Appeal from the Circuit Court of the 14th Judicial Circuit, Rock Island County, Illinois 96--MR--191 Honorable Charles H. Stengel and Martin E. Conway, Judges, Presiding
The opinion of the court was delivered by: Justice Thomas Homer
This appeal arises out of a declaratory judgment action brought by Aetna Casualty and Surety Co. (Aetna) against its insured, O'Rourke Bros., Inc. (O'Rourke), seeking to determine insurance coverage. O'Rourke filed a counter-complaint against Aetna and brought a third- party complaint against American Manufacturers Mutual Insurance Co. (American Manufacturers), another insurer of O'Rourke, seeking declaratory judgment. All of the parties filed motions for summary judgment. The trial court granted summary judgment in favor of American Manufacturers, finding that it owed O'Rourke no duty to defend or indemnify. The court granted partial summary judgment for Aetna and partial summary judgment for O'Rourke, finding that Aetna had no duty to defend or indemnify O'Rourke under its commercial general liability (CGL) policy but had a duty to defend and indemnify O'Rourke under its commercial excess liability (CEL) policy. The court ordered Aetna to reimburse O'Rourke for the money O'Rourke paid in settlements and further ordered Aetna to pay O'Rourke's attorney fees in the declaratory judgment action. O'Rourke appealed, and Aetna cross-appealed. We affirm in part, reverse in part, and remand.
O'Rourke is a consumer electronics distributor headquartered in Moline, Illinois. In the early 1990s O'Rourke entered into an agreement with American General Finance (AGF) in which AGF agreed to finance satellite systems that O'Rourke sold in Alabama and Mississippi. Pursuant to their agreement, O'Rourke established a credit card purchasing program for its prospective customers. In 1995, O'Rourke was named as a defendant in numerous consumer cases filed in Mississippi and Alabama involving the sale and financing of satellite systems. The complaints in those cases alleged that O'Rourke made misrepresentations to its customers, committed fraud, breached contracts and violated truth-in-lending statutes. The complainants claimed that they suffered mental anguish as a result of O'Rourke's scheme to defraud them. Some of the plaintiffs also claimed that they suffered damage to credit or a fear of damage to credit because of O'Rourke's actions. When the complaints were filed against O'Rourke, O'Rourke sought coverage from its insurers, Aetna and American Manufacturers.
Aetna issued CGL and CEL policies to O'Rourke for the contract periods from January 1, 1993 to January 1, 1994, and January 1, 1994 to January 1, 1995. American Manufacturers issued CGL and CEL policies to O'Rourke for the policy period from December 31, 1994 to December 31, 1995. The CGL policies provided coverage of up to $1 million, and the CEL policies provided coverage of up to $3 million each.
The CGL policies issued by Aetna and American Manufacturers provide coverage for "'personal injury' caused by an offense arising out of your business, excluding advertising, publishing, broadcasting or telecasting done by you *** if the offense was committed in the 'coverage territory' during the policy period." Under the policies, "'[p]ersonal injury' means injury, other than 'bodily injury', arising out of *** oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services." The CGL policies also provide coverage for "bodily injury," which is defined as "injury, sickness or disease sustained by a person, including death resulting from any of these at any time."
The CEL policies issued by Aetna and American Manufacturers provide coverage for specific and defined occurrences not covered by the CGL policies and provide excess coverage when the underlying limits of the CGL policies have been exhausted. The CEL policies issued by Aetna and American Manufacturers provide coverage for "bodily injury," "personal injury" and "advertising injury." "Bodily injury" has the same definition in both American Manufacturer's CEL and CGL policies. Aetna, however, defines "bodily injury" more expansively in its CEL policy to include "shock, fright, mental injury, disability, mental anguish, humiliation, sickness or disease sustained by a person, including death resulting from any of these at any time."
The Aetna CEL policy provides that Aetna will pay on behalf of the insured the "ultimate net loss" in excess of the "applicable underlying limit" which the insured becomes legally obligated to pay as damages because of "bodily injury", "property damage, "personal injury" or advertising injury to which the insurance applies. Under the policy, the "[a]pplicable underlying limit" is the amount stated in the Declarations as the "retained limit." The amount of the retained limit identified in the Declarations page is $10,000 for "any one occurrence or offense." The CEL policy provides that the insurance applies only to bodily injury or property damage that occurs during the policy period that is caused by an "occurrence." The CEL policy defines "occurrence" as "an accident including continuous or repeated exposure to substantially the same general harmful conditions." Aetna's CEL policy specifically excludes coverage for "bodily injury" or "property damage" expected or intended from the standpoint of the insured.
O'Rourke gave notice of the claims to Aetna and American Manufacturers in October 1995, and submitted the complaints to them. Both companies denied coverage. In September 1996, Aetna filed a declaratory judgment action to resolve the coverage issues, and O'Rourke filed a counter-complaint for declaratory judgment against Aetna and a third-party complaint against American Manufacturers. O'Rourke filed a motion for partial summary judgment against Aetna and American Manufacturers. Aetna filed a counter-motion for summary judgment, and American Manufacturers filed a cross-motion for summary judgment.
As a result of these motions, the trial court granted summary judgment in favor of American Manufacturers, ruling that American Manufacturers did not have a duty to defend or indemnify O'Rourke under its CGL or CEL policies. The trial court granted partial summary judgment to Aetna, concluding that it had no duty to defend or indemnify O'Rourke under its CGL policy and granted partial summary judgment to O'Rourke, finding that Aetna had a duty to defend and indemnify O'Rourke under its CEL policy. The court also granted partial summary judgment to O'Rourke against Aetna for any further relief to which O'Rourke may be entitled. The trial court's orders expressly reserved for ruling whether O'Rourke would be entitled to attorney fees and O'Rourke's right of reimbursement for indemnity paid in settlement of the underlying suits subject to the retained limit in the CEL policy, if applicable.
Later, O'Rourke filed a second motion for partial summary judgment seeking reimbursement for attorney fees for the declaratory judgment action and interest on amounts advanced by O'Rourke for defense costs and settlement of certain suits. The trial court granted the motion as to attorneys fees but did not address the issue of interest. O'Rourke filed a third motion for partial summary judgment seeking indemnity for all settlements paid by O'Rourke, and that motion was granted. The court ordered Aetna to pay full reimbursement to O'Rourke for the cases that O'Rourke had settled and precluded Aetna from asserting the retained limit as a coverage defense.
The trial court determined that there was no just reason for delaying enforcement or appeal of the orders, and O'Rourke appealed pursuant to Supreme Court Rule 304(a). 155 Ill. 2d R. 304(a). O'Rourke specifically appealed the court's finding that Aetna and American Manufacturers did not owe a duty to defend or indemnify under their CGL policies. In its cross-appeal, Aetna claims the court erred by (1) finding that Aetna had a duty to defend and indemnify under the CEL policy issued to O'Rourke, (2) holding that the retained limits set forth in the CEL policy was inapplicable to O'Rourke's claims, and (3) granting O'Rourke attorney fees incurred in the declaratory judgment action.
I. Coverage under the CGL policies
This court conducts a de novo review of the trial court's grant of summary judgment. Landeros v. Equity Property & Development, 321 Ill. App. 3d 57, 63, 747 N.E.2d 391, 398 (2001). Although the trial court found that neither Aetna nor American Manufacturers had a duty to defend under their CGL policies, O'Rourke claims that the allegations of damage to credit reputation contained in some of the complaints are sufficient to invoke a duty to defend under both Aetna's and American Manufacturers' GCL policies. O'Rourke argues that the claims of injury to credit reputation establish claims of slander or libel against O'Rourke and, therefore, fall under the ...