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SECOND DIVISION
JUNE 5, 2001

No. 1-00-2063

JUSTICE COUSINS delivered the opinion of the court:

This is a dispute over which of two insurance companies hasto provide a defense and possible indemnification to InsigniaFinancial Group, Inc. (Insignia), in connection with anunderlying tort case filed in the circuit court of Cook County. The underlying complaint was filed against Insignia and seeksdamages for in utero injuries sustained by Robert Kelley when hismother, Stacie Kelley, received an electric shock while she wasemployed by Insignia. Reliance Insurance Company (Reliance)brought a declaratory judgment action, alleging that it did nothave a duty to defend or indemnify Insignia under its employersliability policy. Royal Insurance Company of America (Royal)also sought a declaration that it did not have a duty to defendor indemnify under its general liability policy. Reliance'stheory was that Robert suffered a direct injury and that onlyconsequential bodily injuries to a child of an injured employeeare permitted under its employers liability insurance. Royal'stheory was that Robert suffered a consequential injury, an injuryexcluded by the general liability policy issued by Royal toInsignia. Royal's motion to consolidate both declaratory actionswas granted.

The trial court denied Reliance's motion for judgment on thepleadings, ruling that Reliance had a duty to defend Insignia inthe underlying case. The trial court granted Royal's cross-motion for summary judgment. Reliance and Insignia filed noticesof appeal.

On appeal, Reliance argues that the trial court erred indetermining that an injury to a fetus caused by an electricalshock to the mother which occurred during the course ofemployment constituted a "consequential" rather than "direct"injury, thereby triggering Reliance's duty to defend a lawsuitagainst the employer.

On appeal, Insignia contends that the trial court erred ingranting Royal's cross-motion for summary judgment because thequestion of whether Robert's injury was a "direct consequence" ofthe shock to Stacie is an unresolved question that cannot bedetermined on the basis of the complaint alone and requires afull evidentiary hearing on the merits.

BACKGROUND

On May 14, 1998, Stacie Kelley, individually and on behalfof her minor son, Robert Kelly, filed a complaint (Kelleycomplaint) against her employer, Insignia, seeking damages for inutero injuries allegedly suffered by Robert. On November 19,1999, Robert Kelley filed a first amended complaint againstInsignia that essentially contained the same allegations as theoriginal complaint. According to the complaint, Stacie wasemployed by Insignia as a swimming pool attendant for the EmeraldCourts apartments when the injury occurred. Insignia manages theEmerald Court apartments. The complaint further provides:

"8. On August 30, 1995, Stacie was pregnant with Robert. Robert was born on December 1, 1995.

9. On August 30, 1995, Stacie went into the pool house toturn on the lights for the pool. At that time, Staciegrabbed a metal switch to turn on the pool lights.

10. As Stacie flipped the lever for the pool lights, shereceived an electric shock that traveled from her hand downthrough her feet.

11. The electric shock traveled through Stacie's uterusand shocked Robert as well. Robert suffered brain damage asa result of the electric shock. Today he suffers from rightspastic hemiparesis, developmental delay and seizures."

Insignia tendered Robert's claim to both Royal and Reliancefor a defense and possible indemnification. Insignia hadpurchased a general liability policy from Royal. Royal's generalliability policy excludes coverage for bodily injury to a childof an employee as a consequence of bodily injury to the employeearising out of and during the course of employment. Exclusion"e" of the Royal policy states in pertinent part:

"This insurance does not apply to:

***

e. Employer's Liability

'Bodily injury' to:

(1) An 'employee' of the insured arising out of andin the course of:

(a) Employment by the insured; or

(b) Performing duties related to the conduct ofthe insured's business; or

(2) The *** child *** of that 'employee' as aconsequence of paragraph (1) above.

This exclusion applies:

(1) Whether the insured may be liable as an employeror in any other capacity; and

(2) To any obligation to share damages with or repaysomeone else who must pay damages because of theinjury." (Emphasis added.)

In addition to the Royal policy, Insignia had purchased aworkers compensation and employers liability policy fromReliance. Reliance's policy covers damages for bodily injury toemployees and for consequential bodily injury to a child of theinjured employee, provided these damages are a direct consequenceof bodily injury arising out of and in the course of employmentby the employee. The Reliance policy provides in pertinent part:

"We will pay all sums you legally must pay as damagesbecause of bodily injury to your employees, provided thebodily injury is covered by this Employers LiabilityInsurance.

The damages we will pay, where recovery is permitted bylaw, includes damages:

1. for which you are liable to a third party byreason of a claim or suit against you by that thirdparty to recover damages claimed against such thirdparty as a result of injury to your employees.

***

3. for consequential bodily injury to a spouse,child, parent, brother or sister of the injuredemployee; provided that these damages are the direct consequence ofbodily injury that arises out of and in the course of theinjured employee's employment by you ***." (Emphasisadded.)

On March 12, 1999, Reliance filed a complaint fordeclaratory relief, seeking a declaration that the Reliancepolicy did not cover the claims made against Insignia because theKelley complaint alleged "direct" injuries to Robert. OnSeptember 1, 1999, Royal filed a complaint for declaratoryrelief, alleging that its policy excluded coverage because theKelley complaint alleged "consequential" injuries to Robert. OnNovember 22, 1999, the court granted Royal's motion toconsolidate the two actions for declaratory relief.

Subsequently, Reliance filed its motion for judgment on thepleadings while Royal filed a cross-motion for summary judgment.During arguments on the motions, Reliance argued that its policywith Insignia was inapplicable because it only covered"consequential" injuries and that Robert's injuries were"directly" caused by the electrical shock. Royal converselycontended that its policy only covered "direct" injuries and thatRobert's injuries were a "consequence" of the electric shockwhich injured his mother. Insignia asserted that thedetermination of whether Reliance or Royal owed coverage couldonly be decided after an evidentiary hearing on the merits.

