Less than a month later, a lawsuit was filed by the estate of Ms. Mustafov (the "Gallo litigation"); Mr. Ramirez subsequently joined as a plaintiff. The defendants ultimately included Dominick's, Kennedy Plaza, and security companies that performed work at that location.

The lawsuit asserted that Dominick's "possessed, operated and controlled a food store and adjacent parking lot" at 3300 West Belmont; that Dominick's had a duty "to ensure the safety of [its] patrons and invitees"; and that Dominick's had breached that duty by negligently failing to supervise or otherwise protect store patrons and invitees such as Ms. Mustafov and Mr. Ramirez from harm.

Dominick's tendered the lawsuit to Netherlands Insurance Company, which had issued a commercial general liability ("CGL") insurance policy to Kennedy Plaza. Dominick's was an additional insured on the policy, and the additional insurance covered not only the Dominick's store but the adjacent parking lot where the shooting had occurred.

Netherlands denied coverage, and the Gallo litigation proceeded.

Kennedy Plaza settled out of the Gallo litigation in January 2010 for $40,000. That left Dominick's and two security companies as remaining defendants.

In March 2013, the remaining defendants settled the litigation, with Dominick's contributing $1.3 million to the settlement.

After settling, Dominick's sued Netherlands, claiming that it had a duty to defend and indemnify Dominick's.

The trial court agreed with Netherlands that Dominick's was not entitled to coverage under the policy and it entered summary judgment in favor of Netherlands.

Dominick's appealed.

The Netherlands Policy

The Netherlands policy stated:

I. ADDITIONAL INSURED—BY CONTRACT, AGREEMENT OR PERMIT

1. Paragraph 2. Under SECTION II—WHO IS AN INSURED is amended to include as an insured any person or organization when you and such person or organization have agreed in writing in a contract, agreement or permit that such person organization [sic] can be added as an additional insured on your policy to provide insurance such as is afforded under this Coverage Part. Such person or organization is an additional insured only with respect to liability arising out of:

a. Your ongoing operations performed for that person or organization; or

b. Premises or facilities owned or used by you. ***

2. This endorsement provision I. does not apply:

a. Unless the written contract or agreement has been executed, or permit has been issued, prior to the "bodily injury", "property damage" or "personal and advertising injury", ****

* * *

d. To "bodily injury", "property damage" or "personal and advertising injury" arising out of any act, error or omission that results from the additional insured's sole negligence or wrongdoing.

(Emphasis added.)

The Appellate Court's Decision

The appellate court reversed the grant of summary judgment in favor of Netherlands and held that the insurer owed Dominick's a duty to defend and indemnify under the relevant language of its insurance policy.

In its decision, the appellate court explained that the Gallo litigation asserted two different theories of liability against Dominick's: First, a premises liability theory, based on Dominick's status as the owner or occupier (in this case, occupier or lessee) of the premises, and second, a theory of voluntary undertaking – that Dominick's had voluntarily assumed a duty to protect patrons and invitees by hiring security companies to patrol the parking lot.

The appellate court then ruled that the premises liability theory "fell within the coverage language" for "liability arising out of [the] premises." In the appellate court's opinion, the sole basis for imposing a legal duty on Dominick's under this premises liability theory was its relationship to the "premises" – its status as the occupier of the property, on which both the common law and the state's Premises Liability Act imposed a duty of care.

In other words, the appellate court stated, it was reasonable to interpret a premises-liability claim as falling within coverage for "liability arising out of the premises."

Next, the appellate court pointed out that the Gallo complaint alleged that Dominick's had been beset in the past with "armed robberies, assault and batteries, car jackings, narcotic sales and many incidents of gang graffiti" of which Dominick's was or should have been aware – enough so, at least, that Dominick's had hired store security. The complaint alleged that Dominick's either had voluntarily undertaken a duty to keep the premises safe for its patrons and invitees, or that it owed one under the common law, given its possession and control of the premises. Ultimately, the appellate court observed, what Dominick's was accused of doing was not keeping its premises safe for its patrons and invitee.

The appellate court then reasoned that if a plaintiff had twisted her ankle in a pothole in the lot, had slipped on a patch of ice by the store, or had tripped on the store's sidewalk as a result of poor overhead lighting, "even Netherlands would agree that lawsuits based on these 'defective' conditions would trigger coverage." It asked:

What is the material difference between the premises being slippery and being unsafe? From being poorly lit versus being poorly secured? How are nonfunctioning security cameras so different than nonfunctioning overhead lights? In each of those cases, there is something hazardous about the "premises" that the owner/occupier failed to remedy, resulting in injury.

Viewed in this light, the appellate court stated that it did not find it "unreasonable" to view the allegations of the Gallo complaint, under either theory of recovery asserted, liberally construed, as alleging "liability," having "its origin in," "growing out of," "flowing from," "connected with," or "incidental to" the premises.

Accordingly, it held, the Gallo complaint, under either theory of recovery asserted, alleged facts that triggered Netherlands' duty to defend Dominick's.

It then concluded that the alleged failure by Dominick's to keep the premises safe – in violation of either its common law duty, its voluntarily-assumed duty, or both – resulted in "liability arising out of the premises," and Netherlands owed Dominick's a duty to indemnify for the $1.3 million settlement.

The case is Dominick's Finer Foods v. Indiana Ins. Co., No. 1-16-1864 (Ill. Ct.App. March 1, 2018).