Begys\u2019 complaint. As noted, exhibits attached to a complaint are considered to be part of that complaint. See Bianchi, 329 Ill. App. 3d at 921. Thus, American Family\u2019s argument that dates are not relevant to the underlying suit is factually inaccurate.\nSecond, American Family\u2019s argument makes no sense. According to American Family, the issues to be decided in the Begy Suit are limited to whether McNaughton performed work poorly and whether, as a result, the Begys\u2019 home was damaged. American Family argues that the question of when the alleged damage occurred is not relevant to the resolution of those issues. In other words, American Family argues that the Begys can prevail in a suit against McNaughton \u2014 a suit in which they allege that McNaughton\u2019s poor workmanship caused damage to their home \u2014 without establishing that the damage to their home stems from the time when McNaughton worked on their home. By that reasoning, a plaintiff could prevail in a suit claiming that he or she suffered injuries in a car crash, without having to establish that his or her injuries were related in time to the car crash. Put simply, that is absurd. Thus, for this reason too, we reject American Family\u2019s argument that dates are irrelevant in the Begy Suit.\nTuregum further supports the conclusion that the trial court\u2019s reasoning on this point was mistaken. There, a patient was admitted to a hospital on three occasions, and she sued the hospital, alleging that, on one or more of those occasions, she received negligent treatment that caused her injury. Turegum, 168 Ill. App. 3d at 161. At the time of the patient\u2019s first admission, the hospital was covered by an insurance policy with Turegum. However, that policy lapsed prior to the patient\u2019s second and third admissions. Turegum, 168 Ill. App. 3d at 161. Nevertheless, because the policy potentially covered the hospital, Turegum had a duty to defend the hospital. At the same time, however, the court found that the situation involved a conflict. This was because Turegum\u2019s interest would be equally protected whether the hospital was found not liable or found liable for negligence occurring during the patient\u2019s second or third admission (that is, after the policy expired). Turegum, 168 Ill. App. 3d at 167-68.\nSimilarly, in this case, although McNaughton and American Family share an interest in McNaughton\u2019s being found not liable, American Family would do just as well if McNaughton were found liable for damage occurring before the inception of the Policy. Consequently, here, as in Turegum, there is a conflict.\nThus, the trial court erred in concluding that, because American Family and McNaughton shared some interests, there is no conflict. Having established as much, we turn to the trial court\u2019s first point, i.e., that there is no present conflict, but only a potential one depending on what is shown by discovery in the Begy Suit.\nWe disagree with that conclusion. A conflict already exists here. A conflict does not arise at the time a lack of coverage is unequivocally established. A conflict arises when the divergent interests of the insurer and insured are apparent and the attorney representing the insured can no longer represent both clients\u2019 interests without prejudice to either client. A conflict already exists here because American Family\u2019s interests would be served by fleshing out in discovery facts showing that the damage to the Begys\u2019 home occurred prior to the inception of the Policy, while McNaughton\u2019s interests would be served by fleshing out facts showing that the damage occurred after the inception of the Policy. In this regard, an attorney representing American Family\u2019s interests would be the enemy of McNaughton. As the supreme court has said, \u201c[a] ruling that required an insured to be defended by what amounted to his enemy in the litigation would be foolish.\u201d Murphy, 88 Ill. 2d at 454-55. Thus, McNaughton should not be forced to use American Family\u2019s attorneys to defend against the Begys\u2019 claims.\nAmerican Family attempts to undermine this conclusion by characterizing the above conflict as merely \u201chypothetical.\u201d Such a hypothetical conflict, American Family says, cannot form the basis for a finding that there exists a conflict between an insurer and its insured entitling the latter to retain independent counsel at the expense of the former. American Family finds support for this position in Shelter Mutual Insurance Co. v. Bailey, 160 Ill. App. 3d 146 (1987).