Appeal from the Circuit Court of Cook County. No. 97 CH 6935 The Honorable Michael B. Getty, Judge Presiding
The opinion of the court was delivered by: Justice Greiman.
MODIFIED OPINION UPON DENIAL OF REHEARING
Westchester Fire Insurance Co. (Westchester) filed a declaratory judgment action against G. Heileman Brewing Co. (Heileman), seeking a finding that it had no duty to defend an action filed in California by a number of Heileman distributors. The trial court granted Heileman's motion for summary judgment. The court, applying California law, found that Westchester had breached its duty to defend; was obligated to indemnify Heileman for the judgment amount in the underlying action; and was liable for all costs and attorney fees incurred in defending that suit and this declaratory action. Westchester appeals, arguing that (1) Illinois law applies; (2) it had no duty to defend Heileman in the underlying action; (3) it did not breach its duty to defend; (4) it should not be estopped from denying coverage; (5) Heileman is not entitled to attorney fees and costs incurred prior to tendering the underlying action; (6) Westchester is entitled to a credit for sums recovered by Heileman from another insurer; and (7) Heileman is not entitled to attorney fees and costs incurred in defending this declaratory action.
On February 26, 1993, Rausser Distributing Co. and other Heileman distributors filed suit against Heileman, Logret Import & Export Co. (Logret), and Dan McKinney Co.(McKinney) in the United States District Court for the Northern District of California. The complaint alleged that the plaintiffs entered into a contract with Heileman which granted them the exclusive right to distribute designated Heileman beer products in a defined geographic area. Count I alleged that defendants violated section 1 of the Sherman Act (15 U.S.C.A. §1 (West 1992)) by conspiring as early as May 1992 to fix the wholesale price of Heileman beer products. Count II alleged that Heileman violated section 13(d) of the Robinson-Patman Act (15 U.S.C.A.§13(d) (West 1992)) by making "discriminatory payments" to Logret and McKinney for services and facilities they furnished in connection with the processing, handling, and sale of Heileman beer products. Count III alleged breach of contract; Count IV alleged that Heileman violated section 17043 of the California Unfair Practices Act (Cal. Bus. & Prof. Code §17043 (West 1992)) by selling its beer products below cost to retail stores; Count V alleged intentional interference with the contract; Count VI alleged that Heileman violated section 17045 of the California Unfair Practices Act (Cal. Bus. & Prof. Code §17045 (West 1992)) by making secret discriminatory payments to Logret and McKinney; and Count VII alleged that Heileman violated section 13(a) of the Robinson-Patman Act (15 U.S.C.A. §13(a) (West 1992)) by extending lower prices to Logret and McKinney than the prices extended to the plaintiffs. Plaintiffs alleged that the complained-of conduct was continuous and ongoing. Plaintiffs further alleged economic damages caused by the loss of retail store customers, profits associated with sales from those stores, and the diminished fair market value of their exclusive distribution rights.
Thereafter, on August 5, 1994, Westchester issued a Commercial Umbrella Policy CUA-100126-0 (initial policy) to Hicks, Muse, Tate & Furst, Inc., Heileman's parent company, for the period of April 1, 1994, to April 1, 1995. The policy named Heileman and over 50 other companies as insureds. The policy was issued in St. Louis, Missouri. Westchester's authorized representative was listed as The London Agency, Inc., of Atlanta, Georgia. On June 6, 1995, Westchester issued a second Commercial Umbrella Policy CUA-101635-0 (renewal policy) to Hicks, Muse for the period of April 1, 1995 to April 1, 1996. The policy named Heileman and over 100 other companies as insureds. The policy was issued in Dallas, Texas. Westchester's authorized representative was listed as Tri-City Brokerage of Illinois, Inc., of Chicago, Illinois. Some of the companies listed as insureds by the policies were Heileman subsidiaries. The policies provided that Westchester is licensed to do business in all states.
We will pay on behalf of the 'Insured' those sums in excess of the 'Retained Limit' which the 'Insured,' by reason of liability imposed by law, or assumed by the "Insured" under contract prior to the 'Occurrence,' shall become legally obligated to pay as damages for *** 'Personal Injury' caused by an offense committed during the 'Policy Period' ***.
(1) We shall have the right and duty to defend any 'Claim' or 'Suit' seeking damages covered under the terms and conditions of this policy when:
(b) Damages are sought for 'Bodily Injury', 'Property Damage', 'Personal Injury', or "Advertising Injury" which are not covered by 'Underlying Insurance' or other insurance." The policies also contained the following definitions:
(1) An accident, including continuous or repeated exposure to substantially the same general harmful conditions, that results in 'Bodily Injury' or 'Property Damage' that is not expected or not intended by the 'Insured.'
All damages that arise from continuous or repeated exposure to substantially the same general conditions are considered to arise from one 'Occurrence.'
(2) An offense that results in 'Personal Injury.'
All damages that arise from exposure to the same act, publication or general conditions are considered to ...