Appeal from the Circuit Court of Cook County No. 09 CH 15303 Honorable Stuart E. Judge Presiding.
The opinion of the court was delivered by: Justice Karnezis
JUSTICE KARNEZIS delivered the judgment of the court, with opinion. Presiding Justice Hoffman and Justice Hall concurred in the judgment and opinion.
¶ 1 Plaintiff-appellant Pekin Insurance Company appeals from an order of the circuit court in favor of defendants-appellees XData Solutions, Inc., and Targin Sign Systems, Inc., finding that Pekin had a duty to defend and indemnify XData in an underlying class action lawsuit filed by Targin. On appeal, Pekin contends: (1) it had no duty to defend XData in the underlying lawsuit because the "advertising injury" provision in the insurance policy did not apply to alleged violations of the Telephone Consumer Protection Act (TCPA) (47 U.S.C. § 227 (2006)); (2) it had no duty to defend XData because the "property damage" and "occurrence" provisions in the insurance policy did not apply to intentional acts; and (3) it had no duty to indemnify XData for the settlement amount because XData violated the insurance policy's "voluntary payments" provision.
¶ 3 On December 19, 2005, XData sent an unsolicited fax to Targin advertising its "Integrated Business Solutions" with "Software Systems for All Your Needs." The unsolicited and apparently unappreciated fax caused Targin to file a class action lawsuit against XData for violating the TCPA. The TCPA prohibits the sending of an unsolicited advertisement to a telephone facsimile machine without the receiver's consent. 47 U.S.C. § 227(b)(1)(C). The TCPA also provides for a private right of action, brought by a person or an entity, to recover monetary losses from a violation, or to receive $500 in damages for each violation, whichever is greater. 47 U.S.C. § 227(b)(3)(B). The TCPA further provides that if the violation is willful or knowing, the court may in its discretion triple the damage award. 47 USC §227(b)(3).
¶ 4 Targin filed the class action complaint in January 2009 in the circuit court of Cook County against XData.*fn1 The three-count complaint alleged violations of the TCPA (count I), conversion (count II), and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2 (West 2008)) (count III). XData tendered defense of the class action to Pekin in February 2009. Pekin declined coverage to XData in March 2009, finding that the allegations in the complaint against XData were not covered under the insurance policy issued to XData. Targin and XData subsequently entered into a settlement agreement, without any input from Pekin, and agreed to settle the class action for $1,975,000. The judgment was to be satisfied solely from the proceeds of XData's insurance policy with Pekin covering the period including December 1, 2005 through December 31, 2005. On June 3, 2009, the court approved the settlement agreement and entered a "Final Approval of Settlement Agreement and Judgment" against XData. The court's order specifically found that XData had sent 4,673 unauthorized fax advertisements to recipients during 2005, but believed that it had their consent when it sent the faxes. The order also specifically found that XData had not intended to injure the recipients when it sent the faxes.
¶ 5 While the underlying action was pending, Pekin filed a complaint for declaratory judgment in the circuit court of Cook County against XData and Targin in April 2009, alleging that it did not have a duty to defend XData in the underlying action. Subsequently, Targin filed a motion for summary judgment and Pekin responded with a cross-motion for summary judgment. The circuit court granted Targin's motion and denied Pekin's motion, finding that Pekin had both a duty to defend and indemnify XData in the underlying action. Pekin now appeals from the court's order.
¶ 7 On appeal, Pekin first contends that it had no duty to defend XData in the underlying action. To determine whether an insurer has a duty to defend its insured from a lawsuit, a court must compare the facts alleged in the underlying complaint to the relevant provisions of the insurance policy. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 107-08 (1992). If the facts alleged in the underlying complaint fall within or potentially within the policy's coverage, the insurer is obligated to defend its insured. Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352, 363 (2006). The allegations in the underlying complaint must be liberally construed in favor of the insured. United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 73 (1991). This is true even if the allegations are groundless, false, or fraudulent, and even if only one of several theories of recovery alleged in the complaint falls within the potential coverage of the policy. United States Fidelity & Guaranty Co., 144 Ill. 2d at 73.
¶ 8 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. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 391 (1993). Similar to a contract, an insurance policy is to be construed as a whole, giving effect to every provision, if possible, because it must be assumed that every provision was intended to serve a purpose. Valley Forge, 223 Ill. 2d at 362. If the words used in the policy, given their plain and ordinary meaning, are unambiguous, they must be applied as written. Crum & Forster, 223 Ill. 2d at 391.
¶ 9 The construction of an insurance policy and a determination of the rights and obligations thereunder are questions of law for the court that are appropriate for disposition by summary judgment. Insurance Corp. of Hanover v. Shelborne Associates, 389 Ill. App. 3d 795, 798 (2009). Summary judgment is appropriate where the pleadings, depositions, and admissions on file, together with any affidavits and exhibits, when viewed in the light most favorable to the nonmoving party, indicate that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Shelborne Associates, 389 Ill. App. 3d at 798. Appellate review of an order granting or denying a motion for summary judgment is de novo. Outboard Marine Corp., 154 Ill. 2d at 102.
¶ 10 Duty to Defend - "Advertising Injury" Provision
¶ 11 We now address Pekin's contention that it had no duty to defend XData in the underlying lawsuit. Pekin first argues that it had no duty to defend because the underlying complaint's claim under the TCPA did not fall within the policy's coverage for an "advertising injury." Pekin admits that Illinois law has held that "advertising injury" coverage can include a TCPA claim; however, it argues that this is only true for a "natural person" rather than for a corporation, as is the case here. ...