Appeal from the Circuit Court of Cook County. No. 04 CH 20705 Honorable Sophia Hall, Judge Presiding.
The opinion of the court was delivered by: Justice Robert E. Gordon
The issue presented in this case is whether defendant Liberty Insurance Underwriters, Inc. (Liberty), had a duty to defend its insured, plaintiff Andreou & Casson, Ltd. (A&C), a law firm, and their representatives, Frank Andreou, Luke Casson, and Frank Kosturos, in an underlying suit filed by Dana Kurtz (Kurtz) alleging, among other things, defamation. On March 24, 2003, Kurtz, an attorney, filed a complaint against A&C and their representatives alleging that she had been ousted from the firm, where she had been a partner, and that after being ousted, A&C and its various representatives "publicly disparaged her professionalism and integrity." On March 25, 2003, A&C tendered its defense of the Kurtz suit to Liberty, which refused the tender of defense and denied coverage on March 31, 2003. On October 27, 2004, A&C retendered the defense of the Kurtz suit to Liberty, and it again refused the tender claiming no coverage. On December 13, 2004, A&C filed a declaratory action in the chancery division of the circuit court of Cook County seeking, among other things, a declaration that Liberty had a duty to defend A&C in the Kurtz suit. On August 28, 2006, the trial court granted Liberty's motion for summary judgment finding that the Kurtz suit was not covered under the Liberty policy, and Liberty therefore had no duty to defend.
1. The Underlying Lawsuit
On March 24, 2003, Dana Kurtz filed a complaint against A&C alleging that A&C and its representatives "publicly disparaged her professionalism and integrity." The following summary of events leading to the filing of Kurtz's complaint is based, in part, on the allegations in her complaint. Kurtz v. Andreou & Casson, Ltd., No. 03 CH 5433 (Cir. Ct. Cook Co.).
According to Kurtz's complaint, Kurtz was "a young attorney induced to join a partnership based on representations that were false and intended ultimately to deprive her of her attorneys' fees from several lucrative cases." Specifically, Kurtz alleged that on August 3, 2002, "she entered into a verbal agreement with Andreou and Casson to join the firm of [A&C]" under certain conditions, including the condition that she would be an equal partner in all respects and that the firm name would be changed to include her own. According to the complaint, Kurtz accepted the offer. Kurtz "moved her law practice to [A&C's] place of business, joined the Partnership and practiced law with [A&C] and deposited all proceeds of her practice into the Partnership's firm account."
Kurtz alleged that from March 8, 2003, though March 15, 2003, Andreou and Casson breached the partnership agreement and engaged in various acts of wrongful conduct, including breach of fiduciary duties, fraud, disparagement, defamation, and humiliation. The Kurtz complaint stated further:
"39. On March 17, 2003 Defendant CASSON filed a pleading in the District Court of the Northern District of Illinois falsely alleging that [Kurtz] 'removed several files from the offices of [A&C] and falsely [stated] that [Kurtz] was in possession of 'all relevant documentation, pleadings, and other written material which [was] required to respond to the motion' when in fact the [subject] files were in the possession of [A&C].
41. At the time that they filed the false pleading, Defendants CASSON and ANDREOU were perfectly aware that [Kurtz] had certain documents from the file (namely discovery answers) because she had been previously working on [a] summary judgment response, as she had advised them.
42. That same day, Defendant CASSON called [Kurtz's] long-standing clients and made false representations that [Kurtz] had not filed anything with the Court on the clients' case, when in fact [Kurtz] had filed an appropriate motion.
44. Defendants' statements and action were committed with the intent and effect *** to damage [Kurtz's] reputation ***.
50. [Kurtz] has protectable interests in not having her reputation and character impugned ***.
52. Further, [Kurtz] has already suffered *** as a direct and proximate result of [A&C's] false and defamatory statements *** and she has suffered injury to her reputation by [A&C's] false and defamatory statements.
91. [Kurtz] has suffered *** damage to her reputation in the legal community ***.
100. On March 17, 2003, Defendant CASSON called [Kurtz's] longstanding clients and made false representations that [Kurtz] had not filed anything with the Court on the clients' cases when in fact [Kurtz] had filed an appropriate motion."
At the underlying trial, A&C claimed that Kurtz was an employee of A&C, had never been a partner, and had been terminated ...