2017 IL App (3d) 160601

Opinion filed July 6, 2017 

_____________________________________________________________________________ 

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

2017 

PEKIN INSURANCE COMPANY, )

 ) 

Plaintiff-Appellant, ) 

 ) 

 v. ) 

 ) 

JOHNSON-DOWNS CONSTRUCTION, INC., ) 

an Illinois Corporation; CINCINNATI ) 

INSURANCE COMPANY, a Foreign Insurance ) 

Corporation; and JEFF BARNETT, ) 

 ) 

Defendants-Appellees. ) 

)

Appeal from the Circuit Court

of the 12th Judicial Circuit, 

Will County, Illinois. 

Appeal No. 3-16-0601 

Circuit No. 16-MR-962 

The Honorable 

John Anderson, 

Judge, presiding. 

_____________________________________________________________________________

JUSTICE McDADE delivered the judgment of the court, with opinion. 

Justices Carter and O’Brien concurred in the judgment and opinion. 

 

_____________________________________________________________________________

OPINION 

¶ 1 Defendant Johnson-Downs Construction, Inc. (Johnson-Downs), entered into a 

construction contract with Art’s Landscaping, Inc. (Art’s). Jeff Barnett, an Art’s employee, was 

injured at the site and sued Johnson-Downs for construction negligence. Pekin Insurance 

Company (Pekin) filed a declaratory judgment action in Will County circuit court claiming it did 

not have a duty to defend Johnson-Downs as an additional insured under Art’s insurance policy. 
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Johnson-Downs filed a motion to stay the action pending the resolution of the underlying case, 

which the trial court granted. Pekin appeals, arguing (1) the trial court’s grant of the motion to 

stay was an abuse of discretion, (2) the trial court cannot consider Johnson-Downs’s third 

amended complaint in its determination, and (3) the trial court cannot consider Barnett’s 

amended complaint in its determination. We reverse and remand with directions.

¶ 2 FACTS

¶ 3 Defendant Johnson-Downs entered into a contract with Art’s, in which Art’s would 

perform work on the construction of an addition to the Riverside Hospital in Kankakee, Illinois. 

Section 13.4 of the contract stated that Art’s was required to name Johnson-Downs as an 

additional insured on its liability insurance policy. Art’s had an insurance policy through Pekin 

Insurance Company. The relevant portion of the policy regarding additional insured states: 

“ADDITIONAL INSURED— 

OWNERS, LESSEES OR CONTRACTORS— 

WHEN REQUIRED IN CONSTRUCTION 

AGREEMENT WITH YOU

PRIMARY AND NONCONTRIBUTORY

This endorsement modifies insurance provided under the 

following: 

COMMERCIAL GENERAL LIABILITY COVERAGE PART

1. Section II—Who Is An Insured is amended to include as an 

insured any person or organization for whom you are performing 

operations, when you and such person or organization have agreed 

in a written contract effective during the policy period stated on the 
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Declarations Page (hereinafter referred to as the ‘Policy Period’) 

and executed prior to the ‘bodily injury’ or ‘property damage’ for 

which coverage is sought, that you must add that person or 

organization as an additional insured on a policy of liability 

insurance (hereinafter referred to as the ‘Additional Insured’). 

The Additional Insured is covered only with respect to vicarious 

liability for ‘bodily injury’ or ‘property damage’ imputed from You 

to the Additional Insured as a proximate result of your ongoing 

operations performed for that Additional Insured during the Policy 

Period.” (Emphasis added.) 

¶ 4 In October 2011, Jeff Barnett, an Art’s employee, was injured while driving a front end 

loader at the construction site. Barnett filed a suit against Johnson-Downs alleging construction 

negligence and premises liability. At the time, Johnson-Downs was the only named defendant. 

Cincinnati Insurance Company, Johnson-Downs’s insurer, tendered the complaint to Pekin for a 

defense and indemnification. Since May 2013, Pekin has defended Johnson-Downs under its 

reservation of rights. 

¶ 5 In March 2014, Johnson-Downs filed a third-party complaint against Art’s alleging Art’s 

was negligent and, as a result, liable for Barnett’s injuries. In April 2016, Pekin sought a 

declaratory judgment claiming that (1) Johnson-Downs does not have any rights under the 

certificate of insurance, (2) Johnson-Downs has failed to bring a claim in which Pekin has a duty 

to defend, and (3) Pekin is entitled to recovery for defense cost. Johnson-Downs filed a response 

and motion to stay the declaratory judgment pending the resolution of the underlying case. In its 

motion to stay, Johnson-Downs alleged that count II of Pekin’s declaratory judgment would 
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result in the trial court determining an issue of ultimate fact in violation of the Peppers doctrine. 

