The opinion of the court was delivered by: United States District Judge Elaine E. Bucklo
MEMORANDUM OPINION AND ORDER
Plaintiff/counter-defendant National Casualty Company ("NCC") filed a one-count complaint seeking a declaration that under its business auto policy it has no duty to defend or indemnify the defendants in connection with an action brought by Jane Doe, as special representative and next friend of J. Doe, a minor, in the Circuit Court of Cook County. Defendant/counter- plaintiff The Burlington Insurance Company ("TBIC"), which had issued a commercial general liability insurance policy to Jewel's Bus Company, filed a counterclaim seeking, in part, a declaration that NCC is obligated by its auto insurance policy to defend and indemnify the defendants in the underlying action.*fn1 NCC and TBIC have filed cross motions for summary judgment. NCC seeks judgment in its favor on its amended complaint, while TBIC seeks summary judgment in its favor on Count I of its counterclaim. For the reasons stated below, NCC's motion for summary judgment is granted in part and TBIC's motion for summary judgment is granted in part.*fn2
The underlying litigation stems from the alleged sexual assault of J. Doe on a school bus by Willie Bledsoe ("Bledsoe").*fn3
Bledsoe was employed by Jewel's Bus Company ("Jewel's") as a bus driver. At the relevant times, the City of Chicago Board of Education ("Board") and Chicago Public Schools ("CPS") contracted with Jewel's to provide transportation for children to and from school. J. Doe required "paraprofessional support" relating to transportation, meaning that an aide was required to be present on the school bus with him. However, for a period of about five days in September 2009, J. Doe was transported to school on the bus without an aide or attendant present. During this period, on September 15, 2009, Bledsoe picked up J. Doe from his home, purportedly to transport the child to school. On that day, Bledsoe instead restrained J. Doe for the entire school day and sexually assaulted J. Doe while on the school bus. Bledsoe threatened J. Doe and warned him not to tell anyone about the sexual assault or the fact that he had not been to school that day.
The complaint filed by Jane Doe consists of nine counts, all stemming from Bledsoe's alleged sexual assault of J. Doe. Counts I, II and VIII were brought against Bledsoe directly for assault, battery, and intentional infliction of emotional distress. Counts III through V were brought against the Board and CPS for negligent supervision, negligent hiring, and negligent retention. Counts VI and VII were brought against Jewel's for negligent supervision and negligent hiring. Finally, count IX was brought against the Board, CPS, and Jewel's for willful and wanton breach of their duties.
Jewel's and the Board filed claims for defense and indemnification for the underlying lawsuit with NCC and TBIC under their respective insurance policies. TBIC accepted the claims and is defending Jewel's, the Board, and Bledsoe subject to a reservation of rights. NCC, however, denied the claims. Thereafter, NCC filed its complaint for declaratory relief.
NCC issued a business auto policy to Jewel's, and the Board was named as an additional insured on the policy. The terms of the insurance agreement between NCC and Jewel's/Board provided:
We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of a covered "auto."
The policy also contains an exclusion for sexual abuse. The "Sexual and/or Physical Abuse Exclusion," contains three paragraphs and states:
This policy does not apply to "bodily injury," "property damage" or "personal injury" sustained by any person arising out of or resulting from "sexual and/or physical abuse" by any person who actively participates in any act of "sexual and/or physical abuse."
We shall have no duty to defend any "suit" against you seeking payment in connection with any claim made against you for "sexual and/or physical abuse."
The following Definition is added to the policy: "Sexual and/or physical abuse" means any sexual or physical injury or abuse action or behavior, including but not limited to assault and battery, negligent or deliberate touching, corporal punishment and mental abuse.
All other terms and conditions remain unchanged.
NCC argues that based on the facts in the underlying complaint, the sexual abuse exclusion applies, thereby relieving NCC from its duty to defend and indemnify the state court defendants. Relying principally on the phrase "by any person who actively participates" in the first paragraph, TBIC responds by arguing that even if the exclusion were to apply to Bledsoe, it could not be applied to Jewel's or the Board. TBIC contends that NCC's reading of the exclusion is unduly ...