No. 3--00--0846

IN THE 

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2001

CINCINNATI INSURANCE		)	Appeal from the Circuit Court

COMPANY, as Subrogee to the	)	of the 10th Judicial Circuit 	

Rights of	Caterpillar, Inc,	)	Tazewell County, Illinois

a Corporation, and THE		)

CINCINNATI INSURANCE COMPANY,	)

a Corporation,				)

						)

	Plaintiffs-Appellants,	)	

						)

	v.					)						

						)	

RIVER CITY CONSTRUCTION,		)	No.	99--L--157

COMPANY and Illinois		)			

Corporation, and AUTO-OWNERS	)

INSURANCE, a Foreign		)

Corporation Authorized to do	)

Business in the State of		)	

Illinois,					)	Honorable

						)	Robert A. Barnes, Jr.,

	Defendants-Appellees.	)	Judge Presiding

PRESIDING JUSTICE HOMER delivered the opinion of the court:

	Cincinnati Insurance Company (Cincinnati) filed a two-count complaint seeking contribution from River City Construction

Company (River City) and Auto-Owners Insurance Company (Auto-

Owners) for a work-related injury settlement paid by Cincinnati

to Victor Modugno.  Cincinnati appeals from the judgment of the

trial court granting the defendants' separate motions to dismiss,

filed pursuant to section 2--619 of the Code of Civil Procedure

(735 ILCS 5/2--619 (West 2000)).  We affirm in part and reverse in part.

	BACKGROUND

	In November 1995, Victor Modugno was working for Illinois

Piping Corporation (Illinois Piping) at the Caterpillar

Corporation (Caterpillar) Building LL in East Peoria.  River City had a contract with Caterpillar to fabricate and install tanks at

Building LL.  By November 1995, River City had fabricated and

installed the tanks and grating around the tanks, but had failed

to install temporary or permanent hand railing as required by the

contract.  Modugno's work required use of the grating to access

his jobsite.  While Modugno was on the grating, he lost his

balance and fell a distance of 20 feet to the ground, sustaining

serious injuries.  Cincinnati alleges that River City knew that

workers were using the grating around the tanks prior to

Modugno's fall.  

	At the time of the accident, Auto-Owners provided general liability insurance coverage for River City, and Cincinnati

provided general liability insurance coverage for Illinois

Piping.  River City was named as an additional insured under

Illinois Piping's policy.  Caterpillar was named as an additional

insured under both policies.  

	In November 1997, Cincinnati settled with Modugno for

$541,422.12 for his injuries.  Modugno's wife received $25,000

for damages she sustained as a result of her husband's injuries. 

As a result of the settlement, the Modugnos signed releases

waiving all claims against Caterpillar, Illinois Piping, and Cincinnati, as well as all claims against River City and Auto-

Owners. 

	In November 1999, Cincinnati filed a two-count complaint

against River City and Auto-Owners.  Count I asserted a

subrogation action on behalf of Caterpillar against River City

pursuant to the Illinois Joint Tortfeasor Contribution Act (740

ILCS 100/0.01 et seq. (West 2000)), requesting contribution from River City based on its pro rata share of the liability.  Count II asserted a direct action by Cincinnati against Auto-Owners for

equitable contribution.  In this count, Cincinnati requested that

a determination be made as to Caterpillar's proportionate share

of liability and that Auto-Owners be ordered to reimburse

Cincinnati for 50% of such amount.

	River City filed a section 2--619 (735 ILCS 5/2--619 (West 2000)) motion to dismiss count I, arguing that since River City

was named as an additional insured under Cincinnati's policy with

Illinois Piping, it was not subject to Cincinnati's subrogation

claim.  River City also filed a section 2--615 (735 ILCS 5/2--615

(West 2000)) motion to dismiss, arguing that count I failed to

state a cause of action because it did not specify the amount

paid by Caterpillar in excess of its pro rata share of liability. 

	Auto-Owners filed a section 2--619 motion to dismiss count

II arguing that Cincinnati could not maintain an action for

equitable contribution because Cincinnati's and Auto-Owners'

policies did not insure the same risk and because Cincinnati

failed to segregate the settlement amounts.  

	Cincinnati obtained and filed deposition testimony from two

River City officersialsprincipals, beitng ng John Hoelscher, chief financial officer, and Joseph West, a former vice president of customer accounts.  Cincinnati also filed affidavits from Jeff Lewis, Illinois Piping's owner and president, and from Peter Coyle of Coyle

Insurance Agency.  Coyle was responsible for procuring the

Cincinnati policy issued to Illinois Piping.  

