The opinion of the court was delivered by: Hon. Harry D. Leinenweber
MEMORANDUM OPINION AND ORDER
Presently before the Court are Cross-Motions for Summary Judgment in Plaintiff's suit for declaratory judgment. For the following reasons, the Defendant's Motion is DENIED. The Plaintiff's Motion is GRANTED in part and DENIED in part, as explained below.
A. Fraudulent Sales at Taylor Chrysler Dodge, Inc.
Plaintiff Taylor Chrysler Dodge, Inc. (hereinafter, "Taylor"), an automobile dealership located in Kankakee, Illinois, is in the business of selling new and used vehicles. Pl.'s Statement of Facts ("Pl.'s SOF") ¶¶ 1, 6. To facilitate these sales, Taylor has agreements with several lending institutions, including Fifth Third Bank ("Fifth Third"), that provide the option of financing to customers. Def.'s Statement of Facts ("Def.'s SOF") ¶ 5.
The current action arises out of Taylor's insurance claim for financial liabilities resulting from the dishonest activities of its former employee, Kendall Gardner ("Gardner"). Gardner worked for Taylor as a salesperson from September 2006 until March 2007. Pl.'s SOF ¶ 15. During that time, unbeknownst to his employer, Gardner identified customers whom he knew or suspected had poor credit histories and could not obtain legitimate financing through Fifth Third. Pl.'s SOF ¶ 36. In exchange for cash payments, Gardner obtained false documents and identification, including Social Security numbers, diplomas, and employment documentation, and used these documents to assist fifteen customers in obtaining financing from Fifth Third for the purchase of cars. Pl.'s SOF ¶ 37. Fifth Third financed these cars for approximately $370,428. Pl.'s SOF ¶ 17. At the time of purchase, Taylor was paid in full by each customer and by Fifth Third. Pl.'s SOF ¶ 18.
On April 2, 2007, the United States Secret Service notified Taylor that it was investigating Gardner for identity theft during his prior employment at another dealership. Pl.'s SOF ¶ 21; Def.'s SOF ¶ 19. Upon request, Taylor supplied the Secret Service with information regarding Gardner's transactions at Taylor. During the next few weeks, Taylor learned that Gardner had assisted fifteen customers in financing the purchase of cars from Taylor by submitting fraudulent information. Def.'s SOF ¶¶ 20, 22; Pl.'s SOF ¶ 23.
In June and July 2007, after the circumstances regarding Gardner's misconduct at Taylor came to light, Fifth Third and the Illinois State Police seized and repossessed the fifteen cars, and Fifth Third released the cars to Taylor for the purpose of sale at an auction in order to recover the fraud loss. Pl.'s SOF ¶¶ 25; Def.'s SOF ¶ 24. In August 2007, Taylor agreed to pay the proceeds that it would receive from the auction to Fifth Third to be applied to the outstanding loan balance, which totaled $370,428. Pl.'s SOF ¶¶ 17,27-29. On August 15, 2007, Taylor sold twelve of the cars at the auction, and the remaining three cars were sold afterwards. Pl.'s SOF ¶ 28. Sales of the fifteen cars totaled approximately $197,367. Def.'s SOF ¶ 26. Taylor paid the remainder of the loan balance, approximately $173,061, to Fifth Third, in three installments. Def.'s SOF ¶ 27.
During the relevant time period, Taylor was covered by a UNICOVER insurance policy (the "Policy") issued by Defendant Universal Underwriters Insurance Company (hereinafter, "Universal"). Pl.'s SOF ¶ 7; Def.'s SOF Ex. F. The Policy, described in further detail below, includes coverage for certain losses resulting from certain acts of employee dishonesty, including theft and forgery.
On April 27, 2007, Taylor informed Universal of a potential employee dishonesty claim under the Policy related to Gardner's fraudulent sales. Pl.'s SOF ¶ 23. On May 24, 2007, Universal sent Taylor a letter providing certain information and procedures regarding the potential claim and discussing the "Proof of Loss" form that Taylor would have to fill out to substantiate its claim. Pl.'s SOF ¶ 24. The letter discussed Taylor's "duties after loss" and advised Taylor that, "Material documents supporting your claim should be attached to your Proof of Loss form. Your documentation should substantiate all available facts material to your claim as well as the amount of loss sustained." Pl.'s SOF, Tab 1, Ex. A. In a letter dated August 3, 2007, Universal reminded Taylor that it had not yet received the Proof of Loss and other documents required to proceed with handling the claim. Def.'s SOF ¶ 32.
On August 30, 2007, Taylor submitted to Universal the Proof of Loss form, which provided details regarding the sales of the fifteen cars and the total amount of the loss. Pl.'s SOF ¶ 32. In a written notice dated October 1, 2007, Universal denied coverage to Taylor for its claim. Universal explained that it could not conclude that Taylor had sustained a loss due to employee "theft" as defined in the Policy. Pl.'s SOF ¶ 33; Def.'s SOF ¶ 35. Universal affirmed its decision on May 27, 2008. Pl.'s SOF ¶ 42. On August 13, 2008, Taylor filed its Complaint in this case, obligations with regard to acts of employee dishonesty:
1. EMPLOYEE THEFT OR FORGERY.
We will pay for loss resulting from theft or forgery committed by an employee, whether identified or not.
We will pay for loss sustained by a third party and resulting directly from theft or forgery by your employee, for which loss you are held legally liable.
Pl.'s SOF ¶ 9; Def.'s SOF Ex. F. "Theft" is defined as "the unlawful taking of money, securities or other property to the deprivation of the insured." Pl.'s SOF ¶ 9; Def.'s SOF Ex. F.
In regard to "Vicarious Liability" under "Employee Dishonesty," "theft" is defined as "an employee unlawfully taking money, securities or other property to the deprivation of someone other than [the ...