Court Opinion

ID: 770545
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:36:16+00
Date Added: 2024-06-11T17:55:51.406802
License: Public Domain

227 F.3d 802 (7th Cir. 2000)
T.H.E. INSURANCE COMPANY, Plaintiff-Appellee,v.CITY OF ALTON, Defendant-Appellant.
No. 99-3225
In the  United States Court of Appeals  For the Seventh Circuit
Argued May 10, 2000Decided September 13, 2000

Appeal from the United States District Court  for the Southern District of Illinois.  No. 98 C 375--Paul E. Riley, Judge.[Copyrighted Material Omitted]
Before EASTERBROOK, RIPPLE, and ROVNER, Circuit  Judges.
ROVNER, Circuit Judge.

1
A tragic accident at a  municipal fireworks display gave rise to this  dispute over insurance coverage. The district  court concluded that the policy at issue excluded  coverage for bodily injury to "shooters," the  persons hired to ignite the fireworks on display,  and that this exclusion applied to the City as an  "additional insured." We agree that the City of  Alton was not entitled to rely on the general  coverage language in the certificate of insurance  because the certificate stated on its face that  it did not amend, extend or alter the terms of  the underlying policy. We therefore affirm the  district court's grant of summary judgment in  favor of T.H.E. Insurance Company.

I.

2
The City of Alton hired Fireworks Partners,  Inc. d/b/a Madbombers Fireworks Production, Inc.  ("FPI") to stage a fireworks display in  celebration of the Fourth of July holiday in  1997. The fireworks were to be launched from a  barge floating on the Mississippi so that they  would be visible at Riverfront Park in downtown  Alton. FPI was insured by T.H.E. Insurance  Company under a general commercial liability  policy. The policy excluded coverage for bodily  injury to shooters or their assistants hired to  perform displays, or anyone aiding in the display  of fireworks, whether or not these persons were  employed by FPI, the named insured. Pursuant to  the contract between FPI and Alton, FPI procured  a certificate of insurance naming Alton and the  Alton Expo Commission as additional insureds  under FPI's insurance policy with T.H.E.  Insurance. The one page certificate of insurance  stated, in relevant part, "This certificate  neither affirmatively nor negatively amends,  extends or alters the coverage afforded by the  policy(ies) described hereon."

3
An explosion during the July 3, 1997 fireworks  display killed three FPI employees and injured a  fourth. All were working as shooters or shooters'  assistants at the time of the accident. The  families brought suit against a number of  defendants, including the City of Alton. Alton  sought indemnification from T.H.E. Insurance.  Alton had never received or reviewed FPI's  underlying policy with T.H.E. Insurance, and was  unaware of the exclusion for bodily injury to  shooters. T.H.E. Insurance filed a declaratory  judgment action against all of the defendants,  seeking a declaration that it was not obliged to  defend or indemnify the City of Alton or any of  the other defendants. T.H.E. Insurance then moved  for summary judgment, and the district court  granted judgment in favor of T.H.E., declaring  that T.H.E. had no obligation to defend or  indemnify the City of Alton in the underlying  tort litigation. The district court found that  the City was not entitled to rely on the general  language in the certificate of insurance when the  certificate itself stated it did not alter,  extend or amend the terms of the underlying  policy. That notice was sufficient to inform the  City that it must refer to the underlying policy  to determine the extent of coverage, according to  the district court. The district court also found  that there was no conflict between the  certificate and the policy itself and thus the  shooters bodily injury exclusion applied to the  City as an additional insured. The City of Alton  appeals.

II.

4
The parties agree that Illinois law governs  this dispute, and the City of Alton concedes that  if the shooters exclusion applies to it as an  additional insured, then T.H.E. Insurance has no  duty to defend or indemnify the City against the  claimed losses. Under Illinois law, construction  of an insurance contract is a question of law,  suitable for disposition by a court on a motion  for summary judgment. See John Bader Lumber Co.  v. Employers Ins. of Wausau, 441 N.E.2d 1306,  1307 (Ill. App. 1 Dist. 1982). Alton contends  that the only document it received was the  certificate of insurance, which listed coverage  but not exclusions. Alton maintains that the  disclaimer language on the certificate was  inadequate, and that the policy exclusions are in  direct conflict with the certificate. Alton  argues that the court is obliged to construe any  conflicts between the certificate and the policy  in favor of granting coverage on behalf of Alton,  and that summary judgment was therefore wrongly  granted. T.H.E. Insurance counters that the  disclaimer put Alton on notice that it could not  rely on the certificate to define coverage but  was obliged to look to the underlying policy to  determine the scope of coverage and exclusions.  T.H.E. also maintains that there are no conflicts  between the language of the certificate and the  underlying policy and thus there are no  ambiguities for the court to construe in Alton's  favor. Because the certificate directs the  insured to the policy and the policy disclaims  liability for shooters, T.H.E. argues that  summary judgment was appropriate.