	In his deposition, Hoelscher said that when Illinois Piping

is a subcontractor of River City, Illinois Piping must include

River City as an additional insured.  However, according to

Hoelscher, when there is no written subcontract between River

City and Illinois Piping, then Illinois Piping is not required to

provide any insurance to River City.  Hoelscher conceded that at

the time of Modugno's fall, there was no contractual relationship

between River City and Illinois Piping regarding the work at

Building LL.  In his deposition, West stated that there was no contractual relationship between River City and Illinois Piping

at Building LL.  West indicated that Hoelscher was charged with

the duty of ensuring that the proper insurance was in place for

River City.  In his affidavit, Coyle indicated that it was his

understanding when he wrote the Cincinnati policy that the

additional insured status for River City would only apply when

River City had a contractual relationship with Illinois Piping on

a construction project.  According to Lewis' affidavit, Illinois

Piping had subcontracts with River City at various work sites,

but was not River City's subcontractor at Building LL at the time of Victor Modugno's fall. 

	The circuit court found the endorsement adding River City as

an additional insured to be clear and unambiguous and not subject

to interpretation by parol evidence.  Stating that it agreed with

the defendants' positions, the court then entered an order

dismissing counts I and II of the complaint with prejudice

pursuant to section 2--619.  735 ILCS 5/2--619 (West 2000). 

Cincinnati now appeals.

	ANALYSIS

	A section 2--619 dismissal resembles the grant of a summary

judgment motion; thus, we conduct a de novo review and consider whether the existence of a genuine issue of material fact should

have precluded the dismissal or, absent such an issue of fact,

whether dismissal was proper as a matter of law.  Epstein v. Chicago Board of Education, 178 Ill. 2d 370, 383, 687 N.E.2d 1042, 1049 (1997).  First, we will consider Cincinnati's claim

against River City and then its claim against Auto-Owners.

	I.  River City

	In count I of its complaint, Cincinnati, as the subrogee of

Caterpillar, seeks contribution from River City according to the

Joint Tortfeasor Contribution Act (740 ILCS 100/2 (West 2000)). 

In defense, River City notes the general rule that an insurer may

not subrogate against its own insured or any person or entity

having the status of a co-insured under the policy.  See Dix Mutual Insurance Company v. La Framboise, 149 Ill. 2d 314, 323, 597 N.E.2d 622, 626 (1992).  River City argues that Cincinnati is barred from seeking contribution from River City because River

City is a co-insured under Illinois Piping's insurance policy

with Cincinnati.  The policy at issue included an additional

insured endorsement which provides:  

	"WHO IS AN INSURED (Section II) is amended to include 

	as an insured the person or organization shown in the

Schedule as an insured but only with respect to liability 

	arising out of your [Illinois Piping's] operations or      

premises owned by or rented to you [Illinois Piping]."

The policy included additional insured endorsements for 18

different entities of which River City was one.  Consequently,

River City argues that Cincinnati cannot seek contribution since

River City is a co-insured. 

	To counter this argument, Cincinnati offered extrinsic

evidence to establish that the additional insured endorsement did

not apply to the instant claim.  Specifically, Cincinnati asked

the trial court to consider the depositions from two River City

officers, as well as affidavits from the insurance broker who

procured the Cincinnati policy for Illinois Piping and from the

principal of Illinois Piping. 

	In dismissing Cincinnati's complaint, the trial court

applied the traditional "four corners" rule of contract

interpretation.  This rule provides that "[a]n agreement, when

reduced to writing, must be presumed to speak the intention of

the parties who signed it.  It speaks for itself, and the

intention with which it was executed must be determined from the language used.  It is not to be changed by extrinsic evidence." 

Western Illinois Oil Co. v. Thompson, 26 Ill. 2d 287, 291, 186 N.E.2d 285 (1962).  The trial court's decision to exclude parol

evidence is reviewed for an abuse of discretion.  See McDonald's Operators Risk Management Ass'n v. Coresource, Inc., 307 Ill. App. 3d 187, 194, 717 N.E.2d 485, 491, (1999).  

	The strict application of the "four corners" rule continues

to find support in the Illinois Appellate Court.  See, e.g., Bonnie Owen Realty, Inc. v. Cincinnati Insurance Co., 283 Ill. App. 3d 812, 820, 670 N.E.2d 1182, 1187 (5th Dist. 1996). 

