FIRST DIVISION

						 March 29, 2002

1-01-1594

PEKIN INSURANCE COMPANY,    		   

	Plaintiff-Appellant,	 		

	v.				

ALLSTATE INSURANCE COMPANY,	

	Defendant-Appellee.

)	Appeal from the 

)	Circuit Court

)	of Cook County

)

)	No. 00 CH 11342

)

)	The Honorable

)	John K. Madden,

)	Judge Presiding.

	JUSTICE COUSINS delivered the opinion of the court:

	The plaintiff, Pekin Insurance Company (Pekin), filed a

complaint for declaratory judgment against the defendant,

Allstate Insurance Company (Allstate), on August 3, 2000. 

Pekin's complaint for  declaratory judgment requested that the

court declare that Pekin and Allstate were co-insurers for the

insured, Trevor Cary.  Trevor Cary was being sued for damages in

a cause filed on March 7, 1997, that was pending in the circuit

court of Cook County. 

	Allstate filed a counterclaim for declaratory judgment on

December 4, 2000, alleging that it did not owe any liability as

its policy excludes coverage of liability arising out of business

pursuits.  Allstate further alleged that it did not owe

reimbursement to Pekin for the defense costs.  On December 4,

2000, Allstate also filed an answer.  On February 9, 2001,

Allstate filed a motion for judgment on the pleadings requesting

that the court declare that Pekin was the sole primary liability

insurer of the insured and his business.  The trial court entered

judgment on the pleadings in favor of Allstate.  

	Pekin filed a timely appeal alleging that the trial court 

erred in allowing judgment on the pleadings because Allstate was

estopped from raising defenses to coverage for failure to

properly respond to the tender of defense.  

 BACKGROUND

	Pekin's action for declaratory judgment against Allstate

arises from an action for damages brought by Rose Stolzenberg and

Linda White, individually and as guardian on Nava R. Stolzenberg,

an 11-year-old minor.  The action named Trevor Cary, French Cary

III and Corals & Critters Pet Store (Corals & Critters) as party

defendants.  The Stolzenberg action alleged that Nava Stolzenberg

was attacked and injured by Trevor Cary's dog while in his pet

store.  On August 7, 2000, in a jury trial, Trevor Cary and

Corals & Critters were found liable for the injuries resulting

from the dog bite.  French Cary III was dismissed from the case. 

The jury assessed damages at $50,000, jointly and severally,

against Trevor Cary and Corals & Critters.  	 Pekin issued an insurance policy to Corals & Critters, under which Trevor Cary

was an insured, that was in effect during the time of the

incident.  Trevor Cary and Corals & Critters tendered its defense

to Pekin.  Pekin contacted Allstate asking Allstate to extend

coverage to Trevor Cary in the defense of the Stolzenberg action. 

On November 14, 1999, Allstate corresponded with Pekin with

carbon copies to Trevor Cary advising that its homeowner's policy

was excess to Pekin's commercial policy and did not extend coverage to business pursuits.  The correspondence also advised

Pekin that the Pekin commercial policy provides that it is

undoubtedly primary.  

	On August 3, 2000, Pekin filed its claim for declaratory

judgment against Allstate, four days before the jury in the

Stolzenberg action found Trevor Cary and Corals & Critters

liable.  On December 4, 2000, Allstate filed a counterclaim for

declaratory judgment against Pekin alleging that Pekin was the

sole primary insurer in the Stolzenberg action.  The trial court

entered judgment on the pleadings in favor of Allstate pursuant

to a motion for judgment on the pleadings filed by Allstate on

February 9, 2001.  The trial court found that Pekin was the sole

primary insurer and Allstate's policy was excess to Pekin's

commercial policy.  

	Pekin appeals.  We affirm.

ANALYSIS

I

	This matter arose from the granting of Allstate's motion for

judgment on the pleadings pursuant to the Code of Civil Procedure

(735 ILCS 5/2-615(e) (West 1992)).  The disposition of a judgment

on the pleadings is not discretionary; therefore, our standard of

review is de novo.  Board of Trustees of the University of Illinois v. City of Chicago, 317 Ill. App. 3d 569, 571, 740 N.E.2d 515 (2000).  A motion for judgment on the pleadings tests

the sufficiency of the pleadings by determining whether the plaintiff is entitled to the relief sought by his complaint.  Village of Worth v. Hahn, 206 Ill. App. 3d 987, 990, 565 N.E.2d 166 (1990).  The motion requires the trial court to examine the

pleadings and determine whether there is an issue of fact or

whether the controversy can be resolved as a matter of law.  Village of Worth, 206 Ill. App. 3d at 990.  On appeal, the reviewing court must ascertain whether the trial court correctly

determined that the pleadings presented no issue of material fact

and, if there were no such issue, whether the court correctly

entered the judgment.  TDC Development Corp. v. First Federal Savings & Loan Ass'n of Ottawa, 204 Ill. App. 3d 170, 174, 561 N.E.2d 1142 (1990).

	Pekin argues that the trial court erred in granting judgment

on the pleadings because Allstate was estopped from raising

noncoverage as a defense.  Pekin claims that Allstate did not

defend the Stolzenberg action under reservation of right or seek

a declaratory judgment that no coverage exists after receiving a

tender of defense.  See La Grange Memorial Hospital v. St. Paul Insurance Co., 317 Ill. App. 3d 863, 870, 683 N.E.2d 947 (2000).  