\nIn Shelter Mutual, the insured\u2019s policy excluded intentional acts. Shelter Mutual, 160 Ill. App. 3d at 155. The insured was sued for negligence only. The court noted that conflicts of interest have been found when a complaint alleged multiple theories of recovery against an insured, only some of which were covered by an insurance policy. Shelter Mutual, 160 Ill. App. 3d at 153-54. In those cases, the court explained, a conflict stemmed from the fact that the insurer\u2019s interest would be served if the insured were found liable under a noncovered theory. Shelter Mutual, 160 Ill. App. 3d at 155. However, the court found that the case before it did not fall into that category. This was because only one theory of recovery was alleged and liability based on that theory was covered by the policy. Shelter Mutual, 160 Ill. App. 3d at 155. The court rejected the idea that a conflict existed because the complaint, at least in theory, could be amended to include a claim that the insured acted intentionally (a claim, that is, that would not be covered by the policy). In doing so, the court reasoned that if, even though the complaint against the insured alleged only negligence, a potential conflict existed entitling the insured to hire his own attorney, \u201cthen in any negligence action an insured could claim that an intentional or wilful and wanton count could be added to the complaint at any time, thereby requiring the insurance company to turn the defense over to another attorney.\u201d Shelter Mutual, 160 Ill. App. 3d at 155.\nShelter Mutual is easily distinguished from the present case. Here, the \u201chypothetical\u201d discovery to which American Family refers likely includes, among other things, questions relating to the timing of the alleged damage to the Begys\u2019 home. As discussed above, the question of the timing of the damage to the home will almost certainly come up in the underlying suit. Thus, there is no merit to American Family\u2019s suggestion that discovery relating to the theory of recovery alleged in the complaint is analogous to unpled, hypothetical theories of recovery. Accordingly, its reliance on Shelter Mutual is misplaced.\nIn sum, the trial court erred in finding that there was no conflict. Therefore, the trial court erred in finding that McNaughton was not permitted to retain its own legal counsel to defend it against the Be-gys\u2019 allegations at American Family\u2019s expense.\nIII. CONCLUSION\nFor the reasons stated, the judgment of the circuit court of Du Page County is reversed, and the cause is remanded.\nReversed and remanded.\nCALLUM and GILLERAN JOHNSON, JJ., concur.\nAn EIFS is a multilayered exterior wall system that wraps the exterior of a home. It is intended to reduce air infiltration and energy consumption, and to stabilize the interior environment. See http://www.eima.com/eima/eifs.htm (last visited January 3, 2006).\nMcNaughton raises several additional arguments. For example, McNaughton notes that, after the record in this case was certified on appeal, the Begys amended their complaint to allege that they did not discover the problems with their home until September 2001. McNaughton argues that we can take judicial notice of the amended complaint, and that the Begys\u2019 allegation as to the date of discovery provides further support for McNaughton\u2019s position that the timing of the alleged damage is in issue in the Begy Suit, and, therefore, a conflict exists. Shifting gears, McNaughton argues that, in addition to the timing-of-the-damage issue, the Begy Suit involves questions of when McNaughton knew of the alleged damage to the Begy home and whether that damage was caused by mold after 2002. For these reasons, too, McNaughton argues that there is a conflict. Our conclusion that a conflict exists based on the timing-of-the-damage issue, and that this is so based on the Begys\u2019 initial complaint, makes it unnecessary to consider these additional arguments.", "type": "majority", "author": "JUSTICE McLAREN" } ], "attorneys": [ "Gerald O. Sweeney, Ryan M. Henderson, and Elsa Y. Trujillo, all of Lord, Bissell & Brook, LLP, of Chicago, for appellant.", "Joshua G. Vincent and Carol Proctor, both of Hinshaw & Culbertson, LLP, of Chicago, for appellee." ], "corrections": "", "head_matter": "AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. W.H. McNAUGHTON BUILDERS, INC., a/k/a W.H. McNaughton Builders, LLC, Defendant-Appellant.\nSecond District\nNo. 2-05-0063\nOpinion filed February 6, 2006.\nGerald O. Sweeney, Ryan M. Henderson, and Elsa Y. Trujillo, all of Lord, Bissell & Brook, LLP, of Chicago, for appellant.\nJoshua G. Vincent and Carol Proctor, both of Hinshaw & Culbertson, LLP, of Chicago, for appellee." }, "file_name": "0505-01", "first_page_order": 523, "last_page_order": 533 }