However, this court has adopted the "provisional approach" to

contract interpretation, which allows the court to provisionally

consider parol evidence to determine if an agreement that appears

to be clear on its face is actually ambiguous.  Ahsan v. Eagle, Inc., 287 Ill. App. 3d 788, 790, 678 N.E.2d 1238, 1241 (1997).  In Ahsan we stated: "[T]he 'four corners' rule has two flaws: it assumes precision in language that cannot exist, and it requires

the judge to determine the true intent of the parties in a

transaction that is removed in time and circumstance."  Ahsan, 287 Ill. App. 3d at 790, 678 N.E.2d at 1240.  Other districts of

the Illinois Appellate Court have also applied the "provisional"

approach to contract interpretation.  See USG Corp. v. Sterling Plumbing Group, Inc., 247 Ill. App. 3d 316, 318, 617 N.E.2d 69, 71 (1st Dist. 1993); Riney v. Weiss & Neuman Shoe Co., 217 Ill. App. 3d 435, 443, 577 N.E.2d 505, 510 (4th Dist. 1991). 

Moreover, in Dungey v. Haines & Britton, Ltd., 155 Ill. 2d 329, 614 N.E.2d 1205 (1993), our supreme court examined the evidence

to determine whether a latent ambiguity existed in an automobile

policy that was not ambiguous on its face.  The court stated:

"'What at first blush might appear unambiguous in the insurance

contract might not be such in the particular factual setting in

which the contract was issued.'"  Dungey, 155 Ill. 2d at 336, 614 N.E.2d at 1209, quoting Glidden v. Farmers Automobile Insurance Ass'n, 57 Ill. 2d 330, 336, 312 N.E.2d 247, 250 (1974)

	The supreme court declined to formally adopt the provisional

approach in Air Safety Inc. v. Teachers Realty Corp., 185 Ill. 2d 457, 706 N.E.2d 882 (1999), because the contract in that case

included an explicit integration clause in the contract, which

provided that the "'[c]ontract represents the entire and

integrated agreement between the parties hereto and supersedes

all prior negotiations, representations, or agreements, either

written or oral.'"  Air Safety, 185 Ill. 2d at 460, 706 N.E.2d at 883.    

	River City argues that the "Changes" clause in the Illinois Piping policy also includes an express integration clause.  This

clause provides:

	"B. CHANGES

	This policy contains all the agreements between you

[Illinois Piping] and us [Cincinnati] concerning the

insurance afforded.  The first Named Insured shown in

the Declarations is authorized to make changes in the

terms of this policy with our consent.  This policy's terms can be amended or waived only by endorsement

issued by us and made a part of this policy."    

	The Changes clause in the instant policy is distinctly

different from the integration clause in Air Safety because it does not express the parties' intent to establish the contract as

their entire and integrated agreement superceding all other

agreements.  Rather, the Changes clause prevents unilateral

modifications of the policy.  

	In Air Safety, the court explained that "[t]he integration clause makes clear that the negotiations leading to the written

contract are not the agreement."  (Emphasis in original.)  Air Safety, 185 Ill. 2d at 464, 706 N.E.2d at 885.  The Changes clause, on the other hand, addresses the circumstances under

which the instant policy can be amended after it was issued. 

Because we conclude that the instant policy does not contain an

explicit integration clause, the policy does not manifest the

parties' agreement to preclude a court from considering extrinsic

evidence to determine the existence of a latent ambiguity.

	Accordingly, we hold that the circuit court erred in declining to provisionally evaluate extrinsic evidence to

determine whether it revealed any latent ambiguities in the

insurance contract.  However, such evidence must have an indicia

of reliability.  The parties are entitled to only present to the

court objective evidence, i.e., evidence that cannot be fabricated and that can be supplied by disinterested third

parties.  See Ahsan, 287 Ill. App. 3d at 791, 678 N.E.2d at 1241.  Objective evidence also includes any admissions of an adverse

party.

	Applying this standard, the court should have provisionally

considered the admissions of the two River City officials,

Hoelscher and West.  They admitted in their depositions that

Illinois Piping was not contractually obligated to provide

coverage to River City for the work performed by River City at

Building LL.  However, such evidence does not establish a latent

ambiguity in the insurance contact at issue, because it sheds no

light on the question of whether Illinois Piping had nonetheless

contracted with Cincinnati for River City's status as an

additional insured for liability arising out of Illinois Piping's

operations at Building LL.  Although Cincinnati argues that the

endorsement should be limited to situations in which Illinois

Piping is acting as a subcontractor for River City, no such

limitation is included in the endorsement.  Because Cincinnati

did not offer objective extrinsic evidence demonstrating any latent ambiguity in the policy, the circuit court's refusal to

provisionally consider the extrinsic evidence offered by

Cincinnati in this instance was harmless error.  For the reasons

stated, we affirm the circuit court's dismissal of count I of

Cincinnati's complaint.    

II. 	Auto-Owners

	In count II of its complaint, Cincinnati seeks equitable

contribution from Auto-Owners for Caterpillar's proportionate

share of liability.  The right to equitable contribution arises when one insurer pays money for the benefit of another insurer. 

