Appellate Court of Illinois,

First District.

Fifth Division.

MOUNT VERNON FIRE INSURANCE COMPANY, Plaintiff-Appellant and Counterdefendant,

v.

HEAVEN’S LITTLE HANDS DAY CARE, a not for profit Illinois Corporation, Leon

Taylor, Individually, Minnie Taylor, Individually and as Employee and/or agent

of Heaven’s Little Hands Day Care, and Margaret Jones, Individually and as

Special Executor of the Estate of Tyrelle Jones, deceased, Defendants-Appellees

(JEFFERSON INSURANCE COMPANY OF NEW YORK, Intervenor and Defendant and

Counterplaintiff-Appellee).

Aug. 22, 2003.

QUINN, Justice.

In this declaratory judgment action, Mount Vernon Fire Insurance Company (Mount Vernon) appeals the order of the trial court granting the motion for judgment on the pleadings filed by Jefferson Insurance Company of New York (Jefferson). This litigation stems from the death of Tyrelle Jones (Tyrelle), a nine-month-old infant who died as the result of heat stroke when left unattended in a van operated by Heaven’s Little Hands Day Care (Heaven’s Little Hands). In reliance upon exclusions contained in its policy with Heaven’s Little Hands, Mount Vernon sought a declaration that it had no duty to defend or indemnify the day-care center or its employees in the lawsuit filed by Margaret Jones, Tyrelle’s mother. Jefferson moved for judgment on the pleadings, which the trial court granted. After the trial court found there was no just reason for delaying enforcement or appeal of its ruling, Mount Vernon appealed. Based upon the automobile exclusions contained in its policy with Heaven’s Little Hands, Mount Vernon contends that the trial court erred in granting Jefferson’s motion for judgment on the pleadings. For the reasons set forth below, we affirm the judgment of the trial court.

BACKGROUND

In September 2000, Margaret, individually and as the special administrator of the estate of Tyrelle, filed a nine-count complaint against Heaven’s Little Hands, Leon Taylor and Minnie Taylor. Leon was named as an employee of Heaven’s Little Hands and Minnie as its manager. In the complaint, Margaret alleged that on August 29, 2000, Tyrelle and other infants and toddlers were picked up by a passenger van driven by Leon and owned and operated by Heaven’s Little Hands. According to the complaint, Leon strapped Tyrelle in a car seat for his transport to Heaven’s Little Hands. Once there, Leon removed all of the children from the van except Tyrelle, who died from heat stroke after being left unattended in the van for more than eight hours.

In her complaint, Margaret alleged negligent and careless acts against Leon based upon his: (1) failure to transport Tyrelle with the proper number of adult attendants; (2) failure to inspect the van after arriving at its destination to ensure that no children were left in the vehicle; (3) leaving Tyrelle unattended in the van; (4) failure to remove Tyrelle from the van; and (5) failure to maintain a safe environment for Tyrelle, who had been entrusted to Leon’s care.

As for Minnie and Heaven’s Little Hands, Margaret alleged that they had been careless and negligent based upon their: (1) failure to assign sufficient personnel to attend to children being transported to Heaven’s Little Hands; (2) allowing use of the van when it had not been inspected and had not received an operating permit; (3) allowing Leon to operate the van when he had not satisfied driving requirements; (4) failure to monitor Leon in the performance of his duties; (5) failure to maintain a proper census of the children scheduled to attend Heaven’s Little Hands; (6) failure to maintain proper procedures to ensure that children transported in the van were removed from the van and taken inside the day-care center; and (7) failure to maintain proper and sufficient procedures for the safety and care of children left in their care.

On February 15, 2001, Mount Vernon filed a complaint for declaratory judgment naming Heaven’s Little Hands, Leon, Minnie and Margaret as defendants. In the complaint, Mount Vernon sought a declaration of the trial court that Mount Vernon did not owe a duty to defend or indemnify for any claims relating to the Jones lawsuit. Mount Vernon argued that under coverage for both professional liability and bodily injury, its policy with Heaven’s Little Hands provided for an exclusion for liability arising out of use of an auto.

After Mount Vernon filed its complaint for declaratory judgment, Jefferson, the auto insurance carrier for Heaven’s Little Hands, was granted leave to intervene and filed a counterclaim for declaratory judgment against Mount Vernon. In its counterclaim, Jefferson stated that it was the insurer of Heaven’s Little Hands under a commercial automobile policy and that Mount Vernon was an insurer of the day-care center under a commercial general liability (CGL) policy. Jefferson sought a declaration that Mount Vernon was obligated to share in the defense costs associated with the Jones litigation.

While the declaratory judgment action was proceeding, Margaret filed a first amended complaint, which contained allegations substantially similar to those in her original complaint. The primary distinction between the two complaints was that rather than alleging a single wrongful death action against Heaven’s Little Hands as Margaret had done in her original complaint, the amended complaint alleged two counts of wrongful death. One was premised upon negligent operation of a motor vehicle and the other was premised upon negligent supervision.

On February 4, 2002, Jefferson filed a motion for judgment on the pleadings relating to its counterclaim against Mount Vernon. Margaret joined Jefferson’s motion for judgment on its counterclaim. Later that month, Mount Vernon filed its motion for summary judgment on its complaint.

On May 21, 2002, the trial court entered a written order granting Jefferson’s motion for judgment on the pleadings and denying Mount Vernon’s motion for summary judgment. In its order, the trial court stated, “The court finds * * * that the death of Tyrelle Jones, deceased, was not the result of operation or use of, the loading of, or unloading of the vehicle, a van, but rather the child was left in the van because of negligence on the part of the driver of the van who had a responsibility for the safety of the child.”

On June 12 2002, the trial court entered an order stating that pursuant to Supreme Court Rule 304(a) (155 Ill.2d R. 304(a)) there was no reason to delay enforcement or appeal of its ruling on Jefferson’s motion on the pleadings. Mount Vernon now appeals.

ANALYSIS

Relating to professional coverage, the terms of the insurance agreement between Mount Vernon and Heaven’s Little Hands provided:

“I. COVERAGE P. PROFESSIONAL LIABILITY

We will pay on behalf of you all sums which you shall become legally obligated to pay as damages because of liability arising out of any negligent act, error or omission in rendering or failure to render professional services * * * whether committed by you or any person employed by you or by others for whom you are legally responsible.

