Pekin Insurance Company v. Precision Dose
968 N.E.2d 664
Ill. App. Ct.2012Background
- Pekin Insurance issued a commercial general liability policy to Xactdose, Inc., later amended to name Precision Dose, Inc. as insured.
- Defendants were Xactdose’s majority shareholders/directors; plaintiffs were minority shareholders who sued derivatively for breach of fiduciary duty.
- Defendants allegedly formed Precision Dose and conducted the same business, with Precision Dose continuing to package/distribute similar products.
- The underlying amended complaint pleaded breach of fiduciary duty and related business matters resulting in alleged losses to plaintiffs.
- Pekin denied coverage and then filed a declaratory judgment action seeking to stop defense; policy included a notice provision and potential coverage for personal and advertising injuries.
- The trial court granted Pekin summary judgment after striking Koopman’s affidavit; appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred by striking Koopman’s affidavit. | Pekin argues the affidavit contained true but unpleaded facts relevant to defense duty. | Defendants contend the affidavit was improperly withheld and could show coverage. | No reversible error; affidavit struck for delay and lack of notice. |
| Whether Pekin owed a duty to defend under eight corners with potential extra-pleaded facts. | Amended complaint’s allegations could fall within policy coverage. | Facts outside the complaint known to Pekin should not create coverage. | Eight-corners rule with exceptions; no duty to defend given lack of potentially covered allegations. |
| Whether the delay in notifying the insurer breached the policy’s notice provision. | Koopman’s facts related to potential coverage should have been disclosed. | Notice was timely; disclosure was not required until later. | Breach of notice provision; aff. properly stricken; no duty to defend. |
| Whether the amended complaint’s allegations create advertising or personal-injury coverage. | Allegations that Precision Dose began operating Xactdose’s factory could trigger coverage. | Allegations do not plausibly describe advertising injury or personal injury under policy terms. | Amendment did not allege covered injuries; no duty to defend. |
Key Cases Cited
- Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (2010) (eight corners rule and qualifiers for extra-evidence is allowed)
- Shriver Insurance Agency v. Utica Mutual Insurance Co., 323 Ill. App. 3d 243 (2001) (true-but-unpleaded-facts doctrine limits insurer duties)
- Country Mutual Insurance Co. v. Livorsi Marine, Inc., 222 Ill. 2d 303 (2006) (notice provisions are prerequisites to coverage; timely notice required)
- Konstant Products, Inc. v. Liberty Mutual Fire Insurance Co., 401 Ill. App. 3d 83 (2010) (eight corners with exceptions; consider extraneous evidence cautiously)
- Envirodyne Engineers, Inc., 122 Ill. App. 3d 301 (1983) (declaratory actions may consider extrinsic evidence not determining underlying action)
- Ainsworth Seed Co. v. Millers Mutual Insurance Ass’n, 194 Ill. App. 3d 888 (1989) (ambiguous pleadings may warrant clarification but here not applicable)