Appeal from the Circuit Court of Cook County No. 98 CH 15583 The Honorable Lester D. Foreman Judge Presiding.
The opinion of the court was delivered by: Justice Tully
Plaintiff, HPF, L.L.C. (HPF), filed a declaratory judgment action against its general liability insurance company defendant, General Star Indemnity Company (General Star), to determine the rights of the parties under a commercial general liability policy (CGL) issued by General Star to HPF. HPF sought a declaration that General Star was obligated to defend and indemnify HPF for costs and attorney fees incurred in defending an action filed against HPF by Robert L. Day (Day), in the superior court of San Francisco County, California. The parties cross-moved for summary judgment. Summary judgment was granted in favor of HPF and the trial court awarded HPF damages in the amount of $317,779.04, plus post-judgment interest.
On appeal, General Star contends that the trial court erred in granting summary judgment in favor of HPF because the underlying Day action did not allege and did not seek damages for bodily injury. General Star further contends that the California statutes under which Day sued did not provide a remedy for bodily injury.
The following facts are relevant to this appeal. HPF is a distributor of herbal dietary supplement products. In 1997, HPF's product line included two herbal combinations called Herbal Phen-Fen and Herbal Phen-Fen Stage 2.
On November 19, 1997, Robert Day filed a lawsuit against HPF in the superior court of San Francisco County, California. Day's lawsuit was brought pursuant to a California statute which permits a plaintiff to sue on behalf of the general public. The Day lawsuit alleged that HPF violated various California statutes through the unlawful labeling, distribution and promotion of Herbal Phen-Fen and Herbal Phen-Fen Stage 2 as treatments for obesity. *fn1 Day alleged that in a letter dated November 5, 1997, the Food and Drug Administration informed HPF that because HPF was representing its products as a "natural alternative" to the prescription drugs commonly known as Fen-Phen, HPF was representing its products as treatments for obesity. As such, the HPF products are considered drugs as defined in the Federal Food, Drug and Cosmetic Act and may not legally be marketed in the United States without approved new drug applications.
The Day complaint alleged that HPF violated the California statutes in the following ways: (1) HPF misbranded Herbal Phen-Fen and Herbal Phen-Fen Stage 2 because their labeling was false and misleading and failed to bear adequate directions for use; (2) HPF unlawfully marketed new drugs which had not been approved by the FDA; (3) HPF's labeling of its products was false and misleading as it suggested that the products were recognized as safe and effective for the intended use when they were not; (4) HPF made assertions of fact which were false when it represented that its products were effective and safe and posed no health risks; (5) HPF misrepresented the quality and nature of its products and failed to disclose that these products had not been proven safe and effective for the treatment of obesity. The Day complaint sought equitable relief in the form of an injunction against HPF to (1) restrain HPF from selling and distributing their Herbal Phen-Fen products in California; (2) disgorge all monies acquired; (3) restrain HPF from continuing to misrepresent its Herbal Phen-Fen products; (4) force HPF to undertake a public information campaign to warn and inform consumers that HPF Herbal Phen-Fen products have not been proven either safe or effective in the treatment of obesity; (5) force HPF to make restitution to consumers of the product; and (6) establish a fund for medical monitoring of all persons who used HPF's Herbal Phen-Fen products.
HPF tendered its defense of the Day complaint to General Star. However, General Star denied it had a duty to defend or indemnify HPF in the Day action because the Day complaint did not seek damages for "bodily injury". HPF ultimately settled the Day action.
HPF filed its complaint against General Star for a declaratory judgment and both parties subsequently moved for summary judgment. The trial court granted HPF's motion for summary judgment finding that the underlying Day action sought damages for bodily injury in that it sought to establish a fund for medical monitoring of all persons who used HPF's herbal products. The trial court ruled that General Star breached its duty to defend and awarded damages to HPF. This appeal followed.
Summary judgment is appropriate where, when viewed in the light most favorable to the non-moving party, the pleadings, depositions, affidavits, and admissions on file show there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2000); Sollami v. Eaton, 201 Ill.2d 1, 6-7, 772 N.E.2d 215 (2002). Our review of a grant of summary judgment is de novo. Villarreal v. Schaumburg, 325 Ill.App.3d 1157, 1160, 759 N.E.2d 76 (2001).
In determining whether an insurer has a duty to defend its insured, the court must look to the allegations in the underlying complaint and compare them to the relevant provisions of the insurance policy. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 107-08, 607 N.E.2d 1204 (1992). If the underlying complaint alleges facts within or potentially within policy coverage, the insurer is obliged to defend its insured even if the allegations are groundless, false, or fraudulent. United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill.2d 64, 73, 578 N.E.2d 926 (1991). An insurer may not justifiably refuse to defend an action against its insured unless it is clear from the face of the underlying complaint that the allegations fail to state facts which bring the case within, or potentially within, the policy's coverage. Wilkin, 144 Ill.2d at 73. Moreover, if the underlying complaint alleges several theories of recovery against the insured, the duty to defend arises if only one such theory is within the potential coverage of the policy. Wilkin, 144 Ill.2d at 73.
The General Star commercial general liability insurance policy issued to HPF provides in pertinent part:
"Bodily injury and property damage liability. We will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies. We will have the right and duty ...