II. EXCLUSIONS

* * *

This Coverage Part does not apply:

* * *

(d) to liability arising out of the ownership, maintenance, operation, use, loading or unloading of any vehicle, watercraft or aircraft * * *.”

Relating to coverage for bodily injury and property damage, the policy provided:

“Section I –Coverages

COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies * * *.”

The general liability coverage portion of the policy contains the following exclusion:

“2. Exclusions

g. Aircraft, Auto or Watercraft

‘Bodily injury’ or ‘property damage’ arising out of the ownership, maintenance, use or entrustment to others of any aircraft, ‘auto’ or watercraft owned or operated by or rented or loaned to any insured. Use includes ‘loading or unloading’.

* * *

11. ‘Loading or unloading’ means the handling of property:

a. After it is moved from the place where it is accepted for movement into or onto an aircraft, watercraft or ‘auto’;

b. While it is in or on an aircraft, watercraft or ‘auto’; or

c. While it is being moved from an aircraft, watercraft or ‘auto’ to the place where it is finally delivered * * *.”

A motion for judgment on the pleadings tests the sufficiency of the pleadings by determining whether the plaintiff is entitled to the relief sought in the complaint. Pekin Insurance Co. v. Allstate Insurance Co., 329 Ill.App.3d 46, 49 (2002). Although a motion for judgment on the pleadings is similar to a motion for summary judgment insofar as both suggest that no material issue of fact exists, a judgment on the pleadings must rely on the allegations of the complaint to establish the absence of material fact, whereas summary judgment may rely on affidavits and other documents. Waterfront Estates Development, Inc. v. City of Palos Hills, 232 Ill.App.3d 367, 371-72 (1992). In addition, the well-pleaded allegations in the nonmoving party’s pleading and inferences therefrom are taken as true. See Mitchell v. Waddell, 189 Ill.App.3d 179, 182 (1989). Our review of the disposition of a case on judgment on the pleadings is de novo. Pekin Insurance, 329 Ill.App.3d at 49.

When construing an insurance policy, the primary function of this court is to ascertain and enforce the intentions of the parties as expressed in the agreement. de los Reyes v. Travelers Insurance Cos., 135 Ill.2d 353, 358 (1990). When ascertaining the meaning of the words used in the policy and the intent of the parties, we are to construe the policy as a whole, while taking into account “the type of insurance for which the parties have contracted, the risks undertaken and purchased, the subject matter that is insured and the purposes of the entire contract.” Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.2d 384, 391 (1993).

Insurance policies are to be liberally construed in favor of coverage, and where an ambiguity exists in the terms of the contract, the ambiguity will be resolved in favor of the insured and against the insurer. State Security Insurance Co. v. Burgos, 145 Ill.2d 423, 438 (1991). The duty of an insurer to defend its insured is much broader than its duty to indemnify. Outboard Marine Corp. v. Liberty Mutual Co., 154 Ill.2d 90, 125 (1992). When determining whether the insurer has a duty to defend, the court must compare the allegations contained in the underlying complaint to the language contained in the policy. Outboard Marine, 154 Ill.2d at 125. While liberally construing the underlying complaint in favor of the insured, if the court determines that the allegations fall within, or potentially within, coverage under the policy, the insurer has a duty to defend the insured against the underlying complaint. Outboard Marine, 154 Ill.2d at 125.

Mount Vernon contends that the trial court erred in granting Jefferson’s motion for judgment on the pleadings. Initially, we note that throughout Mount Vernon’s original brief on appeal, it repeatedly asserts that Tyrelle’s death arose out of the “use, operation, loading or unloading” of the van. However, “loading or unloading” is defined to include only the “handling of property.” Thus, because the injury at issue, the death of Tyrelle, has nothing to do with the handling of property, we find that the auto exclusion relating to “loading and unloading” does not serve as a basis for finding that Mount Vernon does not have a duty to defend.

Mount Vernon first argues this case is controlled by the supreme court’s ruling in Northbrook Property & Casualty Co. v. Transportation Joint Agreement, 194 Ill.2d 96 (2000), which was a declaratory judgment action stemming from an accident where a METRA train collided with a school bus, resulting in death and injuries to students on the bus. The school districts’ CGL policy excluded losses for bodily injury “arising out of the * * * use * * * of any * * ‘auto.” ‘ 194 Ill.2d at 98. The trial court granted summary judgment in favor of the insurance carrier, finding that it had no duty to defend the school districts in the litigation following the accident. The appellate court reversed, holding that the underlying complaints had adequately alleged that the injuries could have arisen from causes other than the use or operation of the bus, such as the failure of the school districts to adequately plan and inspect the bus routes and warn the bus drivers of potential hazards. The supreme court reversed the judgment of the appellate court, ruling that the insurance carrier had no duty to defend the school districts. The supreme court explained:

“Here, the allegations of the underlying complaints utterly fail to state facts which either actually or potentially bring the cases within the policy’s coverage. The policy excludes injuries arising from the school districts’ use or operation of a motor vehicle. Allegations that the school districts inadequately planned and inspected bus routes or failed to warn bus drivers of potential hazards along the routes are nothing more than rephrasings of the fact that the students’ injuries arose from the school districts’ use or operation of a motor vehicle. Contrary to the appellate court’s holding, the students’ complaints failed to allege that the injuries arose from events ‘wholly independent of any negligent operation of the bus.’ 309 Ill.App.3d at 266.” Northbrook, 194 Ill.2d at 98-99.

Mount Vernon argues that as in the Northbrook case, here, Margaret had failed to allege that Tyrelle’s death arose from events “wholly independent” of any use, operation, loading or unloading of the van. It advances that because all theories of alleged negligence in the underlying complaint, including those relating to a failure to supervise or maintain head counts, are dependent upon allegations of use or operation of the van, the auto exclusion applies.