See Maryland Casualty Co. v. Peppers, 64 Ill. 2d 187 (1976). 

¶ 6 In July 2016, Barnett filed an amended complaint in the underlying case breaking the 

construction negligence claim into two separate counts: direct construction negligence and 

vicarious construction negligence. In Johnson-Downs’s reply to the motion to stay, it requested 

that the trial court consider Barnett’s amended complaint and Johnson-Downs’s third-party 

complaint when ruling on the motion. In September 2016, the trial court granted the motion to 

stay the declaratory judgment pending the resolution of the underlying claim. 

¶ 7 ANALYSIS

¶ 8 I. Motion to Stay 

¶ 9 Pekin argues that the trial court abused its discretion when it granted Johnson-Downs’s 

motion to stay because the declaratory judgment did not involve a determination of ultimate fact 

in the underlying case. 

¶ 10 A circuit court may grant a motion to stay as part of its inherent authority to control the 

disposition of cases before it. Cullinan v. Fehrenbacher, 2012 IL App (3d) 120005, ¶ 10. The 

court should consider certain factors including the orderly administration of justice and judicial 

economy when making its determination. Id. We will not disturb a circuit court's decision on a 

motion to stay absent an abuse of discretion. Id. An abuse of discretion occurs if the court “acted 

arbitrarily without the employment of conscientious judgment or, in view of all the 

circumstances, exceeded the bounds of reason and ignored recognized principles of law so that 

substantial prejudice resulted.” (Internal quotation marks omitted.) Id. 

¶ 11 Under the Peppers doctrine, it is inappropriate for a court to make a determination on an 

issue of ultimate fact critical to the underlying case. See Peppers, 64 Ill. 2d at 197. Specifically, 
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any determination of ultimate facts upon which liability or recovery might be found in an 

underlying case is precluded from review. Landmark American Insurance Co. v. NIP Group, 

Inc., 2011 IL App (1st) 101155, ¶ 59. 

¶ 12 In Peppers, our supreme court held that the trial court’s ruling that the injury was 

intentional was one of ultimate fact that could bind the parties to the underlying litigation. 

Peppers, 64 Ill. 2d at 196-97. In Canel, the First District ruled that determining whether Canel 

Associates knew or should have known that a claim would be made before the insurance policy 

took effect was an “ultimate fact[ ] upon which recovery is predicated in the underlying action.” 

TIG Insurance Co. v. Canel, 389 Ill. App. 3d 366, 374 (2009). Our court in Pittington held that 

Pittington’s argument that injury was not expected, anticipated, or intended is not one of ultimate 

fact because the “underlying tort suit is based solely on theories of negligence.” Metropolitan 

Property & Casualty Insurance Co. v. Pittington, 362 Ill. App. 3d 220, 229 (2005). In NIP 

Group, the First District ruled that determining whether faxes are covered under the insurance 

policy was not an issue of ultimate fact when the nature and extent of the faxes were not a 

deciding factor in the underlying case. Landmark American Insurance Co. v. NIP Group, Inc., 

2011 IL App (1st) 101155, ¶ 61. 

¶ 13 In Johnson-Downs’s motion to stay, it requested that the trial court stay Pekin’s 

declaratory judgment action because Pekin’s count II allegation presents an issue of ultimate fact 

critical to the underlying case. Count II claims that Pekin does not owe a duty to defend JohnsonDowns because the insurance policy states that an additional insured is only covered for 

vicarious liability claims and the underlying complaint lacks such allegations. Without 

specifying its reasons, the trial court granted Johnson-Downs’s motion to stay. Assuming 

arguendo that the trial court’s ruling is based on the argument presented by Johnson-Downs in 
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its motion to stay, the trial court can make a determination of whether the complaint contains any 

allegations of vicarious liability that Pekin has a duty to defend by comparing the complaint to 

the language in the insurance policy. This can be decided without examining the extent of 

Johnson-Downs’s supervisory control over Art’s alleged negligent acts and, ultimately, 

determining whether Johnson-Downs is in fact vicariously liable. Thus, we find that the trial 

court abused its discretion in granting the motion to stay and the declaratory judgment action can 

proceed to resolution prior to the conclusion of the underlying suit. Accordingly, we reverse and 

remand for a hearing on and resolution of the declaratory judgment action. We continue our 

analysis to determine whether the trial court can consider Johns-Downs’s third-party complaint 

and Barnett’s amended complaint in its duty to defend determination. 

