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General Agents Insurance Company of America, Inc. v. Midwest Sporting Goods Co.

March 04, 2002


The opinion of the court was delivered by: Justice McNulty


Appeal from the Circuit Court of Cook County Honorable Julia M. Nowicki, Judge Presiding

The City of Chicago and Cook County sued a number of gun manufacturers and distributors, including Midwest Sporting Goods, for negligently entrusting guns to inappropriate purchasers and thereby creating a public nuisance. Midwest tendered defense of the lawsuit to its liability insurer, General Agents Insurance Company of America (Gainsco). Gainsco filed this action seeking a judgment declaring that it had no duty to defend or indemnify Midwest. The trial court granted summary judgment in favor of Gainsco and Midwest appeals. We hold that the pattern of sales practices the plaintiffs will need to prove for recovery cannot qualify as an accident within the meaning of the policy. Accordingly, we affirm the judgment of the trial court.

The city and the county alleged in the complaint that during 1998 undercover police officers went to Midwest's store in Cook County to test the measures Midwest took to prevent guns from getting into criminal hands. One officer purchased a Uzi. According to the complaint:

"The sales clerk said that since they could not legally deliver the Uzi to him in Cook County, they would have to write up the purchase order on the forms of the Midwest Sporting Goods' Downers Grove store, and he would have to pick up the firearm at the Downers Grove store. The sales clerk used a blank purchase order with the Downers Grove masthead, and he called the Downers Grove store and asked them to call in his FOID [firearm owners identification card] number. When Officer 1 said that he wanted to purchase a pistol barrel for the Uzi, the sales clerk told him that since it was illegal to put the pistol barrel on the Uzi, he should write up the pistol barrel as a separate purchase from Midwest's Lyons store (the one he was in at the time) rather than the Downers Grove store from which he was technically buying the Uzi. The sales clerk also advised Officer 1 that he should have all of the purchases written up on separate orders so as to avoid ATF [United States Bureau of Alcohol Tobacco and Firearms] scrutiny."

When the officer picked up the Uzi in Downers Grove, a Midwest employee advised him "to put the Uzi in his trunk, because he would be arrested if caught with it in Cook County." The same officer purchased six other guns at Midwest between September 30 and October 24, 1998. He picked up all seven guns between October 19 and November 5, 1998.

A second undercover officer asked a Midwest sales clerk to help her find a concealable but powerful gun to keep at her Chicago address. The clerk told her it was illegal to carry a handgun in Chicago, and that 90% of the store's customers came from Chicago. The officer chose two guns. The clerk advised her to order the firearms separately, and pick them up separately, so that the store would not need to inform ATF of a multiple purchase.

That same officer on another occasion purchased a gun for another undercover officer, who accompanied her to the store and paid the clerk for the gun. Midwest's sales clerk did not ask for the paying officer's identification, and registered the sale to the non-paying officer's FOID number.

The complaint explained that "straw" purchases, by one person for the benefit of another (who usually cannot legally purchase a firearm), contribute disproportionately to crime. An officer observed customers unaffiliated with the police make such a straw purchase from Midwest.

The city and the county further allege that Midwest sells guns to Chicago residents who indicate that they will use or possess the guns in violation of Chicago ordinances. Midwest sells guns even to customers who show that they intend to transfer the guns, illegally, to other persons. From data Midwest receives from ATF, Midwest knows that multiple sales of firearms and sales to Chicago residents create a substantially greater likelihood of criminal use and possession of the firearms sold.

According to the complaint, Midwest "intentionally and recklessly facilitates the illegal possession and use of firearms" with the advice it gives to Chicago customers and customers purchasing more than one gun. Midwest and the other gun dealers "know that many of the firearms they sell *** will be obtained by persons who will use *** their firearms illegally." The multiple sales to straw purchasers from Chicago "unreasonably facilitate violations of City ordinances, and contribute to physical harm *** to Chicago residents."

The city and the county seek injunctions and damages, including costs of emergency medical services and the "Bureau of Health's costs to treat victims of firearms violence," estimated to exceed $50,000,000 for the period from 1994 through 1998.

Gainsco agreed to defend Midwest against any claim for bodily injury caused by an occurrence in the policy period. An "occurrence" is "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The policy also included an Expected or Intended Injury Exclusion, which states:

"This insurance does not apply to and no duty to defend is provided by us for 'bodily injury' or 'property damage' arising from an intentional act whether or not the resultant 'bodily injury' or 'property damage' was intended or expected from the standpoint of the insured."

After Midwest filed its answer to the complaint for declaratory judgment, Gainsco moved for summary judgment. Gainsco argued that the complaint did not allege an occurrence, within the meaning of the policy, and the Expected or Intended Injury Exclusion precluded coverage. Midwest answered that the city's complaint alleged occurrences in both the public nuisance and ...

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