ILLINOIS OFFICIAL REPORTS

Appellate Court

Illinois School District Agency v. St. Charles Community Unit School District 303,

2012 IL App (1st) 100088

Appellate Court

Caption

ILLINOIS SCHOOL DISTRICT AGENCY, Plaintiff-Appellant and

Cross-Appellee, v.THE ST. CHARLES COMMUNITY UNITSCHOOL

DISTRICT 303, a Unit of Local Government, Defendant-Appellee and

Cross-Appellant.

 District & No. First District, Sixth Division

Docket Nos. 1-10-0088, 1-10-2005 cons.

Filed March 30, 2012

Held

(Note: This syllabus

constitutes no part of

the opinion of the court

but has been prepared

by the Reporter of

Decisions for the

convenience of the

reader.)

In an action arising from a dispute over defendant school district’s

insurance coverage for mold claims, the appellate court rejected the

district’s argument for the extension of the targeted tender rule beyond

cases involving concurrent insurance policies where the policies at issue

were all consecutive and, therefore, the appellate court reversed the trial

court’s ruling that the selective tenderrule applied to compel plaintiff, an

agency established by several school districts to pool their risks by

offering insurance coverage for purchase bymembers, to defend the mold

claims alone, without equitable contribution; however, the appellate court

rejected the district’s argument that invoices from a mold expert retained

separately by the district and the agency were for litigation purposes and

were subject to reimbursement under the policy and upheld the finding

that the invoices were the district’s responsibility. 
Decision Under 

Review

Appeal from the Circuit Court of Cook County, No. 03-CH-2413; the

Hon. Nancy J. Arnold, Judge, presiding.

Judgment Reversed in part and affirmed in part; cause remanded.

Counsel on

Appeal

Daniel J. Zollner, of Dykema Gossett PLLC, and J. Timothy Eaton,

Patricia S. Spratt, and Michael P. Sheehan, all of Shefsky & Froelich

Ltd., both of Chicago, for appellant.

Scott O. Reed, of Donnelly, Lipinski & Harris, LLC, and Michael J.

Duggan, of Klein, Thorpe & Jenkins, Ltd., both of Chicago, for appellee.

Panel PRESIDING JUSTICE GARCIA delivered the judgment of the court,

with opinion.

Justices McBride and R. Gordon concurred in the judgment and opinion.

OPINION

¶ 1 Plaintiff Illinois School District Agency (ISDA), a provider of commercial general

liability insurance, appeals the circuit court’s ruling that defendant St. Charles Community

Unit School District 303 (District) properly targeted the ISDA to defend the District in a

series of lawsuits stemming from mold infestation in the District’s high school building, over

other insurers that issued policies covering the District prior to the policy issued by the

ISDA. Illinois is one of only three states that allow an insured to selectively tender the

defense of a lawsuit to one insurer over other chronologically concurrent insurers. The

Illinois Supreme Court has never approved extending this uncommon right to include

chronologically consecutive insurance policies. The policy grounds underlying the selective

tender rule do not apply to past insurers where the risk of increased premiums or the risk of

policy cancellation does not exist. We reverse the circuit court’s grant of summary judgment

in favor of the District on counts II, III and IV of the ISDA’s amended complaint; we remand

for further proceedings consistent with this opinion. We reject the District’s cross-appeal

challenging the circuit court’s judgment in favor of the ISDA on the District’s counterclaim

that it was entitled to reimbursement for certain invoices from the same mold expert

separately retained by the ISDA and the District.

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¶ 2 BACKGROUND

¶ 3 The District is a public entity that oversees St. Charles East High School, which suffered

a mold infestation that gave rise to this case. The ISDA was established by certain school

districts of Illinois to pool their risk. It offers for purchase by its members insurance

coverage, much like ordinarycommercial insurance carriers. The ISDAprovided commercial

general liability (CGL) insurance coverage to the District from July 1, 1995, through July 11,

2001. Its policy provided that the ISDA “will have the right and duty to defend any ‘suits’

seeking *** damages.” It also provided that the ISDA “will pay, with respect to any claim

or ‘suit’ we defend: *** All reasonable expenses incurred by the [District] at our request to

assist us in the investigation or defense of the claim or ‘suit.’ ”

¶ 4 Prior to coverage by the ISDA, the District held CGL policies with General Casualty

Company of Wisconsin (General Casualty) from September 1, 1971, to September 1, 1974,

Employers Fire Insurance Company from October 1, 1974, to October 1, 1977, Hartford

Accident and Indemnity Company (Hartford) from October 1, 1977, to July 1, 1985, and

Indiana Insurance Company (Indiana) from October 1, 1985, to July 1, 1995.

¶ 5 The Mold Lawsuits

¶ 6 In March 1999, the District notified the ISDA that it faced potential tort liability

stemming from mold exposure to St. Charles East High School students. The ISDA reserved

its rights and retained attorney Robert Smyth of the law firm of Donohue, Brown,

Mathewson & Smyth to investigate and monitor mold-based claims.

¶ 7 Between March 2001 and March 2002, three separate lawsuits were filed against the

District alleging the District’s negligence caused the former students to suffer mold-related

injuries. In April 2001, the District tendered the defense of the suits to the ISDA and Indiana.

On June 26, 2001, the ISDA accepted the defense of the suits against the District, subject to

a reservation of rights; the ISDA retained attorneySmyth to represent and defend the District

in the lawsuits. On August 21, 2001, the District tendered the defense of the lawsuits to

Hartford and General Casualty as well. On September 7, 2001, Hartford acknowledged

receipt of the tender. On September 24, 2001, Indiana agreed to defend the District pursuant

to a reservation of rights. On October 1, 2001, General Casualty acknowledged receipt of the

tender, reserved its rights, and declined to defend. On February 15, 2002, Hartford agreed to

defend against the lawsuits under a reservation of rights.

