Standard Mutual Insurance Co. v. Lay
2013 IL 114617
Ill.2013Background
- Lay, a real estate agency in Illinois, was sued under the TCPA for sending unsolicited faxes via a third-party broadcaster in 2006.
- A class action settled for $1,737,500, with the judgment to be satisfied from Lay's insurance only, not Lay's noninsurance assets.
- Standard Mutual Insurance Company defended Lay under a reservation of rights and filed a declaratory judgment action seeking no duty to defend or indemnify.
- Lay assigned to Locklear its claims against Standard and Locklear sought coverage under Lay's policies.
- The circuit court granted summary judgment for Standard; the appellate court affirmed in part and reversed in part; the case was brought to the Illinois Supreme Court.
- The Supreme Court held that TCPA damages are remedial, not punitive, and addressed estoppel and coverage defenses with remand on remaining issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Standard estopped from asserting policy defenses? | Locklear contends Standard’s reservation letter was insufficient to inform Lay of defenses. | Standard argues adequate reservation of rights informed Lay of potential defenses and conflicts. | Not estopped; reservation letter adequate and Lay knowingly accepted defense. |
| Are TCPA damages insurable under Lay's policies? | Locklear asserts TCPA damages are insurable as remedial and not punitive. | Standard contends damages may be punitive and thus uninsurable under policy terms. | TCPA damages are remedial, not punitive; insurability unresolved and remanded for further consideration. |
| What is the proper characterization of TCPA damages for insurance coverage purposes? | Locklear argues damages are not punitive and should be treated as insurable under Illinois law. | Standard asserts potential punitive nature would exclude coverage. | Remanded to appellate court for further consideration of remaining issues. |
Key Cases Cited
- Nicor, Inc. v. Associated Electric & Gas Insurance Services Ltd., 223 Ill. 2d 407 (2006) (contract interpretation governs insurance policy construction)
- Landis v. Marc Realty, L.L.C., 235 Ill. 2d 1 (2009) (test for punitive damages; remedy considerations)
- Williams v. Staples, 208 Ill. 2d 480 (2004) (statutory interpretation framework)
- TRW Inc. v. Andrews, 534 U.S. 19 (1992) (statutory construction and remedial purpose principles)
- Universal Underwriters Insurance Co. v. Lou Fusz Automotive Network, Inc., 401 F.3d 876 (8th Cir. 2005) (remedial nature of TCPA damages; damages as incentive and remediation)