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Pace Communications Services Inc., Individually and As the Representatives of A Class of v. Express Products

March 22, 2011

PACE COMMUNICATIONS SERVICES INC., INDIVIDUALLY AND AS THE REPRESENTATIVES OF A CLASS OF SIMILARLY SITUATED PERSONS, PLAINTIFFS AND CITATION PETITIONERS- APPELLEES,
v.
EXPRESS PRODUCTS, INC., DEFENDANT



Appeal from the Circuit Court CORPORATION and TUNICA PHARMACY, of Lake County. No. 04-L-1043 Honorable (Cumberland Mutual Fire Insurance Company, ) David M. Hall, Citation Respondent-Appellant. Judge, Presiding.

The opinion of the court was delivered by: Justice Bowman

JUSTICE BOWMAN delivered the judgment of the court, with opinion. Justices Zenoff and Birkett concurred in the judgment and opinion.

OPINION

The circuit court of Lake County entered an agreed order between plaintiffs, Pace Communications Services Corporation and Tunica Pharmacy, Inc., and defendant, Express Products, Inc., providing for a monetary judgment against defendant that could be satisfied only through the collection of the proceeds of any applicable liability insurance policy. Plaintiffs then issued a citation to discover assets against citation respondent, Cumberland Mutual Fire Insurance Company (Cumberland), an insurer of defendant. Cumberland moved to dismiss the citation, arguing in part that a nationwide coverage clause within the liability policy it issued to defendant was an insufficient basis for the court's exercise of personal jurisdiction over it. Cumberland also sought dismissal based on improper service. The trial court denied Cumberland's motion. We granted Cumberland's petition for leave to appeal under Supreme Court Rule 306(a)(3) (Ill. S. Ct. R. 306(a)(3) (eff. Sept. 1, 2006)), and we now affirm the trial court's judgment.

I. BACKGROUND

Defendant is a Pennsylvania corporation with its principal place of business also located in Pennsylvania. Cumberland is a New Jersey corporation with offices in New Jersey, Pennsylvania, Maryland, and Ohio. Cumberland issues policies for fire loss and commercial general liability, insuring property and businesses in the states of New Jersey, Pennsylvania, Maryland, and Delaware. Cumberland issued defendant sequential annual liability policies covering the period from April 26, 2001, to April 26, 2003. The policies both contain the same material terms and provide a general aggregate limit of $2 million; a personal and advertising injury limit of $1 million; a per-occurrence limit of $1 million; and other limits not relevant here. The policies state that Cumberland "will have the right and duty to defend the insured against any 'suit' " seeking damages covered by the policies if the injury or offense took place in the " 'coverage territory,' " the definition of which includes the "United States of America."

Plaintiffs filed a class action complaint against defendant in December 2004 alleging that it violated provisions of the Telephone Consumer Protection Act of 1991 (47 U.S.C. §227 (2000)) by faxing unsolicited advertisements to persons and companies in Illinois and other states, without the recipients' consent. As amended, the complaint alleged improper faxes between the dates of February 2002 and October 2004. Defendant tendered its defense to Cumberland and another insurance company. Cumberland initially took the position that it had no obligation to defend or indemnify defendant, but it later agreed to defend under a reservation of rights. Cumberland and the other insurance company filed actions in Pennsylvania seeking declarations that they had no obligation to defend or indemnify defendant.

On October 13, 2009, the Lake County circuit court entered an agreed order whereby judgment was entered in favor of plaintiffs, as representatives of a class of similarly situated persons, and against defendant for $7,999,999.96. The settlement provides that the judgment can be satisfied only from the proceeds of defendant's insurance policies.

Also on October 13, plaintiffs caused a citation to discover assets to be issued on Cumberland via the Illinois Department of Insurance.

On November 12, 2009, Cumberland filed a motion to dismiss the citation, pursuant to section 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 2008)). Cumberland argued that: (1) it was not a resident of Illinois and not subject to the personal jurisdiction of Illinois courts; (2) plaintiff did not properly serve it with the citation; and (3) there were prior-filed suits pending between the same parties for the same cause of action.

Plaintiffs filed an amended citation on May 26, 2010. On May 28, 2010, plaintiffs served the citation on the Department of Insurance and on Cumberland directly via certified mail.

On June 29, 2010, the trial court denied Cumberland's motion to dismiss. It found that Illinois courts had personal jurisdiction over Cumberland based on the nationwide-territory-of-coverage clause in the insurance policies. It also found that plaintiffs' service of process on Cumberland complied with the requirements of section 123 of the Illinois Insurance Code (Insurance Code) (215 ILCS 5/123 (West 2008)), and it further granted plaintiffs leave to file a third citation.

Last, the trial court found that the Pennsylvania lawsuits did not involve the same parties, because plaintiffs were not a part of those suits.

Plaintiffs filed a third citation on July 27, 2010, and served it directly on Cumberland on August 2, 2010.

On July 26, 2010, Cumberland sought leave to appeal the trial court's decision finding personal jurisdiction over it. We ...


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