¶ 8 In a letter dated March 19, 2002, the District’s coverage counsel, Scott Reed, informed

the ISDA that the District “has now obtained defense of the [action] under a reservation of

rights from all primary general liability insurers with coverage in force on an occurrence

basis from October 1, 1981 through July 11, 2001.”

¶ 9 As a result of the mold problem, the District employed several contractors and experts

to investigate and remedy the mold infestation. On July 23, 2002, Reed provided the ISDA,

Indiana, and Hartford with copies of the “expert and consultant bills to date” generated by

these services, which totaled approximately $2.2 million.

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¶ 10 Hartford, Indiana, and General Casualty Settle

¶ 11 On August 14, 2002, Hartford sued the District in federal court, asserting it was not

obligated to reimburse the District for the expert and consultant bills the District had

incurred. On or about October 16, 2002, Hartford and the District reached a settlement

whereby Hartford paid the District $150,000 in exchange for the District’s “de-activation”

of its tender of defense, which rendered moot its claim for indemnity. The agreement was

fully executed on November 20, 2002. It provided that Hartford’s payment satisfied its

obligations to the District, including

“any costs and expenses incurred by The School District in defense or indemnity of the

Underlying Lawsuits, or any other costs associated with the mold remediation which

were incurred on or before October 14, 2002. These costs and expenses include, but are

not limited to, AAA Environmental, Golan Harris, Holian Asbestos Removal, Carnow

Conibear, Judge & James, Raths Raths & Johnson, Shirmer Engineering, STS

Consultants, Air Quality Services, HP Woods, and Donohue Brown Mathewson &

Smyth [hereinafter, the vendors].”

In a letter dated November 22, 2002, the District informed the ISDA’s in-house claims

handler and its outside counsel that the District and Hartford had reached a settlement

agreement, “the terms of which are confidential.” Pursuant to the settlement, the District

withdrew its tender to Hartford effective October 14, 2002.

¶ 12 On December 9, 2002, the District settled with Indiana. It deactivated its tender in

exchange for a $500,000 payment. The settlement included language substantially similar

to that of the Hartford settlement in that Indiana’s payment satisfied obligations as to both

litigation defense and reimbursement of mold remediation expenses provided by the same

vendors listed in the Hartford settlement. The District also informed the ISDA’s claims

handler and outside counsel of this agreement, the terms ofwhich were declared confidential.

A similar settlement was reached between the District and General Casualty for $10,000.

¶ 13 The District’s reimbursement claims arose from its payment of certain vendors from its

own funds. When it later received the settlement proceeds, it deposited the proceeds into the

District’s “Educational Fund,” which it used to pay general operating expenses.

¶ 14 The Lawsuits

¶ 15 The District remained in settlement discussions with the ISDA and apparently believed

the discussions would continue. The ISDA, however, filed the instant action against the

District on February 6, 2003. Count I of the lawsuit sought a declaration that the ISDA had

no obligation to cover mold remediation expenses unrelated to the defense of the mold

lawsuit; count II alleged the District’s “secret” settlements with the other three insurers

breached its insurance contract with the ISDA. On September 30, 2005, the District filed an

answer and a four-count counterclaim. Count I of the counterclaim sought a declaration that

the ISDA was obliged to cover mold remediation costs in addition to litigation defense

expenses; count II alleged the ISDA had breached its contract with the District by failing to

compensate the District for remediation and litigation defense costs; count III sought to

recover costs and attorney fees the District incurred in pursuing insurance coverage from the

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other insurers; and count IV sought penalties against the ISDA pursuant to section 155 of the

Insurance Code (215 ILCS 5/155 (West 2004)) for the ISDA’s “vexatious and unreasonable

delay” in providing the insurance coverage to which the District was entitled.

¶ 16 The ISDA moved to dismiss all four counts of the counterclaim. On May 4, 2006, the

circuit court denied the motion as to counts I through III, but granted it as to count IV. On

June 21, 2010, the court entered judgment for the ISDA on count III of the counterclaim. The

District does not challenge these rulings on cross-appeal.

¶ 17 On January 27, 2006, the District moved for partial summary judgment on count I of its

counterclaim that sought reimbursement under the ISDA policy for mold remediation

expenses that it claimed also aided the litigation, and on count II of the ISDA’s lawsuit that

claimed the settlements with the three other insurers and deactivations of tender breached the

ISDA’s insurance contract. Following oral argument, Judge Nancy Arnold denied the

District’s summary judgment motion as to count I of the counterclaim. As to the District’s

summaryjudgment motion regarding count IIof the ISDA’s complaint, the ISDA argued that

the District’s deactivations of tender to Hartford, Indiana, and General Casualty were

improper because the District was compensated for the deactivations. Judge Arnold ruled no

legal distinction existed between compensated and uncompensated deactivation of tender:

“I don’t see any real dispute in your response, frankly. *** There is a little argument made

with no support saying there is a distinction here. But there’s no case law telling me the

distinction has any legal basis.”

¶ 18 On June 14, 2006, the circuit court entered summary judgment for the District on count

II of the ISDA’s complaint, holding the District had the right to deactivate tender of the

litigation defense as to the other three insurers and that doing so in exchange for settlement

payments did not breach its policy with the ISDA. With a favorable ruling on the same claim

by the ISDA, the District voluntarily dismissed count II of its counterclaim, claiming a policy

breach by the ISDA. The court, however, granted leave to the ISDA to file an amended

complaint alleging the District received a “double recovery” from its settlement with the

other insurers and the unspecified insurance proceeds it received from the ISDA.

¶ 19 The ISDA moved for reconsideration of the court’s ruling on the compensated

deactivation of tender, which the court denied on August 14, 2006. On November 7, 2007,

the ISDA again moved the court to reconsider, this time based on a relatively new case,

Kajima Construction Services, Inc. v. St. Paul Fire & Marine Insurance Co., 368 Ill. App.