Mount Vernon also directs this court’s attention to St. Paul Mercury Insurance Co. v. Chilton-Shelby Mental Health Center, 595 So.2d 1375 (Ala.1992), where the Supreme Court of Alabama considered a case in which a small child was left unattended in a van and subsequently died of heat stroke. The court ruled that an automobile exclusion contained in a CGL policy precluded coverage for the child’s death. Although the underlying complaint included allegations other than negligence in the operation of the van, the court concluded that “the fact remains that [the victim] died in the van while it was being used by the [day-care center] to provide transportation services to the communities it serves.” St. Paul Mercury, 595 So.2d at 1377.

Jefferson argues that the Northbrook case is distinguishable from this case on the basis that in Northbrook, at issue was coverage involving a “straightforward auto accident.” Jefferson recognizes that both here and in Northbrook, the underlying complaints alleged that the injuries arose from more than merely the negligent operation of a vehicle, but asserts that in the instant case, it cannot be said that the multiple allegations of negligence are “nothing more than rephrasings” that Tyrelle’s death arose out of operation of the van.

Jefferson argues that Tyrelle’s death did not arise out of operation or use of the van because the vehicle was merely the situs of the injury and that nothing in the inherent nature of the vehicle is alleged to have contributed to the child’s death. In support of its position, Jefferson asserts that the instant case is factually indistinguishable from United States Fidelity & Guaranty Co. v. State Farm Mutual Automobile Insurance Co., 107 Ill.App.3d 190 (1982) (USF & G ). In USF & G, the insurance carrier brought an action for declaratory judgment wherein it argued that it owed no duty to defend a day- care center for injuries a child had sustained when she fell from a station wagon owned by the day-care center. In the underlying complaint, it was alleged in count I that the defendants were negligent in the operation of the day-care center by failing to provide sufficient personnel to adequately care for the children and in failing to retain sufficient control and discipline over the children. In count II, it was alleged that the defendants had negligently operated the automobile. In reliance upon a provision of the insurance policy excluding coverage for “bodily injury arising out of the ownership, maintenance, operation [or] use of * * * any automobile * * * owned or operated by * * * any insured” (107 Ill.App.3d at ____), the insurance carrier moved for summary judgment, arguing that it owed no duty to defend because the child’s injuries could not have occurred without the operation or use of the station wagon. This court disagreed, noting that “if the liability of an insured arises from negligent acts which constitute non-auto-related conduct, the policy should be applicable regardless of the automobile exclusion or the fact that an automobile was involved in the occurrence.” USF & G, 107 Ill.App.3d at 194. The court further noted that “the duty to defend extends to cases where the complaint alleges several causes of action or theories of recovery against an insured even if only one or some of them are within the policy coverage.” USF & G, 107 Ill.App.3d at 194.

Jefferson also argues that based upon the allegations in the underlying complaint, the van was not being “used” at the time of Tyrelle’s death. Jefferson asserts that Tyrelle’s death occurred when the van was parked, with no driver, and that it was not performing any of the functions normally associated with “use” of an auto. In support of this argument, Jefferson directs this court to State Farm Mutual Automobile Insurance Co. v. Pfiel, 304 Ill.App.3d 831 (1999), and a line of cases cited within the Pfiel case. In Pfiel, the mother of a murder victim, who had been stabbed by a hunting knife in an automobile, filed a lawsuit against the murderer and his parents. In her complaint, the victim’s mother sought damages based upon the negligent supervision of the murderer on the part of his parents and their negligent entrustment of the hunting knife and automobile to him. After the parent- defendants tendered their defenses to their insurance carrier, the insurance carrier sought a declaration that there was no coverage under the relevant automobile policy. Pursuant to the terms of the policy, coverage extended to damages for bodily injury “resulting from the ownership, maintenance or use” of the car. Pfiel, 304 Ill.App.3d at 833. The trial court granted summary judgment in favor of the insurance company. In affirming the trial court, this court stated:

“A causal relation or nexus must exist * * * between the accident or injury and the ownership, use or maintenance of the vehicle in order for the accident or injury to come within the policy coverage; where such nexus or connection is absent, coverage is denied. Jiffy Cab, 265 Ill.App.3d at 540 (although a dispute over the destination or route of a taxicab, resulting in a stabbing outside the taxicab, ‘may well have created a hostile atmosphere between the parties,’ ‘the mere creation of such an atmosphere is an insufficient causal connection upon which to predicate coverage under an automobile liability policy’). See also Laycock v. American Family Mutual Insurance Co., 289 Ill.App.3d 264, 682 N.E.2d 382 (1997); Aryainejad v. Economy Fire & Casualty Co., 278 Ill.App.3d 1049, 663 N.E.2d 1107 (1996) (Aryainejad ). The resolution of this issue must be obtained by determining whether the alleged use of the vehicle is reasonably consistent with the inherent nature of the vehicle. See, e.g., Doe v. State Farm Fire & Casualty Co., 878 F.Supp. 862 (E.D.Va.1995) (when abductor pushed insured’s head against interior automobile window, the injuries were somewhat causally connected to the automobile, but were not connected to use of the automobile as an automobile); United Services Automobile Ass’n v. Aetna Casualty & Surety Co., 75 A.D.2d 1022, 429 N.Y.S.2d 508 (1980) (the ‘accident’ causing injury, occurring inside the vehicle, must be connected with the use of an automobile qua automobile); Allstate Insurance Co. v. Furo, 588 So.2d 61 (Fla.Dist.Ct.App.1991) (passenger shot in vehicle was not entitled to insurance recovery because injury did not result from ‘use of motor vehicle’ and vehicle was mere situs of injury and not cause of it).” Pfiel, 304 Ill. app.3d at 836.

Applying the rationale of these cases to the facts in the Pfiel case, this court affirmed the trial court’s granting of summary judgment in favor of the insurance company because the policy did not cover the conduct alleged in the complaint. This court found that the manner in which the murderer “used” the vehicle to injure the victim was “attenuated from the actual legitimate purpose of an automobile and, therefore, not contemplated by the parties to the insurance contract.” Pfiel, 304 Ill.App.3d at 836-37. We additionally noted that “liability arose from nonvehicular conduct and existed independent of the ‘use’ or ‘ownership’ of the vehicle” and that actual involvement of the vehicle was “incidental to the injuries” sustained by the victim. Pfiel, 304 Ill.App.3d at 837.

