SECOND DIVISION

May 4, 2010

No. 1-09-0080

KONSTANT PRODUCTS, INC., ROGER W. MEYERS

and ST. PAUL FIRE AND MARINE INSURANCE

COMPANY, Individually and as Subrogee of

Konstant Products, Inc. and Roger W.

Meyers, 

Plaintiffs-Appellants,

v.

LIBERTY MUTUAL FIRE INSURANCE COMPANY,

RICKY FELTES and PATRICIA L. FELTES, 

Defendants-Appellees.

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Appeal from the

Circuit Court of

Cook County

No. 07 CH 05310

Honorable LeRoy K.

Martin, Jr., 

Judge Presiding.

JUSTICE KARNEZIS delivered the opinion of the court:

Plaintiffs Konstant Products, Inc. (Konstant), Roger W.

Meyers (Meyers) and St. Paul Fire and Marine Insurance Company

(St. Paul), individually and as subrogee of Konstant and Meyers,

appeal from the circuit court’s order granting summary judgment

in favor of defendants Liberty Mutual Fire Insurance Company

(Liberty Mutual), Ricky Feltes (Feltes) and his wife, Patricia

Feltes. On appeal, plaintiffs contend the circuit court erred in

(1) concluding that an allegation made by Feltes in his original

complaint constituted a judicial admission; (2) failing to

consider extrinsic evidence when determining Liberty Mutual’s

obligations to Meyers and Konstant; and (3) failing to consider
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Feltes' second amended complaint in determining Liberty Mutual's

duty to defend. For the following reasons, we affirm. 

BACKGROUND

This cause of action arose as a result of an accident

occurring at Konstant Products' facility in Quincy, Illinois, in

which Feltes was injured. On April 1, 2003, Feltes, during the

course of his employment with Alter Scrap Co., drove an Alter

Scrap truck to Konstant Products' facility to pick up a dumpster

of scrap iron and load it onto his truck. As Feltes stood in

front of the truck, it began to roll forward and pinned Feltes

between the truck and the dumpster. Meyers, a Konstant Products

employee, heard Feltes’ cries for help and got into the truck. 

In attempting to back the truck away from Feltes, Meyers placed

it in the wrong gear and drove the truck into Feltes. Feltes

filed a verified complaint against Konstant Products and Meyers. 

In paragraph 6A of the complaint, he alleged that Meyers

negligently and carelessly operated the truck "against [Feltes']

verbal request." St. Paul, Konstant Products' commercial

liability insurer, accepted and undertook the defense of Konstant

Products and Meyers. St. Paul then tendered the defense to Alter

Scrap’s auto carrier, Liberty Mutual, on the basis that the

Liberty Mutual auto policy provided coverage for Meyers as a
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"permitted user" of the Alter Scrap truck. Liberty Mutual

subsequently denied the tender because it contended that Meyers

was not a permissive user since the verified complaint expressly

alleged that Meyers operated the vehicle against Feltes'

objections. Feltes subsequently filed a second amended verified

complaint, which omitted paragraph 6A. St. Paul continued

defending Konstant and Meyers and ultimately settled the lawsuit

on their behalf for $40,000. 

Thereafter, St. Paul filed a declaratory judgment action

seeking a declaration that Liberty Mutual had a duty to defend

Konstant and Meyers in connection with the Feltes' lawsuit and

further sought reimbursement of defense costs and the $40,000

settlement payment. Ultimately, both Liberty Mutual and St. Paul

filed cross-motions for summary judgment. The court granted

Liberty Mutual's motion, from which plaintiffs now appeal. 

ANALYSIS

On appeal, plaintiffs contend the circuit court erred in

concluding that paragraph 6A of the original complaint

constituted a judicial admission that was binding throughout the

litigation for purposes of determining Liberty Mutual’s duty to

defend. Specifically, paragraph 6A alleged: 

"Against Plaintiff’s verbal request, [Meyers]
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negligently and carelessly entered Plaintiff’s vehicle,

against Plaintiff’s request and drove the vehicle into

the dumpster three (3) times causing Plaintiff each

time to be pinned between the truck and the dumpster." 

Feltes' second amended complaint was identical to the

original complaint, except that paragraph 6A was omitted. The

circuit court, in granting Liberty Mutual’s motion for summary

judgment, found that Feltes’ allegation in the original complaint

that Meyers did not have permission to drive the truck was a

binding judicial admission that "did not go away" merely by

filing an amended complaint. 

Judicial admissions are formal admissions in the pleadings

that have the effect of withdrawing a fact from issue and

dispensing wholly with the need for proof of the fact. Robins v.

