Illinois State Bar Association Mutual Insurance Company v. Frank M. Greenfield and Associates, P.C.
980 N.E.2d 1120
Ill. App. Ct.2012Background
- Policyholder Greenfield admitted a drafting error in a will that affected trust distributions; beneficiaries sued for legal malpractice; ISBA Mutual insured Greenfield under a professional liability policy; Greenfield sent a detailed letter to beneficiaries informing them of the error; the letter arguably admitted liability or at least facts relevant to liability; ISBA Mutual claimed the policy’s Voluntary Payments clause barred defense/coverage for such admission; the trial court held ISBA Mutual had a duty to defend; on appeal, the court evaluated whether the clause is enforceable against public policy and whether it voids the insurer’s defense duty with respect to the malpractice suit; the court found the clause unenforceable as against public policy and affirmed the trial court’s judgment granting Greenfield summary judgment; Justice Garcia specially concurred.
- Procedural posture: declaratory judgment action by insurer; cross-motions for summary judgment; trial court granted Greenfield; appellate court affirmed.],
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the voluntary payments clause is enforceable against public policy | ISBA Mutual argues clause forbids admitting liability and defeats defense | Greenfield argues clause is unenforceable as it violates public policy and ethics duty | Unenforceable; policy does not bar defense |
| Whether Greenfield’s letter admitted liability or merely stated facts | Letter admitted liability under policy terms and thus breached | Letter stated facts and did not admit liability; ethical duties govern disclosure | Letter did not constitute a liability admission; duty to defend remains |
| Impact of the admission on insurer’s duty to defend vs indemnify | Admission would relieve insurer of defense obligation | Duties to defend broader than indemnity; policy language limited to indemnity | Insurer owes duty to defend; indemnity issue ripe only if liability is established |
Key Cases Cited
- Blake v. Continental Casualty Co., 278 Ill. App. 232 (1934) (admission of fault vs. liability; public policy limits on admissions)
- Westchester Fire Insurance Co. v. Heileman Brewing Co., 321 Ill. App. 3d 622 (2001) (voluntary payment clause different in scope; pre-tender expenditures not defense trigger)
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (1992) (duty to defend determined by underlying allegations; policy construed; broad defense scope)
- United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64 (1991) (exclusionary analysis; defense if allegations fall within policy coverage)
- American Family Mutual Insurance Co. v. Fisher Development, Inc., 391 Ill. App. 3d 521 (2009) (duty to defend when underlying complaint potentially within coverage)