Mount Vernon argues that Jefferson’s reliance upon the USF & G cases is erroneous because under Northbrook, it is no longer proper to import tort law principles into contract construction. See also Allstate Insurance Co. v. Smiley, 276 Ill.App.3d 971 (1995) (criticizing USF & G for its “assimilation of principles from tort law into the analysis of an insurance policy”).

Mount Vernon further argues that the transportation of children in a vehicle is reasonably consistent with the inherent nature of the vehicle. In support of this argument, Mount Vernon directs us to Aryainejad v. Economy Fire & Casualty Co., 278 Ill.App.3d 1049 (1996), where the driver of a vehicle was injured when he swerved to avoid hitting an uninsured motorist, who had run out of gasoline and was walking on an interstate highway en route to a gas station. The injured driver sought coverage under the uninsured motorist provision of his insurance policy, which provided that ” ‘the owner’s or operator’s liability for these damages must arise out of the ownership, maintenance, or use of the uninsured motor vehicle.’ ” Aryainejad, 278 Ill.App.3d at 1050. Finding that the accident which caused the motorist’s injuries was unrelated to the ownership, maintenance or use of the vehicle of the man walking in the road, the trial court ruled that the injured motorist’s insurance company was not obligated to cover his damages. On appeal, this court reversed that ruling. In addressing whether an injury arises out of “use” of an automobile, we stated that injuries from physical altercations do not arise out of the “use” of an automobile because such altercations “are not a normal or reasonable consequence of the use of a vehicle.” Aryainejad, 278 Ill.App.3d at 1054-55. In reversing the trial court, this court stated, “walking down the highway after a vehicle breaks down or runs out of gas is a reasonable consequence of the use of a vehicle.” Aryainejad, 278 Ill.App.3d at 1055.

In reliance on Aryainejad, Mount Vernon asserts that just as walking down the interstate after running out of gas is a reasonable consequence of the use of a vehicle, so is forgetting to remove a child from a vehicle. Mount Vernon further asserts that there are no allegations in the underlying complaint that Tyrelle was in the van for any reason other than to be transported to the day- care center, which is clearly a contemplated use. Additionally, Mount Vernon argues that allegations of systematic failure to maintain head counts are geared toward ensuring that children are removed from automobiles in the first instance and, therefore, they also arise out of the use of an automobile.

The Northbrook case is factually distinguishable from this case. Jefferson is correct in its assessment that at issue in Northbrook was a common, albeit tragic, automobile accident. The accident there occurred when the bus was being used in a manner consistent with its customary use. Here, Tyrelle’s death occurred when the van was not being used at all, rather than when it was being used as a method of transportation. Unlike the situation in Northbrook, the death of an infant from heat stroke when left unattended in a vehicle for an eight-hour period is attenuated from the actual legitimate purpose of the van. Although the transport of children to Heaven’s Little Hands is certainly a legitimate purpose of the van, the deserting of a small child in the vehicle for an extended period of time is not.

As in the Pfiel case, we find after reviewing the allegations in the underlying complaint that the victim’s death resulted from nonvehicular conduct on the part of Heaven’s Little Hands and its employees. The allegations in the complaint assert multiple theories of negligence including a failure to maintain a proper census of the children attending the day-care facility. Had Leon kept an accurate head count of the children inside the van or if someone inside Heaven’s Little Hands had noticed Tyrelle’s absence soon after the van in question had arrived at the day care facility, Tyrelle would not have died. In short, the van is the situs, rather than the cause, of Tyrelle’s death.

The Aryainejad case does little to support Mount Vernon’s position. We do not dispute that walking down the interstate after running out of gas is a reasonable consequence of use a car. In reliance on Arvyainejad, Mount Vernon asks this court to hold that forgetting to remove a child from a vehicle once that child has been transported to a day-care facility is a reasonable consequence of use of the vehicle. We decline to so hold. Simply put, leaving an infant in an automobile used to transport him to a day-care facility is not a normal or reasonable consequence of the use of the vehicle.

We also reject Mount Vernon’s argument that Northbrook has overruled USF & G and all other cases importing tort principles into contract construction. At no time in Northbrook did the supreme court state that it was overruling all cases in Illinois that have applied tort principles when interpreting insurance contracts. Nor did the supreme court state that for the plaintiffs to recover, they must allege that the students’ injuries arose from events “wholly independent of any negligent operation of the bus.” Considered in context, the supreme court was merely criticizing this court’s ruling in Northbrook and was not overruling a long line of Illinois cases.

We recognize that the Supreme Court of Alabama reached a different conclusion in St. Paul Mercury different from the one we have reached in the instant case. However, we are not bound by the holding in the St. Paul Mercury case because cases from foreign jurisdictions are not binding upon this court. See VanPlew v. Riccio, 317 Ill.App.3d 179, 184 (2000). Moreover, by stating that the victim died in the van “while it was being used” by the day-care facility, the court in St. Paul Mercury merely stated a conclusion in the absence of analysis. We further note that the St. Paul Mercury court held that there was coverage under the professional liability portion of the CGL policy at issue. The court held that the providing of transportation services was within the meaning of “professional services” as contemplated by the parties to the insurance agreement. Mount Vernon posits that, unlike the insurance policy at issue here, the professional liability coverage portion of the policy in St. Paul Mercury “apparently” contained no auto exclusion as the Supreme Court of Alabama did not discuss it. This omission also undercuts Mount Vernon’s position that we should follow St. Paul Mercury. Therefore, because the application of an exclusion that results in denying the duty to defend “must be clear and free from doubt,” we affirm the trial court’s granting of judgment on the pleadings. Oakley Transport, Inc. v. Zurich Insurance Co., 271 Ill.App.3d 716, 721-22 (1995).

Finally, Mount Vernon argues that the trial court’s granting of judgment on the pleadings should be reversed because in its order, the trial court found that Tyrelle’s death occurred because he “was left in the van because of negligence on the part of the driver of the van.” According to Mount Vernon, the trial court has “arguably” ruled on the ultimate issue of negligence, an issue that is only appropriately determined in the underlying litigation. Consequently, we should reverse the trial court’s judgment relating to Mount Vernon’s duty to defend. See State Farm Fire & Casualty Co. v. Leverton, 289 Ill.App.3d 855 (1997).

