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SIXTH DIVISION
November 2, 2001

Northern Insurance Company of New York (Northern) brought thisdeclaratory judgment action against its insured, the City ofChicago (City). Northern's complaint alleged that, because theCity failed to provide timely notice of a pending action, Northernowed no duty to defend or indemnify the City. The trial courtgranted the City's motion for summary judgment and awarded the City$24,000 plus costs and expenses. Northern appeals, arguing that the trial court erred in granting the City's summary judgmentmotion because the City failed to provide timely notice of anunderlying action and that the trial court should have stricken theCity's summary judgment motion. The City disagrees, arguing thatNorthern is estopped from asserting a late-notice defense. For thefollowing reasons, we reverse and grant summary judgment in favorof Northern.

In May 1993, Vixen Construction, Inc. (Vixen), contracted withthe State of Illinois to repair the streets, sidewalks and parkingmeters along North Lincoln Avenue in Chicago. Pursuant to anordinance, Vixen applied for a construction permit. To receive apermit, construction companies must present proof of insurance andagree to indemnify the City against losses arising from theconstruction. Such insurance coverage must include the City, itsofficers, employees, and agents as additional insureds. The Cityissued Vixen's permit on May 14, 1993.

In July 1994, Northern issued two policies to Vixen. Thepolicies provided coverage between July 1994 and July 1995 andnamed the City as an additional insured. The policies provided inpart that Northern would "pay those sums that the insured becomeslegally obligated to pay as damages" and that Northern would "havethe right and duty to defend any 'suit' seeking those damages." More specifically, the policies provided:"2. Duties in the Event of Occurrence, Offense, Claim or Suit a. [Vixen or the City] must see to itthat [Northern is] notified as soon as practicable ofan 'occurrence' or an offense which may resultin a claim.

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b. If a claim is made or 'suit' isbrought against any insured, [Vixen or theCity] must:

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2. Notify [Northern] as soon aspracticable. [Vixen or the City] must see to itthat [Northern receives] written notice of theclaim or 'suit' as soon as practicable.

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d. No insured will, except at their own cost,voluntarily make a payment, assume anyobligation or incur any expense, other thanfor first aid, without [Northern's] consent." (Emphasis added.)

After Vixen completed construction, Karim Sadny allegedlytripped and fell on North Lincoln Avenue in December 1994. Sadnyfiled suit against the City (Sadny v. City of Chicago, No. 95-L-14597 (Cir. Ct. Cook Co.), alleging that the sidewalk wasdefective. The City was served with a summons and copy of Sadny'scomplaint on October 11, 1995.

For the next two years and two months, the City dealt withSadny's suit on its own and made no attempt to discover who Vixenhad contracted to be its, and the City's, insurer. On December 17,1997, the City's counsel sent Vixen a facsimile requesting to viewthe certificates of insurance and any relevant contract betweenVixen and the City about the North Lincoln Avenue project.

When the City had not received any information from Vixen byFebruary 25, 1998, it sought copies of the contract and insurancecertificates from the State of Illinois pursuant to the Freedom ofInformation Act (5 ILCS 140/1 et seq. (West 1998). In March 1998, theState provided the City with a copy of the contract but no longerhad possession of the insurance certificates.

On March 30, 1998, the City finally identified Northern as itsinsurer, informed Northern of Sadny's suit, and requested thatNorthern defend and indemnify the City. On August 18, 1998,Northern sent the City a letter denying this request for tworeasons: first, the City had failed to provide an insurancecertificate naming it as an additional insured on Vixen's policies,and second, assuming that Vixen's policy covered the City as anadditional insured, the City had failed to notify Northern "as soonas practicable of an 'occurrence' or an offense which ***result[ed] in a claim" as required under the policy.

In September 1998, the City sent Vixen a subpoena for itsinsurance certificate. Vixen informed the City that it no longerhad documentation relating to the North Lincoln Avenue constructionproject.

On January 5, 1999, the City sent a letter advising Northernthat it had settled Sadny's suit for $24,000. In addition torenewing its request for indemnification, the City demanded anadditional $4,200 for costs in defending the suit. Less than 30days later, on February 2, 1999, Northern filed for declaratoryjudgment against the City.

The City filed an answer and a cross-complaint againstNorthern and Vixen for declaratory relief and sanctions. In March1999, Northern moved for summary judgment, arguing that the City'suntimely notice excused its failure to defend or indemnify theCity. The City also moved for summary judgment, arguing, interalia, that Northern's failure to either defend the City under areservation of rights or to file a timely declaratory judgmentaction estopped it from asserting the untimeliness of the City'snotice as a defense. Northern filed a motion to strike the City'ssummary judgment motion. Following a hearing, the trial courtordered the City to file affidavits supporting its summary judgmentmotion. Both the City and Northern filed replies to each others'summary judgment motions.

On July 15, 1999, the court heard arguments on the parties'summary judgment motions. The court granted the City's motion andordered Northern to pay $24,000 plus costs and expenses in theCity's favor. Northern appeals.

