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Village of Schaumburg v. ST. Paul Mercury Insurance Co.

March 23, 2009


The opinion of the court was delivered by: Marvin E. Aspen, District Judge


This dispute hinges on language in an insurance contract entered into between the parties. Plaintiff Village of Schaumburg ("the Village") contends that Defendant St. Paul Mercury Insurance Company ("St. Paul Mercury") breached its contractual duty to defend the Village and its employee in a state-court personal injury action. St. Paul Mercury denies these allegations. The parties have filed cross-motions for summary judgment, each seeking declaratory judgment concerning St. Paul Mercury's obligations under the pertinent contract. For the reasons discussed below, we grant St. Paul Mercury's Motion for Summary Judgment on Phase I Issues and deny the Village's Motion for Partial Summary Judgment.*fn1


St. Paul Mercury issued the Village an insurance policy, numbered GP09300703, which was in effect from October 1, 1999 through October 1, 2000 ("the 1999 Policy"). (Village SOF ¶ 4.) Among other things, the 1999 Policy included a section entitled "Health Care Facility Medical Professional Liability Protection -- Claims Made," providing insurance coverage for potential liability incurred by certain health care professionals ("Health Care Policy").*fn3 (Id. ¶ 5; St. Paul Mercury Resp. to Village SOF ¶ 5; see also St. Paul Mercury Am. SOF, Ex. B, Health Care Policy.)

The Health Care Policy provides that St. Paul Mercury has "the right and duty to defend any claim or suit for covered medical professional injury made or brought against any protected person." (St. Paul Mercury Am. SOF, Ex. B, Health Care Policy at 2.) St. Paul Mercury agreed to do "so even if any of the allegations of any such claim or suit are groundless, false or fraudulent." (Id.) The Health Care Policy defines "medical professional injury" as "injury, including death, to others that results from health care professional services provided, or which should have been provided, by or for a protected person." (Id. at 1.) "Health care professional services" include "mental or other similar health care professional services or treatments." (Id.)

Pursuant to the Health Care Policy, "protected person" refers to "any person or organization who qualifies as a protected person under the Who Is Protected Under This Agreement section." (Id.) That section then states that "[i]f you are named in the Coverage Summary and are a corporation or other organization, you are a protected person." (Id. at 4.) Furthermore, the "employees, students and volunteer workers" providing services for any such corporation or organization "are protected persons only for work done within the scope of their duties for you." (Id.) In this instance, the cover page of the Health Care Policy -- the "Coverage Summary" -- identifies the Village as the "protected person" in a section entitled "Who's Protected Under This Agreement." (Id., Coverage Summary.*fn4

The Coverage Summary includes additional language, however, that proves critical to this litigation. Specifically, the Coverage Summary -- as revised and in its uncontroverted final form -- contains a section entitled "Type of Facility," which appears just above the "Who's Protected Under This Agreement" section. (Id.) The "Type of Facility" section then provides the following notations: "EMTS,"*fn5 followed by the word "Nurses." (Id.) It is undisputed that the terms "Type of Facility," "EMTS" and "Nurses" are not defined in the Health Care Policy. The parties essentially contest the meaning of Health Care Policy, particularly the significance of the "Type of Facility" section.

This dispute over the proper interpretation of the Health Care Policy arose following the tragic death of a young woman who sought mental health care at the Village's Family Counseling Center. (St. Paul Mercury SOF ¶¶ 11-22; Village SOF ¶ 8.) According to the underlying state-court complaint filed by her family, Tiffany Slee engaged in counseling sessions with Larry Frank, a social worker employed by the Village, from October 1996 through November 1998. (Village SOF ¶ 8.) In April 1999, Slee walked out into oncoming traffic, was struck by a car, and died the next day. (St. Paul Mercury SOF ¶¶ 11-13.) On April 3, 2000, plaintiffs in the underlying lawsuit filed their complaint against the Village, Frank and other defendants ("Slee Complaint"), alleging that Frank and the Village breached their duty to Slee because Frank rendered deficient counseling that resulted in her death.*fn6 (Id. ¶¶ 16-17.)

On approximately June 1, 2000, the Village notified St. Paul Mercury of the Slee Complaint. (Id. ¶ 27; Village SOF ¶ 10.) By letter dated June 20, 2000, St. Paul Mercury denied that it owed a duty to defend the Village under any pertinent coverage part of the 1999 Policy, including the Health Care Policy. (St. Paul Mercury SOF ¶¶ 28-30; Village SOF ¶ 12.) On July 31, 2000, the Village responded to St. Paul Mercury's disclaimer of coverage and requested reconsideration of the decision. (St. Paul Mercury SOF ¶ 31; Village SOF ¶ 14.) Nonetheless, St. Paul Mercury reiterated its denial, emphasizing that the Health Care Policy covered only EMT facilities and nurses and that the Village had never explicitly requested coverage for its social workers or other medical professional employees at the Family Counseling Center. (Village SOF ¶ 14; St. Paul Mercury Resp. to Village SOF ¶ 14; see also St. Paul Mercury SOF, Ex. G, 08/22/2000 Ltr.) The Village filed suit in this court on November 27, 2007, seeking a declaration that St. Paul Mercury had a duty to defend the Village and Frank and an award reimbursing the Village for the fees and expenses incurred in its successful defense of the Slee Complaint.


Summary judgment is proper only when "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed R. Civ. P. 56(c). A genuine issue for trial exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). This standard places the initial burden on the moving party to identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986) (internal quotations omitted). Once the moving party meets this burden of production, the nonmoving party "may not rest upon the mere allegations or denials of the adverse party's pleading" but rather "must set forth specific facts showing that there is a genuine issue [of material fact] for trial." Fed. R. Civ. P. 56(e). In deciding whether summary judgment is appropriate, we must accept the nonmoving party's evidence as true, and draw all reasonable inferences in that party's favor. See Anderson, 477 U.S. at 255.


Under Illinois law, which the parties agree governs this dispute, "the interpretation of an insurance policy is a question of law that is properly decided by way of summary judgment." BASF AG v. Great Am. Ins. Co., 522 F.3d 813, 818-19 (7th Cir. 2008); see Rich v. Principal Life Ins. Co., 226 Ill. 2d 359, 370-71, 875 N.E.2d 1082, 1089-90 (Ill. 2007); Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 391, 620 N.E.2d 1073, 1077 (Ill. 1993). As the Illinois Supreme Court has stated:

A court's primary objective in construing the language of an insurance policy is to ascertain and give effect to the intentions of the parties as expressed by the language of the policy. Like any contract, an insurance policy is to be construed as a whole, giving effect to every provision, if possible, ...

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