3d 665 (2006), aff’d, 227 Ill. 2d 102 (2007). At oral argument, Judge Arnold observed that

Kajima stood only for the proposition that an insured cannot selectively tender defense of a

lawsuit to an insurer based on an excess insurance policy when the insured still has available

primary insurance policies. The circumstances in Kajima were not the circumstances in the

instant case and thus did not warrant reconsideration of the ISDA’s claim.

¶ 20 On June 8, 2008, the ISDA filed an amended complaint, adding count III, which sought

setoff or restitution of amounts paid in defending and settling the litigation, and count IV,

which argued for proration or restitution from the District for the amount it allegedly paid

in excess of its “allocable pro rata share” of defense costs in the lawsuits. The ISDA then

filed a “Motion for Setoff of Insurance Settlement Proceeds,” arguing that the District

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“breached its express duties, implied duty of good faith, and fiduciary duties under the ISDA

Agreement”; that the District “received a double recovery of defense and indemnity costs,

received a windfall profit and has been unjustly enriched”; and that the District’s settlement

agreements with the other insurers “intentionally prejudiced [the] ISDA by releasing its right

to equitable contribution.” The District responded that it had actually recovered less than

one-third of its investigative costs and therefore received no windfall and breached no duty

to the ISDA. On December 4, 2009, the circuit court denied the ISDA’s motion and entered

judgment for the District on counts III and IV of the ISDA’s amended complaint. The record

before us contains no findings of fact or conclusions of law as to the order of December 4,

2009, which is unaccompanied by any transcript of the proceedings.

¶ 21 The ISDA remained the lone insurer that defended and indemnified the District in the

lawsuits, which settled for $90,000 in September 2007. The ISDA alleges it paid “$550,889

in defense fees and expenses related to the Mold Lawsuits, and $90,000 to settle the Mold

Lawsuits,” for a total expenditure of $640,889.1

¶ 22 The ISDA timely appeals, following the circuit court’s order of June 21, 2010, which

disposed of count III of the District’s counterclaim, the last issue in the case.

¶ 23 The Cross-Appeal

¶ 24 The District cross-appeals from the circuit court’s judgment in the ISDA’s favor on count

I of the District’s counterclaim and count I of the ISDA’s amended complaint. Before the

circuit court, the parties submitted cross-motions for partial summary judgment regarding

“whether disputed invoice entries from Dr. James Woods are legitimate defense costs as to

which [the ISDA] owes a duty to reimburse [the District], or whether these invoice entries

represent services requested by [the District] for its efforts to remediate the mold condition

in its physical plant.” The court’s previous orders of June 14, 2006, and April 24, 2008, had

established that the ISDA had no duty to indemnify the District for remediation under the

CGL policy. The court resolved the cross-motions for reimbursement on the disputed

invoices in “a bench trial,” pursuant to a joint stipulation. On May 22, 2009, the court issued

written “Findings of Fact and Entry of Judgment After Stipulated Trial.” In the course of the

stipulated trial, the court considered the briefs, exhibits, oral arguments, and the depositions

of expert Woods and attorney Smyth.

¶ 25 The court found Dr. Woods was “an expert originally retained by the ISDA defense

counsel, Robert Smyth, but then separately retained by [the District] for its own purposes.”

It noted that the ISDA had only paid a portion of expert Woods’ invoices, contending the

unpaid invoices were allocable to mold remediation, not litigation defense. Under the

language of the ISDA’s policy, the “ISDA was obligated to pay for expenses it actually

incurred, and all reasonable expenses incurred by [the District] at ISDA’s request to assist

in the investigation or defense of the mold litigation.” The court agreed with the case law

The ISDA also states at page 22 of its brief that “[t]he total spent by [the] ISDA to defend 1

and settle the Mold Lawsuit was $715,674.” The discrepancy of $74,785 between the two totals is

the amount for “allocated Loss (Claim Adjustment) Expenses.”

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cited by the District, Aerojet-General Corp. v. Transport Indemnity Co., 948 P.2d 909, 924

(Cal. 1997), that “the burden of proving the existence, amount, reasonableness, and necessity

of site investigation as defense costs rests with the insured.” However, the circuit court found

Aerojet and the other cases cited by the District distinguishable because the remediation

measures undertaken by the insureds in those cases were compelled by government

environmental cleanup regulations, which triggered the duty of the insurers to indemnify for

the remediation costs. The court noted: “The mold infestation at St. Charles High School did

not need to be corrected to avoid potential liability in any of the lawsuits.”

¶ 26 The court then turned its attention to the disputed invoices from expert Woods. The

question for the court was whether the disputed invoice entries represented reasonable

expenses incurred for defense purposes at the ISDA’s request. The court “reject[ed] [the

District’s] argument that where Woods’ work was useful for remediation and litigation, the

court should arbitrarily order each party to bear half of the costs.” It found “relevant, but not

conclusive, the fact that [the District] internally coded these expenditures as construction,

capital improvement, or operation and maintenance costs.” The court found that Woods’

work on the “Seven-Step Protocol,” a step-by-step plan for some of his work at the high

school, “was done pursuant to [the District’s] request, was not requested by the defense

counsel engaged by the ISDA, and was implemented for the purpose of remediation, not

litigation.” Turning to specific invoices, the court found the invoices dated April 26, 2001,

and May 16, 2001, were properly chargeable to litigation expenses, which the ISDA was

obligated to pay. The ISDA does not appeal that finding.