Lasky, 123 Ill. App. 3d 194, 198 (1984). Illinois law is well

established that when a pleading is verified it remains part of

the record even upon the filing of an amended pleading. Robins

v. Lasky, 123 Ill. App. 3d 194, 198 (1984). A party's admissions

contained in an original verified pleading are judicial

admissions that still bind the pleader even after the filing of

an amended pleading that supercedes the original. Yarc v.

American Hospital Supply Corp., 17 Ill. App. 3d 667, 670 (1974). 
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Moreover, any admissions that are not the product of mistake or

inadvertence also bind the pleader throughout the litigation. 

Rynn v. Owens, 181 Ill. App. 3d 232, 235 (1989). 

Here, it is undisputed that the original verified complaint

contained Feltes' admission in paragraph 6A that unequivocally

stated that Feltes did not grant Meyers permission to use the

truck. Additionally, there is no evidence or assertion that this

admission was a result of a mistake or inadvertence. Thus,

Feltes' judicial admission remained binding on him throughout the

litigation, notwithstanding the amended complaint. 

The admission also remained binding on Liberty Mutual in

determining its duty to defend. Our supreme court has made clear

that Illinois adheres to an “eight corners” analysis when

determining a carrier’s duty to defend. Valley Forge Insurance

Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352, 363 (2006)

(stating a court must compare the facts alleged in the underlying

complaint to the relevant provisions of the insurance policy to

determine duty to defend); see also Pekin Insurance Co. v. Dial,

355 Ill. App. 3d 516, 519 (2004) (stating a court should apply

the “eight corners rule” – that is the court should compare the

four corners of the underlying tort complaint with the four

corners of the insurance policy to determine whether facts
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alleged in the underlying complaint fall within or potentially

within coverage). Therefore, if a judicial admission remains

binding on Feltes throughout the litigation (including all

subsequent amended pleadings), then Feltes' admission must also

be considered binding on Liberty Mutual because Liberty Mutual’s

duty to defend is specifically determined by allegations

contained within the four corners of the underlying complaint. 

We find this court’s decision in State Security Insurance

Co. v. Linton, 67 Ill. App. 3d 480 (1978), helpful since it also

involved a judicial admission that affected whether an insurance

carrier had a duty to defend. In Linton, the court held that the

plaintiff’s judicial admission that the court found binding on

the defendant was also binding on the insurance carrier in

determining the carrier’s duty to defend. Linton, 67 Ill. App.

3d at 484-85 (finding that the defendant’s judicial admission in

the answer to the insurer’s declaratory judgment complaint was

determinative in showing that a policy exclusion applied and

barred coverage under the policy). 

Plaintiffs also contend that the circuit court improperly

concluded that its review was confined to the original complaint

and that the court should have considered evidence outside of the

complaint in determining Liberty Mutual’s duty to defend. 
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Plaintiffs rely on several cases including Associated Indemnity

Co. v. Insurance Co. of North America, 68 Ill. App. 3d 807

(1979). The Associated Indemnity Co. court was careful in

stating its narrow holding: 

"We do not even reach the issue of when, if ever,

an insurance carrier is obligated to conduct an

independent investigation of the facts underlying a

complaint filed against a putative insured. All we hold

is that an insurance carrier may not ignore unpleaded

facts within its knowledge, which it knows to be

correct, and which, when taken together with the

complaint's allegations, indicate that the claim

asserted against the putative insured is potentially

within the coverage of the insurance policy. (Emphasis

in original.) Of course, if the complaint contains

allegations which if true would exclude coverage under

the policy, the insurer has no obligation to defend." 

Associated Indemnity Co., 68 Ill. App. 3d at 817.

(Emphasis added and omitted.) 

Applying the reasoning in Associated Indemnity Co. to this

case, plaintiffs' argument fails. First, Liberty Mutual was

under no duty to conduct an independent investigation as to
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whether Meyers had permission to drive the truck. Furthermore,

Associated makes clear that if the complaint contains

allegations, which if true, would bar coverage, then the carrier

would have no duty to defend. Thus, the nonpermission allegation

in the original complaint, which remained binding throughout the

litigation, clearly would disqualify Meyers as a permissive

driver and exclude coverage under the policy. 

Plaintiffs also rely on American Economy Insurance Co. v.

Holabird & Root, 382 Ill. App. 3d 1017 (2008), in support of

their contention that the circuit court may consider evidence

beyond the underlying complaint in determining an insurer’s duty

to defend. In Holabird, the issue on appeal was whether the

trial court erred in considering outside evidence (a third party

complaint) in determining a carrier’s duty to defend. The

plaintiff carrier, American Economy, had denied additional

insured coverage to Holabird under a policy issued to its

insured, Metrick (an electrical subcontractor), since the

underlying complaint did not allege any negligence against

Metrick as required for coverage to apply. In ruling against

American Recovery, the trial court looked outside the complaint

by taking into account a third-party complaint against Metrick

that specifically alleged Metrick negligently performed the
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installation that was at issue in the underlying case. The

Holabird court held that because American Economy was aware of a

true but unpleaded fact (that its insured Metrick allegedly

performed the installation), it had a duty to defend Holabird. 

