American Zurich Insurance Co. v. Wilcox and Christopoulos, L.L.C.
984 N.E.2d 86
Ill. App. Ct.2013Background
- Demnicki filed a civil conspiracy claim against Wilcox, the Wilcox law firm, Panacea Partners, Liquor License Solutions, Walsh, and others relating to obtaining a liquor license for De La Costa.
- The Wilcox law firm held a lawyers professional liability policy with American Zurich for February 2009–February 2010.
- American Zurich denied coverage and filed a declaratory judgment action seeking to avoid defense/indemnity.
- Exclusions D and E in the policy preclude coverage for acts of insureds in business enterprises with controlling interests and for acts by insureds in such enterprises.
- Circuit court ruled Wilcox owed no duty to defend but the Wilcox law firm did; it granted American Zurich partial summary judgment.
- On appeal, the court reverses, holding Exclusion E bars coverage for the Wilcox law firm as well as Wilcox.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether exclusion E bars coverage for the Wilcox law firm | Zurich argues Wilcox acted for Liquor License Solutions, with controlling interest, triggering exclusion E. | Wilcox law firm contends Wilcox acted for Panacea Partners, not Liquor License Solutions; exclusion E ambiguity should be construed against insurer. | Exclusion E applies; insurer has no duty to defend the Wilcox law firm. |
Key Cases Cited
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (Ill. 1992) (duty to defend determined by underlying complaint, liberally construed for insureds)
- Wilkin Insulation Co. v. City of Northbrook, 144 Ill. 2d 64 (Ill. 1991) (ambiguities resolved in insured's favor)
- Aetna Casualty & Surety Co. v. Prestige Casualty Co., 195 Ill. App. 3d 660 (Ill. App. 1990) (duty to defend when potential coverage exists)
- Atlantic Mutual Insurance Co. v. American Academy of Orthopaedic Surgeons, 315 Ill. App. 3d 552 (Ill. App. 2000) (liberal construction of exclusions in insurance contracts)
- Lyons v. State Farm Fire & Casualty Co., 349 Ill. App. 3d 404 (Ill. App. 2004) (duty to defend when allegations potentially fall within policy)
- Thompson v. Gordon, 241 Ill. 2d 428 (Ill. 2011) (uniformly interpret policy terms in context; emphasize meaning of terms)