Royal Globe Insurance Co. v. Aetna Insurance Co., 82 Ill. App. 3d 1003, 1006, 403 N.E.2d 680, 683 (1980).  The doctrine of equitable contribution permits an insurer that has paid the

entire loss to be reimbursed by other insurers that are also

liable for the loss.  Liberty Mutual Insurance Co. v. Westfield Insurance Co., 301 Ill. App. 3d 49, 52, 703 N.E.2d 439, 441 (1998).  In order for the settling insurer to recover in an action for equitable contribution, the policies must cover a risk

on the same basis and there must be identity between the policies

as to parties and insurable interests and risks.  Aetna Casualty & Surety Co. v. James J. Benes & Associates, Inc., 229 Ill. App. 3d 413, 417, 593 N.E.2d 1087, 1090 (1992).

	The Cincinnati insurance policy provided coverage to

Illinois Piping and to Caterpillar as a co-insured for liability

arising out of Illinois Piping's operations.  The Auto-Owners'

insurance policy provided coverage to River City and to

Caterpillar as a co-insured for liability arising out of River

City's work.  Victor Modugno was injured while performing work

for Illinois Piping on grating erected by River City.  Modugno's

claim against Caterpillar is based upon the alleged failure of

its subcontractor River City to erect guardrailhand rails.  Since both policies insured against Caterpillar's liability for the same

risk, there is sufficient identity of insurable interests to

support equitable contribution for the settlement paid by

Cincinnati on behalf of Caterpillar.  

	However, Auto-Owners points out that the policies have

different sets of insureds and argues that the decision in Schal Bovis, Inc. v. Casualty Insurance Co., 315 Ill. App. 3d 353, 732 N.E.2d 1179 (2000), supports its argument that Cincinnati cannot

seek equitable contribution from Auto-Owners because there is not

an identity of risks insured.  

	While it is well established that excess insurers cannot

seek equitable contribution from primary insurers, the court in

Schal Bovis extended this rule of law, reasoning that a primary insurer cannot seek equitable contribution from another primary

insurer unless the coverage is substantially identical in all

respects.  See Schal Bovis, 315 Ill. App. 3d at 363, 732 N.E.2d at 1187.  Because the rule in Schal Bovis would unfairly protect Auto-Owners from paying for the benefit it received -- release

from liability -- we refuse to follow Schal Bovis.  The Cincinnati policy insures Caterpillar for liability arising out

of Illinois Piping's operations, and the Auto-Owners policy

insures Caterpillar for liability arising out of River City's

work.  Cincinnati settled the Modugnos' claim against Caterpillar

and paid out insurance proceeds for Cincinnati's benefit and for

the benefit of Auto-Owners.  While the Auto-Owners and Cincinnati

policies have different sets of insureds, Caterpillar was insured

for Modugno's injuries under both policies.  Consequently, dismissal of Cincinnati's claim for equitable contribution was

error. 

	Auto-Owners next argues that Cincinnati should be barred from seeking contribution because it failed to differentiate

between worker's compensation and personal injury awards within

the settlement with Modugno.  A plaintiff in contribution must

plead and offer evidence of the amount he paid to the injured

party, along with evidence of the joint tortfeasor's fault, so

that the fact finder has a basis for determining what, if any,

amount was paid by plaintiff over and above his fair share of the

joint liability.  Victory Memorial Hospital Ass'n v. Schmidt, Garden & Erickson, 158 Ill. App. 3d 931, 935, 511 N.E.2d 953, 956 (1987).  However, in Hall v. Archer-Daniels-Midland Co., 122 Ill. 2d 448, 459-61, 524 N.E.2d 586, 591-92 (1988), the court held

that Archer-Daniels-Midland (ADM) was not prohibited from seeking

contribution although it failed to segregate compensatory damages

from punitive damages (sought in the complaint against ADM only)

within the settlement.  The court reasoned that the settlement

was in good faith and whether the plaintiff had paid in excess of

its pro rata share could be appropriately decided by a jury.  Hall, 122 Ill. 2d at 461, 524 N.E.2d at 592.  As in  Hall, the settlement in this case appears to have been made in good faith

and a jury should have the opportunity to determine Caterpillar's

proportionate share of liability.

	CONCLUSION

	The judgment of the circuit court of Tazewell County

dismissing count I is affirmed.  The judgment of the circuit

court dismissing count II is reversed.  The case is remanded for

further proceedings in accordance with this opinion.

	Affirmed in part and reversed in part; cause remanded.

HoldOLDRIDGE  AND and SLATER, j.J.J., CONCURRED.concurredcocncuured.AND S