Joseph T. Ryerson & Son, Inc. v. Travelers Indemnity Co. of America
165 N.E.3d 439
Ill. App. Ct.2021Background
- Two underlying matters: (1) Champagne Metals (antitrust and tortious interference claim) where Travelers denied duty to defend; (2) Hoffman (fatal auto-accident) where Travelers defended Ryerson, a $27.6M verdict was returned, and post‑verdict disputes arose between Travelers (primary) and Illinois National (excess) over control, appeal bond, and who would protect Ryerson.
- Champagne Metals complaint alleged conspiratorial conduct to keep a competitor out of the market and an interference count; it did not allege false statements about Champagne Metals’ goods or services.
- Travelers refused to defend Champagne Metals; district court initially entered summary judgment for defendants, Tenth Circuit reversed, and the case later settled. Ryerson sued Travelers for declaratory relief, breach, and a §155 claim arising from the denial.
- In Hoffman, Travelers provided defense; after the adverse verdict Ryerson alleged Travelers (a) improperly controlled/postponed handling of post‑judgment matters, (b) had a conflict of interest because of exposure beyond its $2M limits, and (c) misled Ryerson — asserting claims for breach of contract, §155 damages, and Consumer Fraud Act relief.
- Trial court: (a) granted summary judgment to Travelers on Champagne Metals duty-to-defend and dismissed the related §155 claim as time‑barred; (b) dismissed Ryerson’s Hoffman-based breach, §155, and Consumer Fraud Act claims. Appellate court affirmed on all counts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend in Champagne Metals (disparagement/advertising injury) | Underlying complaint alleged defendants "expressed disapproval" and statements deterring customers—this potentially pleads disparagement of Champagne Metals’ services, triggering duty to defend. | Complaint accused pressure on suppliers and anticompetitive conduct, not false statements about Champagne Metals’ goods/services; no allegation of publication to the buying public or falsity. | No duty to defend: allegations did not plausibly allege disparagement of Champagne Metals’ goods/services. |
| §155 claim based on Champagne Metals denial | Travelers’ denial of defense was unreasonable and supports §155 relief. | No coverage existed, so §155 cannot apply because insurer owed no benefits. | §155 issue moot: no coverage → no §155 liability. |
| Breach of contract in Hoffman (conflict of interest; failure to allow independent counsel or tender limits) | Travelers had a conflict because Ryerson faced nontrivial probability of excess judgment; Travelers put its own interests ahead of Ryerson and thus breached duty by controlling defense and not tendering limits/allowing insured‑selected counsel. | No conflict existed: Travelers had a right/duty to control defense, Illinois National was timely involved, Ryerson knew of excess exposure, and Travelers’ control did not amount to a breach. | Dismissed: no conflict giving insured right to insurer‑paid independent counsel; Travelers did not breach duty to defend. |
| §155 and Consumer Fraud Act claims re: Hoffman (vexatious delay/deceptive conduct) | Travelers misled Ryerson about committing its $2M limits, concealed conflicts, and engaged in vexatious delay causing Ryerson harm and fees. | Ryerson knew relevant facts; insurers’ position and correspondence showed Illinois National also obstructed; no unlawful delay or actionable deception that proximately caused damage. | Dismissed: §155 inapplicable absent contractual/legal obligation to tender limits; Consumer Fraud Act claim not supported given exhibits and facts. |
Key Cases Cited
- Valley Forge Ins. Co. v. Swiderski Elecs., Inc., 223 Ill.2d 352 (2006) (duty‑to‑defend standard: compare underlying complaint to policy; pleadings construed liberally for insured)
- Gen. Agents Ins. Co. of Am. v. Midwest Sporting Goods Co., 215 Ill.2d 146 (2005) (insurer must defend if complaint alleges facts potentially within coverage)
- Pekin Ins. Co. v. Phelan, 343 Ill. App.3d 1216 (2003) (elements of disparagement/advertising injury: statement about competitor’s goods/services, falsity/misleading, made to influence public)
- Lexmark Int’l, Inc. v. Transp. Ins. Co., 327 Ill. App.3d 128 (2001) (definition of disparagement as criticisms of quality of goods/services)
- R.C. Wegman Constr. Co. v. Admiral Ins. Co., 629 F.3d 724 (7th Cir. 2011) (when insurer’s litigation strategy creates divergent interests, duty to notify insured and possible right to independent counsel)
- Perma‑Pipe, Inc. v. Liberty Surplus Ins. Corp., 38 F. Supp. 3d 890 (N.D. Ill. 2014) (district court finding a conflict when nontrivial probability of excess judgment led insurer to insist on insurer‑selected counsel)
- Cramer v. Ins. Exchange Agency, 174 Ill.2d 513 (1996) (purpose and scope of §155: penalize vexatious/unreasonable insurer conduct)
- Nandorf, Inc. v. CNA Ins. Cos., 134 Ill. App.3d 134 (1985) (discussion of insurer conflict and insured’s right to independent counsel)