2020 IL App (1st) 191175
Ill. App. Ct.2020Background:
- Markel insured Carolyn’s Lounge for Feb 18, 2011–Feb 18, 2012 with a $1,000,000 per‑occurrence CGL policy that included assault-and-battery and firearms exclusions.
- On Oct. 30, 2011, two men returned to Carolyn’s armed; plaintiffs allege the men assaulted Tremeice Dangerfield and fatally shot Kyle Matthews in the parking lot while Carolyn’s security barred reentry.
- Plaintiffs sued Carolyn’s, its owner, and others asserting negligence, wrongful death, survival, assault and battery, and IIED claims; Markel disclaimed coverage (Nov. 2013) and declined to defend.
- A default judgment entered in the underlying case awarding about $3.04M to plaintiffs; Markel then sued for a declaratory judgment that it owed no duty to defend or indemnify.
- The trial court granted summary judgment to defendants (finding breach of duty to defend/indemnify, estoppel, and section 155 liability) but later limited indemnity to the policy’s $1M per‑occurrence; both parties appealed.
- The appellate court reversed: it held Markel had no duty to defend because the underlying allegations fell within the unambiguous assault-and-battery and firearms exclusions, mooting estoppel, section 155, and limit/occurrence questions.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend | Exclusions (assault/battery, firearms) bar coverage for all claims | Underlying complaint potentially pleads non‑excluded negligence and accidental theories so duty to defend exists | No duty to defend; exclusions unambiguously cover the alleged intentional assaults and firearm use |
| Estoppel from denying coverage for default judgment | Not estopped if no duty to defend; insurer may seek declaratory judgment | Failure to defend estops insurer from raising policy defenses | Estoppel unavailable because insurer had no duty to defend; estoppel applies only where insurer wrongfully breached duty to defend |
| Section 155 (vexatious and unreasonable denial) | Denial based on legitimate policy defenses is not vexatious | Denial was vexatious and unreasonable | Denial not vexatious; denial premised on legitimate, supported exclusions |
| Policy limit / number of occurrences | If estopped, indemnity limited to $1M per occurrence | Underlying events may constitute multiple occurrences or otherwise justify full judgment | Moot/unused: appellate court resolved case on lack of coverage so limit/occurrence questions were not reached substantively |
Key Cases Cited
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (establishes duty-to-defend standard: compare complaint allegations to policy)
- Employers Insurance of Wausau v. Ehlco Liquidating Trust, 186 Ill. 2d 127 (insurer must defend under reservation of rights or seek declaratory relief; estoppel doctrine limits)
- Britamco Underwriters, Inc. v. J.O.C. Enterprises, Inc., 252 Ill. App. 3d 96 (assault-and-battery exclusion precluded coverage where complaint alleged battery)
- L.A. Connection v. Penn‑America Insurance Co., 363 Ill. App. 3d 259 (distinguishes accidental shooting allegations from intentional assault where exclusion may not apply)
- Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill. 2d 11 (policy construction principles: unambiguous language enforced)
- Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (insurance contract interpretation is a question of law for summary judgment)
- Country Mutual Insurance Co. v. Livorsi Marine, Inc., 222 Ill. 2d 303 (ambiguities construed in favor of coverage)
- General Motors Corp. v. Pappas, 242 Ill. 2d 163 (notice-of-appeal form defects excused where no prejudice)