¶ 27 The court next found the “overwhelming evidence” indicated the May 14-16 entry

pertained to meetings and preparation requested by the District for purposes of mold

remediation. The court observed, “The remaining invoices were all billed to [the District]”

through its superintendent. It found “[the District] bears the burden of proving that the

expenses listed are reasonable expenses incurred at the ISDA’s request to assist in the

investigation or defense of the mold litigation.” With regard to each of the remaining

invoices, dated June 14, August 6, October 1, and December 31, 2001, consistent with the

deposition testimony of Woods that the work “was needed for remediation [but] could be

used for forensic[s],” the court found the work predominately served to remedy the school’s

mold infestation. Judge Arnold ruled the possible dual purpose of the work was “not

sufficient to establish that the work represented *** was performed at the ISDA’s request to

aid it in the mold litigation.” Accordingly, the court held the ISDA had no obligation to pay

any of the remaining disputed invoices.

¶ 28 The District timely cross-appeals.

¶ 29 ANALYSIS

¶ 30 The ISDA contends the District violated the terms of its insurance policy by entering into

“secret” settlements with the other insurers and tendering the defense of the mold litigation

to the ISDA alone. It argues these actions constituted a breach of the District’s purported

fiduciary duty to the ISDA and that the District received a “windfall” in the amount of the

insurance proceeds it received that exceeded the amount of its litigation costs. The ISDA

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seeks a setoff or restitution of that amount. The District counters that an insured party has a

paramount right to tender defense of a lawsuit to any primary insurer it chooses, that an

insured owes no fiduciary duty to an insurer, and that the mold infestation cost the District

farmore than the sum of the settlements it received. In its cross-appeal, the District urges that

the ISDA is liable for a greater portion of the Woods invoices than the circuit court allowed.

The ISDA responds that the court ruled based on the evidence before it when it found the

ISDA not liable for the invoices in question.

¶ 31 We note that the District’s responsive brief contains 34 single-spaced footnotes, many

of which advance substantive arguments, in the span of 64 pages. “Footnotes are

discouraged, but if used must be double-spaced.” Ill. S. Ct. R. 341(a) (eff. July 1, 2008).

“Substantive arguments may not be made in footnotes.” Technology Solutions Co. v.

Northrop Grumman Corp., 356 Ill. App. 3d 380, 382 (2005) (sua sponte striking all

footnotes from the parties’ briefs where their briefs contained slightly more footnotes per

page than the District’s). While we grant the District greater lenience than did the court in

Technology Solutions, we caution counsel for the District that supreme court rules are not

mere suggestions.

¶ 32 The ISDA’s Appeal–Selective Tender

¶ 33 We agree with the parties that our review of the circuit court’s summary judgement order

finding the District in compliance with the ISDA insurance contract is subject to de

novo review. Kajima, 227 Ill. 2d at 106 (“This court conducts a de novo review of an order

granting summary judgment.”); Avery v. State Farm Mutual Automobile Insurance Co., 216

Ill. 2d 100, 129 (2005) (“the construction, interpretation, or legal effect of a contract is a

matter to be determined by the court as a question of law”). “Summary judgment is

appropriate where the pleadings, depositions, admissions and affidavits on file, viewed in the

light most favorable to the nonmoving party, reveal that there is no genuine issue as to any

material fact and that the moving party is entitled to judgment as a matter of law.” Kajima,

227 Ill. 2d at 106 (citing 735 ILCS 5/2-1005(c) (West 2006)).

¶ 34 The ISDA notes the parties’ insurance agreement expressly provides the ISDA’s

coverage is applicable only as excess over other applicable insurance. It argues the District

breached the policy’s provision of “other insurance” when the District, through its

settlements with Indiana, Hartford, and General Casualty, foreclosed the ISDA from seeking

equitable contribution from these other insurance companies for the mold litigation. The

District counters that it had the unfettered right to tender the defense of the lawsuits to any

of its insurers.

¶ 35 “[T]he doctrine of equitable contribution allows [an insurer] to be reimbursed by other

insurers that are also liable for [a] loss.” American States Insurance Co. v. CFM

Construction Co., 398 Ill. App. 3d 994, 998 (2010). It “ ‘arises from a right, which is

independent from the rights of the insured, to recover from a co-obligor who shares the same

liability as the party seeking contribution.’ ” Id. (quoting Argonaut Insurance Co. v. Safway

Steel Products, Inc., 355 Ill. App. 3d 1, 10-11 (2004)). “The purpose of the doctrine is to

provide a remedy when one insurer has paid a debt that is equally owed by another insurer.”

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CFM, 398 Ill. App. 3d at 998. “ ‘The fact that one insurer undertakes the burden of a full

settlement payment does not mean the insurer is a volunteer.’ ” Id. (quoting Chicago

Hospital Risk Pooling Program v. Illinois State Medical Inter-Insurance Exchange, 325 Ill.

App. 3d 970, 981 (2001)). “Equitable ‘contribution applies to *** policies [that] insure the

same entities, the same interests, and the same risks.’ ” CFM, 398 Ill. App. 3d at 998

(quoting Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307, 316 (2004)).

¶ 36 The District does not argue that the ISDA failed to meet the criteria for equitable

contribution; rather, it contends the ISDA is ineligible for equitable contribution arising from

the doctrine’s exception known as the targeted tender or selective tender rule. “[T]he

‘targeted’ or ‘selective’ tender doctrine allows an insured covered by multiple insurance

policies to select or target which insurer will defend and indemnify it with regard to a

specific claim.” Kajima, 227 Ill. 2d at 107; John Burns Construction Co. v. Indiana

InsuranceCo., 189 Ill. 2d 570, 574 (2000); Cincinnati Cos. v. West American InsuranceCo.,

183 Ill. 2d 317, 323 (1998). “ ‘Where an insured makes such a designation, the duty to

defend falls solely on the selected insurer. That insurer may not in turn seek equitable

contribution from the other insurers who were not designated by the insured.’ ” Burns, 189

Ill. 2d at 575 (quoting Cincinnati, 183 Ill. 2d at 324). “The insured may choose to forgo an

insurer’s assistance for various reasons, such as the insured’s fear that premiums would be

increased or the policy cancelled, in the future.” Cincinnati, 183 Ill. 2d at 326. The insured

is also “ ‘permitted to deactivate coverage with a carrier previously selected for purposes of

invoking exclusive coverage with another carrier.’ ” Kajima, 227 Ill. 2d at 110-11 (quoting

Alcan United, Inc. v. West Bend Mutual Insurance Co., 303 Ill. App. 3d 72, 83 (1999)).