While Mount Vernon appears to be correct that the trial court improperly stated that Tyrelle’s death occurred “because of negligence” on the part of the van’s driver, we need not reverse the trial court’s judgment. A review of the trial court’s May 21, 2002, order makes clear that it was ruling only upon Mount Vernon’s duty to defend. In its order, the trial court stated, “Mt. Vernon has brought an action for declaratory judgment to obtain a judicial declaration that Mt. Vernon is not obligated to defend Heaven’s Little Hands in a wrongful death action.” The trial court’s written order further makes clear that its ruling was based upon allegations contained in the underlying complaint. Nowhere in its order did the trial court state that it was ruling upon the indemnification issue. In fact, Mount Vernon does not assert that the trial court actually ruled on the indemnification issue; rather, it asserts only that it “arguably” did. The trial court’s choice of words cannot serve as a basis for reversing its judgment.

Accordingly, the judgment of the circuit court of Cook County is affirmed.

Affirmed.

CAMPBELL, P.J., and REID, J., concur.

United States Court of Appeals,

Ninth Circuit.

Mark KESEL, Plaintiff-Appellant,

v.

UNITED PARCEL SERVICE, INC.; UPS Airlines, Inc.; UPS Customhouse Brokerage,

Inc., Defendants-Appellees.

Argued and Submitted April 8, 2003.

Filed Aug. 4, 2003.

Before FERGUSON, McKEOWN, and RAWLINSON, Circuit Judges.

Opinion by Judge McKEOWN; Dissent by Judge FERGUSON

OPINION

McKEOWN, Circuit Judge.

A package of paintings by prominent Ukrainian artists, en route from Odessa to California via United Parcel Service, arrived at a Kentucky warehouse, then vanished like the Ark of the Covenant. [FN1] The shipper, Mark Kesel, contends that the paintings were worth far more than the $558 declared value listed on the waybill, and seeks to hold United Parcel Service and UPS Custom Brokerages, Inc., (collectively, “UPS”) liable for the full value of the paintings.

We must decide whether UPS violated the released valuation doctrine, which requires carriers to give interstate shippers reasonable notice of limited liability and a fair opportunity to buy more insurance. UPS provided notice of its limited liability ($100 per shipment) in the documents that constituted its shipping contract. Although Kesel, through his agent, was able to purchase insurance in excess of the limitation, UPS rebuffed the agent’s attempt to insure the paintings for more than their value as stated on a Ukrainian customs form. The district court, on summary judgment, concluded that UPS complied with the released valuation doctrine, and limited its liability to $558. We agree and affirm.

BACKGROUND

Kesel is a corporate executive in the high technology arena and a sponsor of a foundation that distributes fine art from Russia and the Ukraine. During a trip to the Ukraine, Kesel and an Odessa-based artist, Sergei Belik, visited studios and selected seven paintings for an exhibition that the foundation planned to hold in San Francisco.

Before leaving Odessa, Kesel asked Belik to ship the paintings to California through UPS. He told Belik to declare the paintings at $13,500 for U.S. customs purposes and to insure them for $60,000, a figure based on Kesel’s belief that the paintings could be sold in the United States for $8,000 to $10,000 apiece.

As required by Ukrainian law, Belik took the paintings to the customs commission in Odessa. According to Belik, if the commission decides that a work of art is not an antique, it does not estimate its artistic worth, but instead assigns a value based on the cost of materials. Belik paid the customs duties and the commission gave him a permit form that listed the value of the paintings as $558.

Belik took the customs form and the paintings to the UPS office in Odessa. He told the UPS clerk that he wanted to insure the paintings for $60,000. After consulting by phone with a central office, the UPS clerk “categorically refused” to insure the paintings for more than $558. Belik, without contacting Kesel, went ahead and shipped all seven paintings in a single package. On the waybill, the value “$558” appears in the box entitled “Declared Value for Insurance.” Belik filled in the addresses on the waybill and signed it.

When the paintings did not arrive in California, Kesel called UPS, which traced the package to its international warehouse in Kentucky. Further efforts to locate the paintings failed, however, and they are presumed to be lost.

Kesel sued UPS in California court, alleging numerous federal and state claims, and seeking $60,000 in damages for the loss of the paintings. After UPS removed the case to federal court, Kesel amended his complaint to allege claims for negligence and breach of contract under federal common law, which governs contractual clauses limiting the liability of interstate carriers for damage to goods shipped by air. See King Jewelry, Inc. v. Fed. Express Corp., 316 F.3d 961, 964 (9th Cir.2003).

The district court granted summary judgment for UPS, limiting its liability to $558. The court concluded that UPS had satisfied the released valuation doctrine. UPS’s shipping contract provided reasonable notice of limited liability, the court reasoned, because the waybill and other documents informed the shipper that UPS would not be liable for more than the $100 per package “released value” unless the shipper declared a higher value on the waybill. Although these shipping documents imposed an upper limit of $50,000 on this additional insurance, the court concluded that UPS had given Kesel a fair opportunity to purchase greater liability because Belik insured the paintings for $558–more than the $100 released value that otherwise would have applied.

DISCUSSION

I. THE BELIK DECLARATION

As a preliminary matter, Kesel argues that the district court erroneously excluded Belik’s declaration. The district court concluded that Kesel had failed to lay a proper foundation for the declaration because he provided “no explanation about how the document was translated, who that translator was, or the expertise of the translator.” We review this evidentiary decision for an abuse of discretion and may not reverse “absent some prejudice.” Wendt v. Host Intern., Inc., 125 F.3d 806, 810 (9th Cir.1997) (citation omitted). Here, we need not consider whether the district court abused its discretion because Kesel does not point to any prejudice from the purported error and acknowledges that the district court permitted the admission of Belik’s deposition transcript in lieu of the declaration. The transcript contains all of the pertinent testimony and information that appears in the declaration and, as the district court noted, the declaration would not have changed its decision. Thus, we consider the evidence offered in Belik’s deposition in evaluating this summary judgment case on appeal.