Based on the allegations of the Kelley complaint and thelanguage of the insurance policies, the trial court concludedthat Robert suffered injuries as a direct consequence of hismother's injury and that the Reliance policy therefore applied. On May 16, 2000, the trial court granted Royal's cross-motion forsummary judgment and denied Reliance's motion for judgment onpleadings.

Reliance and Insignia appeal. Royal also filed a motionchallenging the jurisdiction of this court to consider theappeals filed by Reliance and Insignia and requesting dismissalof this appeal. Royal's motion raises two issues: (1) Reliancelacks standing to appeal; and (2) Insignia's appeal is untimely.For the following reasons, we deny the motion to dismiss, affirmin part, and reverse in part.

ANALYSIS

I

We initially consider Royal's motion to dismiss. First,Royal asserts that Reliance lacks standing to appeal the trialcourt's order granting summary judgment in favor of Royal. Although both insurers opposed each other's motions at the trialcourt level, Royal claims that the interests of Royal andReliance are not adverse and Reliance was not prejudiced by thesummary judgment order. Generally, a defendant does not havestanding to appeal a judgment in favor of a codefendant becausejudgment for or against one of them does nothing but establishtheir respective rights and liabilities toward the plaintiff. Anexception exists, however, in cases where the issues between thecodefendants were actively litigated in the action below. Tisoncik v. Szczepankiewicz, 113 Ill. App. 3d 240, 244, 446N.E.2d 1271 (1983). Here, in its cross-motion for summaryjudgment, not only did Royal argue that its policy excludedcoverage, but it further contended that the Kelley complaintalleged a "consequential injury" that was covered by the Reliancepolicy. Since the co-insurers actively litigated the commonissue of whether Robert suffered a consequential injury in thetrial court below, Reliance has standing to appeal the judgmentin favor of Royal. Tisoncik, 113 Ill. App. 3d at 244.

Second, Royal contends that Insignia's appeal was untimely.Jurisdiction is conferred upon the appellate court only throughthe timely filing of a notice of appeal. Berg v. AlliedSecurity, Inc., 193 Ill. 2d 186, 189, 737 N.E.2d 160 (2000). Generally, a notice of appeal must be filed "within 30 days afterthe entry of the final judgment appealed from." 155 Ill. 2d R.303(a)(1). If a notice of appeal is filed by a party, "any otherparty, within 10 days after service upon him or her *** may joinin the appeal *** by filing a notice of appeal." (Emphasisadded.) 155 Ill. 2d R. 303(a)(3). Under Supreme Court Rule 12(c)(145 Ill. 2d R. 12(c)), service by mail is complete four daysafter mailing. The four-day period is calculated by excludingthe day on which the notice is mailed and including the followingfour days after the notice is mailed. Acosta v. Sharlin, 295Ill. App. 3d 102, 105, 692 N.E.2d 396 (1998).

In the instant case, Reliance filed its notice of appeal onJune 14, 2000. Insignia alleges that Reliance mailed its noticeto Insignia on the same day. Under Rule 12(c) (145 Ill. 2d R.12(c)) and Acosta, service of Reliance's notice of appeal was notcomplete until four days after it was mailed, on June 18, 2000. Therefore, pursuant to Rule 303(a)(3) (155 Ill. 2d R. 303(a)(3)),Insignia did not have 10 days from June 14, 2000, but, rather,had 10 days from June 18, 2000 (until June 28, 2000), to file itsnotice of appeal. Since Insignia filed its notice of appeal onJune 27, 2000, its appeal was timely.

II

We now turn to the merits of the instant appeal. This courtreviews de novo an order granting a motion for summary judgment(McDaniel v. Ong, 311 Ill. App. 3d 203, 208, 724 N.E.2d 38(1999)) or a trial court's ruling upon a motion to dismiss(Sherrod v. Ramaswamy, 314 Ill. App. 3d 357, 360, 732 N.E.2d 87(2000)). When a declaratory judgment action is brought todetermine an insurer's duty to defend, the court must look onlyto the complaint in the underlying action to determine whetherthe allegations show that the claim falls within or potentiallywithin coverage. Zurich Insurance Co. v. Raymark Industries,Inc., 118 Ill. 2d 23, 52, 514 N.E.2d 150 (1987). Thus, only theallegations in the underlying complaint, considered in thecontext of the relevant policy provisions, should determinewhether an insurer owes a duty to defend an action broughtagainst the insured. Bituminous Casualty Corp. v. Fulkerson, 212Ill. App. 3d 556, 562, 571 N.E.2d 256 (1991). A trial court mayconsider evidence beyond the underlying complaint only if suchevidence does not tend to determine an issue crucial to theunderlying lawsuit. Fidelity & Casualty Co. v. EnvirodyneEngineers, Inc., 122 Ill. App. 3d 301, 304-05, 461 N.E.2d 471(1983).

In the instant case, the complaint alleges that Staciereceived an electric shock that traveled from her hand downthrough her feet. Further, the "electric shock traveled throughStacie's uterus and shocked Robert as well" and "Robert sufferedbrain damage as a result of the electric shock." Reliance'spolicy covers "consequential bodily injury" to a child of aninjured employee "provided that these damages are the directconsequence of bodily injury that arises out of and in the courseof the injured employee's employment." (Emphasis added.)

Reliance initially relies on the Corpus Juris Secundum(C.J.S.) definition of "consequential" and "direct" damages toargue that Robert's alleged injury must be deemed direct andfalls outside the scope of coverage. 25 C.J.S. Damages