¶ 37 In 2001, Justice Quinn of the First District observed that Illinois’s status as one of a very

small minority of states that employ the targeted tender doctrine is not one of distinction: “In

the vast area of legal jurisprudence, there are undoubtedly many instances where being the

first, or only, jurisdiction to grant rights to persons or entities may rightly be a source of

pride. While it is still very early, the doctrine of ‘selective tender’ does not appear to me to

be one of those instances.” Chicago Hospital Risk Pooling Program, 325 Ill. App. 3d at 987

(Quinn, J., specially concurring). Ten years later, our research has identified Montana and

Washington as the only other states recognizing the right of selective tender. See XL

Specialty Insurance Co. v. Progressive Casualty Insurance Co., 411 F. App’x 78, 81 (9th

Cir. 2011) (citing Casualty Indemnity Exchange Insurance Co. v. Liberty National Fire

Insurance Co., 902 F. Supp. 1235, 1237, 1238 & n.3 (D. Mont. 1995), citing Institute of

London Underwriters v. Hartford Fire Insurance Co., 234 Ill. App. 3d 70 (1992)); Mutual

of Enumclaw Insurance Co. v. USF Insurance Co., 191 P.3d 866, 873 (Wash. 2008). As

such, we tread with caution when the application of this right, which is uncommonly

generous to insured parties, falls outside of the circumstances previously approved by our

supreme court.

¶ 38 The ISDA contends the “other insurance” clause of its policy entitled it to equitable

contribution from the District’s other insurers. The clause provides:

“Coverage provided by this Plan shall apply only as excess over other insurance and/or

coverage applicable to a loss hereunder regardless of whether such other coverage

provides primary, excess, umbrella or contingent coverage. When both this coverage and

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other insurance apply to the loss on the same basis, whether excess or contingent, the

Agency shall not be liable under this Plan for a greater proportion of the loss than that

stated in the [contribution by equal shares provision].”

“Other insurance” excess clauses such as this one are “an effort to override [an insured’s

right] to choose among co-insurers.” River Village I, LLC v. Central InsuranceCos., 396 Ill.

App. 3d 480, 487 (2009). Such provisions, as in this case, “attempt to render otherwise

primary insurance as excess over any other collectible insurance, most often with statements

in the policy that declare the insurer’s coverage to be excess over any other valid and

collectible insurance available to the insured.” Id. “An ‘other insurance’ provision does not

in itself overcome the right of an insured to tender defense of an action to one insurer alone.”

Burns, 189 Ill. 2d at 578. Accordingly, the existence of the “other insurance” clause is not

dispositive. Nor are we inclined to address in this case whether a legal distinction exists

between compensated and uncompensated deactivation of tender, as the circuit court below

rejected.

¶ 39 Rather, we deem the dispositive issue to be whether an insured’s right to selective tender

among chronologically concurrent policies extends to consecutive ones such as the policies

at issue in this case. There is no supreme court precedent for doing so. See Kajima, 227 Ill.

2d at 117; John Burns Construction Co. v. Indiana Insurance Co., 189 Ill. 2d 570 (2000);

Cincinnati, 183 Ill. 2d at 317. The most recent supreme court decision on the selective tender

rule suggests that the insurance policies must be concurrent for the rule to apply: “[T]argeted

tender can be applied to circumstances where concurrent primaryinsurance coverage exists.”

(Emphasis added.) Kajima, 227 Ill. 2d at 117 (insured could not selectively tender lawsuit

defense to one insurance carrier over another where the two policies were not concurrent

primary policies); see also Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 200:37

(3d ed. 2007) (citing Kajima for the proposition that “the selective tender rule is only

applicable to concurrent insurance coverage and not consecutive primary or excess coverage

policies where other primary coverage is available”). Accordingly, where coverage is not

concurrent, but rather consecutive as it was in this case, we do not read the authority the

District relies upon as foreclosing the ISDA’s claim for equitable contribution by invoking

the targeted tender exception.

¶ 40 In River Village, this court declined to apply the targeted tender rule to a policy

determined to provide “excess coverage,” consistent with the supreme court’s decision in

Kajima. River Village, 396 Ill. App. 3d at 492. The River Village court noted: “The targeted

tender doctrine allows an insured who is covered by multiple and concurrent insurance

policies to select, or ‘target,’ which insurer he wants to defend and indemnify him regarding

a specific claim.” (Emphasis added.) Id. at 486. River Village is not authority for the

District’s claim in the instant case.

¶ 41 We are aware of only one Illinois case that appears to have applied the targeted tender

rule to consecutive insurance policies, a case which the District acknowledged at oral

argument is not factually on point for the issue before us. See Richard Marker Associates v.

Pekin Insurance Co., 318 Ill. App. 3d 1137 (2001).

¶ 42 In that case, architect Marker was insured by Pekin Insurance Company from August 25,

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1991, to August 25, 1992, and by Statewide Insurance Company beginning on August 25,

1992. Id. at 1139. Marker was sued by a client and tendered defense of the suit to both

insurance companies. Id. Marker then withdrew his tender to Statewide, leaving only Pekin

to indemnify Marker after he settled with the former client. Id. In Pekin’s suit for equitable

contribution from Statewide, the circuit court granted Pekin summary judgment. Id. at 1140.