II. THE RELEASED VALUATION DOCTRINE

Whether Kesel can recover more than the $558 declared value for the lost paintings is an issue of federal common law that we review de novo. See King Jewelry, 316 F.3d at 965; Milne Truck Lines v. Makita U.S.A., Inc., 970 F.2d 564, 567 (9th Cir.1992) (holding that “the construction of a tariff … presents a question of law for the court to resolve.”) (citations omitted). The essential facts regarding the shipment are not in dispute. “The released valuation doctrine, a federal common law creation, delineates what a carrier must do to limit its liability.” Id. [FN2] Under this doctrine, in exchange for a low rate, the shipper “is deemed to have released the carrier from liability beyond a stated amount.” Deiro v. American Airlines, 816 F.2d 1360, 1365 (9th Cir.1987).

UPS can limit its liability to $558 only if it provided Kesel with “(1) reasonable notice of limited liability, and (2) a fair opportunity to purchase higher liability.” Read-Rite Corp. v. Burlington Air Express, Ltd., 186 F.3d 1190, 1198 (9th Cir.1999) (citation omitted); see also Deiro, 816 F.2d at 1365 (“[T]he shipper is bound only if he has reasonable notice of the rate structure and is given a fair opportunity to pay a higher rate in order to obtain greater protection.”) (citations omitted).

UPS’s shipping agreement with Kesel comprised the air waybill that Belik signed, the Guide to UPS Services (the “Service Guide”), and UPS’s General Tariff Containing Classifications, Rules and Practices for the Transportation of Property (the “Tariff”). See King Jewelry, 316 F.3d at 964 (noting that the airbill and Service Guide formed the contract between the shipper and FedEx). As we discuss below, because these documents gave Kesel reasonable notice of limited liability, and UPS gave Kesel a fair opportunity to purchase greater liability coverage, the district court properly limited UPS’s liability to the amount stated on the waybill. [FN3]

A. NOTICE OF LIMITED LIABILITY

UPS’s waybill, Service Guide, and Tariff each contain “prominent notices of the liability limitation in plain language.” King Jewelry, 316 F.3d at 966. For example, the front of the waybill instructs the reader in bold type to “See Instructions On Back.” The reverse side of the waybill explains that “any liability of UPS shall be … limited to proven damages up to a maximum per shipment of the local currency equivalent of USD 100 per shipment, unless a higher value has been declared….” UPS’s Service Guide and Tariff both contain similar language. [FN4]

Kesel does not dispute the presence of the limited liability language on the shipping documents. Rather, he argues that he lacked notice of UPS’s liability limitation because the waybill and other materials are written in English– which Belik cannot read–and the back of the waybill was smudged. Also, according to Kesel, he and Belik misunderstood the purpose of the insurance they sought to buy from UPS, mistakenly believing that it would provide them with additional protection above and beyond UPS’s liability for the full value of the paintings.

Despite an effort to suggest he was duped, Kesel cannot escape the broad reach of our precedent regarding notice of limited liability: “[F]ederal common law has never required actual notice of a carrier’s liability limitation.” Deiro, 816 F.2d at 1366 (citation omitted). Nor is “actual possession of the bill of lading with the [liability] limit … required before a party with an economic interest in the shipped goods can be held to the limitation.” Read- Rite, 186 F.3d at 1198 (quoting Royal Ins. Co. v. Sea-Land Service, Inc., 50 F.3d 723, 727 (9th Cir.1995)) (internal quotation marks omitted) (alteration in the original). Kesel, who is fluent in English and had previously shipped expensive items through UPS–such as electronic equipment insured for up to a million dollars–knew how to find out the extent of UPS’s liability. Cf. Deiro, 816 F.2d at 1365 (noting that “an experienced commercial air traveler” had “ample opportunity to become familiar” with the carrier’s liability limitation). Whatever their alleged naivete in matters of international shipping, it would be “unfair to place the loss” on UPS merely because Belik or Kesel now claim to have “misunderstood the effect of the liability limitation commonly used by interstate carriers.” Norton v. Jim Phillips Horse Transp., Inc., 901 F.2d 821, 830 (10th Cir.1989). Such a result would effectively spell the death knell for liability limitations in interstate shipping and dramatically alter the fairly settled landscape that defines the relationship between the shipper and the carrier.

B. FAIR OPPORTUNITY TO PURCHASE ADDITIONAL LIABILITY COVERAGE

The heart of Kesel’s case is that UPS denied him a fair opportunity to purchase greater liability coverage because it refused to let Belik insure the paintings for more than $558–a fraction of the $50,000 maximum listed in UPS’s waybill, Service Guide, and Tariff. [FN5] Although this argument seemingly has appeal, it is inconsistent with King Jewelry, in which we held that “the released valuation doctrine only requires a fair opportunity to purchase a higher liability, not necessarily up to the full value of the item.” 316 F.3d at 966 (citations omitted). UPS in fact did allow Belik to buy insurance for more than the standard $100 per package limit that otherwise would have applied.

In King Jewelry, the plaintiff shipped marble candelabra through FedEx and attempted to insure them for their full $37,000 value. Id. When the candelabra were damaged during shipment, FedEx sought to limit its liability to $500, which the waybill stated was the maximum liability for “items of extraordinary value.” Id. at 963. We held that FedEx was liable only for $500, and that it had complied with the released valuation doctrine by insuring the candelabra for that amount–less than their actual value, but higher than the $100 released value. Id. at 966.

Kesel likens his situation to a case in which the carrier altogether refused to give shippers the opportunity to buy additional insurance. See Klicker v. Northwest Airlines, 563 F.2d 1310, 1312 (9th Cir.1977). In Klicker, the shippers informed the Northwest Airlines’ ticket agent that their dog was worth $35,000, but the agent would not permit them to declare any value for the dog or buy any additional coverage. Id. The dog died during the flight. We held that the airline was liable for the entire value of the dog, and that the airline could not rely on its tariff provision that limited recovery to $500 in the absence of a declared value. Id. at 1316. Kesel’s case, however, presents a different scenario. In contrast to the airline in Klicker, UPS permitted Belik to declare a value for the paintings and to insure them for the declared value.