5
Two lines of Illinois cases address the issue  of coverage when there is a certificate of  insurance separate from the policy itself. In one  line of cases, where the certificate did not  refer to the policy, and the terms of the  certificate conflicted with the terms of the  policy, the courts found that the certificate  language should govern the extent and terms of  coverage. See International Amphitheatre Co. v.  Vanguard Underwriters Ins. Co., 532 N.E.2d 493,  502 (Ill. App. 1 Dist. 1988) (where the terms of  the certificate conflicted with the terms of the  policy, the insured was not aware of the  exclusions in the policy, and the certificate did  not warn of further exclusions, the certificate  would govern the terms of the insurance  contract); John Bader Lumber, 441 N.E.2d at 1308  (same); J.M. Corbett Co. v. Insurance Co. of  North America, 357 N.E.2d 125, 127-28 (Ill. App.  1 Dist. 1976) (same). But where the certificate  refers to the policy and expressly disclaims any  coverage other than that contained in the policy  itself, the courts found that the policy should  govern the extent and terms of the coverage. See  American Country Ins. Co. v. Kraemer Brothers,  Inc., 699 N.E.2d 1056, 1060 (Ill. App. 1 Dist.  1998) (where the certificate of insurance  contains a disclaimer, the insured may not rely  on the certificate but must look to the policy  itself to determine the scope of coverage); Pekin  Ins. Co. v. American Country Ins. Co., 572 N.E.2d 1112, 1114-15 (Ill. App. 1 Dist. 1991) (where the  certificate of insurance contains a disclaimer  and there is no conflict between the terms of the  certificate and the terms of the policy, the  insured will be held to the terms of the  underlying policy); Lezak & Levy Wholesale Meats,  Inc. v. Illinois Employers Ins. Co. of Wausau,  460 N.E.2d 475, 477 (Ill. App. 1 Dist. 1984)  (same).

6
The City argues that the disclaimer language in  the second line of cases was much broader than  the disclaimer on T.H.E.'s certificate. T.H.E.'s  certificate simply stated that the "certificate  neither affirmatively nor negatively amends,  extends or alters the coverage afforded by the  policy(ies) described hereon." In Lezak, the  certificate stated, "This certificate is not a policy or binder of insurance and does not in any  way alter, amend or extend the coverage afforded  by any policy referred to herein." 460 N.E.2d at  476-77. The Lezak certificate then reiterated  that it was subject to the terms, conditions and  exclusions of the policy. 460 N.E.2d at 467. In  Pekin, the certificate stated that it was "issued  as a matter of information only and confers no  rights upon the certificate holder. This  certificate does not amend, extend or alter the  coverage afforded by the policies below. . . .  The insurance afforded by the policies described  herein is subject to all of the terms,  exclusions, and conditions of such policies."  Pekin, 572 N.E.2d at 1114. Finally, the  certificate in Kraemer was identical to the Pekin  disclaimer. Kraemer, 699 N.E.2d at 1060. We agree  with the district court that the operative phrase  in each disclaimer is the language stating that  the certificate does not alter, amend or extend  the coverage of the underlying policy. That  phrase puts the insured on notice that the  insurance contract will be governed by the terms  of the underlying policy and not by the  certificate itself. The certificate issued to the  City of Alton contained adequate warning that the  insured could not simply rely on the certificate  for the terms and conditions of coverage.

7
Nor do we find any conflict between the  relevant terms of the policy and the language  contained in the certificate. Alton complains  that the certificate does not exclude coverage  for bodily injury to shooters, but that the  policy does. Alton also complains that the  certificate provides coverage for independent  contractors of FPI while the policy excludes  coverage for bodily injury to any shooters  whether they are employees or independent  contractors of FPI. Alton characterizes the  absence of the exclusion on the certificate and  its inclusion in the policy as an ambiguity that  must be construed in favor of coverage for the  City. This is simply a restatement of Alton's  argument that it should not be held to exclusions  that are not evident on the face of the  certificate. As we explained above, the  disclaimer removes any ambiguity by informing the  insured that it may not rely on the certificate  to determine the limits of coverage. There is no  conflict in the terms regarding coverage for  bodily injury to shooters when reading the  certificate and the policy together, as we must  under Illinois law. See Vanguard, 532 N.E.2d at  500 (where a policy of insurance consists of a  policy and other documents executed as part of  one transaction and the policy is incorporated  into the other documents by reference, all of the  documents must be construed together to determine  the meaning and effect of the insurance  contract).

8
Alton's final argument is that the certificate  and policy conflict on the issue of coverage for  accidents arising out of the use of watercraft.  Alton points out that the certificate lists the  location of the fireworks display as "on [a]  barge on [the] Mississippi River," but the policy  excludes coverage for bodily injury or property  damage arising out of use of any watercraft,  rendering the coverage illusory. There are two  problems with the City's argument. First, the  City of Alton raises this argument for the first  time on appeal and therefore has waived the  issue. Second, it is not the watercraft exclusion  that T.H.E. Insurance is invoking to deny  coverage. Indeed, if this were the only exclusion  T.H.E. could point to in order to deny coverage,  we might well find that there is a conflict  between the terms of the certificate and the  terms of the policy. In that circumstance, the  Illinois cases make clear that the later issued  certificate will prevail. See Vanguard, 532 N.E.2d at 502-03 (if the certificate contains  provisions that conflict with the master policy,  the certificate normally controls); J.M. Corbett, 357 N.E.2d at 128 (same). This ambiguity does not  affect the outcome here because T.H.E.'s policy clearly disclaims liability for bodily injury to  shooters.

III.

9
Because the certificate of insurance contained  an adequate disclaimer placing the City of Alton  on notice that it would be held to the terms of  the underlying policy, we affirm the grant of  summary judgment in favor of T.H.E. Insurance.

10
AFFIRMED.