The appellate court reversed, holding that Pekin was not entitled to equitable contribution

from Statewide precisely “because Marker had elected to forgo coverage under Statewide’s

policy.” Id. at 1145. The Marker court acknowledged that “our courts have chosen to protect

the insured’s right to choose or knowingly forego coverage.” Id. at 1144. An insured’s

decision to forego coverage by one insurer in favor of another was explained by “the

insured’s fear that premiums would be increased or the policy canceled in the future.” Id. at

1141 (citing Cincinnati, 183 Ill. 2d at 326, and Alcan, 303 Ill. App. 3d at 79).

¶ 43 That explanation for the selective tender rule has no application in this case. The District

selectively tendered the defense of its litigation to its current insurer, the ISDA. Thus, the

District could not have acted out of “fear that premiums would be increased or the policy

canceled, in the future” as was noted in Marker. Marker, 318 Ill. App. 3d at 1141. See

Cincinnati, 183 Ill. 2d at 326 (“[The] insured may choose to forgo an insurer’s assistance for

various reasons, such as the insured’s fear that premiums would be increased or the policy

cancelled in the future.”); Enumclaw, 191 P.3d at 873 (“Like a driver involved in a minor

accident, an insured may choose not to tender in order to avoid a premium increase. The

insured may also want to preserve its policy limits for other claims, or simply to safeguard

its relationship with its insurer.”). The District’s tender to the ISDA made future premium

increases or cancellation of its policy more likely, rather than less. Of course, the District 2

may well have decided that either risk was acceptable given the compensation it received

from Indiana, Hartford, and General Casualty for deactivation of its tender of defense. Cf.

CFM, 398 Ill. App. 3d at 998. Nor is it accurate to describe this case as one where the

District exercised its right “[to] forgo coverage” from the other insurers as the Marker court

noted for the outcome there. Marker, 318 Ill. App. 3d at 1144. While we have declined to

address the issue of compensated versus uncompensated deactivation of tender, first noted

and then dismissed by the circuit court, we observe that foregoing coverage from other

insurers generally does not entail receiving $660,000 as the District received from Hartford,

Indiana, and General Casualty for its deactivation of tender. Compensated deactivation of

tender appears indistinguishable from a payment of “a debt *** equally owed by another

insurer.” CFM, 398 Ill. App. 3d at 998. The District presents us with no good reason to

conclude that the targeted tender doctrine, as established by our supreme court’s decisions,

should extend to the circumstances present in this case.

¶ 44 The ISDA advances a handful of other arguments effectively seeking equitable

contribution. It relies on the “transfer of rights” clause of its insurance agreement with the

District; it argues the targeted tender doctrine does not apply to it because it is an

Indeed, the insurance policy between the District and the ISDA was terminated about three 2

months after the District tendered to the ISDA.

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“intergovernmental cooperative”; and it contends the District violated a fiduciary duty and

a duty of good faith owed to the ISDA. Further, it argues that the District “has been paid

twice for its defense and indemnity costs in the Mold lawsuits–once by [the] ISDA and once

by the settling insurers.” We decline to address those arguments as well.

¶ 45 Under the circumstances presented in this case, we narrowly draw our holding. In our

review of the grant of summary judgment on counts II, III, and IV of the ISDA’s amended

complaint, we conclude that the District was not entitled to judgment as a matter of law. No

supreme court case approves the use of the selective tender rule to consecutive insurance

policies. Nor do we provide such authority in this case. Accordingly, we conclude the circuit

court erred in granting summary judgment to the District based on its purported right to

selectively tender the defense of the mold lawsuits to the ISDA as a consecutive insurer.

Given our remand, we decline to address the “double payment” arguments urged by the

ISDA to support this outcome, though we note that the ISDA is correct that an insured party

may not receive a double recovery for the same “harm or injury.” Federal Insurance Co. v.

Binney &Smith, Inc., 393 Ill. App. 3d 277, 296 (2009) (remanding for furtherfindings where

“[f]ailure to account for *** settlement [with one insurer] ha[d] the potential of providing

[the insured] with a windfall” in light of additional insurance payments from a second

insurer). We remand to the circuit court for further proceedings consistent with this opinion.

¶ 46 Though our reversal of summary judgment in favor of the District renders unavailing the

District’s request for attorney fees in its “Conclusion” of its brief, even if our decision were

otherwise, we would reject the District’s request out-of-hand as “a claim of error that is

merely listed but not ‘argued’ [does] not satisfy the requirements of Rule 341.” Vancura v.

Katris, 238 Ill. 2d 352, 373 (2010) (citing Ill. S. Ct. R. 341 (eff. July 1, 2008)).

¶ 47 The District’s Cross-Appeal

¶ 48 The District asserts it is entitled to reimbursement from the ISDA for certain invoices

from Dr. James Woods that it contends could benefit both remediation and litigation. The

District contends the circuit court misconstrued the District’s burden as to the so-called “dual

purpose” invoices. The District contends the circuit court enhanced the District’s burden of

proof at trial when the court referenced policy language that the ISDA would be responsible

only for defense costs “at ISDA’s request.”

¶ 49 We understand the ISDA to counter that the true issue on cross-appeal is whether the

District met its burden before the circuit court to prove the “dual purpose” invoices were

predominately litigation expenses rather than remediation expenses, which the bench trial,

based on the stipulated facts, was meant to resolve.

¶ 50 The parties dispute the applicable standard of review on the cross-appeal issue. The ISDA

accuses the District of failing to identify the applicable standard of review in violation of

Illinois Supreme Court Rules 341(h)(3) and 341(i) (eff. July 1, 2008) (both parties “must

include a concise statement of the applicable standard of review for each issue”). We note

the ISDA’s position on the applicable standard is itself unclear as it identifies potentially

different applicable standards but fails to state which standard should apply to the issue

before us. The District argues that its fundamental claim that the circuit court improperly

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enhanced its burden regarding the disputed invoices presents a question of law subject to de

novo review.