UPS does not have carte blanche to impose arbitrary limits, irrespective of its Tariff and waybill, on the insurance it offers to shippers. Nonetheless, in the context of its dual role as customs agent and carrier, UPS complied with its Tariff and shipping agreement in limiting available insurance to the value listed on the customs documents. The Service Guide explains that, for international shipments, the shipper must “provide required documentation for customs clearance … By providing required documentation, the shipper certifies that all statements and information relating to exportation and importation are true and correct.” According to the Guide, UPS requires the shipper to submit an invoice listing, among other things, the “total value of each item,” and the shipper appoints UPS as “the agent for performance of customs clearance, where allowed by law.”

Given these shipment guidelines and the circumstances of Kesel’s shipment, UPS complied with the released valuation doctrine in limiting the insurance to the value listed on the form presented with the paintings. This procedure did not deprive Kesel of proper notice. Belik admits that the UPS agent clearly told him that it would not insure the paintings for more than the customs value, and Belik, without consulting Kesel, chose to ship through UPS fully aware of the limited liability. Nothing here supports a claim of coercion or misinformation.

The opportunity to purchase additional liability coverage from UPS was fair and it did not leave Belik in the lurch. Belik could have bought separate insurance elsewhere or shipped with a different carrier. [FN6] Instead, Belik shipped the paintings through UPS, aware that he had only purchased $558 worth of liability, but hoping “in this particular case everything would be as normal.” Through his agent, Kesel took the gamble that the paintings would not vanish. When they did, he was stuck with the bargain he struck–UPS’s liability is limited to the $558 declared value stated on the waybill. [FN7]

AFFIRMED.

FERGUSON, Circuit Judge, dissenting.

I respectfully dissent. The majority misconstrues our decision in King Jewelry, Inc. v. Fed. Express Corp., 316 F.3d 961, 966 (9th Cir.2003), effectively permitting common carriers to manipulate their rate structures by adding unpublished terms to their tariffs at the time of shipment. Even more troubling, the majority holds that a shipper has presumptively been afforded a fair “opportunity to purchase additional coverage” anytime she “could have bought separate insurance elsewhere or shipped with a different carrier.” Maj. Op. at —- – —-. In other words, after this decision, a carrier may comply with the requirements of the released valuation doctrine by posting a sign listing some (but not all) of their terms and doing business in a location where there are other carriers or third-party insurance providers. This evisceration of the protection afforded by the released valuation doctrine is unwarranted and unwise. Because I believe that, construing the facts in the light most favorable to Kesel, UPS did not provide a “fair opportunity” to purchase greater liability coverage, I must dissent.

As the majority recognizes, under the released valuation doctrine,

[a common] carrier can lawfully limit recovery to an amount less than the actual loss sustained only if it grants its customers a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge … [T]he shipper is bound only if he has reasonable notice of the rate structure and … a fair opportunity to pay the higher rate in order to obtain greater protection.

Deiro v. Am. Airlines, Inc., 816 F.2d 1360, 1365 (9th Cir.1987) (internal citations omitted). The purpose of the released valuation doctrine “is to ensure that the shipper has an opportunity to make an informed choice between … shipping at a lower cost with limited liability, and, on the other, separately purchasing insurance or shipping at a higher cost without limited liability.” Read-Rite Corp. v. Burlington Air Express, Ltd., 186 F.3d 1190, 1198 (9th Cir.1999). “Limited liability provisions are prima facie valid if the face of the[air waybill] … recites the liability limitation and ‘the means to avoid it.’ ” Id.(citing Royal Ins. Co. v. Sea-Land Serv. Inc., 50 F.3d 723, 727 (9th Cir.1995)). Thus, the notice provisions and the “fair opportunity” requirement are inextricably linked, as a shipper must have a “fair opportunity” to insure shipments pursuant to the terms of which she was given notice.

In the instant case, Kesel was provided notice of UPS’s general limited liability provisions through its waybill, Service Guide, and Tariff. [FN1] However, not one of these publications stated or even implied that Kesel was prohibited from insuring his package for a value greater than what appeared on the Ukrainian customs form, or that a shipper is in any way restricted from submitting a speculative declared value for the purposes of acquiring additional insurance. Before Kesel passed on the responsibility of shipping to his agent, Belik, he reasonably believed that, in order to insure the paintings, he had only to declare their value on the UPS waybill. Nevertheless, as the majority concedes, the UPS clerk “categorically refused” to insure the paintings under the terms as set out in UPS’s waybill, Tariff, or Service Guide. In contrast to the majority’s assertion, see Maj. Op. at —-, Belik was not allowed to insure his shipment for the declared value that he provided to UPS. The UPS clerk would only allow Belik to ship the paintings with UPS if he agreed to declare them for the value that the UPS clerk had determined should be applied. While these actions may not technically qualify as coercion, they are certainly not consistent with the requirements of the released valuation doctrine.

The majority asserts that this was permissible because UPS’s Service Guide informs shippers that “[b]y providing required [customs] documentation, the shipper certifies that all statements and information relating to exportation are true and correct.” See Maj. Op. at —-. This directly contradicts the heart of the released valuation doctrine’s notice provision, however, which requires not only that a tariff “recite[ ] the liability limitation” but also ” ‘the means to avoid it.’ ” Read-Rite Corp., 186 F.3d at 1198 (citing Royal Ins. Co., 50 F.3d at 727.). In this case, UPS certainly did not state the supposed custom’s valuation limitation, let alone the means to avoid it.

In stark contrast to King Jewelry, in which the carrier’s “airbill and [ ]Service Guide contained prominent notice[ ]” of its limitation on coverage for “items of extraordinary value,” see King Jewelry, 316 F.3d at 962-63, 966, in the instant case there was no notice of any limitation on the items which could be insured, or the method by which they could be valued. King Jewelry’s holding was limited to the unremarkable proposition that the shippers in that case were bound by the “extraordinary value” limitation that was clearly listed on the waybill; it cannot possibly stand for the broad proposition that a carrier complies with the released valuation doctrine even if they provide only a nominal amount of insurance above the minimum coverage, regardless of the terms they publish in their tariffs or other documents. UPS has not argued that the paintings were items of extraordinary value or that they otherwise did not fall within the general provisions for additional liability coverage. They cannot come back now and argue that the information as to customs declarations, discussed in an entirely different section of the Service Guide from the insurance provisions and hardly a commonly understood limitation of interstate carriers, see Maj. Op. at —-, creates an implied term in their liability coverage contract.

