APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY HONORABLE RICHARD A. SIEBEL, JUDGE PRESIDING.
The opinion of the court was delivered by: Presiding Justice Hoffman
The Law Offices of Melvin James Kaplan (Kaplan) appeals from a summary judgment entered in favor of its malpractice insurance carrier, Continental Casualty Company (Continental), in Continental's action seeking a judicial declaration that it has no duty to defend Kaplan in an action brought by one of its former clients, or to indemnify Kaplan from any judgment that might be entered in that action. Kaplan also appeals from the denial of its cross-motion for summary judgment. For the reasons which follow, we reverse the judgment of the circuit court and remand this cause with directions to enter a partial summary judgment in favor of Kaplan.
The facts of this case are not in dispute. Continental issued a policy of insurance (hereinafter referred to as the "Policy") pursuant to which it agreed to pay on behalf of Kaplan all sums in excess of the stated deductible that Kaplan "shall become legally obligated to pay as damages and claim expenses because of a claim that is both first made against *** [Kaplan] and reported in writing to *** [Continental] during the policy period by reason of an act or omission in the performance of legal services by *** [Kaplan] or by any person for whom *** [Kaplan] is legally liable ***." The Policy defines "legal services," in relevant part, as "those services performed by an Insured for others as a lawyer." It also states that the term "damages" includes "judgments, awards, and settlements," but that the term does not include, among other things:
"1. legal fees, costs and expenses paid or incurred or charged by *** [Kaplan], no matter whether claimed as restitution of specific funds, forfeiture, financial loss, set-off or otherwise, and injuries that are a consequence of any of the foregoing;
2. civil or criminal fines, sanctions, penalties or forfeitures, whether pursuant to law, statute, regulation or court rule ***;
3. punitive or exemplary amounts;"
The Policy provides that Continental has "the right and duty to defend in *** [Kaplan's] name and on *** [Kaplan's] behalf a claim covered by this Policy even if any of the allegations of the claim are groundless, false or fraudulent."
On January 3, 2001, Cort Chubko, one of Kaplan's former clients, filed a class-action complaint in the Federal District Court for the Northern District of Illinois (hereinafter referred to as the "underlying action"). Chubko's second amended complaint in that action alleged, inter alia: that Kaplan represented him in a proceeding brought pursuant to Chapter 7 of the United States Bankruptcy Code (Code) (11 U.S.C. § 701 et seq. (1998)); that, prior to filing a petition on his behalf, Kaplan required Chubko to sign a retainer agreement for the payment of attorney fees in installments; and that a portion of the fees collected by Kaplan from Chubko after the filing of his bankruptcy petition was for services rendered by Kaplan prior to the filing of the petition. In count I of his second amended complaint, Chubko sought relief against Kaplan for a violation of the automatic stay provisions of section 362 of the Code (11 U.S.C. § 362 (1998)) by reason of Kaplan having collected, after Chubko's bankruptcy petition was filed, fees for services rendered to him prior to the filing of the petition. In count II, Chubko asserted a negligence claim against Kaplan for having failed to obtain a discharge of a pre-petition obligation of his; namely, the fees which he owed Kaplan for pre-petition services. Count III sought a finding of contempt against Kaplan and an award of actual damages, punitive damages and attorney fees predicated upon Kaplan's alleged violation of the injunction imposed under the provisions of section 524(a)(2) of the Code (11 U.S.C. § 524(a)(2) (1998)), prohibiting the collection of a pre-petition debt after discharge. Each of the counts was brought on behalf of Chubko individually and as the putative representative of all similarly situated former clients of Kaplan.
On March 14, 2001, Continental filed the instant action in the circuit court of Cook County, seeking a judicial declaration that it has no duty under the Policy to defend or indemnify Kaplan from the claims made by Chubko in the underlying action. Continental and Kaplan filed cross-motions for summary judgment. The circuit court issued a written Memorandum Opinion and Order wherein it found that all of the claims asserted by Chubko against Kaplan in the underlying action sought recovery for injuries incurred as a consequence of legal fees charged by Kaplan and were, as a result, excluded from coverage under the terms of the Policy. The circuit court granted Continental's motion for summary judgment and denied Kaplan's cross-motion. This appeal followed.
Our resolution of this appeal turns on an analysis of the issue of whether, under the terms of the Policy, Continental is obligated to defend Kaplan in the underlying action. The issue is one of contract construction.
"The construction of an insurance policy and a determination of the rights and obligations thereunder are questions of law for the court which are appropriate subjects for disposition by way of summary judgment." Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 391, 620 N.E.2d 1073 (1993). Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2000); Carruthers v. B.C. Christopher & Co., 57 Ill. 2d 376, 380, 313 N.E.2d 457 (1974). When, as in this case, parties file cross-motions for summary judgment, they concede the absence of a genuine issue of material fact and invite the court to decide the questions presented as a matter of law. Spencer v. Riordan, 240 Ill. App. 3d 938, 944, 608 N.E.2d 432 (1992). Our review, however, is de novo. In re Estate of Hoover, 155 Ill. 2d 402, 411, 615 N.E.2d 736 (1993).
"In construing an insurance policy, the court must ascertain the intent of the parties to the contract. [Citations.] To ascertain the meaning of the policy's words and the intent of the parties, the court must construe the policy as a whole [citations], with due regard to the risk undertaken, the subject matter that is insured and the purposes of the entire contract [citations]. If the words ...