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Indiana Insurance Co. v. CE Design Ltd.

United States District Court, N.D. Illinois, Eastern Division

December 20, 2013

INDIANA INSURANCE COMPANY, an Indiana Corporation, Plaintiff,
v.
CE DESIGN LTD., Defendant

Page 859

For Indiana Insurance Company, an Indiana corporation, Plaintiff: James A. Morsch, LEAD ATTORNEY, Mark A Schwartz, Rachel D. Sher, Butler Rubin Saltarelli & Boyd LLP, Chicago, IL.

For CE Design Ltd., Defendant: David Max Oppenheim, LEAD ATTORNEY, Jeffrey Alan Berman, Anderson & Wanca, Rolling Meadows, IL; Phillip A. Bock, Phillip James Bullimore, Bock & Hatch, LLC, Chicago, IL.

OPINION

Page 860

MEMORANDUM OPINION AND ORDER

Hon. Harry D. Leinenweber, United States District Judge.

Before the Court are the parties' Cross-Motions for Summary Judgment. For the reasons stated herein, Plaintiff Indiana Insurance Company's Motion for Summary Judgment is granted in part and denied in part, and Defendant CE Design Ltd.'s Motion for Summary Judgment is granted in part and denied in part.

I. BACKGROUND

Plaintiff Indiana Insurance Company (" Indiana" ) is an Indiana corporation with its principal place of business in Boston, Massachusetts. Defendant CE Design Ltd. (" CE Design" ) is an Illinois limited

Page 861

liability company. They dispute several coverage issues related to an insurance policy purchased from Indiana by non-party Matrix LS Inc. (" Matrix" ).

On September 29, 2004, Matrix applied for business insurance from Indiana, with a combined single limit of $1,000,000. In its application, Matrix described its business as " lead generating office for mortgage brokers." Pl.'s. Rule 56.1 Statement of Facts ¶ 14. Indiana sold Matrix Commercial Protector Policy No. BOP9894530 (the " Policy" ), which had an effective date of September 28, 2004 and a termination date of September 28, 2005. The total policy premium charged by Indiana for the Policy was $501.00.

The Policy has several provisions that are relevant to this litigation. Under Section A for " COVERAGES," the Policy provides:

1. Business Liability

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of " bodily injury," " property damage," " personal injury" or " advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any " suit" seeking those damages. However, we will have no duty to defend the insured against any " suit" seeking damages for " bodily injury," " property damage," " personal injury" or " advertising injury" to which this insurance does not apply. . . .
b. This insurance applies:
(1) To " bodily injury" and " property damage" only if:
(a) The " bodily injury" or " property damage" is caused by an " occurrence" that takes place in the " coverage territory" ; and
(b) The " bodily injury" or " property damage" occurs during the policy period.
(2) To:
. . .
(b) " Advertising injury" caused by an offense committed in the course of advertising your goods, products or services;
but only if the offense was committed in the " coverage territory" during the policy period.

Id. ¶ 38. Section F of the Policy provides various definitions with respect to several key terms related to " Liability and Medical Expenses," including:

1. " Advertising injury" means injury rising out of one or more of the following offenses:
. . .
b. Oral or written publication of material that violates a person's right of privacy;
. . . .

Id. ¶ 30. The declarations page of the Policy provides coverage with limits of $1 million in liability and medical expenses and aggregate limits of $2 million for all non-product injury or damage. Id. ¶ 27.

CE Design initiated a class action lawsuit against Matrix in Lake County, Illinois on March 14, 2006 captioned CE Design Ltd. v. Matrix, Case No. 05 L 269 (the " Underlying Action" ). In the Complaint filed in that action (the " Underlying Complaint" ), CE Design alleges that Matrix violated the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the " TCPA" ), engaged in common law conversion and violated the Illinois Consumer Fraud and Deceptive Practices Act, 815 Ill. Comp. Stat. 505/2, by sending unsolicited junk fax advertisements to Plaintiff and hundreds of others. It alleges that Matrix is responsible for sending more than 9.36 million unauthorized fax advertisements, including two specific faxes to CE Design without its

Page 862

permission on February 16, 2005 and ...


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