Krzysztof Emiljanowicz owned a 1995 Freightliner tractor. On April 21, 2014, he applied for employment with SSTS, Inc. (SSTS), a corporation that transported both interstate and intrastate freight. SSTS operated under a Certificate of Public Convenience and Necessity issued by the Interstate Commerce Commission and held operating rights issued by the state of Illinois. SSTS owned units and also leased equipment from contractors such as Emiljanowicz.

Note: The Certificate of Public Convenience and Necessity is the grant of operating authority given to common carriers. The carrier must prove that there is a public need for its service(s) and that it is capable, willing, and able to provide the needed service(s). The certificate may specify the routes the carrier may use and the commodities it may haul.

On May 12, 2004 at 10:00 a.m., SSTS and Emiljanowicz entered into a contractor operating agreement. Emiljanowicz agreed to lease his Freightliner to SSTS to haul freight. The agreement stated that Emiljanowicz would furnish the tractor “for the exclusive possession, control, and use of” SSTS and ”shall transport only freight of” SSTS. However, Emiljanowicz (the contractor) assumed “complete responsibility for the operation of equipment for the duration of this agreement.” SSTS had a corporate policy that required its contractors to have a mechanic inspect and service their equipment before they transported freight for SSTS.

SSTS issued decals that Emiljanowicz placed on the unit. The decals authorized him to operate the unit under SSTS’ authority. He was on his way to a mechanic to inspect and service the tractor as SSTS required when he collided with a vehicle driven by Barbara Karawacki-Horowitz at approximately 1:45 p.m. on May 12, 2004.

Progressive Premier Insurance Company of Illinois (Progressive) insured Emiljanowicz. The policy stated that coverage did not apply when Emiljanowicz operated the tractor as an agent or employee of any other organization. Occidental Fire and Casualty Company (Occidental) insured SSTS. Among other covered symbols, it included Symbol 47 that applied to “those autos you hire, rent, or borrow.” All parties agreed that Emiljanowicz’s tractor fell under Symbol 47 and the policy was endorsed to add his tractor to the schedule of vehicles on June 8, 2004.

Karawacki-Horowitz filed a bodily injury claim against Emiljanowicz to recover damages as a result of the accident. Her husband, David Horowitz, filed a claim for loss of consortium. Progressive defended the claim under a reservation of rights. The claims were subsequently dismissed after the parties settled for $400,000. Progressive then filed a declaratory judgment action seeking a declaration that the Occidental policy provided coverage, not Progressive’s. It asked to be reimbursed for defending and settling the Horowitz claims. Occidental filed a counterclaim alleging that its policy did not provide coverage. The trial court granted summary judgment to Progressive. It stated that the underlying action triggered Occidental’s duty to defend. Occidental appealed.

The appellate court stated the following:

• Emiljanowicz was engaged in SSTS’ business at the time of the accident. As a result, he was a covered insured under the Occidental policy.
• Emiljanowicz’s tractor, as a specifically described auto under Occidental’s policy, was a covered auto according to the terms of Occidental’s policy at the time of the accident.
• The contingent liability endorsement in the Progressive policy applied to exclude coverage for the accident.

The appellate court upheld the trial court’s decision.

Appellate Court of Illinois, First District, Second Division. Progressive Premier Insurance Company of Illinois, Plaintiff–Appellee, v. Krzysztof Emiljanowicz, Barbara Karawacki-Horowitz, David Horowitz, Geico General Insurance Company, and Occidental Fire and Casualty Company, Defendants (Occidental Fire and Casualty Company, Appellant and Counterplaintiff, v. Progressive Premier Insurance Company of Illinois, Krzysztof Emiljanowicz, Barbara Karawacki-Horowitz, David Horowitz, and Geico a/k/a Geico General Insurance Company, Counterdefendants). Docket No. 1-11-3664. May 28, 2013. 2013 IL App (1st) 113664, 991 N.E.2d 352, 372 Ill.Dec. 45