The majority contradicts itself, holding that Kesel received adequate notice because of the clarity of the explicit general provisions in the Service Guide, but also stating that he had an adequate opportunity to purchase additional insurance because of what it construes to be unspoken terms in the Guide. See Maj. Op. at —- – —-. There can be no notice of terms which were not present in the contract. Both the “fair opportunity” to insure and the notice requirement are meaningless if shipping companies can coerce customers into shipping with them by misinforming them about the terms of liability coverage with impunity.

The majority compounds its misunderstanding of the released valuation doctrine by implying that Belik also had an adequate opportunity to purchase additional coverage because he “could have bought separate insurance elsewhere or shipped with a different carrier.” Id. This is fallacious reasoning. The released valuation doctrine applies to the particular carrier that the case involves; the shipper must have had an adequate opportunity to purchase insurance from that carrier, not just in the general scheme of things. See Read-Rite Corp., 186 F.3d at 1198 (“[carrier] contract must offer … a fair opportunity to purchased higher liability”); Deiro, 816 F.2d at 1365 (“carrier can … limit recovery … only if it grants its customers a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge.”) (citing New York, New Haven & Hartford v. Nothnagle, 346 U.S. 128, 135, 73 S.Ct. 986, 97 L.Ed. 1500 (1953)). The majority’s assertion that the mere availability of third-party insurance “shows that the shipper had a fair opportunity to purchase greater liability” misses the point. See Maj. Op. at —- n. 6. If this were so, then the fair opportunity requirement of the released valuation doctrine would have absolutely no substantive content whenever a party shipped within the United States or any country where third- party insurance is available.

Kesel is not arguing that he should have had a right to insure for whatever amount he desired; he is arguing that he should have been afforded the opportunity to insure under the terms that UPS published. The majority’s assertion that UPS should be allowed to limit liability to the amount declared in the customs form is unpersuasive, given that UPS included no such provision in its liability limitations. The evidence Kesel profered is sufficient to raise a triable issue of fact as to whether Belik was given a fair opportunity to purchase higher liability coverage. I therefore respectfully dissent.

FN1. We refer to the film, Raiders of the Lost Ark (Paramount Pictures 1981), in which the government, much to the chagrin of Indiana Jones, decided that placing the Ark inside a crate amid a giant warehouse filled with identical crates was the best way to ensure that it would never be found.

FN2. We agree with the district court that the Warsaw Convention, “an international treaty governing the liability of air carriers engaging in international air travel,” does not apply to Kesel’s claims. Wayne v. DHL Worldwide Express, 294 F.3d 1179, 1185 (9th Cir.2002) (internal quotation marks and citation omitted); see Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000, 3014, T.S. No. 876 (1934), reprinted in note following 49 U.S.C. § 40105 (the “Warsaw Convention”). Kesel alleges that the package disappeared, not during the flight from Odessa to the United States, but after it arrived at UPS’s Kentucky warehouse. Federal common law governs liability limits on shipments by air within the United States. See Wayne, 294 F.3d at 1185.

FN3. We note that although Kesel hoped to recover $60,000, the projected amount that the paintings would have sold for in the United States, the district court held that UPS’s Tariff barred the recovery of such consequential damages. Kesel did not appeal this ruling. We therefore limit our analysis to whether Kesel may recover the actual value of the paintings.

FN4. The Service Guide states that, “[u]nless a greater value is declared in writing in the space provided on the shipping record provided to the carrier, the shipper declares the released value of each shipment to be no greater than $100 (U.S.).” The Tariff provides that “[t]he maximum liability per package assumed by UPS is limited to the lesser of: i) $100, or ii) actual cost of the loss or damage sustained.”

FN5. The back of UPS’s waybill provides that “[t]he shipper may obtain coverage in excess of UPS’s limit of liability by declaring a higher value in writing on the face of the waybill and paying an additional charge, as stated in the Tariff Guide.” UPS’s Guide to Services states that the shipper “can obtain additional coverage up to $50,000 per package…. To insure a package having a value greater than $100, show the full value in the Declared Value field as appropriate to your UPS shipping system.” The Tariff notes that “[t]he maximum liability per package assumed by the applicable insurance company shall not exceed $50,000 regardless of the value in excess of the maximum.”

FN6. The dissent’s suggestion that the availability of separate insurance is irrelevant misreads Read-Rite. The purpose of the released valuation doctrine is to guarantee the shipper “an opportunity to make an informed choice between … shipping at a lower cost with limited liability … and separately purchasing insurance or shipping at a higher cost without limited liability.” Read-Rite, 186 F.3d at 1198 (emphasis added). Just as the purchase of separate insurance tends to show notice of limited liability, see id., the availability of such insurance shows that the shipper had a fair opportunity to purchase greater liability. Here, Kesel had the full range of choices: he could have accepted the released value, bought insurance from UPS for the customs value, or bought separate insurance for what he believed to be the actual value.

FN7. Kesel argues that the district court should not have entered judgment for UPS because he is at least entitled to the $558 declared value on the waybill. The district court’s judgment does not prevent Kesel from recovering the $558 because the order explicitly fixed UPS’s liability at that amount. Kesel also claims that the district court unfairly awarded costs to UPS, but Kesel did not challenge the cost award in the district court, and he cannot do so now. See Walker v. California, 200 F.3d 624, 626 (9th Cir.1999).

FN1. As the majority notes, each of these documents uses slightly different language, but each states substantially the same thing as the waybill: “any liability of UPS shall be … limited to proven damages [up to $100.00] …, unless a higher value has been declared…. The shipper may obtain coverage in excess of UPS’s limit of liability by declaring a higher value in writing on the face of the waybill and paying an additional charge, as stated in the Tariff Guide.”