¶ 51 We elect to apply a de novo standard of review to the District’s initial contention that its

burden was unfairly enhanced by the circuit court’s interpretation of the CGL contract

between the parties. See 1350 Lake Shore Associates v. Healey, 223 Ill. 2d 607, 614, 627

(2006) (questions of law regarding the burden of proof are reviewed de novo). Should we

find no fundamental error of law regarding the District’s burden, we review the circuit

court’s findings supporting its judgment, following the bench trial, against the manifest

weight of the evidence. System Development Services, Inc. v. Haarmann, 389 Ill. App. 3d

561, 570 (2009) (“The standard of review in a bench trial is whether the judgment is against

the manifest weight of the evidence.” (Internal quotation marks omitted.)).

¶ 52 The District concedes that it bore the general burden of establishing that the disputed

invoices were subject to reimbursement under the CGL policy. Our supreme court “has long

established that the burden is on the insured to prove that its claim falls within the coverage

of an insurance policy.” Addison Insurance Co. v. Fay, 232 Ill. 2d 446, 453 (2009). The

District quotes Aerojet for the indisputable proposition, under the context of this case, that

“it is the insured that must carry the burden of proof on the existence, amount, and

reasonableness and necessity of the site investigation expenses as defense costs, and it must

do so by the preponderance of the evidence.” Aerojet, 948 P.2d at 924; see also Continental

Casualty Co. v. Board of Education, 489 A.2d 536, 546 (Md. App. 1985) (“The insured has

the burden of establishing that a given item of legal service or expense was reasonably

related to the defense of [the suit against it.] The [insured] must prove its damages.”). The

District acknowledges that expenses incurred only for remediation are its sole responsibility.

¶ 53 Paragraph 4 of the supplementary payments subsection in section I of the CGL policy

expressly provides: “We will pay, with respect to any claim or ‘suit’ we defend: *** All

reasonable expenses incurred by the Member [the District] at our request to assist us in the

investigation or defense of the claim or ‘suit.’ ” (Emphasis added.) The circuit court duly

noted this language. “When construing the language of an insurance policy, a court’s primary

objective is to ascertain and give effect to the intentions of the parties as expressed by the

words of the policy.” Rich v. Principal Life Insurance Co., 226 Ill. 2d 359, 371 (2007). “If

the words used in the policy are clear and unambiguous, they must be given their plain,

ordinary, and popular meaning.” Id.

¶ 54 The District argues that the circuit court improperly enhanced its burden when it required

the District to demonstrate, pursuant to the policy language, that the defense costs were “at

ISDA’s request.” The District asserts the circuit court “went too far in [the] ISDA’s favor.”

However, the District does not contend this provision was invalid or inapplicable. Rather,

the District suggests that requiring it to demonstrate Woods’ services were at the ISDA’s

request effectively allows an insurer to simply “say *** that it is not going to pay for

particular services.” According to the District, such an unrestrained reading of paragraph 4

of the supplementary payments of the policy gives insufficient consideration to the ISDA’s

“duty,” under the CGL policy, to defend suits against the District. The District contends it

should not be required to prove the ISDA “requested” the work of Woods reflected in the

disputed invoices when the work underlying the invoices benefitted the investigation or

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defense of the suits against the District and the remediation the District sought. The District

contends the circuit court erroneously classified certain expenses as remediation expenses

when they were in fact litigation defense costs as well, for which the ISDA should share

responsibility.

¶ 55 The ISDA contends the District’s burden at the stipulated bench trial was the same with

or without “at our request” language in the policy that the circuit court duly noted. The ISDA

points out that had the District not hired the same individual for its remediation work that the

ISDA hired as a litigation expert, the dispute between the parties would not have arisen. In

any event, it remained the District’s burden to prove, by preponderance of the evidence, that

any so-called “dual purpose” billings weighed in favor of an expense for litigation defense

and against an expense for remediation. The ISDA points to the absence of a provision in the

CGL policy for equally sharing so-called “dual purpose” expenses. The ISDA contends the

District’s challenge to the outcome of the trial concerns the circuit court’s assessment of the

evidence, not some sort of misallocation of the District’s burden.

¶ 56 Each of the invoices contested by the District was for work performed subsequent to the

District’s retention of Woods for its own remediation purposes. Indeed, Woods’ testimony

was that his litigation work was “winding up” toward the end of April of 2001. The four

invoices contested by the District, with the earliest dated June 14, 2001, were billed directly

to the District, unlike previous bills, which were billed to defense counsel. The District

internally coded all of Woods’ invoices it received directly as construction, capital

improvement, or operation and maintenance costs.

¶ 57 Woods testified that he considered the June 14, 2001, invoice to be the responsibility of

the District. He stated that all of the work invoiced for August 16, 2001, was done pursuant

to his contract with the school board. He testified that the October 1, 2001, invoice “was

needed for the remediation, but it could be used for the forensic[s].” The final invoice, dated

December 31, 2001, contained a single line entry that expressly pertained to a meeting

regarding remediation. Woods testified that other line items on this invoice “could have been

used for both,” but later stated line items were performed for remediation and “were not

intended for the lawsuit.” Nonetheless, Woods noted that most of the work reflected in the

invoices “could” have been used for litigation in addition to remediation.

¶ 58 At the bench trial on the stipulated facts, the circuit court was asked to decide whether

the services in the disputed invoices were “incurred by [the District] at [the ISDA’s] request

to assist [the ISDA] in the investigation or defense of the claim or ‘suit,’ ” under the

language of the policy. Whether Woods’ services could have been used for litigation, and not

solely for purposes of remediation, was rendered a factual question, which fell to the circuit

court to resolve as trier of fact. The court did precisely that. The circuit court did not rule that

absent a directive from the ISDA authorizing Woods’ work all of the disputed invoices were

the responsibility of the District. Rather, the circuit court properly sifted through each line

item in the invoices to determine whether the invoices, which undoubtedly arose at the

direction of the District, were predominately for remediation or litigation. The court

concluded that the ISDA had to reimburse the District for the April 26, 2001 invoice and the

May 16, 2001 invoice, because the line items concerned litigation defense matters, not

because there was a showing that the ISDA expressly “requested” the work to be performed.