As mentioned above, Northern raised the City's failure toproduce a certificate indicating that it was an additional insuredon the Vixen policies as a ground for denying coverage in August1998. It must be noted at the outset of our decision that, to thisday, the record remains silent as to any evidence of an insurancecertificate naming the City as an additional insured. Accordingly,we could reverse the trial court's decision on the basis that thereis no proof that Northern had the duty to defend or indemnify theCity, since the certificate--an agreement to provide insurance--hasnever been presented to this, or any, court. See EmployersInsurance of Wausau v. Ehlco Liquidating Trust, 186 Ill. 2d 127,143 (1999) (insurer's duty to defend rests on whether it had actualnotice of suit falling within scope of policy coverage); UnitedStates Fire Insurance Co. v. Hartford Insurance Co., 312 Ill. App.3d 153, 154-55 (2000). However, Northern specifically states inits appellate brief that it chooses not to argue the issue ofwhether the City was an additional insured. Therefore, for pur-poses of this appeal, we shall assume that the City was so insuredand instead address the applicable issues of delay and estoppel.

Primarily, Northern argues that the trial court improperlygranted summary judgment in the City's favor because the Cityfailed to provide timely notice of Sadny's suit as required underthe insurance policy. The City disagrees, arguing that becauseNorthern failed to either defend the suit under a reservation ofrights or seek a timely declaratory judgment, Northern is estoppedfrom raising the City's late notice as a defense and summaryjudgment was proper.

In ruling on a motion for summary judgment, the court mustconstrue the pleadings, depositions and affidavits strictly againstthe movant and in favor of the opposing party. Dowd & Dowd, Ltd.v. Gleason, 181 Ill. 2d 460, 483 (1998). Summary judgment isappropriate where the pleadings, depositions, admissions andaffidavits, taken together in the light most favorable to thenonmovant, show that there is no genuine issue of material fact andthat the movant is entitled to judgment as a matter of law. 735ILCS 5/2-1005(c) (West 1998); Majca v. Beekil, 183 Ill. 2d 407, 416(1998). We review the trial court's grant of summary judgment denovo. In re Estate of Rennick, 181 Ill. 2d 395, 401 (1998).

The insurance contract controls the insured's duties. Northbrook Property & Casualty Insurance Co. v. Applied Systems,Inc., 313 Ill. App. 3d 457, 464 (2000). When such a contractincludes a provision requiring the insured to notify the insurer ofa suit against it, this provision is not just a technical require-ment but a "condition precedent to the triggering of the insurer'scontractual duties." Northbrook Property, 313 Ill. App. 3d at 464. When the insured fails to comply with this provision to givenotice, the insurer may be relieved from its duty to defend andindemnify the insured under the policy. Northbrook Property, 313Ill. App. 3d at 464; INA Insurance Co. of Illinois v. City ofChicago, 62 Ill. App. 3d 80, 83 (1978).

Illinois courts have dealt on several occasions with insurancenotice provisions identical to the one in the instant case, whichcalls for the City to notify Northern of any suit "as soon aspracticable." Twin City Fire Insurance Co. v. Old World TradingCo., 266 Ill. App. 3d 1, 7-8 (1993). From this, our law has esta-blished that the phrase "as soon as practicable" requires theinsured to notify the insurer of the impending suit within areasonable time. Northbrook Property, 313 Ill. App. 3d at 465. Whether the time at issue, that between the insured's knowledge ofthe suit and its notification to the insurer, is reasonable dependson the facts and circumstances of each case. Northbrook Property,313 Ill. App. 3d at 465; Twin City, 266 Ill. App. 3d at 7 (test iswhether any reasonably prudent person could foresee a suitinvolving the policy and would contact insurer).

The insured is expected to act with due diligence when itspolicy requires it to give notice of a suit to the insurer. Northbrook Property, 313 Ill. App. 3d at 465. And while the time-liness of the notice is generally a question of fact, this issuecan be resolved as a matter of law where, as here, no materialfacts are in dispute. Twin City, 266 Ill. App. 3d at 7; INAInsurance Co., 62 Ill. App. 3d at 83.

An insured who knows a suit against it exists but allows aconsiderable length of time to pass before notifying the insurerdoes not automatically lose coverage under the insurance policy,even one which includes the "as soon as practicable" provision. Northbrook Property, 313 Ill. App. 3d at 466. This is true,however, only if the insured's delay in notifying the insurer isjustifiable. Northbrook Property, 313 Ill. App. 3d at 465 (absentvalid excuse, "the insured's failure to satisfy the noticerequirement will generally absolve the insurer of its duties underthe policy"). To determine this, we evaluate several factors,including the language of the notice provision, the insured'ssophistication in commerce and insurance matters, its awarenessthat a suit was pending and once aware, its diligence in ascertain-ing whether policy coverage is available. Northbrook Property, 313Ill. App. 3d at 466.

In the instant case, the City, as the insured, is controlledby the provisions in the insurance policy with Northern. Asoutlined above, several provisions of that policy clearly statethat the City is required to give Northern notice of any event thatmay result in a suit as soon as practicable. This is a conditionprecedent to triggering Northern's duty to defend and indemnify theCity. In addition, the policy specifies that any payment the Citymakes or expense it incurs without Northern's consent is at theCity's own expense.

The facts here are undisputed. Sadny's accident occurred onDecember 8, 1994. The City was served with a complaint and summonsregarding Sadny's suit on October 11, 1995. It is clear that, byOctober 11, 1995, the City knew of Sadny's accident and that it wasnot only foreseeable but certain that it was facing a lawsuit overthe North Lincoln Avenue construction project. However, the Citydid not notify Northern of the suit until March 30, 1998, almost 2