	Our supreme court has held that when a complaint against the

insured alleges facts within or potentially within the scope of

the policy coverage, the insurer taking the position that the

complaint is not covered by the policy has two options.  It must

either defend the suit under reservation of right or seek a

declaratory judgment that there is no coverage.  State Farm Fire & Casualty Co. v. Martin, 186 Ill. 2d 367, 371, 710 N.E.2d 1228 (1999).  If the insurer refuses to defend under reservation or

seek declaratory judgment, it may be found to have breached its

duty to defend.  La Grange, 317 Ill. App. 3d at 870.  When an insurer has breached its duty to defend, it is estopped from

raising any policy defenses based on noncoverage.  La Grange, 317 Ill. App. 3d at 870.

	Allstate responds that the estoppel rule does not apply to

this situation because an action for declaratory judgment was

filed by Pekin prior to the resolution of the Stolzenberg action. 

Allstate relies on Sears, Roebuck & Co. v. Seneca Insurance Co., 254 Ill. App. 3d 686, 694, 627 N.E.2d 173 (1993).  In that case

the plaintiff brought a declaratory judgment action against the

defendant insurance company to determine the issue of coverage. 

The court in Sears held that whether the plaintiff or defendant initiated the declaratory judgment action is irrelevant, and the

estoppel rule does not apply when one party actively seeks,

through a motion for summary judgment, an adjudication of its

rights and duties.  Sears, 254 Ill. App. 3d at 694. See also Village of Melrose Park v. Nautilus Insurance Co., 214 Ill. App. 3d 864, 867, 574 N.E.2d 198 (1991); Ayers v. Bituminous Insurance Co., 100 Ill. App. 3d 33, 35 n. 1, 424 N.E.2d 1316 (1981).

	In the instant case, Pekin brought an action for declaratory

judgment on August 3, 2000.  The underlying suit was resolved on

August 7, 2000.  The action for declaratory judgment, even though initiated by Pekin, was brought prior to the resolution of the

Stolzenberg action.  Allstate actively sought an adjudication of

its rights by filing a counterclaim for declaratory judgment and

a motion for judgment on the pleadings.  As a result, Pekin's

estoppel argument fails.  State Farm, 186 Ill. 2d at 374 (holding that an insurer will not be estopped from denying coverage merely

because the underlying case proceeds to judgment before the

declaratory judgment action is resolved.)  

	Allstate also argues that it had no duty to defend.  In

their correspondence, Allstate claims that Pekin is solely

responsible for defending Trevor Cary because it is the primary

insurer and Allstate's policy is an excess policy.  Allstate

further claims that because Pekin did not reply to Allstate's

letter and proceeded to defend Trevor Cary, Pekin acknowledged

that Allstate had no duty to defend.  However, we need not

address that issue in light of our holding that Allstate was not

barred by the estoppel doctrine from contesting the claim that it

had a duty to defend because Pekin filed an action for

declaratory judgment against Allstate while the suit against the

insured was pending.  

II

	In its counterclaim for declaratory judgment, Allstate

further contends that its homeowner's policy is excess to Pekin's

primary commercial policy and, thus, all coverage under Pekin's

policy must first be exhausted.  Universal Underwriters Insurance Group v. Griffin, 287 Ill. App. 3d 61, 74, 677 N.E.2d 1321 (1997) (rev'd on other grounds).  Pekin claims that both policies are

excess policies and, therefore, both insurers must contribute

equally to the defense and loss of the insured.  North American Specialty Insurance Co. v. Liberty Mutual Insurance Co., 297 Ill. App. 3d 595, 598, 697 N.E.2d 347 (1998).   

	The relevant provisions of Pekin's insurance policy are as

follows:

	   "H. OTHER INSURANCE

	   1. If there is other insurance covering the same loss or

damage, we will pay only for the amount of covered loss or

damage in excess of the amount due from that other

insurance, whether you can collect it or not.  But we will

not pay more than the applicable Limit of Insurance.	   		

	   2.  Business Liability Coverage is excess over any other

insurance that insures for direct physical loss or damage

***."

The relevant provision of Allstate's policy is as follows:

	   "8. Other Insurance - Coverage X - Family Liability 

Protection.  This insurance is excess over any other valid and collectible insurance except insurance that is written

specifically as excess over the limits of liability that

apply to this policy.

* * *

	   12.  We do not cover bodily injury or property damage arising out of the past or present business activities of an

insured person."

	In our view, Pekin's commercial insurance policy is not an

excess policy.  Pekin's policy states that "if there is other

insurance covering the same loss or damage, then [Pekin] will pay

only for the amount of covered loss or damage in excess of the

amount due from that other insurance."  In this case, there is no

"other insurance" that covers the "same loss or damage." 

	The Allstate policy is a homeowner's liability policy that

was issued to Cary that insures his home and family.  In

addition, Allstate's policy contains an exclusion of coverage for

bodily injury resulting from business pursuits.  Pekin's

commercial liability policy was issued to Corals & Critters and

insures Carey's business from fire loss, physical damage to the

store and third-party liability from claims arising from

operations of the business.  This incident took place at Cary's

place of business and, therefore, Pekin is the primary insurer. 

Accordingly, the trial court did not err in granting judgment on

the pleadings in favor of Allstate.  

	For the forgoing reasons, the judgment of the trial court is

affirmed.

	Affirmed.\

	cCousinCOHEN, P.J., Aand McNULTY, J., CONCURconcur.