Pekin Ins. Co. v. XData Solutions, Inc.
354 Ill. Dec. 654
| Ill. App. Ct. | 2011Background
- On December 19, 2005, XData sent an unsolicited fax to Targin advertising its Integrated Business Solutions and software systems.
- The TCPA prohibits unsolicited advertisements to fax machines without consent and provides for damages and treble penalties for willful violations.
- In January 2009, Targin filed a class action in Cook County alleging TCPA, conversion, and Illinois Consumer Fraud claims; XData tendered defense to Pekin in February 2009.
- Pekin declined coverage in March 2009; the class action settled for $1,975,000, to be paid from Pekin-insured policy proceeds for December 2005 coverage period.
- The circuit court approved the settlement on June 3, 2009, finding 4,673 unauthorized faxes but no intent to injure; Pekin then filed a declaratory judgment action in April 2009, which the circuit court decided in favor of Targin and XData.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TCPA claim falls within advertising injury coverage | Pekin contends advertising injury does not cover TCPA claims for a corporation | XData argues TCPA claim is within advertising injury as violation of privacy | Yes; TCPA claim falls within advertising injury coverage. |
| Whether property damage/occurrence coverage supports defense | Pekin argues no coverage under property damage/occurrence because acts were intentional | XData relies on Illinois law and policy language applying to the TCPA context | Yes; Pekin owed a duty to defend under property damage/occurrence. |
| Whether settlement triggered indemnity under voluntary payments | Pekin says settlement breached voluntary payments provision | XData settled after tender and denial of coverage; no breach and no insurer consent needed | No breach; Pekin breached defense duty, but indemnity still owed. |
| Choice of law governing coverage for TCPA claim | Indiana law should apply due to contacts | Illinois law governs due to lack of Indiana law on issue | Illinois law applies; no Indiana conflict. |
Key Cases Cited
- Valley Forge Ins. Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352 (2006) (advertising injury includes TCPA-type privacy invasion claims)
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90 (1992) (defense duty determined by comparing underlying complaint to policy)
- Crum & Forster Mgt. Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (1993) (interpretation of insurance policy language as contract)
- United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64 (1991) (liberal construction of underlying pleadings in defense duty)
- Westchester Fire Ins. Co. v. G. Heileman Brewing Co., 321 Ill. App. 3d 622 (2001) (voluntary payments provision and need for prejudice to deny indemnity)