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As we noted, the ISDA does not challenge these findings on appeal.

¶ 59 We reject the District’s contention that the circuit court’s reference to the policy language

should somehow be understood as enhancing the District’s burden at trial. Based on our de

novo review, the District’s burden was never enhanced by the circuit court below. The

District’s burden before the circuit court was to demonstrate that the disputed invoices

predominately concerned litigation work, not remediation work. Based on the circuit court’s

judgment, the District did not meet its burden below.

¶ 60 We also agree with the ISDA that the District attempts to make more out of the language

in paragraph 4 of the supplementary payments of the policy than is supported by the record.

The District’s novel claim that the circuit court’s rejection of the District’s “dual purpose”

argument is the product of some sort of misunderstanding by the circuit court regarding the

District’s burden of proof on the issue is not only misguided but unsupported by any case

law. Nor does the record support the District’s suggestion that Woods was engaged to do

“dual purpose” work. As the circuit court expressly found, Woods was “originally retained

by [the] ISDA defense counsel, Robert Smyth, but then separately retained by [the District]

for its own purposes.” (Emphasis added.) The District disingenuously attempts to use the

timing of the hiring of Woods to bolster its argument that it should not have been required

to obtain the ISDA’s consent for Woods’ “dual purpose” work because the “ISDA had

already given its overall approval to Woods’ retention.” The distinct and separate hiring of

Woods by the ISDA and the District amply supports the circuit court’s resolution of the

disputed invoices in the ISDA’s favor. Clearly, the ISDA did not approve all of the work

performed by Woods. The circuit court properly rejected the District’s facile claim that the

hiring of Woods by the ISDA triggered a duty to reimburse the District for the invoices that

arose, following its hiring of Woods, for his efforts at remediation.

¶ 61 The cases cited by the District do not support a result contrary to one reached by the

circuit court. “[I]t is the insured that must carry the burden of proof on the existence, amount,

and reasonableness and necessity of the site investigation expenses as defense costs, and it

must do so by the preponderance of the evidence.” Aerojet, 948 P.2d at 924. Whether

expenses are remedial or defense-related “will depend upon the facts.” Continental Casualty,

489 A.2d at 544. Nor does the language in another California case cited by the District help

its cause. “ ‘Ifsite investigation expenses must be incurred by the insurer in fulfilling its duty

to defend the insured, they must be incurred. *** Even if the insured may happen to derive

some added benefit, the insurer does not shoulder any added burden. The insurer may not be

heard to complain.’ ” (Emphasis added.) Barratt American, Inc. v. Transcontinental

Insurance Co., 125 Cal. Rptr. 852, 859 (Cal. App. 2002) (quoting Aerojet, 948 P.2d at 925).

As always, “if” conveys far more than its two letters suggest. It is undoubtedly true that the

insurer will not be heard to complain when the insured proves “site investigation expenses”

had to be incurred to fulfill the insurer’s duty to defend the insured. In the instant case, the

inescapable conclusion is the District failed to meet that burden. The other cases the District

cites, General Accident Insurance Co. of America v. State of New Jersey, Department of

Environmental Protection, 672 A.2d 1154 (N.J. 1996), American Bumper & Manufacturing

Co. v. Hartford Fire Insurance Co., 550 N.W.2d 475 (Mich. 1996), and State v. Blank, 745

F. Supp. 841 (N.D. N.Y. 1990), are equally inapposite. Those cases involved governmentally

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mandated investigations that were necessary for the defense in the litigation, unlike Woods’

work in the invoices before us.

¶ 62 We are given no reason to disturb the findings of the court below that the contested

expenses were incurred pursuant to Woods’ engagement by the District and not at the

ISDA’s request, as the policy requires for reimbursement. The District failed to meet its

burden before this court to demonstrate that the circuit court’s findings were contrary to the

manifest weight of the evidence presented. Haarmann, 389 Ill. App. 3d at 570. The circuit

court’s findings do not reflect some sort of enhanced burden imposed on the District based

on the policy language; rather, the findings were in line with the evidence that each of the

disputed invoices was the sole responsibilityof the District, which arose from its remediation

efforts. We also agree with the circuit court’s observation that nothing in the CGL policy

provides support for the District’s proposition that remediation invoices should be split

evenly between the insurer and insured when the underlying work “could” have aided the

litigation.

¶ 63 Upon our review of the record, the circuit court’s conclusions regarding each of the

disputed invoices were not contraryto the manifest weight of the evidence. Rather, the record

evidence supports that the work reflected in the disputed invoices was not requested by the

ISDA or required to fulfill the ISDA’s duty to defend the District.

¶ 64 CONCLUSION

¶ 65 We decline the District’s invitation to extend the targeted tender rule beyond cases

involving concurrent insurance policies, as the only context in which our supreme court has

applied the rule. Because the District’s insurance policies were all consecutive, the selective

tender rule did not apply to compel the ISDA to defend alone, without the prospect of

equitable contribution from other insurers, the mold lawsuits against the District. We reverse

the summary judgment granted to the District on counts II, III, and IV of the ISDA’s

amended complaint. We reject the District’s cross-appeal that the circuit court erred in its

judgment that certain invoices from the mold expert, retained separately by the ISDA and the

District, were for litigation purposes and therefore subject to reimbursement under the CGL

policy. We affirm the judgment in favor of the ISDA following the stipulated bench trial. We

remand for further proceedings consistent with this opinion.

¶ 66 Reversed in part and affirmed in part; cause remanded.

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