However, the instant case is distinguishable from Holabird. 

First, the critical fact at issue (permission) was pled by Feltes

(unlike Holabird, where the fact was not pled). Moreover, there

is nothing in the record, nor did plaintiffs present any

evidence, to indicate that Feltes had granted Meyers permission

to use the truck. Thus, Liberty Mutual was never aware of "a

true, but unpleaded fact" (that Meyers did actually have

permission), as required by the Holabird holding. In contrast,

American Economy, in Holabird, did have actual knowledge of a

true but unpleaded fact that would have been relevant to its

duty-to-defend analysis by the filing of a third-party complaint,

which made American Economy aware that its insured was alleged to

have negligently performed the installation even though that was

not alleged in the underlying complaint. Thus, the Holabird

decision does not apply here. 

Plaintiffs also argue that, based on deposition testimony,

Meyers had implied permission to drive the truck due to exigent

circumstances and thus should qualify as an insured under the
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Liberty Mutual auto policy. Implied permission generally may be

inferred from a course of conduct or relationship between the

parties in which there is mutual acquiescence or lack of

objection under circumstances signifying permission. Country

Mutual Insurance Co. v. Bowe, 13 Ill. App. 3d 386, 389 (1973). 

However, Feltes’ judicial admission in the original complaint

established that Meyers did not have permission and, furthermore,

there was no mutual acquiescence or lack of objection, thus

rendering the implied permission argument unviable. Further, the

circuit court did not need to consider anything further than the

affirmative nonpermission allegation in accordance with the eight

corners rule. Therefore, the implied permission analysis is

inapplicable here. 

Finally, plaintiffs contend that Liberty Mutual owed a

primary duty to defend and indemnify Meyers and Konstant against

the Feltes' lawsuit merely because the truck involved in the

accident was owned by Feltes' employer. Plaintiffs reason that

since the Liberty Mutual auto policy provides primary coverage

for any covered auto and because Illinois public policy mandates

that primary liability should rest with the insurance carrier for

the owner of the auto rather than on the insurance carrier for

the driver, Liberty Mutual’s policy should respond. However,
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plaintiffs fail to recognize that although Liberty Mutual’s

policy is a primary policy, coverage is still limited to those

entities that qualify as insureds under the policy, such as the

named insured, its employees and permitted users. According to

plaintiffs’ logic, the driver of the vehicle would be irrelevant

since the owner's policy would respond as primary in all

instances. However, this logic is misplaced since, for example,

if a vehicle is stolen and the driver subsequently causes injury

or damage to a third party, it would not be fair to force the

auto owner’s insurance policy to respond in that instance. 

Moreover, it would be increasingly difficult for carriers to

accurately underwrite risks and assess proper premiums when

potentially all drivers, whether they have permission or not,

would have to be covered. Accordingly, we reject plaintiffs’

argument that Liberty Mutual’s policy should respond as primary

merely because the truck in the underlying accident was owned by

Liberty Mutual’s insured, Alter Scrap. 

Accordingly, we affirm the circuit court's judgment granting

Liberty Mutual's motion for summary judgment. 

Affirmed.

CUNNINGHAM, P.J. and THEIS, J., concur.
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REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT

KONSTANT PRODUCTS, INC., ROGER W. MEYERS and ST. PAUL FIRE AND

MARINE INSURANCE COMPANY, Individually and as Subrogee of Konstant Products,

Inc. and Roger W. Meyers, 

Plaintiffs-Appellants,

v.

LIBERTY MUTUAL FIRE INSURANCE COMPANY, RICKY FELTES and PATRICIA L.

FELTES, 

Defendants-Appellees.

No. 1-09-0080

Appellate Court of Illinois

First District, Second Division

May 4, 2010

JUSTICE KARNEZIS delivered the opinion of the court.

CUNNINGHAM, P.J. and THEIS, J., concur. 

Appeal from the Circuit Court of Cook County.

The Honorable LeRoy K. Martin, Judge Presiding.

For APPELLANT, Cassiday Schade LLP, Chicago, IL (Jamie L. Hull and Deborah A. 

Martin-Sheridan, of counsel)

For APPELLEE, Judge, James & Kujawa, LLC, Park Ridge, IL (Jay S. Judge, Andrew
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G. Witik, of counsel)