Hartford Casualty Insurance v. ContextMedia, Inc.
65 F. Supp. 3d 570
N.D. Ill.2014Background
- Hartford issued Illinois-based business liability policies to ContextMedia for 2008–2013, including property damage and personal and advertising injury coverages with exclusions for care/custody/control and for advertising/broadcasting businesses.
- Healthy Advice Networks (HAN) sent a January 2011 letter accusing ContextMedia of interfering with HAN’s contracts, misappropriating property, and other unlawful acts; ContextMedia investigated, found the allegations unfounded, and did not notify Hartford at that time.
- HAN later sued ContextMedia in the Southern District of Ohio (filed August 10, 2012); ContextMedia notified Hartford in September 2012 and Hartford began a defense under a reservation of rights.
- Hartford denied coverage for HAN’s claims in December 2012; ContextMedia filed a complaint seeking a declaratory judgment that Hartford had a duty to defend/indemnify, and ContextMedia filed a cross-motion for its own damages.
- The court applied Illinois law, focusing on the policy’s notice provision and five Livorsi Marine factors to determine reasonable notice; the court held ContextMedia breached the notice provision by delaying 19 months, thus Hartford has no duty to defend/indemnify for HAN’s suit; Counts I, VI, VII were deemed moot, and ContextMedia’s cross-motion for damages was denied.
- The court concluded that the insurance policy requires timely notice so Hartford could investigate and potentially resolve HAN’s allegations before suit, and that ContextMedia’s delay prejudiced Hartford and violated the contract terms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ContextMedia’s notice to Hartford was timely. | ContextMedia argues nineteen months was ‘as soon as practicable.’ | Hartford argues delay was unreasonable under Livorsi Marine factors. | Not timely; notice breached. |
| Whether Hartford had a duty to defend/indemnify ContextMedia in HAN’s suit. | ContextMedia contends Hartford defended under a reservation of rights and thus had a duty. | Hartford denied coverage and sought a declaratory judgment. | Hartford has no duty to defend/indemnify. |
| Whether the alleged exclusions (Care Custody/Control; Advertising) preclude coverage. | HAN’s claims fall within ? that may be covered; ContextMedia asserts exclusions apply. | Court did not reach due to notice breach; moot. | Moot; no decision on exclusions. |
| Whether ContextMedia is entitled to defense-cost damages despite no duty to defend. | ContextMedia seeks costs incurred defending HAN claim. | Illinois law bars recovery when insurer had no duty to defend. | Denied; cross-motion denied. |
Key Cases Cited
- Livorsi Marine, Inc. v. Country Mutual Ins. Co., 856 N.E.2d 343 (Ill. 2006) (five-factor test for reasonable notice of an occurrence)
- Yorkville National Bank v. United States Fidelity & Guaranty Co., 939 N.E.2d 293 (Ill. 2010) (reasonableness of notice; ‘as soon as practicable’ interpreted as reasonable time)
- Philadelphia Indemnity Ins. Co. v. 1801 W. Irving Park, LLC, 2012 WL 3482260 (N.D. Ill. 2012) (ten-month delays; reasonableness under Livorsi factors)
- West Bend Mut. Ins. Co. v. United Road Towing, 2008 WL 4442628 (N.D. Ill. 2008) (notice must be timely; belief of non-liability not excuse)
- General Agents Ins. Co. of Am., Inc. v. Midwest Sporting Goods Co., 215 Ill.2d 146 (Ill. 2005) (insurer may not seek defense costs after declaratory judgment denying coverage)