¶ 14 II. Third-Party Complaint

¶ 15 Pekin argues that Johnson-Downs’s third-party complaint against Barnett cannot be 

considered by the trial court in its determination because the complaint was prepared by a 

putative additional insured seeking coverage under the policy in violation of case law. 

¶ 16 A trial court may consider evidence beyond the underlying complaint, including a thirdparty complaint. Pekin Insurance Co. v. United Contractors Midwest, Inc., 2013 IL App (3d) 

120803, ¶ 29 (citing Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446, 458-62 (2010)). However, 

there are exceptions that prohibit the review of third-party complaints. See Wilson, 237 Ill. 2d at 

459 (“a circuit court may, under certain circumstances, look beyond the underlying complaint in 

order to determine an insurer’s duty to defend” (emphasis added)). In DePaul University, the 

First District determined that a putative additional insured is not allowed to bolster its claim of 

coverage by referencing its own third-party complaint. American Economy Insurance Co. v. 

DePaul University, 383 Ill. App. 3d 172, 180 (2008). The First District in National Fire also 
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determined that a putative additional insured could not reference his third-party complaint as a 

way to bolster coverage under the insurance policy. National Fire Insurance of Hartford v. 

Walsh Construction Co., 392 Ill. App. 3d 312, 322 (2009). Following the guidance of DePaul 

University and National Fire, our court in United Contractors declined to consider the putative 

additional insured’s third-party complaint where the additional insured filed the complaint after 

the declaratory action, demonstrating potential self-serving evidence. Pekin Insurance Co. v. 

United Contractors Midwest, Inc., 2013 IL App (3d) 120803, ¶¶ 29-32. 

¶ 17 Here, Johnson-Downs, the putative additional insured and the author of the third-party 

complaint, is requesting the trial court to consider its own complaint in the trial court’s 

determination of Pekin’s duty to defend. As in DePaul University, National Fire, and United 

Contractors, Johnson-Downs cannot present its own complaint to bolster its position that a claim 

of vicarious liability is present in the underlying case. Therefore, we instruct the trial court not to

consider Johnson-Downs’s third-party complaint in its determination of Pekin’s duty to defend. 

¶ 18 III. Amended Complaint 

¶ 19 Pekin argues that Barnett’s amended complaint was a transparent attempt to plead into 

coverage and, therefore, should not be considered in the trial court’s determination. JohnsonDowns alleges Illinois law does not prohibit a pleading that potentially triggers coverage when 

the facts support a cause of action. 

¶ 20 We agree with Johnson-Downs. In Illinois, a pleading is not a transparent attempt to 

plead into coverage when the facts support a cause of action. See American Family Mutual 

Insurance Co. v. Guzik, 406 Ill. App. 3d 245, 248-49 (2010) (State Farm’s argument that Guzik 

negligently failed to prevent fire from spreading was transparent attempt to plead into coverage 

when the factual allegations show Guzik’s actions were not negligent); Pekin Insurance Co. v. 
8 

Dial, 355 Ill. App. 3d 516, 522 (2005) (transparent attempt to plead into coverage where the 

factual allegations show a course of conduct that was clearly intentional and not merely negligent 

or accidental conduct that falls within the insurance policy); USAA Casualty Insurance Co. v. 

McInerney, 2011 IL App (2d) 100970, ¶ 26 (“the Cyrs properly alleged an alternative theory of 

recovery and there is no indication that the claim for negligent misrepresentation was a 

transparent attempt to trigger insurance coverage”). 

¶ 21 In this case, the amended complaint alleges that Art’s failure to maintain equipment and 

working conditions resulted in Barnett’s injuries and that Johnson-Downs, as the general 

contractor, exercised control over Art’s such that Johnson-Downs was liable for Art’s negligent 

acts and omissions. The insurance policy covers claims of vicarious liability imputed to JohnsonDowns as a proximate result of Art’s acts or omissions in its performance for Johnson-Downs. 

We believe the factual allegations in the amended complaint state a vicarious liability claim that 

falls within the coverage of the insurance policy, and therefore, Barnett’s amended complaint 

was not an improper or unsupported attempt to plead into coverage. Moreover, the facts 

supporting the amended claim were present in an undifferentiated form in Barnett’s original 

complaint. Accordingly, we instruct the trial court that it may consider Barnett’s amended 

complaint in its duty to defend determination. 

¶ 22 CONCLUSION

¶ 23 The judgment of the circuit court of Will County is reversed and remanded with 

directions. 

¶ 24 Reversed and remanded with directions.