A state appeals panel has ruled an insurer can’t skirt its obligation to fund the legal defense of a Northwest Suburban school district facing a lawsuit regarding its alleged failure to prevent the molestation of minors during after-school programs operated on district property by a Boys & Girls Club.
At issue is the plight of Community School District 300, based in Algonquin, which operates 31 elementary, middle and high schools in Kane and McHenry counties. District 300 rented space to the Boys & Girls Club of West Dundee Township. Both entities employed Carlos Alberto Bedoya, who is accused of molesting and abusing unnamed minor students.
West Bend Mutual Insurance Company asked Kane County Circuit Court Judge Kevin Busch to issue a declaratory judgment it had no duty to defend District 300 in lawsuits accusing it of errors in its hiring, retention and supervisory policies that allowed the abuse to persist. Busch instead granted the District 300's motion for summary judgment in the case, prompting West Bend’s appeal.
Daniel Zollner
| Dykema Gossett
Justice Ann Jorgensen wrote the Illinois Second District Appellate Court opinion issued Nov. 12; Justices Susan Hutchinson and Mary Seminara-Schostok concurred.
According to the panel, the club’s rental agreement with District 300 started in the fall of 2016, through which it agreed to name the district on its commercial general liability policy, requiring West Bend to “defend, indemnify and hold harmless” District 300 against any claim linked to the club’s use of district property. The allegations against Bedoya include events said to have started as far back as August 2016, though those complaints say nothing was reported to the district until April 2017.
Busch, according to Jorgensen, said the policy’s “physical abuse and sexual molestation liability endorsement insured the district against loss for claims made against it for sexual molestation arising out of its negligent employment, supervision or retention of any person for whom the district was responsible.”
On appeal, West Bend argued its policy language obligates it to cover only certain types of negligent conduct, not the allegations of “willful and wanton conduct” on the district’s part. The insurer said Busch improperly equated the two principles.
The panel said Illinois law distinguishes between an insurer’s obligation to defend a client and its duty to pay, with a lower threshold triggering the responsibility to defend. It further said the lawsuits apparently allege the district’s vicarious liability, not intentional conduct. Those complaints said the district should’ve known Bedoya lacked proper identification and was subject of an arrest warrant while working with children.
“We agree with the district that, in addition to alleging willful and wanton misconduct, the Doe allegations potentially also allege ordinary negligence,” Jorgensen wrote. The panel said those plaintiffs could prove an ordinary negligence claim without being able to do the same for willful misconduct or gross negligence. Should that happen, the allegations would fall under the policy’s coverage terms and District 300 would be protected under the Tort Immunity Act.
That situation, Jorgensen wrote, “is a clear and reasonable potential outcome,” and ignoring the possibility would be like determining liability, an improper step in determining West Bend’s duty to defend the district.
West Bend also said Judge Busch was wrong to say District 300, as an “additional insured” party on the policy, acted in a timely fashion by giving it notice in October 2018 of the initial lawsuit because it first heard of the underlying allegations in April 2017. The named policy holder was the Boys & Girls Club, District 300 argued, making it the party obligated to give notice of the allegations.
“West Bend criticizes the trial court’s and our interpretation as creating the absurd result of imposing greater notice burdens on the named insured than on the additional insured,” Jorgensen wrote. “However, it fails to acknowledge that it drafted the unambiguous language of the policy. We will not find an ambiguity where there is none and where it renders irrelevant the policy definitions.”
West Bend is represented in the matter by attorney Jeffrey A. Siderius, of the firm of Cray Huber Horstman Heil & Van Ausdal, of Chicago.
Representing District 300 are attorneys Daniel J. Zollner, Charles A. LeMoine, and Jennifer Warner, of Dykema Gossett PLLC, of Chicago.