" St. Paul relies on Traveler's Insurance Co. v. Freightliner Corp., 256 Ill. App. 3d 1049 (1993), to argue that coverage is excluded because Unocal used the Kaye controller as a component part of a larger system. We find Freightliner inapposite to the case at bar.
Thus, our best Erie guess is that Louisiana would adopt the majority position and require the nexus between the alteration and the injury. COUCH ON INSURANCE § 130:10 (3d ed. 2007) (Citing Mattocks, 452 F.Supp. 512; Oliver Machinery Co. v. United States Fid. Guar. Co., 187 Cal.App.3d 1510, 232 Cal.Rptr. 691 (2d Dist. 1986); Am. White Cross Laboratories, Inc. v. Continental Ins. Co., 202 N.J.Super. 372, 495 A.2d 152 (1985)); see also Oliver Machinery, 187 Cal.App.3d 1510, 232 Cal. Rptr. 691 (rejected the insurer's argument that the relabeling exclusion triggered the exclusion from coverage under the vendor's endorsement predicated on the Sears case); but see Travelers Ins. Co. v. Freightliner Corp., 256 Ill.App.3d 1049, 1056-57, 194 Ill.Dec. 828, 628 N.E.2d 325 (1993) (disagreeing with other courts that a nexus is required between the exclusion and the injuries). In his complaint, Weaver asserted a number of product liability theories in support of recovery.
There is no argument that the insurance company was trying to deceive Kasten or if it was that any harm to Kasten resulted. It was a pointless act on the part of the insurance company, a feeble and gratuitous effort to strengthen its already impregnable litigating position, and all it did was persuade the district judge to have a trial. Well, says Riley, if the meaning of the insurance policy was sufficiently in doubt to warrant a trial, it must have been sufficiently in doubt to trigger the insurance company's duty to defend, see USFG v. Wilkin Insulation Co., 578 N.E.2d 926, 930 (Ill. 1991); Travelers Ins. Co. v. Freightliner Corp., 628 N.E.2d 325, 328 (Ill.App. 1993); Indiana Ins. Co. v. Hydra Corp., 615 N.E.2d 70, 72 (Ill.App. 1993), which is broader than the duty to indemnify. State Farm Fire Casualty Co. v. Leverton, 683 N.E.2d 476, 479 (Ill.App. 1997); Pekin Ins. Co. v. Richard Marker Associates, Inc., 682 N.E.2d 362, 364 (Ill.App. 1997); Jandrisits v. Village of River Grove, 669 N.E.2d 1166, 1170 (Ill.App. 1996).
Defendants argue that these exclusions mean that only vendors who sell products —offthe rack" are insured. (Dkt. No. 63 (citing Travelers Ins. Co. v. Freightliner Corp., 628 N.E.2d 325 (1993).)
At least one court interpreting the new language has agreed. In Travelers Ins. Co. v. Freightliner Corp., 628 N.E.2d 325 (Ill.App. 1993), the court was asked to interpret the vendors endorsement when the insurer of National Seating, a seat manufacturer, filed a declaratory judgment action seeking a determination that a truck cab manufacturer was not entitled to coverage under the vendors endorsement for claims by truck drivers who were injured as a result of an alleged defect in the seats. The insurer argued that Freightliner had incorporated the National seats as component parts of its trailer truck cabs and thus was a manufacturer and not a vendor entitled to coverage.
In resolving the question, it is the duty of the court to effectuate the parties' intent as expressed by the terms of the insurance policy. Travelers Ins. Co. v. Freightliner Corp., 256 Ill. App.3d 1049, 194 Ill.Dec. 828, 832, 628 N.E.2d 325, 329 (1993). "Normally contracts are to be taken at face value, and the written agreement is presumed to express the parties' intent."
In resolving the question, it is the duty of the court to effectuate the parties' intent as expressed by the terms of the insurance policy. Travelers Ins. Co. v. Freightliner Corp., 256 Ill. App.3d 1049, 194 Ill.Dec. 828, 832, 628 N.E.2d 325, 329 (1993). To ascertain the intent of the contracting parties, the court must consider the policy as a whole.
A number of courts in other jurisdictions have previously considered when and how these same exclusions in a vendors endorsement apply, and more specifically, whether the exclusions require some nexus between the vendor's conduct and the damages alleged. See, e.g., Weaver v. CCA Industries, Inc., 529 F3d 335 (5th Cir 2008); Hartford Fire Ins. Co. v. St. Paul Surplus Lines Ins.Co., 280 F3d 744 (7th Cir 2002); Dometic Corp. v. Liberty Mut. Ins. Co., 2008 WL 4443234 (SD Ind 2008); Shade Foods, Inc. v. Innovative Product Sales Marketing, Inc., 154 Cal App 4th 1184, 93 Cal Rptr 2d 364 (2000); Travelers Ins. Co. v. Freightliner Corp., 256 Ill App 3d 1049, 628 NE 2d 325 (1993). That body of law, though not strictly following Oregon's method of policy interpretation, buttresses our own observation regarding the text of the exclusions in paragraphs c. and g.: They are ambiguous as to whether it matters how the damages arose.
We are not persuaded by the authority relied upon by West American on this question. Travelers Insurance Co. v. Freightliner Corp., 256 Ill. App. 3d 1049, 1055, 628 N.E.2d 325 (1993), is also distinguishable. The appellate court never addressed the estoppel argument in Travelers because it affirmed the trial court's determination that Freightliner was not an additional insured under the policies in that case.