2014 IL App (2d) 121238
Ill. App. Ct.2014Background
- The John T. Doyle Trust (with trustees Kevin, Michael, and Pamela Doyle) leased second-floor studio/storage space to tenant Christian K. Narkiewicz-Lane. In 2010 the Doyles sold the building and removed Christian’s personal items without his permission.
- Christian sued the Doyles in federal court alleging, inter alia, wrongful eviction under the Illinois Forcible Entry and Detainer Act, conversion, and a claim under the Visual Artists Rights Act for destruction of artwork.
- The Doyles tendered defense and indemnity to their insurer, Country Mutual, which denied coverage. The Doyles sued Country Mutual in state court seeking a declaratory judgment that the insurer had a duty to defend/indemnify and sought sanctions under 215 ILCS 5/155 for allegedly vexatious refusal to defend.
- Country Mutual argued the federal complaint did not plead covered "bodily injury, property damage, or personal and advertising injury," and that policy exclusions (breach of contract; expected/intended injury) barred coverage.
- The trial court granted the Doyles’ motion for judgment on the pleadings, holding Country Mutual had a duty to defend; it denied the Doyles’ motion for section 155 sanctions. Both sides appealed; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Country Mutual had a duty to defend the Doyles in the federal suit | The policy’s "personal and advertising injury" expressly includes "wrongful eviction," which covers allegations that the Doyles evicted Christian and disposed of his property | The pleadings did not allege covered "bodily injury," "property damage," or "personal and advertising injury;" if eviction were covered, policy exclusions (breach of contract; expected/intended injury) nonetheless bar coverage | Duty to defend exists: "wrongful eviction" in the policy reasonably encompasses dispossession/harm to tenant’s personal property, so insurer owed a defense; exclusions did not clearly or unambiguously exclude that claim |
| Whether the breach-of-contract exclusion defeats coverage for a lease-related wrongful eviction | Wrongful eviction is covered by the policy language; the breach-of-contract exclusion is not sufficiently clear to bar coverage of lease-related evictions | Excluding breach-of-contract claims (leases are contracts) should bar coverage for wrongful eviction arising from a lease breach | Exclusion ambiguous or not sufficiently specific; because reasonable interpretations favor coverage, exclusion does not defeat duty to defend |
| Whether the "expected or intended" exclusion applies | N/A (insurer argued it) | The eviction and disposal of property were expected/intended acts, so excluded | Court found a competing reasonable interpretation existed that would allow coverage; construed against insurer, exclusion did not justify denial of defense |
| Whether section 155 sanctions were appropriate | Doyles: insurer’s denial was unreasonable and vexatious, warranting attorney fees | Country Mutual: had a bona fide dispute (reasonable basis) to deny coverage, so sanctions are not appropriate | Trial court did not abuse discretion in denying sanctions — insurer had a bona fide basis to challenge coverage (e.g., Allstate v. Amato reasoning) |
Key Cases Cited
- Pipefitters Welfare Educational Fund v. Westchester Fire Ins. Co., 976 F.2d 1037 (7th Cir.) (defines "eviction" as landlord actions to deprive tenants of right to occupy)
- Allstate Ins. Co. v. Amato, 372 Ill. App. 3d 139 (Ill. App.) (policy language may unambiguously limit personal-injury terms to persons rather than property)
- Gillen v. State Farm Mut. Auto. Ins. Co., 215 Ill. 2d 381 (Ill.) (ambiguities in insurance policies must be construed in favor of the insured)
- Employers Ins. of Wausau v. Ehlco Liquidating Trust, 186 Ill. 2d 127 (Ill.) (where competing reasonable interpretations exist, court construes policy for insured)